‘I don’t believe in the new normal’: DHL Express boss John Pearson says pandemic was boon for the logistics sector

While emphasising that the challenges thrown up by the Covid-19 pandemic and subsequent geopolitical developments have boosted the logistics business, John Pearson, CEO of international logistics service provider DHL Express, sees a continued focus on digitalisation, sustainability, globalisation and e-commerce being critical to the company’s future market strategy. In an exclusive interaction with Business Today’s Manish Pant, the 60-year-old DHL veteran says that the company would maintain its laser-sharp focus on people—be it employees or customers—to drive its quality of services and growth in India and the world. Edited excerpts:

Q: What’s the new normal in this VUCA world?

A: I don’t believe in the [term] ‘new normal’. The world has changed a lot in terms of working from home and things like that. But when we talk about logistics and supply chain, things haven’t changed much. Like, people now look at the Icelandic ash cloud crisis of 2010 as a weather thing. [But] it was a major logistical catastrophe, where no aircraft, including DHL, was flying over Europe for those 30-40 days. Everyone said they were going to change their supply chains… that they were going to bring them closer to where consumption was happening through nearshoring and reshoring. What happened? Nothing!

When we think about Covid-19 and its impact on supply chains—which has been a hot topic of discussion—supply chain and logistics companies did extremely well during the pandemic. Not only with all the normal things that people move, but also with vaccines. Some people claimed that logistics companies would struggle to deliver vaccines. However, logistics companies, including our competitors and freight forwarders, did a fantastic job of delivering all the vaccines, without any spoilage, to where they should be consumed. Thus, the pandemic was an extraordinary time for logistics companies to be acknowledged a little bit more for what they do.

Q: How have the global supply chains been impacted?

A: Some organisations are thinking about supply chain resilience going forward. What does that mean? That means China-plus one. [They are] thinking about whether they should set up a manufacturing base in Vietnam, Thailand, the Philippines, Malaysia or India. One of the outputs of global trade in the DHL Trade Growth Atlas [an annual report on global trade growth trends and prospects] was that those countries are benefitting from some of the reshoring activity to create supply chain resilience. Don’t forget that for more than 24 months, different Chinese cities were in some state of lockdown. So that is a little bit of the new normal. By and large, the only other thing I would comment on is that we have redoubled our efforts in terms of our global aviation strategy to make sure we have more aircraft and more optionality to make sure that our partners are just as flexible as we have always imagined them to be. We added over 100 aircraft in the last two years. And that was to make sure that we could supply transportation to our customers because transit time is what they require from us. And without transportation, there is no transit time and without transit time, there is no quality.

Q: Have the Covid-19 pandemic and subsequent geopolitical events led you to reorganise operations?

A: I don’t think we have reorganised operations. We always need to be very tuned into the challenges. Being a truly global organisation, we [quickly] responded when the Russia-Ukraine crisis happened. We responded to the energy crisis by buying more warm clothing for the people that would typically use central heating in offices in case of energy restrictions. We closely watch the trends and react to them. Being a global company with people in 220 countries, we adapt to any news coming our way. But, as I mentioned, we have had to reorganise our aviation fleet to add more aircraft; we need to have them in different places and we might have to accelerate some of our big hub infrastructure. Since we are opening up a large hub in Copenhagen [this year], we need to be equipped to handle the volume of goods that will be coming our way.

Q: Other than reaching Covid-19 vaccines to different geographies, what are the other old- and new-economy segments that you see driving the growth in logistics?

A: We are in six verticals—automotive, chemicals, consumer, energy, life sciences & healthcare, and the public sector. If you look at their sub-sectors, that goes up to 35. If you asked anyone if DHL was relevant in any of those verticals or sub-sectors, the answer would be yes. During the pandemic, all industries were growing fast, but life sciences & healthcare was particularly strong. As we came out of the pandemic, automotive started coming back and so did the search and demand for semiconductor chips. All industries have benefitted and will be fuelling our growth going forward. E-commerce is another great example. During 2020, they had literally three or even four years of growth in just four or five months to cruise at a new altitude. Although the demand for e-commerce has [currently] softened, those motions are ready to kick in when the economy recovers and people have more disposable income. Now, one in two of our shipments is for e-commerce. That was probably one in 10, six years ago. As you travel around our countries, six of our Top 10 shipments are often e-commerce ones from merchants such as eBay, Amazon, ASOS, MatchesFashion and Farfetch. We don’t seek to move razor blades or cheap T-shirts around domestically. We are into international cross-border and rental products that can carry the cost of transportation.

