Rethinking Packaging: DHL Trend Report discovers how e-commerce era drives wave of sustainability and efficiency

DHL survey reveals that packaging will be in the spotlight over the next five years as companies and customers demand sustainable packaging materials and less waste
Fast-tracked e-commerce deliveries require adoption of packaging optimization, automation, smart-packaging solutions and new conveniences to ensure outstanding customer experience
DHL calls its customers and partners to collaborate on rethinking packaging to drive innovation in logistics operations

DHL has released "Rethinking Packaging", a new Trend Report that offers a comprehensive look at the future of packaging in the logistics industry. The report breaks down the trends accelerating the need to rethink packaging, how industries and their packaging needs are evolving, and provides insights on how packaging innovations will shape greener and more efficient logistics operations across all sectors.

Driven by globalization and e-commerce, the overall volume of products shipped is rising, and packages are traveling further through longer, more complex cross-border logistics networks. A survey conducted by DHL on its customers and partners shows that for nine out of 10 companies, packaging will play an important role in the next three to five years. Fast-tracked deliveries and increasingly popular subscriptions services result in frequent single-item shipments, contributing to more carbon emissions and packaging waste. The expanded variety of e-commerce products has led to new challenges in shipping and packaging. Surveyed customers see themselves confronted with maintaining a reasonable spend on packaging, the number of shipments damaged in transit, as well as optimizing the available transport capacity.

Demand for more sustainable shipping is driving new efforts to minimize waste, promote green materials, and implement convenient recovery systems. Leading retailers are answering these expectations by providing hassle-free and recyclable materials, capitalizing on the new opportunity to delight the customer with aesthetically pleasing accessible packaging features.

Matthias Heutger, SVP, Global Head of Innovation & Commercial Development, DHL, explains: "The Trend Report and our customer survey illustrate just how important easy, recyclable, and robust packaging is to an overall positive customer experience. The acceleration of changing needs of companies, consumers, and the wider environment however increase costs and reduce effectiveness. We believe that the adoption of new packaging optimization tools, materials, and handling technologies will significantly boost efficiency and productivity. That in turn, will drive changes in the operation of supply chains and logistics processes."

Across industries, increasing demands are being placed on packaging. In the automotive and technology sectors, supply chains must evolve to accommodate growing volumes of delicate, high-value components. In healthcare, logistics professionals must ensure safe and compliant delivery of lifesaving medicines and devices to hospitals, communities, and patients' homes. As e-commerce usurps traditional retail, the package on the doorstep is now a critical touchpoint between consumers and brands.

Implications for the logistics industry

The logistics industry will play a key role in reducing the cost, inconvenience, and environmental impact of packaging. It must adopt new technologies, materials and processes across the value chain:

Packaging optimization
Shipments that are not completely filled up are a major cause of product damage and detriment to cost and sustainability measures. Therefore, companies are introducing software that expertly calculates the best possible ratio of items, cartons, and pallets and then communicates the results directly to pickers. OptiCarton for example, DHL's innovative package density optimization tool, maximizes carton and pallet space by more efficiently selecting and arranging packages based on size and weight.

Packaging automation
Automated unloading processes, end-of-line packing and labeling systems, and collaborative robots to relieve the burden of seasonal packaging and hiring needs will enable companies to balance the growing e-commerce market with an aging workforce.

Sustainable packaging material
In the DHL customer survey, the majority of respondents said that the introduction of sustainable packaging materials is their number one near-future packaging priority. Research into green alternatives to plastic shrink wrap and single-use plastic envelopes, as well as sustainable groceries' packaging is ramping up while at the same time, balancing cost and customer convenience is proving challenging for retailers.

Reusable packaging and reverse logistics
The adoption of reusable materials and closed-loop recycling programs to eliminate waste has increased lately, some challenges however remain. Industries considering building an economically viable reusable packaging system need to think about required size of the packaging material pool, the design of systems for cleaning, inspecting, and maintaining containers, and the cost, speed, and ease of use of reverse logistics processes.

