Dhe Deutsche Post is stepping up its activities in India in order to participate in the rapid growth of the subcontinent. To this end, the DHL supply chains in the country and the connections abroad are to be expanded as quickly as possible. In just three years, the group wants to double the number of its employees in the Supply Chain division in India to 25,000. The group currently employs around 30,000 people in India, most of them in the express business. At the same time wants DHL mobilize half a billion euros to boost the supply chain business for industry and commerce in the world's fifth-largest economy.
“The Asia Pacific region currently represents approximately 15 percent of DHL Supply Chain's global revenues; however, it is the fastest growing region where India is a key player. The Indian logistics market, which currently has a volume of more than 200 billion dollars, will grow by around 10 percent annually over the next five years to around 330 billion dollars,” says Terry Ryan, Asia Head of Contract Logistics at DHL. The rating agency Fitch accepted its growth forecast for India on Thursday from 7.8 to 7 percent. But the country of almost 1.4 billion people is likely to remain the fastest growing economic power in the medium term.
“Supply chains are now an issue for the board”
Thanks to high subsidies, the electronics industry is now also growing. Only Apple suppliers Foxconn and Vedanta build a chip factory for 20 billion euros. "India is already the eighth largest market in the world for e-commerce and the second largest for digital connectivity," says Oscar de Bok, head of the Supply Chain division. "Since 2015, our Indian business has grown by 14 to 15 percent." Thanks to the planned expansion, the growth rate will rise to an estimated 22 percent, the manager predicts. With the investments, DHL wants to double its often digitally equipped department stores to around two million square meters. Centers are to be built in the economic centers of Bangalore and Pune near Bombay. The greatest challenge lies in finding and retaining suitable employees. DHL works with a young team, the average age of which is only 29 years.
The Germans see themselves as market leaders in the clothing sector and have “strong positions” in automotive manufacturing, technology and healthcare. India is the world's largest producer of vaccines and DHL has played an important role in supplying corona vaccines. “We sense that production patterns are changing. Supply chains are now an issue for the board. He doesn't necessarily want to bring everything home, but he does want to have different production centers. The manufacturing industry in India will benefit from this and from the government funding,” says de Bok.
The retail landscape is changing
The DHL Trade Growth Atlas presented on Thursday underscores why the Group is expanding its involvement in the region so strongly. In it, the Group, together with the Stern School of Business at New York University, regularly examines the most important trends in international trade in goods. According to the study, “new poles of trade growth” are emerging in Southeast and South Asia in particular. India, Vietnam and the Philippines stand out in the forecasts up to 2026, both in terms of the pace of growth and the volume of trade.
The most important impetus comes from the fact that more and more companies are trying to reduce their long-standing strong focus on China. Production will be relocated, procurement strategies will be diversified. As a result, the growth expected for China is weakening, and the growth is spread across more countries. While China has accounted for around a quarter of growth in global trade in recent years, this share is likely to fall to 13 percent by 2026. In addition to Asian emerging markets, the winners also include countries in sub-Saharan Africa, led by the Republic of the Congo, Niger, Rwanda, Senegal and Uganda.
The retail landscape is changing, but overall the outlook is surprisingly positive - despite the pandemic and the Ukraine war. In the first Covid year 2020, the global trade in goods temporarily collapsed by up to 15 percent, but then recovered very quickly. The pre-Covid level has now been exceeded by a good tenth. And despite the conflict in Ukraine, researchers expect trade to grow faster this year and next than the average for the past decade. The change in trade relations means new challenges. "However, forecasts of a massive setback in world trade are clearly contradicted by this report," said Steven Altman of NYU Stern, who led the study. An important driver is international online trade, from which Swiss Post in particular is benefiting greatly. The report cites a McKinsey study that says e-commerce could triple to nearly $1 trillion by 2030.