Q: DHL has also moved away from being a conveyor of goods to becoming a logistics solutions provider. How central is digitalisation to this evolution?

A: Digitalisation is one of the four big themes on our desks. The other three are sustainability, globalisation and e-commerce. However, digitalisation is not a new word. There was a company called the Digital Equipment Corp. founded in 1954 that had ‘digital’ in its name. We must, therefore, understand what digitalisation means. To me, that means rapid development of IT products. There’s much more utility in these products and we need to make sure that we embrace them. The definition of digitalisation in DHL Express is that our employees embrace technology for the benefit of customer satisfaction, employee engagement and operational efficiency. So, it’s a big part of our Strategy 2025 [programme]. We are investing heavily in digitalisation for those three benefits. We recently reviewed digitalisation versus execution in India and I think that was one of the best demonstrations of data analytics, robotic process automation, and Campfire [software]. As countries all over our network often come up with good ideas, we need to assess and build them into our standard global operating platform. India is a good example of a country that has taken the global digitalisation strategy and is moving parts to localise them for the benefit of customers, employees and operational differences. We are also reskilling and upskilling our IT people to ensure they are in a position to capitalise on the new technologies.

Q: Despite the large size of your company and its headcount, you have one of the lowest employee attrition rates globally. How do you ensure that?

A: It may sound clichéd, but it’s about putting people at the centre of everything we do. My boss used to say, ‘Put the customer at the centre.’ If you imagine a dart board, the employee is the next concentric circle. P=GQ or people equals growth and quality. You can’t get through a pandemic or sustain quality without having great people. And if you can’t drive quality, you won’t drive growth. Therefore, my leadership team and the leadership teams below them need to make sure that we are doing everything to make our people happy.

The most important stratum of our organisation is the supervisory level because supervisors manage people who [in turn] manage the frontline [staff]. Therefore, supervisors need to be very communication-savvy because they take all the communication from the frontline to the top and all the communication from the top to the frontline… And that’s why we have invested up to $50 million a year in our Certified International Specialist (CIS) programme, much of which is directed at the supervisory level to make sure that the people on the frontlines are motivated, engaged and well-led. And that is the central focus of our people strategy because you can’t fake it in a network of 220 countries. As someone told me the other day, ‘Happiness can’t hide.’ I loved the phrase because if our people are happy, you’ll see it on their faces. DHL is full of one-liners, with ‘There’s Nothing Basic About the Basics’ being one of them. Another one of those one-liners is ‘Respect & Results’. Results are important but so is respect. So, the 110,000 people in DHL seesaw [between] respect and results. That’s very important because you can’t just drive results without showing respect to your people. Another example is, ‘Diversity, Equity, and Inclusion at Work’. These are the things that [especially] younger employees look for in an organisation.

Q: You have also committed to becoming the world’s greenest logistics company. Tell us something about that.

A: Sustainability is something that every company is facing up to. The very breadth and understanding of it are enormous. But companies have got to start taking action than just thinking, understanding and talking about it because that stage is largely behind us. We at DHL are going to demonstrate that every new building has solar panelling on top to not only run the facility but to also put something back into the electricity grid. Organisations need to demonstrate that their first- and last-mile pickup and delivery fleet is highly electrified. The Netherlands is now a country where our first- and last-mile delivery is carbon neutral. Companies are going to be demonstrating that they are buying sustainable aviation fuel (SAF). Two years ago, if I had asked the 110,000 employees at DHL Express about SAF, only 1 per cent might have known what it stood for. Now that’s gone up to 70 per cent. So, the world is moving quickly on the programmes and ways in which you can drive sustainability targets. We have put a line in the sand to invest $7 billion in this very area to make sure that we get to a carbon-neutral position by 2030. And that’s hard work.

Q: What are your medium- and long-term strategic plans for India?

To invest and look after our people—that means investing in India to stay ahead of the curve, while also looking out for our people.

Q: And what kind of investments would they be?

In service centres, gateways, aviation and technology.

@manishpant22