Smart packaging
Smart-packaging technologies such as smart labels or tags and last mile product protection measures strengthen the connection between the customer, the supply chain, and the package via real-time updates on its condition and location.
The Trend Report demonstrates that the entire purpose of packaging has evolved. Reaching the next step in packaging performance will require close collaboration between supply chain experts, packaging specialists, and customers.



DHL Supply Chain unveils Strategy 2025: "Innovation and digitalization will help us to put people and customers first."

At its Smart Warehouse in Beringe, DHL shows how cutting-edge logistic industry solutions create immediate value for customers and employees.
Oscar de Bok, CEO DHL Supply Chain, deep dives into key execution elements of Strategy 2025 and explains how automation and digitalization will re-shape the logistics industry.

To unveil the new Strategy 2025 for his business unit, Oscar de Bok, CEO DHL Supply Chain, selected the Technology Campus in Beringe, Netherlands, one of the DHL innovation lighthouses. Here, DHL Supply Chain, the world's leading contract logistics provider, already runs one of its Smart Warehouses and serves customers across Europe with highly automated and digitalized contract logistics solutions. During a media briefing de Bok gave fresh insights into the strategies and innovations the business unit is deploying for Strategy 2025.

Oscar de Bok, CEO DHL Supply Chain, explains, "DHL Supply Chain is not just the leading contract logistics provider in the world, we're a leader in digitalization and innovation as well. As we continue to grow alongside the market, our customer-focused approach enables us to transform innovative ideas into scalable and commercially viable products that we can roll-out across the regions. The Smart Warehouse at our Technology Campus in Beringe is a prime example of how we deploy smart solutions to create immediate value for the customer and for our employees."

The new business Strategy 2025 mainly focuses on four areas: when it comes to people and talent, DHL is focusing on how to overcome labor shortage and attract new talent, while at the same time preparing, training and certifying existing employees for the changes digitalization will bring. "Our people and the way we train and manage them are a competitive advantage for us" says de Bok. On the execution side, standardization and constantly improved processes will lead to more profitable growth, while customer experience, especially the digital customer journey, are becoming more important than ever. Leading innovations and digitalization are the connecting element above all.

Markus Voss, CIO and COO DHL Supply Chain, asserts, "What sets us apart is our drive to track down innovation and bring the results quickly and comprehensively into operation. Attracting new talents is a crucial step towards adapting to the digitalization of the logistics industry. Equally important is committing to data-backed, agile collaboration and balancing customers' demand for fast and transparent services with businesses' need to reduce costs. With Strategy 2025 we aim for putting our people and customers first and maximizing the pace of product roll-outs to take these opportunities head on."

The Technology Campus in Beringe boasts 128,000 m2 of warehouse space equipped with 100 loading docks that see 200-250 inbound and outbound trucks per day. This campus serves globally leading technology companies as pan-european distribution hub and the local team orchestrates the global supply chains of DHL customers. The Transported Asset Protection Association (TAPA) certified campus relies on a variety of innovative specialized tools, including processing and sorting machines, augmented reality technology, robotic arms, indoor robotic transport, and the next generation of scanning mobile devices.



Kuehne + Nagel acquires in the Netherlands and Belgium to expand its overland network

Acquisition of the overland and logistics activities of Rotra
Long-established player in two European centres of logistics gravity
Complements Kuehne + Nagel's overland network in Europe

Kuehne + Nagel announces the acquisition of the overland and logistics activities of Rotra, a company headquartered in the Netherlands with approximately 800 employees and a yearly net revenue of above EUR 100 million.

Following the recent takeover of the Jöbstl Group in Austria, this acquisition is another strategic step for Kuehne + Nagel in expanding its leading European overland network with strong positions in all major markets.

