Background information: Parcel Germany
Increasingly, Santa Claus is decked out in yellow and red, the colors of DHL. But that's not surprising when you consider that more and more people are using the Internet to order their gifts for family and friends. The result: The parcel volume handled by the couriers of DHL will double in the days before Christmas - the total will climb from the more than 2.7 million delivered each day during normal times to well over 5 million parcels. About 90 percent of the parcels are delivered from one day to the next - a truly impressive performance.
But there is still room for improvement, says Jürgen Gerdes, the Board of Management member at Deutsche Post DHL who oversees the MAIL division and thus the parcel business in Germany: "Our goal is clear: Parcels should be delivered as fast as letters. As the market leader, we intend to provide our customers with better, more innovative services in the future. As part of our Parcel Concept 2012, we will invest EUR 750 million in the continued modernization of the German parcel business in coming years." As a result of these investments, the parcel business will ultimately become the second strong pillar of the MAIL division. Even without the capital expenditure, the business is already generating high growth rates these days.
The growth driver: parcels
Since the turn of the millennium, parcel volume in Germany has risen by nearly 50 percent - by the end of 2011, Deutsche Post DHL alone is expected to have transported about 1.7 billion parcels. The Bonn-based company has fueled this growth by systematically adding numerous innovations to the parcel business: In 2001, the first Packstation was put into service. In 2005, private individuals also gained the option of having their parcels picked up at their doorstep. And, in 2007, the company introduced the first "mailboxes for parcels." With online returns (2009), the online-shopping portal MeinPaket.de (2010) and the opportunity for customers to set the delivery date for parcels (2011), more and more web-based solutions have been added to the range of the company's solutions.
And the innovations have paid off: Revenues in the parcel business have been growing by an average of 3.5 percent annually since 2007 - the rate even exceeded 10 percent in the third quarter of 2011. As a result, the parcel business is already producing more than one-fifth of segment revenues in the MAIL division. In the first nine months of 2011 alone, these revenues totaled well over EUR 2 billion.
Retailers currently generate nearly one-tenth of their revenues through the mail-order business, and all signs are pointing upward. At Deutsche Post DHL, around 40,000 couriers work every day in Germany to deliver an average of 2.6 million parcels sorted by the 33 national parcel centers. These parcels are filled with such products as books, CDs, DVDs, fashions, shoes and consumer electronics, that is, products that are delivered free of charge and, thus, easily and conveniently. As demographic change creates a society made up of more and more older people, completely new business opportunities for mail-order retailing will arise. The investments now being made by Deutsche Post DHL will enable the Group to take advantage of them.
EUR 750 million for improvements
With the Parcel Concept 2012, the Bonn-based Group is making its largest investment in the parcel business since the 1990s. Overall, the world's leading postal and logistics group is pouring EUR 750 million into the modernization of its parcel service value chain.In particular, business customers will profit from the expanded cut-off times for the pickup and delivery of parcels. In the future, parcels can be dropped off up to two hours later in the evening, but will not have to spend an extra day being transported. This improvement will be accomplished by taking such steps as doubling the sorting capacities of the parcel centers and delivery bases. The magic words here are "needs-based improvement." Instead of today's typical rate of 20,000 parcels an hour, the parcel centers will be able to handle 28,000, 40,000 or even 50,000 parcels an hour in the future, depending on location and demand.
The result: Practically 95 percent of all parcels will reach their recipients the next day.This will open the way for new, trend-setting services: In the future, medications, pharmacy products and food will increasingly be delivered in parcels. The addition of 6,000 new vehicles and a redrawing of 650 of the 7,800 delivery districts will also ensure that the products are delivered to end customers in an environmentally efficient manner. In the future, customers will also be able to track the status of their shipments in real time. And: They will be able to spontaneously decide whether the package should be delivered to their homes, a Packstation or some other address. This new service will be facilitated by a complete upgrading of the IT architecture and systems, a move that is one other component of the Parcel Concept 2012.
Christmas is secured
The initial positive impact of the capital-expenditure program will be seen this Christmas season already. The capacity of 10 of the 33 parcel centers has already been expanded, right on time for the increased wave of parcels produced by the holiday season. As a result, the parcel network of Deutsche Post DHL will have 15 percent more capacity this year. But this is just the first step.
"We will have completed our investments by 2014," Jürgen Gerdes says. "For our customers, this will mean a dramatic improvement in our market-leading quality and reliability. We're doing our part to take e-commerce to the next level in Germany."
And not just at Christmastime. Rather, year-round.