With pandemic restrictions easing and some optimism returning to the international freight industry, ExporterToday thought it timely to catch up with DHL country manager Mark Foy for the latest on the freight situation in New Zealand.
ET: What are your predictions on the international freight situation for the balance of 2022 and going into 2023? How soon can businesses expect to see the overall situation improve?
Mark: As the world starts to open back up and we see commercial aircraft slowly returning, some pressure on the logistics industry will ease. But as government restrictions continue to impact international ports, our predictions are that capacity will remain tight for the remainder of this year and into 2023.
Supply chains will take a number of months to stabilise, meaning businesses will need to continue to adapt to market disruptions in real-time.
The 2021 ExportNZ DHL Export Barometer showed that 57 percent of Kiwi exporters were unable to get shipping space and 86 percent experienced shipping delays – which highlights the trend we see. As consumers experience congestion via sea freight, they then move their goods via air freight, before moving to Express. We expect the situation in China will drive more of this process.
ET: What have been the biggest challenges for your organisation in maintaining services for clients? Did you take any extraordinary measures to service the needs of New Zealand-based clients in particular?
Mark: Forecasting the demand and maintaining service levels to deliver an unrivalled and uninterrupted service was a challenge. The lack of space within the underbellies of planes due to the reduction in commercial airlines, combined with the backlogs at ports and the e-commerce surge meant DHL Express experienced a significant increase in volume; at times seeing import volumes 60 percent above the pre-Covid peak period figures (peak period runs from late October through to mid-December).
To manage demand, we continuously invested in freight capacity and services, putting operational efficiency at the forefront; benefiting customers with enhanced access to international markets. We launched a new dedicated freighter between Melbourne and Auckland in 2020, giving an additional 19 tonnes of capacity. We had our dedicated Sydney-Auckland freighter flying eight or nine times per week, as opposed to five flights per week during pre-Covid times. Additionally, 26 passenger charters were used over the last Christmas period, to ensure all stock and e-commerce presents arrived in time for Christmas. Recently, our Express footprint has been increased with new courier facilities in Napier, Hamilton and Auckland Airport.
ET: What other steps are being taken generally by international freight service providers to improve the current situation – and by DHL in particular?
Mark: With our global network we’ve been able to utilise network flights to keep trade flowing and limit disruptions. DHL Express has an owned fleet of dedicated aircraft, including two based in New Zealand, keeping Kiwi businesses directly connected to Australia and onto the rest of the world. In 2021 the company placed an order for an additional eight new Boeing 777 freighters, with the investment marking a further step in the expansion of its intercontinental air network to meet customer demand in fast growing international express shipping markets.
ET: Explain how online shopping has been impacted by market trends and market restrictions in recent times – and how do you see that market segment playing out in the next 12 months?
Mark: There is no denying that there has been a structural shift off the back of e-commerce, with digitalisation here to stay. Our whitepaper The Ultimate B2B E-commerce Guide: Tradition is out. Digital is in, predicts strong growth for the B2B e-commerce market in the coming years, stating that by 2025, 80 percent of all B2B sales interactions between suppliers and professional buyers will take place in digital channels.
We saw a lot of Kiwi businesses adapt their business models and enhance their digital presence in order to keep up with the demand, as lockdowns forced consumers online. By the end of 2021, e-commerce sales in New Zealand accounted for ten percent of total sales. But when compared to China, who sit around 20 percent of total sales, we can see there is still a lot of room for e-commerce growth.
However, as pandemic restrictions ease, it is expected that some consumers will want to return to previous shopping habits. So, we expect to experience a slowdown on the e-commerce “boom”.
ET: What role has new technology had in dealing with the freight situation? Have you introduced any new initiatives recently?
Mark: Over the years advancing technology, new business models and dramatic shifts in customer behaviour are all trends that have reshaped the logistics industry. Our company makes every effort to stay on top of the logistics trends and ahead of new developments.
Digital technology has been a critical catalyst of change in recent years – as well as one of the most disruptive trends in the logistics industry. New innovations come on line every day and the pace of change is only accelerating.
In New Zealand, we have made investments on predictive workload planning, On Demand Delivery (ODD) service enhancement, virtual reality training platform, AI aided route design and real time diagnostics on shipment movement and increased use of electric courier vehicles.
We can use data and systems to better understand our people, which allows us to personalise decisions and provide information and support as needed. Technology can create a better platform for engagement, maximise the skills of our workforce, improve job satisfaction, and lead to more creativity, better customer service, and ultimately a better organisation.
ET: What’s your message for Kiwi business owners and companies struggling to meet their goals and obligations due to the international shipping and logistics crisis?
Mark: Understand that some supply chains might not have returned to their prior efficiency and in some cases, it may be necessary to adapt. We expect businesses will have to continue to warehouse essential inventory throughout 2022.
Of course, if your shipments are time-sensitive, we recommend using Express and leveraging off our dedicated network.
Mark Foy is pictured below.