"Rotra is a leading and well-rooted player in the Netherlands and in Belgium ? two of the centres of gravity for logistics in Europe," says Stefan Paul, Member of the Management Board of Kuehne + Nagel International AG, responsible for Overland. "Their activities strategically complement Kuehne + Nagel's existing network all over Europe; to the benefit of our local and international customers who will have access to our expanded service portfolio in this region."

Rotra is a family-owned company that stands for excellent customer service, reliability and flexibility ? values that are also central to Kuehne + Nagel. The company operates a fleet of over 200 trucks, providing Europe-wide overland transportation as well as contract logistics services for Dutch, Belgian and international customers. It manages cross dock facilities in the Netherlands and in Belgium.

Harm Roelofsen, Director and co-owner of Rotra, comments: "After more than a century of growing our family business, the time has now come to offer our customers an even wider road network and a broader range of services. Kuehne + Nagel, one of the leading logistics providers worldwide, is our partner of choice to enable further growth and at the same time offering our employees the best future development opportunities."

Kuehne + Nagel will acquire the overland and logistics activities of Rotra. The seafreight and airfreight as well as the container terminal activities will remain with the current owners. The acquisition is subject to customary closing conditions, including merger clearance by the competent competition authorities.



Digitalization, e-commerce, sustainability: DHL Express presents its new Strategy 2025

Investments totaling more than EUR 1 billion annually in technology and infrastructure will ensure continued growth through quality
EUR 123 million state-of-the-art green logistics center opened at Cologne-Bonn Airport

DHL Express, the world's leading international express service provider, presented its new Strategy 2025 on the occasion of the opening of its EUR 123 million state-of-the art hub at Cologne-Bonn Airport. Digitalization, e-commerce and sustainability are at the core of the company's journey to further improve growth through quality. By investing more than EUR 1 billion annually in technology and infrastructure and by putting the new green logistics center into operation, DHL clearly demonstrates its ambitions. An ice energy storage system with over 1.3 million liters holding capacity and 18 kilometers of piping ensures the hub stays cool in the summer and warm in the winter. This system in combination with a heat pump and solar panels on the roof makes this an entirely emissions free solution.

"Since its founding 50 years ago, DHL has time and again made its mark with innovative solutions and powered the rapid evolution of the Express industry as a whole. The many new technologies at our Cologne hub are just one more example of this, and it shows the basis of our new Strategy 2025 as well," explains John Pearson, CEO DHL Express. "As the experts in export and import, we can only grow by ensuring top quality, which is why we invest more than a billion euros each year in employee training, infrastructure, and digitalization. The main goal here is to increase our transport and delivery capacity for time-sensitive TDI shipments to meet the ever-growing customer demand in the area of e-commerce. At the same time, we're continuously improving on process efficiency. Our recently published quarterly results show pretty clearly that we're on the right track."

DHL completed the upgrade of its air hub at Cologne-Bonn Airport in August 2019 following a two-year building and renovation phase. In the hub's 15,000 m? sorting center, with its 12,000 m? warehouse and 3,000 m? office space, several new technologies allow DHL Express to process up to 20,000 shipments per hour on its 2.5-kilometer-long conveyor belt. A number of other additions, including 3D scanners and vacuum lifters, help make life easier for the hub's 340 employees, who hail from 34 different countries.

"The EUR 123 million investment in our new hub clearly shows our commitment to the Cologne-Bonn region and ensures the future of a lot of jobs here," says Detlef Schmitz, Managing Director of the DHL Express hub. "This also makes the hub an even more important part of DHL's international network. With the new direct route between Hong Kong and Cologne, 28 daily flight movements, and our use of state-of-the-art technologies, we are proud to be contributing - sustainably - to the worldwide growth of DHL Express."

DHL Express is the most international company in the world. With a presence in over 220 countries and territories, it transports over 400 million shipments per year. 22 hubs worldwide form the backbone of the DHL Express network, which includes over 260 dedicated aircraft, 17 partner airlines, and a capacity for over 3,000 flights daily to over 500 airports. In 2018, the company announced its plans to add 14 new Boeing 777 aircrafts to its own fleet.

