DHL chief urges govt to support logistics

DHL chief urges govt to support logistics

Better infrastructure 'will speed up growth'

Germany's Deutsche Post DHL, the world's largest logistics group, is urging the Thai government to continue investing in infrastructure and education to address the challenges faced by the logistics industry.

Appel: Wants easier border processes

Chief executive Frank Appel, speaking during a visit to Thailand, acknowledged that an increasingly service-oriented continent such as Asia offers huge opportunities for DHL to grow its business.

However, Asia including Thailand poses challenges for logistics firms.

"What will remain a challenge is definitely the border processes." Mr Appel said.

"They are still very complex, and countries can make a significant difference for themselves to accelerate growth if they make access to their own markets easier."

Infrastructure is another challenge, as it has not developed at the same pace as Asia's huge growth.

"Asia and Thailand should continue to invest in infrastructure and education, because these are competitive advantages for a country," Mr Appel said.

'We have seen that the better the infrastructure, the lower the costs for logistics. When that goes down, growth rate accelerates in these countries."

Countries that are well connected with others through good infrastructure and efficient borders tend to grow faster.

Mr Appel said Thailand's very low unemployment rate will also put pressure on growth.

Nonetheless, DHL is very committed to expansion in Thailand, particularly to increasing its number of trucks and logistics contracts.

As the largest postal company in Europe, DHL leads the global market in air freight with a 13% share, while it holds the No.2 position in ocean freight with an 8-9% share.

Thomas Tieber, chief executive of DHL Global Forwarding South Asia, said Thailand must reduce its logistics costs for the upcoming Asean Economic Community to make sure businesses maintain competitiveness with those in neighbouring countries such as Singapore and the Philippines, where costs are 15-19% lower.

DHL has operated for 40 years in Thailand, where it generates 400 million euros (16.1 billion baht) in annual revenue and employs 12,000 staff.

Mr Appel said Asia accounted for 19% or 38.9 billion euros of its global revenue as of 2011.

China, India and Thailand are the major contributors to the company's strong growth.

DHL is confident that Asia's contribution will grow to 30% as it continues to expand hub operations, enlarge truck fleets and create new gateways and warehouses.

"We will continue to invest heavily in Asia following the growth path we are on," said Mr Appel, adding that the company saw significant revenue growth in the first nine months of last year.

Globalisation and increases in global wealth are the underlying reasons behind the logistics industry's fast growth.

In the past decade, logistics has grown nearly twice as fast as countries' gross domestic product.

"Consumption and services developed in Europe are now coming to Asia and driving the need for more logistics," Mr Appel said.

Kevin Burrell, the managing director of Thailand DHL Supply Chain, said more customers are deciding to outsource their logistics operations.

The compound annual growth rate of the outsourced market is growing by 18.4%.

"This offers an opportunity for DHL to gain additional market share," said Mr Burrell.

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