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Q&A: DHL Express CEO Talks Going Green, the Last Mile and Delivery Dynamics

With the rapid rise of e-commerce and the need for greater efficiency and capability in domestic and cross-border trade, Greg Hewitt, CEO of DHL Express U.S., faces many challenges to meet the needs of businesses and consumers.

DHL, like many transportation and logistics providers, has given more attention and resources to the cost of fuel and how to manage expenses, but also to investing in new technologies and alternative energy sources for a better environmental footprint.

Hewitt has held his current position for three years and leads the Express U.S. management board. In an interview with Sourcing Journal, Hewitt discussed key issues DHL faces, and how the company has been tackling them.

Sourcing Journal: DHL Express recently announced it was rolling out a new fleet of electric delivery vans to serve U.S. markets. How does this help meet the corporate target of zero emissions by 2050?

Greg Hewitt: Based on that, we have several interim targets for 2020 and 2025 that each business unit and country manager and CEO like me need to work toward. Those include, and probably most closely linked to our announcement on (the fleet of 63 NGEN-1000 electric delivery cargo vans produced by Workhorse Group), is 70 percent of our first and last mile being green vehicles–where the overall group is at 28 percent and I’m sitting at 13 percent, 50 percent of sales incorporating green solutions, 80 percent of our employees being certified as Go Green specialists and 1 million trees being planted per year, it will allow us to have a carbon efficiency increase of 50 percent from 2007 levels.

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When I look at the U.S., I’m targeting having 25 percent of my vehicles to be green by 2020. That includes electric, propane, hybrid and hydrogen. Where we’ve been challenged is, with most of our routes are more than 200 miles per day and require a bigger payload and cubic capacity… the price point and capability is not where it needs to be yet to do those big conversions. We’ll also be introducing in Los Angeles later this year the first green [trucks] capable of moving 52-foot trailers in the L.A. market. So, we’re continuing to look at ways to green our fleet as we grow and as I work toward the targets of 2020 and 2025, and somebody else works toward the 2050 targets.

SJ: What are DHL Express’s efforts and initiatives in meeting the demands of e-commerce and last-mile delivery?

GH: Certainly, the overall volume growth of e-commerce has been a main driver of our expansion over the last five years, which has meant we continue to add people and vehicle and facilities to match that volume growth. The growth rates on business-to-consumer traffic globally are much faster than business-to-business because the unique requirements of meeting last-mile delivery to a place of residence or individual are different challenges than going to traditional warehouses or offices or mail rooms.

We tried to stay at the front of that by listening to what our customers and their customers want. Probably the biggest innovation we had in that space was around on-demand delivery (ODD) and trying to put more power in the hands of the consignee…so that they can tell us how and what and when they want their delivery. While it came as a value-added service, we’ve expanded that because some people said not all our customers are enabling that ODD feature and we want it for every one of our packages. So we’ve opened that up recently and allowed individuals and consignees to register so that on any shipments coming to them, they have that same kind of functionality.

The other piece we’re piloting that will give more information to our customers is route optimization software, a dynamic program that enables us to take the inbound volume that is coming to us and lay out the most efficient and effective routes, and accept ad hoc pickups or changes from the customer base in real time to route our curriers in the best way. With that coming on line, it will enable us to give even more accurate delivery windows and specifics to our customers. We are also leveraging in a dynamic fleet environment applications live Waze and Uber to allow us to provide better visibility to customers on their package delivery timing. We have that in seven markets right now, we’re going to roll to seven more in this quarter and I expect that to continue.

We have also had a lot of success with robotic process automation. That is machine learning and getting bots to look at some routine or mundane tasks that we might be doing manually that could be done faster, more effectively off-hour that free our people to be more problems solvers for customers.

SJ: How are you meeting the last-mile challenge?

GH: When I look at the last mile in our network, it’s about making sure that my dedicated, structured network and fleet in the U.S. and around the globe gets the product or information all the way to the person that’s receiving it as quickly as possible, that they are constantly updated throughout that shipment, that they have access to any fees, duties, taxes or amounts owed so that they can quickly interact and pay for them, ensuring no stoppages; that if we are missing any important or relevant information they have a portal and an ability to go in and update, supply and upload information we need to clear and bring product in.

And then we have to run our network–our hubs, our gateways, our stations–in the most efficient and effective way to make sure those packages get to that final mile route and then my responsibility is to run that route as efficiently and effectively as I can to get those packages to them as early as I can, or to update, amend and be flexible enough so as I’m out delivering, to take feedback from the customer and adjust the route accordingly.

SJ: How has the company been impacted by shifts in global trade and geopolitical volatilities?

GH: There’s no company better positioned to help companies when there’s uneasiness, uncertainty or questions. As things change, we have people that are close to the Customs and regulatory authorities so we can learn, understand and then communicate and work with our customers so they can understand the impact it has on them.

We also have a diverse network and we’re in 221 countries and territories, so as businesses need to change and maybe choose different points of origin for production because of new trade or tariffs, we’re there to help them understand what they need to know to get into that market. It’s fair to say that when there is uneasiness and uncertainty, overall volumes in global trade are impacted. Certainly, we have seen some volatility. There are things going on with Brexit in Europe and the negotiations between the U.S. and China that have created some uneasiness and it has impacted volume, but our message to the market is that we’re there to help.