"We expect continued growth in the coming years, especially in cross-border e-commerce trade," says Travis Cobb, EVP DHL Global Network Operations. "By modernizing our air fleet, we can increase our intercontinental connections and do so with reduced carbon emissions and less fuel consumption. Next year, we will deploy another six brand-new planes from our Boeing order."



Deutsche Post DHL Group opens new mega parcel center in Bochum

With a sorting capacity of up to 50,000 shipments per hour, one of the most efficient parcel centers in Europe has been launched in Bochum
Location on the former Opel site creates 600 new jobs in the region
New parcel center makes an important contribution to the further improvement of service quality

Deutsche Post DHL Group is continuing to strengthen its efficient parcel network in Germany and today opened a state-of-the-art mega parcel center in Bochum. Together with the Minister-President of the State of North Rhine-Westphalia, Armin Laschet, and Bochum's mayor, Thomas Eiskirch, Tobias Meyer, Corporate Board Member for Post & Paket Deutschland, Deutsche Post DHL Group, gave the official go-ahead for the new location in the heart of the Ruhr region. With a sorting capacity of up to 50,000 shipments per hour, the Bochum parcel center, along with the Obertshausen parcel center near Frankfurt am Main, which opened in 2016, is the largest DHL parcel center in Germany and also one of the most efficient parcel centers in all of Europe. When it reaches its full capacity in 2020, the new location will create a total of around 600 jobs subject to social insurance contributions and covered by collective agreements. As in the area of parcel and mail delivery, at the Bochum parcel center, Deutsche Post DHL also works with directly employed employees in a co-determined company - thereby setting itself apart from many other companies in the industry. With currently more than 20,000 sorted items per hour, the Bochum parcel center is already providing major support for the fast and reliable processing of shipments in the Ruhr region in the run-up to the 2019 Christmas period. The new parcel center is thus also supporting Deutsche Post DHL's ongoing quality initiative in Germany, which, in the current year, has already resulted in a significant reduction in the number of complaints and an improvement in the company's customer-care service.

"With its high level of sorting performance and use of innovative technology, the Bochum parcel center is making a major contribution to Deutsche Post DHL's German parcel network. This will enable us to fulfill our service promise to our customers in the region even more reliably as shipment volumes continue to rise. At the same time, we are delighted to be able to create jobs subject to social security contributions and covered by collective agreements at a logistically advantageous location in the Ruhr region and thereby play our part in the development of the region," says Tobias Meyer. Meyer points out that DHL business customers in the region will also benefit from the immediate proximity to the new parcel center as their shipments can be picked up at later times and still be delivered the following day throughout Germany.

"The fact that DHL is opening one of Europe's most efficient parcel centers in Bochum is further proof of the attractiveness of the Ruhr region and strengthens North Rhine-Westphalia as a leading logistics location. Investments in the Ruhr region are worthwhile for companies - as the development of the former Opel site in Bochum, supported by state funding, once again demonstrates. DHL's investment is providing 600 people in the area with future-proof employment, and a large number of other companies will be creating thousands more jobs in the next few years. New companies, high innovation potential and well-paid jobs - that is exactly what the state government is giving momentum to through the Ruhr Conference. We want to quickly translate technical solutions from the laboratories into practice, be attractive to start-up entrepreneurs and use brownfield sites for new developments. The latter has been achieved on the Opel site in Bochum by companies such as DHL," says Armin Laschet.

"DHL's choice of location at Mark 51°7 was a strong signal of a new departure and a sign of confidence in the future viability of the city and the entire region. Bochum Perspective 2022 immediately prepared the ground, thereby laying the foundations for the revitalization of the area. Today, it is the site of one of the most efficient and state-of-the-art parcel centers in Europe. Soon, there will be 600 people working here, and soon also more than 6,000 in the complex as a whole. I am delighted that DHL has chosen Bochum as its business location, and that the success story of Mark 51°7 continues," says Thomas Eiskirch.

