DHL executives offer up peak season plans and prospects

The common sentiment that the 2020 Peak Season will be unlike any other was a key theme on a media call hosted earlier this week by executives at global freight transportation and logistics services provider DHL.

Speaking on the call were:Chet Paul, Sr. VP, Commercial,DHL ExpressU.S.; Kraig Foreman, President, eCommerce for DHL Supply Chain North America; and Craig Morris, CIO, DHL eCommerce Solutions Americas.

One ongoing logistics-related focus, out of many, in 2020, has pertained to how peak season conditions have been intact already for the last several months, going back to the onset of the COVID-19 pandemic.

“The best way Express is looking at this is that we’re handling our second peak,” said Paul. “We’ve already experienced unprecedented demand this year—with growth numbers in the 50% range—coming out of the lockdowns. Heading in to peak season again, we’re well-prepared. We’ve demonstrated our capabilities. We’re predicting 50% growth on inbound, 30% on outbound. That is primarily e-commerce volume.”

Looking ahead, Paul said that he expects December 21 to be DHL’s peak delivery day, stating that it will represent a 30% increase in pick-up and delivery than compared to a typical peak, with Black Friday and Cyber Monday pegged to be up 45% annually.

As for how DHL Express is prepared for peak season, Paul explained that, in addition to owning its own fleet, facilities, and resources, it also has brought in four additional B777 freighters, with plans for two more, coupled with changes to its network to continue to provide service to the 220 countries and territories, in which it has operations.

“Here in the U.S., we’ve invested $20 million to expand our hubs, gateways, sorting equipment, service centers,” he said. “We’re in great shape heading into the “traditional” peak season. We also have people in position—we’ve added 3,000 jobs—including 1,600 new pickup and delivery routes—these are now all already in place in the US. We’re confident that we’ll have a record peak.”

For DHL eCommerce Solutions Americas, Morris said that his group has seen more than 50% growth annually while expecting a surge of more than 50% during the busiest peak week.

“We’ve been making investments and adjustments since March—we hired over 900 permanents and 1600 temps,” he said. “We opened six annex facilities to give spillover capacity in Dallas Fort Worth, Atlanta, LA, NYC Chicago and Phoenix. We’re adding automation and adding infrastructure enhancements. Our planning started in March when we realized we were dealing with unprecedented volumes.”

And on the DHL Supply Chain side, Foreman explained that with his unit serving as the company’s fulfillment engine and creating packages for customers, it has a different approach, as it is integrated with customers in building solutions for peak season in distribution centers and fulfillment facilities.

“We typically spend all year preparing,” he said. “It’s make or break time at peak. With COVID-19, we’ve had to adjust a lot of those plans. We’ve focused on three streams: the first is associate safety (we have revamped all operations to include safety protocols and infrastructure). It’s an ongoing effort to keep them safe. Second, we’ve brought on 6,000 more people across our sites this year. We’re close to hitting that number by Monday next week and we’re very excited about that, as this was a challenge to overcome. We’ve managed very well in key markets to get the right level of resources. Third, we have also been focused on forecasting – as everyone has seen, it is unprecedented. We have been working to understand what volumes to expect. Consumer behavior is materially different. We’re directly impacted by that in operations, working closely to forecast, understand customers’ capacity levels and resourcing needs.”

From a peak planning perspective, Morris observed that customers are concerned, in that they are entering into an unprecedented peak that is replete with concerns related to delivery capacity and related costs.

“That’s understandable—we’ve been really focused on working with our trading customers and making the commitment to them that we’ve planned for them and will perform,” he said. “We stopped onboarding new customers in August—this is a typical thing for us ahead of peak and we usually do it in October, but we did it this year in August, given the increases we’d seen and in order to prepare for peak and to deliver for the customers that trusted us with their volumes. We are well positioned for that. Some customers in the market might be vulnerable from a capacity perspective.”

And with peak season capacity more limited perhaps than ever before, Foreman noted that all shippers and carriers are aware of the options they have at this point, adding that over the summer and fall, DHL focused heavily on ensuring capacity was built out and based on its business forecasts.

“This is why you’ve seen many retailers moving promotions early and encouraging customers to order early,” he said. “What’s expected now is that if everything goes to plan, there will be enough capacity based on retail strategy changes to meet the demands. The challenge becomes that if demand is higher than expected, it will create a constraint in the final weeks. Service levels will be stretched out, so when do retailers call off promotions? Most retailers believe they are in a good place. Unprecedented demand will become a question of when to turn off promotions based on capacity constraints.”