The world’s largest transportation and logistics company is getting larger as demand for e-commerce, time definite international express delivery and supply chain services drives up revenue and profit at Deutsche Post DHL.
The German logistics giant increased revenue 3 percent last year from 2012 to €55.1 billion, or about US$77 billion in 2013, after excluding a negative impact from currency exchange rates. Operating profit rose 7.4 percent to €2.86 billion, nearly $4 billion. Consolidated net profit at Deutsche Post DHL soared 27.5 percent last year to €2.1 billion, which translates to about $2.9 billion.
The growth in parcel, time-definite international express and supply chain business helped DHL grow despite soft freight markets. The company saw its freight forwarding business, which handles air, ocean, truck and rail freight, decline 2 percent from 2012 last year, after adjusting for exchange rates, to €14.8 billion, or about $20.6 billion. DHL cited weakened air freight demand from several large customers and lower ocean freight demand in its Americas and Europe regions.
Slight economic improvement led to an increase in overland transportation revenue in Germany, Eastern Europe, the Benelux countries and France, DHL said.
In contrast, express package revenue rose about 4 percent organically, after excluding revenue from domestic operations sold in 2012 from year-over-year comparisons, to €12.7 billion, or about $17.7 billion. The express unit benefited from greater focus on time-definite international or TDI business. TDI revenue rose 7 percent in 2013 and 8.2 percent in the fourth quarter, and shipment volume was up 8.4 percent for both the end-of-the-year quarter and the full year.
“They are the largest in international express package business by a long shot,” with about US$16.8 billion in annual revenue from that segment, said Satish Jindel, president of SJ Consulting. In comparison, UPS, Jindel said, has $11.8 billion in international express package revenue, and FedEx $9.5 billion.
Ending domestic operations in the U.S. and other markets forced DHL to focus on international, he said, “because that’s where it has to happen for them.”
E-commerce helped fueled 3.4 percent growth in DHL’s mail division, with parcels accounting for 26 percent of volume, compared with 20 percent in 2012. Much of that growth came from German online shoppers, who took advantage of DHL expanded evening service and a bigger network of parcel drop-off boxes.
“DHL, like others, has been hit by the e-commerce bug,” Jindel said. “People are trying all kinds of different models to see which one is going to stick. There will be a cleansing process over the next couple of years before the answer will emerge.”
Expansion in Asia and in the automotive, life science, consumer and technology sectors helped boost DHL supply chain revenue nearly 6 percent in 2013 to €14.3 billion, about $19.9 billion, after accounting the sale of three subsidiaries and exchange rates. The division won about $2.1 billion in new contracts.