Exclusive: Hendrik Venter on how DHL Supply Chain is supporting GCC’s logistics industry

Q. How are disruptions in major trade routes, such as those affecting the Red Sea, impacting your business operations and the broader global supply chain, particularly in terms of economic recovery expectations?

The string of attacks on commercial vessels transiting the Red Sea to the Suez Canal is an issue that is on everybody’s lips. It’s not only disruption to Red Sea container shipping, but the world has seen its fair share of disasters starting with the Covid-19 pandemic, supply-chain woes and the geopolitical tensions in Eastern Europe and the Middle East.

The value that DHL Supply Chain brings is that we s not only manage global supply chains during times of calmness but, we also manage our customers supply chains through challenging times, disasters and disruptions. The Red Sea attacks on commercial ships are inflicting significant pain impact on the global supply chains as several shipping firms are being forced to divert their vessels, taking the longer route around the Cape of Good Hope.

We continue to closely monitoring the situation, working in partnership with key players in the supply chain ecosystem as well as with our customers to provide real-time visibility and advice because of our extended footprint and expertise in the industry. DHL Supply Chain offers our customers alternatives, for instance, multimodal solutions.

DHL Supply Chain’s alternative multimodal solutions can include sea, road and rail – but this depends on the customer, customer base, suppliers and the points of demand. This is not business as usual. The multimodal approach can add lead times and additional costs but avoids further disruptions.

We are also working with our customers to mitigate the impact of other global supply chain challenges and provide wider guidance. One of our products, Lead Logistics Provider (LLP) plays a significant role in managing our customers’s end-to-end supply chain requirements.

LLP also provides real-time visibility ranges from anticipating challenges and bottlenecks to anything to strikes (industrial action) and bad weather conditions – events that can lead to rerouting of shipments while allowing for business continuity without significant disruptions.

 

Q. The GCC region is a thriving logistics market; how does it differ from other hot spots in emerging markets? What opportunities and challenges are you seeing in this market?

The GCC region is emerging as one of the thriving supply chain and logistics markets, it is indeed an exciting region. One thing that sticks out about the Gulf region is its strategic geographical location, when compared to other emerging markets in Latin America and the Far East, making it a natural transit hub.

I think the GCC countries have realised the strategic importance of the region to the global supply chain and governments are making significant investments in this space as part of National Visions such as Saudi Arabia’s Vision 2030.

Governments in the GCC region are investing to modernise supply chain and logistics infrastructure including ports, rail networks and airports to advance connectivity to the wider Middle East and other global markets. Previously, e-commerce in the GCC was lagging the growth in other emerging markets but we are witnessing a significant boom and the players in the region are investing in the infrastructure to facilitate the e-commerce boom.

There are a lot of opportunities that are emerging with an economic boom in the GCC region, as governments are diversifying economies away from reliance on oil and gas. The region has incredible purchasing power, which also creates opportunities for us as a supply chain management company.

On the innovation front, governments in the GCC region are adopting and embracing innovative technologies and automation to make data-driven decisions, which creates an environment that makes it easier for companies such as DHL Supply Chain to introduce new cutting-edge solutions.

We can also play a significant role in the transition of local manufacturing and local investments, where we could bypass industrial projects in the logistics sector and provide activities to manage end-to-end supply chains into the region and further onwards.

On challenges, I anticipate an increase in competition as both local and international players are trying to get a slice of the market share as well as a shortage in skilled labour.

Q. Tell us more about DHL Supply Chain collaborative partnerships in the GCC region and how you expect these to advance logistics and supply chains.

Earlier in February, we joined forces with Saudi Aramco to set up a joint venture, ASMO (Advanced Supply Management Operations), a new procurement and logistics services hub in the kingdom.

Our venture with Aramco is the region’s first hub offering comprehensive and integrated end-to-end supply chain services for businesses in the energy, chemicals, engineering, manufacturing, and industrial sectors.

Leveraging Aramco’s expertise in technology and region footprint and DHL’s supply chain capabilities, we are positioned to revolutionise the way that supply chains are managed in the GCC region while focusing on the diversification of supporting operations and infrastructure for supply chain management.

The venture is envisioned to meet the growing demand for more sustainable and efficient supply chain services in Saudi Arabia while underscoring the potential of the region as a global trade gateway for the energy, chemical, and industrial sectors.

Digital technologies are fundamental to ASMO, which plans to integrate advancements in automation and collaborative robotics, AI, data analytics, and blockchain. Similarly, sustainability will be a core principle and the measures that ASMO is implementing across its operations seek to advance circular practices in the economy.