In 2016, Deutsche Post DHL Group acquired approximately 140,000 square meters of space at the former Opel site in Bochum-Laer. Construction of the parcel center began in fall 2017 and was completed on schedule within two years. The new parcel center building alone covers an area of 40,000 square meters, equivalent to the size of more than five football fields. In addition, extensive measures were taken to make sure the new location is as energy-efficient as possible in line with Deutsche Post DHL Group's sustainability strategy. For example, the parcel center is supplied with electricity and heat by its own block-type thermal power station. The Group therefore not only procures electricity or heat, but also feeds the heat generated in the block-type thermal power station into Bochum's public utility network. A roof-mounted photovoltaic system is also planned. Power-saving LED lamps controlled by presence detectors and daylight are used to illuminate the parcel center. With 35 charging columns of its own, the Bochum location is already well-equipped for the further expansion of e-mobility, with further charging columns to follow. Deutsche Post DHL has invested a three-digit million sum in the location.

In March 2019, Deutsche Post DHL launched a major quality offensive, as part of which, between 2019 and 2021, an additional approximately EUR150 million will be invested, for instance, in additional personnel, new services for customers, improved shipment management and notifications, and 3,000 new DHL Packstations.

Including the new location in Bochum, Deutsche Post DHL Group operates a network of 36 parcel centers in Germany, in which a total of around 1.2 million items can be sorted during every hour of operation. Deutsche Post DHL Group already ships an average of around five million parcel items for its customers nationwide every working day. On peak days before Christmas, the number climbs to as many as 11 million parcels per day.



A.P. Møller - Mærsk A/S improves operational profitability

A.P. Moller - Maersk’ third quarter is characterised by improved profitability across the business. Earnings before interest, tax, depreciation and amortization (EBITDA) improved 14% to USD 1.7bn in the quarter, reflecting an increase in EBITDA margin to 16.5%. Revenue decreased slightly by 0.9% to USD 10.1bn. Operating cash flow increased by 25% to USD 1.7bn with a cash conversion ratio of 105% and free cash flow before capitalized lease payments was USD 1.5bn.

“While the global container demand, as expected, was lower in Q3 due to weaker growth in the global economy, A.P. Moller - Maersk continued to improve the operating results. We delivered strong free cash flow and a return on invested capital of 6.4% as a result of strong operational performance in Ocean, higher margins in Terminals and solid earnings progress in Logistics & Services,” says Søren Skou, CEO of A.P. Moller ? Maersk, and continues:

“The strong performance for the quarter combined with our expectations for the rest of the year, led to the recent upgrade of our earnings expectations for 2019. We will continue our focus on profitability and free cash flow in Q4 and into 2020.”

EBITDA in Ocean improved 13% to USD 1.3bn and EBITDA margin increased to 17.4%, reflecting the focus on profitability through capacity management and operational performance which mitigated lower freight rates and modest volume growth in Q3 of 2.1%. Revenue was USD 7.3 which is on par with Q3 last year.

Terminals & Towage reported an increase in EBITDA to USD 313m and an increase in revenue of 5.8% to USD 986m in the third quarter. In gateway terminals, the increase in EBITDA of 33% to USD 261m and a margin of 31.7%, was driven by a volume growth of 9.2%, which contributed to higher utilization, combined with stronger cost efficiency.

Logistics & Services progressed with gross profit up 13% to USD 336m following increased activities in intermodal and warehousing & distribution, however partly offset by lower revenue in air and sea freight forwarding. The improved gross profit lead to an increase in EBITDA of 34% to USD 94m and an EBITDA margin of 5.8% and an EBIT conversion ratio of 17.5%.

Net interest-bearing debt decreased further to USD 12.1bn at the end of Q3 (USD 12.9bn at end Q2 2019) after buying back shares of USD 363m as part of the share buy-back programme announced in May 2019.

Solid progress despite market uncertainties

As part of the strategic target to become more balanced in earnings between the Ocean and non-Ocean partly through cross-selling of end-to-end and digital services, Maersk continues to develop products and services for customers, resulting in high customer satisfaction.

