Deutsche Post DHL expands parcel network in Germany to meet future customer requirements

- Group investing approx. EUR750 million in the growing parcel market
- Parcel business second strong pillar of the MAIL division in the long term
- Parcels to be sent as fast as letters in the future

Bonn/Hamburg - In the coming years Deutsche Post DHL will invest approximately EUR750 million in the modernization of its German-wide parcel network. The investment will create a strong foundation for further growth and for new, innovative services. Deutsche Post DHL is both the market leader and leading innovator in the German parcel market. New business models in e-commerce - a market that is booming - and evolving consumer behavior also require new shipping solutions.

These range from nationwide, reliable transport of sensitive goods to efficient and cross-border return services and rapid transit times for perishable goods such as food products. Given the consistent growth in parcel volumes, the parcel business has already become an important pillar of the MAIL division. Mail order-business in Germany has seen consistently growing online sales figures, which serves as further confirmation of the potential of the internet and e-commerce.


Dramatic improvement

“This is the largest investment in our parcel infrastructure since the 1990s. It will expand our leading position in the market and ultimately make our parcel business the second strong pillar of our mail business. Our customers are going to see a dramatic improvement in our already market-leading quality and reliability. And we’ll help e-commerce in Germany achieve the final breakthrough,” says Jürgen Gerdes, Corporate Board Member MAIL at Deutsche Post DHL.

Since 2007, revenue in the parcel business has increased on average by 3.5 percent annually. It went up by as much as nearly 10 percent in the first half of 2011. As a result, this growing market already makes up around one-fifth of the total revenue in the MAIL division. The investment is therefore an important step to ensure that the parcel business continues to contribute increasingly to earnings in the MAIL division. “We’re investing in an infrastructure that will help further the positive trend in our parcel business margins,” says Gerdes.

As a result, the parcel business will establish itself as a strong pillar of the MAIL division next to the company’s traditional mail business and e-products and play an important role in the success of the whole Group.


Performance increased

DHL Parcel currently transports more than 2.6 million parcels on average each day. Pre-Christmas volumes are double this amount. Thirty-three fully automated parcel centers, some 40,000 couriers and countless vehicles ensure that by and large parcels are delivered anywhere in Germany the day after they are posted. In order to improve this already high quality of service, the performance of the parcel centers is being considerably increased, in part by significantly speeding up the sorting process.

In the future parcel centers will process 28,000, 40,000 and even 50,000 parcels per hour, depending on the location. Today this figure is generally 20,000 parcels per hour. The changes will include technologies that considerably improve efficiency and pace of processing. This includes scanners that can read addresses on all six sides of a parcel, partially automated vehicle unloading and new sorting technology, which should further minimize the risk of damage.


Restructuring our entire transport network

At the beginning of the year, Deutsche Post DHL began testing new sorting solutions at three pilot locations in Greven, Kizingen and Neuwied. The tests have resulted in a 40 percent higher capacity and speed of parcel processing at these locations. Based on these results, seven additional parcel centers will be retrofitted to achieve an hourly throughput of 28,000 shipments. DHL Parcel’s many business and retail customers will profit from the increased capacities at Aschheim, Augsburg, Bielefeld, Dorsten, Hagen, Regensburg and Saulheim as early as this Christmas season. In addition, other measures have already been taken, such as the deployment of 6,000 new parcel delivery vehicles and the redrawing of 650 parcel districts across Germany in an effort to improve the service quality.

“What’s more, we are going to restructure our entire transport network in Germany. Our goal in the future is to deliver a parcel anywhere in Germany as fast as we can deliver a letter today,” said Gerdes. One of the measures Deutsche Post DHL will take to accomplish this will be to adapt the transports between the sorting centers so that items can be fed into the daily parcel stream a lot later in the day and in higher numbers than what is possible today. Modern computer applications will also ensure customers have the greatest possible access to real-time parcel tracking information.

“As a result, with the click of the mouse we will be able to offer a considerably more efficient and flexible parcel delivery service, reducing all the while our carbon emissions and offering modern services for a new type of consumer. Both business and retail customers alike will benefit equally from this,” added Gerdes.