We have been doing business in the GCC region for the past 40 years, we are expanding our regional footprint and we have created lucrative partnerships and joint ventures while stepping up to transform the GCC world into the global logistics hub – the partnership with Aramco is a testament of what intend to accomplish in the region.

 

Q. How is the company leveraging innovative technologies such as warehouse robotics and automation?

We have a very structured approach towards digitalisation and automation or robotics. DHL Supply Chain has a radar that researches for innovative technologies that have the potential to revolutionise the industry. We also consider the potential impact of the technology on our services and operations as well as the timeline as to when that technology will be available to us so that we can invest and scale at pace.

Within our warehouses, DHL Supply Chain EMEA has approximately 350 locations where we operate and all our locations are leveraging advanced technologies to boost efficiencies and streamline work processes. So we are always trying to accelerate the automation or robotics once we identify that the technology can bring difference to our operations.

DHL Supply Chain is leveraging automation and robotics to support business growth as well as complement the work of our approximately 37,000 employees in the EMEA region. We are growing our resource base by double digits in the region while automating our operations.

Going forward, the company is focusing on ensuring that our resources boost our value-added services.

While robotics are taking the mundane and repetitive tasks to our resources such as transportation in a warehouse and administrative tasks, we want our workforce to focus on adding value and robotics taking over the rest.

Similarly, the company uses innovative technologies to optimise route planning, using artificial intelligence to ensure that routes are optimised and that we drive fewer kilometres as we say in logistics that the last mile is the mile that you are not driving.

Q. How is DHL Supply Chain decarbonising its operations and which trends do you expect to accelerate logistics sustainability?

Sustainability is a subject that we feel very passionate about at DHL Group and personally, it is a trend that is close to my heart.

DHL Supply Chain is one of the companies that is advancing sustainability in the supply chain and logistics sector. Given our extensive regional footprint, we have a responsibility to lead logistics into a greener future and we made a commitment to accelerate sustainability within our operations and the initiative is gaining momentum.

On trends and investments, we are using alternative fuels and electrifying our fleet. Over the years, DHL Supply Chain has slashed emissions related to our transportation and warehouse operations. This part of our broader green transport policy, which mandates that we need to start using and transitioning our fleet to alternative fuels like either treated vegetable oils, hydrogen and liquefied petroleum gas

We have 350 warehouse locations in the EMEA region and we are committed to achieving 100 per cent net zero-carbon warehousing by 2025 – this represents a massive undertaking. On a global scale, we are working to make sure that the 1500 warehouses we operate from are carbon-neutral by 2045.

While meeting this goal is a clear priority for our business, net zero-carbon warehousing is also beneficial to our customers who can make significant reductions to their carbon footprints by pursuing greener supply chains. Since 2008, we have been supporting customers with a broad range of GoGreen Solutions aimed at reducing their greenhouse gas emissions and improving their overall

DHL Supply Chain’s seven large warehouses use solar energy and they are not refrigerated but it is cold chain warehouses, and the company needs to manage the temperatures in there for our customers.

We have made significant investments in the UAE to greenify our operations and we are on track to achieving carbon-neutral warehousing by 2025. We nearly achieved 100 per cent renewable energy usage across the board last year, shifting away from gas-based electricity.

 

Q. E-commerce is one of the fastest-growing industries in the world. Give us an insight into DHL Supply Chain eCommerce and how the company connects retailers with their customers.

Over the past couple of years and especially during the pandemic, we have helped several of our customers transition from predominantly high street sales and businesses to implement e-commerce solutions, when it was difficult to run brick-and-mortar stores as well as to reach customers.

So, I can say the outbreak of the pandemic fueled the e-commerce boom globally and the industry is poised to capture 41 per cent of global retail sales by 2027 – up from 18 per cent in 2017, according to a Boston Consulting Group report.

We have different products and services to facilitate that growth by providing our customers with end-to-end solutions. I do not mean the large global companies that we do business with to a very large extent, where DHL Supply Chain has dedicated e-commerce facilities and return facilities for large customers.

But we also have multi-user facilities that can accommodate several e-commerce companies in a single facility allowing the companies to enjoy economies of scale and improve productivity. Furthermore, we have a unique product called DHL Fulfillment Network (DFN), which caters to small and medium enterprises (SMEs) – the main engine for economic growth and employment creation in the GCC region.

DHL Supply Chain supports SMEs in the Gulf region with access to vetted global suppliers of goods and services as well as connects them to customers. When small entrepreneurs begin to expand and grow their businesses, DHL Supply Chain offers a paper use free implementation, quick and easy integration and warehouses to help SMEs store their products close to demand centres or multiple demand centres globally. SMEs can also ship their wares from the centre, it’s a seamless and growing fulfilment product that is promising for the GCC region.

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