“I am pleased with the progress on the transformation of A.P. Moller - Maersk. We are making progress across multiple fronts including our digital transformation and growth in our land-based logistics products and terminals business,” says Skou.

Looking at the measurements of the development in the transformation this quarter, Maersk reports a cash return on invested capital improvement (CROIC) of 13.4% in Q3 from 9.0% in the same period last year.

Furthermore, non-Ocean revenue increased 3.7% in Q3 2019, driven by strong growth in the gateway terminals and growth within the strategic integrated parts of Logistics & Services such as intermodal and warehousing.

The improved profitability led to an increase in return on invested capital (ROIC) to 6.4% from negative 0.2% in the same quarter last year.

We still need to improve on profitability and return, and we continue to take measures across the business to fund the next stages of the transformation and maintain cost leadership.

Guidance for 2019
As announced on 21 October 2019, A.P. Moller - Maersk now expects EBITDA for 2019 in the range of USD 5.4 ? 5.8bn, from the previously communicated USD 5bn range.

The organic volume growth in Ocean is now expected to be slightly below the estimated average market growth, which is now expected to be in the range of 1-2% for 2019 compared to previously an expected market growth of 1-3%. Guidance is maintained on gross capital expenditures (CAPEX) of around USD 2.2bn and a high cash conversion (cash flow from operations compared with EBITDA).

CAPEX for 2020-2021 accumulated for the two years is expected to be USD 3-4bn.

The guidance continues to be subject to uncertainties due to the weaker macroeconomic conditions and other external factors impacting container freight rates, bunker prices and foreign exchange rates.


DHL & Hewlett Packard Enterprise take aim at invoice process improvement

Through a joint collaboration, DHL Global Forwarding and HPE invest in the automation of administrative and shipment processing, offering more transparency and a better customer experience

DHL Global Forwarding, the air and ocean freight specialist of Deutsche Post DHL Group, and Hewlett Packard Enterprise (HPE) have worked to deploy a blockchain solution supporting logistics payment processing. Based upon smart contracts and blockchain technology, this solution offers a more robust alternative to back-end processes which are often error-prone and tedious. DHL believes blockchain has significant potential in this area and (by deploying a solution in conjunction with a major customer) intends to take a leading position in the application of this technology. The growing number of digital solutions and services deployed by DHL Global Forwarding is fully in line with Deutsche Post DHL Group's recently presented new corporate "Strategy 2025 - Delivering excellence in a digital world".

"Blockchain and other innovative technologies can be seen as key differentiators in removing significant layers of complexity from global supply chains," said Eugenius Otte, Head of Product Management, DHL Global Forwarding, Netherlands. "We are extremely excited to work with HPE, a long-standing customer, on this joint venture with the goal of delivering significant service enhancements, productivity improvements and savings in the supply chain."

Live since July 1, this Minimum Viable Product (MVP) solution links multiple entities of HPE and DHL Global Forwarding for one-off order management. One-offs are defined as requests for shipments that can be supported by the DHL network, but that are not part of the standard contract. The MVP aims to address some of the pain points in the approval process by making use of the inherent functionality of a distributed ledger. It simplifies the approval process and clearly identifies the shipment quotes that are approved (by whom, and when) - all in immutable records.

"Based on the initial results, HPE has observed a number of inherent benefits, including 100% invoice accuracy and paid on agreed terms, less days payment aging, and little to no manual intervention," according to Kim Masone, HPE Vice President, Global Logistics.

By eliminating the post -delivery checks for shipment approval, considerable time is gained by both HPE and DHL. In addition to facilitating shipment quote approvals, use of the MVP offers customers insight into expected payments, improves accounts receivable, and offers a single source of transparency for all parties. Invoices are triggered immediately following POD and can be paid to contractual payment terms.

According to Masone, "We see great benefits in using this tool and look forward to expanding its use to other non-contractual business globally."


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