Canadian Shipper

Feature

E-comm Boom


As consumers  grow their online purchasing habits, courier and logistics companies looking to compete are challenging their retailer and logistics partners to deliver even more speed and convenience.

For one member of the Big Three integrators—DHL—the e-commerce factor has led to the company making investments in North America in an attempt to win the final mile.

One recent move was the launch of a direct DHL Express flight into Vancouver from the integrator’s Americas Hub at the Cincinnati/Northern Kentucky International Airport (CVG).

The new direct Boeing 757 freighter flight, which replaced a Boeing 767F flight from CVG, comes as a result of double-digit shipment growth into Vancouver generated from the growing international trade—specifically between the U.S. and Canada. In the last year, inbound shipments increased by 38 per cent to Vancouver, while outbound volumes increased by 10 per cent, all of which are a result of the accelerating e-commerce business paired with an already-strong customer base .

“The new flight will help to meet the rising demand of U.S. exporters and also create more opportunity for Vancouver’s small and medium-sized businesses to trade internationally, by improving reliability, connectivity and capacity between the two markets,” said Andrew Williams, DHL Express Canada’s CEO.

The flight operates daily, arriving at 8 a.m. to Vancouver and departing at 7 p.m., improving the transit time by an additional hour for both inbound and outbound shipments and offering customers better pick-up and delivery windows, while also improving service delivery times and reliability.

The new flight also increases shipment capacity on the route by up to 40 per cent.

With the rising number of small and medium-sized enterprises venturing into e-commerce, DHL is seeing higher demand for dedicated solutions in several industry sectors including fashion, consumer electronics, media products and consumer pharmaceutical products. To meet these demands, DHL Express has also invested more than CDN$4 million in four new service points in Ontario, Ottawa, Calgary and Surrey in 2018.

Each B757F flight has capacity for 25 tonnes, serving 18 stations and service centres in Canada which can handle anything between 30,000 to 40,000 packages in and out per night.

According to Williams, e-commerce volumes alone have increased close to 20 per cent, which has been introduced “relatively easily” into a Canadian delivery network he described as “large and robust.”

“The properties of a typical e-commerce shipment sit very well into the network of a global integrator because they tend to be well-packaged and we have all the data required for the receiver, which enables us to make contact when the shipment arrives.

“The shipments also tend to be of a lighter weight and conveyable, and when we are dealing with the bigger players they can be picked up in bulk at the point of origin.”

The Hub

While the Canadian market continues to grow, DHL Express has invested US$58 million over the past two years in its Americas Hub at Cincinnati/Northern Kentucky International Airport to meet strong growth in international shipments.

Since 2016, international trade has generated a 24 per cent growth in shipments per day. With 2.8 million shipments cleared every month at the CVG Hub, DHL continues to see rising demand for automated solutions to move shipments in several industry sectors, with the top five commodities being electrical goods, machinery, consumer electronics, medical and photographic goods, and clothing.

CVG, DHL Express has invested a total of $339 million to expand its operations, including building its north ramp to provide additional warehouse space, 16 more aircraft gates to accommodate route expansions, new equipment to increase sorting capacity as well as the faster unloading and reloading of planes.

During a recent visit to the CVG Hub, Canadian Shipper viewed the fruits of the aforementioned $58 million investments, which have allowed for a new reload sorter, new slides, outbound loose-load truck doors, material handling equipment, new technology with GPS systems to track aircraft containers, new weatherize ground support equipment and other improvements in efficiencies and quality to ensure DHL Express has the capacity needed to meet the demands of the growth generated by international shipping and global trade.

“Our commitment to the Americas is clearly represented by the $339 million investment that we’ve allocated to guarantee that we meet the demands of our customers,” said Mike Parra, CEO for DHL Express Americas. “We continue our dedication to the regional Northern Kentucky and Cincinnati economy, and we are proud to have steadily added new jobs at our CVG Hub, the backbone of our Americas network.”

Photo by PL Rogers

Logistics urban-style

When it comes to e-commerce logistics DHL sees urbanization making the last mile of delivery more complex and critical for success.

