Thursday, November 13, 2008

DHL Thailand and the auto market


Speed merchants supreme

After the PR 'coup' it pulled off with the Singapore Grand Prix, DHL Express Asia-Pacific would seem to have good reason to be a little smug


The significance of DHL for the automobile industry can be best underlined for you, dear reader, if we name, here and now, all the vehicle manufacturers which don't do business with that global-market leader in the field of logistics and express delivery.

But we weren't able to track down a single one - a little fact which speaks volumes.

And in Thailand, the relationship between car-makers and DHL is particularly close.

"I lived in Bangkok for three years ... I know the Bangkok Post very well," a beaming Dan McHugh, CEO of DHL Express Asia-Pacific, assures me as he tries to stem the flow of my introductory sales pitch for this august publication.

But then he's a veteran expat, having lived and worked in Asia for 26 years now.

"In 1985 I was the country manager for APL [a subsidiary of Singapore-based Neptune Orient Lines] and there was a coup d'e'tat on the first day I arrived! By the time I got to the hotel, there were tanks in the streets and one shooting death.

"My boss, an old Asia hand, told me, 'Well, it won't be the last time, so go to the office and manage your business' [McHugh chuckles].

"Business goes on, in Thailand or any other market unless real tragic events happen. One of our highest, healthiest business is in Pakistan."

McHugh oversees DHL Express in 41 countries across the Asia-Pacific region, which has development into a major stronghold for the firm.

(Its name, by the way, is derived from the first letter of the surnames of its three founders: Dalsey, Hillblom and Lynn).

DHL's top 10 countries include Thailand, Singapore, Japan, China, Australia and Malaysia.

"Thailand is very successful. We have a hub in Bangkok at Suvarnabhumi Airport which helps us feed out to Burma, Vietnam, Laos and Cambodia."

The Express division of DHL, McHugh claims, gets little competition from the likes of FedEx, UPS and TNT. "It's a high-growth business averaging 15 to 17 % growth over the last five years. It's also a very good proxy for economic activities. Express is always healthy when the global economy is good. Our business is picking up really fast. We deliver to 240 countries around the world."

We've heard that DHL and the Formula One boys work very smoothly together ...

"Yes, it's a fantastic partnership!" he responds with a satisfied smile. "Our speed, precision teamwork in difficult operating environments and excellent customer service culminates into a highly complex logistics operation that is one of the most amazing things! It's hard to understand ... like when we went over to the track two years ago at Shanghai after the race ended, we had our first 747 taking off to Japan for the following week's race four hours after everything ended! It's the sequencing operation, how quickly things happen, in managing multi-million-dollar cars, wheels and spare parts."

How different is "expressing" F1 to, say, delivering a package from the DHL hub at Suvarnabhumi?

"We build the infrastructure with people and capabilities from DHL, a dedicated team which makes use of our DHL footprint in any country. We're such a dominant global player, with significant capital investment, that we have the leverage for different types of expertise."

So how does McHugh appraise intangibles such as its sponsorship of Formula One events?

"Besides the tangibles such as the iconic DHL balloon, airplanes, vans, facilities and people, F1 is amazing branding exposure. More than a billion people will be watching F1. It's [the Singapore Grand Prix] the largest TV audience with evening prime time in Asia, noon time in Europe and morning on the US east coast and South America, especially where it has a huge F1 fan base. It simply was the largest TV broadcast in history and they'll see the DHL [logo]. It's probably worth something."

Shifting gears, I ask what impact the current financial meltdown is having on DHL. In response, he first broaches the subject of oil prices.

"It certainly is the volatility itself. It was $45 per barrel last year, then $147 and back to $85 [at the time of this interview]. Obviously price is a huge component of our costs.

"Aviation jet fuel will cost more and eventually the customer pays for it but the economic turmoil is frankly more concerning in the immediate term than oil."

He agrees that some drastic changes are on the cards for the US financial market.

"I don't think we've the seen the true impact yet. It's not the end yet. In 2009, the first two quarters will be rocky, then, if the credit market settles down, we might see some growth."

DHL, in which Deutsche Post became a major shareholder in 2002, still views Thailand as "above the mean", he says, in terms of average growth in the Asia-Pacific region.

"I believe, with all due humility, that we are the best in the express business, so we are taking market share in Thailand. I expect 12 to 13% growth this year, to be on the safe side."


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