According to new research by DHL and Euromonitor, with over 600 million more people forecast to live in urban environments by 2030 and new technologies creating opportunities for both service enhancement and disruption, online retailers and their logistics partners are being challenged to embrace bold new approaches in order to survive and compete. In a white paper entitled, Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer, DHL and Euromonitor have identified the four main trends that are shaping urban last mile transportation—localized delivery, flexi-delivery networks, seasonal logistics and evolving technologies—and ways in which companies can adapt their supply chains to the changing market environment and achieve competitive advantage.

“The last mile is increasingly becoming the key battleground in the e-commerce supply chain, and companies will have to develop targeted strategies in this area to compete effectively,” DHL’s chief commercial officer, Katja Busch told a group of international media, including Canadian Shipper, gathered in New York in late 2018. “It’s not just about transportation, but about companies’ overall approach to managing inventory—getting the right items to the right place at the right time. DHL is developing focused solutions to help e-commerce companies reach their end customers quickly and efficiently, from using machine learning to better route shipments within cities to adding more automation to our delivery networks.”

The white paper found that the major urban trends all create various challenges in terms of cost, service impact and organizational strain. For example, the growth of seasonal logistics as a result of increasingly popular holidays and promotional days such as Asia’s Singles’ Day or national Cyber Days, places significant pressure on logistics companies to build up additional capacity and hire resources to cope with short-term volume surges, which can in turn be difficult to predict. Urban customers’ demands for speed and convenience are forcing retailers to overhaul their warehousing networks, replacing centralized networks with local fulfilment and distribution infrastructure, which can require more accurate balancing of inventory. Evolving technologies are creating opportunities for new disruptive challengers to enter the market, while also requiring incumbents to invest prudently and incorporate new skills into their workforce. To overcome these challenges, DHL and Euromonitor have jointly identified the F.A.D. (Flexible transport networks, Automation and Data) model as a framework that will help retailers and logistics operators to ensure their competitiveness over the last mile. By improving their performance in increasing automation, managing data and building flexibility into their networks, e-commerce companies in all markets will be able to better manage inventory and increase the efficiency of their last-mile delivery networks.

“The future evolution of this fast-moving, highly competitive e-commerce market is still incredibly difficult to predict, so companies need to remain nimble and efficient while ensuring they are meeting customer demands,” said Lee Spratt, CEO, DHL eCommerce Americas. “The last mile requires considerable attention because, however the market evolves, it will continue to be one of the main touchpoints in the customer experience. Those companies that can build effective partnerships to make their urban delivery networks more elastic, invest in the most effective technologies to boost productivity, take advantage of data to build better customer experiences and, most importantly, manage their inventory as efficiently as possible will emerge as winners in the dynamic e-commerce marketplace of tomorrow.”

Driving supply chain

Technology is a key component of DHL’s e-commerce strategy and its contract logistics arm, DHL Supply Chain recently announced plans to deploy emerging technologies in 350 of its 430 facilities in North America (56 of which are in Canada) as part of a US$300 million investment.

The availability—and practical utilization—of these technologies is expected to help the diverse customer base including those addressing e-commerce and omnichannel challenges to minimize complexity, remove capacity constraints, and maximize service to their customers. Accelerating the implementation of selected technologies such as robotics, augmented reality, robotics process automation, IoT and DHL’s proprietary end-to-end visibility solution—MySupplyChain—is the objective of DHL Supply Chain’s global digitalization strategy.

“This investment is about a holistic view of emerging technologies that enables our customers to achieve their growth and profitability goals,” said DHL Supply Chain North America CEO Scott Sureddin. “Our customers’ needs are not homogenous as each business and segment has unique challenges and levels of maturity. Therefore, it is important that our customers can benefit from our experiences and expertise with a variety of emerging technologies.”

According to a recent DHL report, the exponential growth of e-commerce and its implications on service was identified by 65 per cent of responding companies as having a significant impact on their supply chain. Executives are turning to technology in support of faster delivery times to efficiently manage fluctuating demand.

“While many technologies are already in active deployment, collaborative piece-picking robots, artificial intelligence applications and self-driving vehicles stand to have the most promise today,” added Sureddin. The potential impact on customers’ businesses, which in some deployments have produced productivity gains upwards of 25 per cent and throughput capacity gains of 30 per cent, are two of the main drivers for accelerated investment in the coming years. DHL’s experience with these technologies stands to minimize infrastructure costs and maximize service levels.