Case 1: The number 1 express carrier

A DHL case study

The international express market is expanding rapidly. According to a recent report by the Boeing
company, it occupied a global market share of 5% of the total international air cargo market in
1994. This rapid growth rate is set to continue and to attain 31% of the total international air cargo
market by the year 2014.
The largest share of this growing market is handled by international express carrier,
DHL. therefore, sets out to chart how DHL Worldwide Express has created one of the greatest
success stories in terms of world-wide renown, company growth and enterprise in the last quarter
of the twentieth century. Its foundation, 27 years ago (in 1969), started an entire industry - air
express distribution – of which it has remained the undisputed world leader. Today, following
tremendous growth and expansion, DHL continues to drive the industry it created through a
relentless pursuit of excellence in all aspects of product and service, in every operation throughout
the world. Understanding the needs and concerns of customers, both globally and locally, is central
to DHL’s business philosophy and lies at the heart of the leadership position maintained
throughout the 223 countries it serves.
Founded in 1969 by Adrian Dalsey, Larry Hillblom and Robert Lynn, DHL is the world’s largest
international express carrier. The founders, whose initials form the company name, launched the
air express industry “overnight” as they transported shipping documents from San Fransisco to
Hawaii, in advance of the actual shipments, saving significant time, as well as money, on
turnaround in customs, previously impossible through traditional methods of transportation.
But what have been the factors which have shaped the development of this relatively new industry
in the UK and internationally? What are the developing trends and what does the future hold? We
look back over the past three decades to find out companies had three alternatives if they needed
to send documents and parcels overseas:
• They could use the Post Office or local equivalent, geared towards private users;
• They could use expensive on-board couriers who were limited by the weight they could
carry; or
• They could use standard air freight which usually involved built-in delays at customs.
A gap in the market
There was therefore a distinct gap in the market for a fast, reliable and cost effective method of
distribution and it was the recognition of this fact which lay behind the foundation of DHL by
Dalsey, Hillblom and Lynn in 1969 in California. Initially express distribution companies, like
DHL, focused primarily on emergency document delivery. However, with the maturing market,
this rapidly developed to include consignments of all sizes. Far from being just a quick fix
solution in a crisis, express distribution was to become an integral part of a company’s planned
distribution strategy. financial institutions, by virtue of the nature of their business, were the
most prolific users of express services. Since this time however, demand has expanded to all
industry sectors, including manufacturing and service industries, in line with the development of
world trade and multinational corporations.
The consolidation of the market
By the 1980s it had become the norm for companies in some industries to use air-express services,
with larger and larger companies investing heavily in their logistics strategies. In 1982, the total
world-wide air express market was worth only $0.5 billion; by the end of the decade it had risen
in size to $4.5 billion.
 Increased demand encouraged air express companies to supplement use of existing commercial
flights with their own fleet of aircraft and to set up their own sorting depots in order to be in a
position to offer greater flexibility to their customer. In the UK, for example, DHL International
(UK) Ltd took the lead in 1980 by creating a hub at Heathrow Airport, followed by a second hub
at East Midlands Airport in 1989, which today has become the third largest air cargo airport after
Heathrow and Stanstead.
New technology also became an important force driving change and enabling greater speed and
efficiency. In 1981, DHL became fully computerized with considerable investment taking place
in automated equipment and processes throughout the organization. This in turn heralded the
advent of total logistics solutions, with customers looking to express distribution companies as
partners to assist them in reducing costs and overheads by reducing stock holding and
warehousing.
It is in the last ten years that we have seen the most dramatic changes in the express distribution
industry. A number of factors have driven these changes:
• Changing Expectations. The globalization of trade and new approaches to the manufacturing
process have shortened consumer lead time expectations. In Europe, the relaxation of trade barriers
and emergence of developing markets and economies such as Eastern Europe, have increased the
demand for a high standard reliable services.
• A Fresh Perspective on Distribution. Distribution is now seen as a powerful business tool
with direct implications to the bottom line. As a result, efficiency in this area plays a vital
role in maintaining competitive edge. By being able to offer far more than just an express
delivery service, companies such as DHL, have become an integral part of their client’s
distribution strategy, servicing the needs of the world’s largest multinationals through
inventory management, mailroom management services and direct distribution services.
• Technological Advancement. Technology began to have a major impact on added
reliability in the 1980s, causing large scale investment on the part of the leading distribution
companies. Computerization allowed organizations such as DHL to offer completely
integrated solutions, so that multinational organizations could rely on just one air express
carrier to fulfil all of their requirements. Technology simplified administration, reduced the
margin for error and made it easier to cut down on costs.
• Changing shipping trends. Air express in the UK is growing in popularity at the expense
of air freight. There is also a growth in heavier parcel weights in all markets.
• Growing emphasis on exports. In the UK in particular, it is argued that increasing exports
has helped to move the country out of recession. Increased export levels have in turn led to
a greater demand for express services.
• Environmental pressures The growing importance of environmental and social
responsibility has affected all businesses regardless of industry or size and has put pressure
on all express distribution companies to improve their distribution methods to ensure
minimum impact to the surrounding environment.
Products and services
Today, the European Union provides business organizations within Europe with a wide market
involving 15 countries. Above and beyond this, the European Union has integrated trading links
with many of its neighbors, who have negotiated trading links of mutual benefit. Trade and
exchange within these areas requires integrated distribution systems which are able to manage a
sophisticated and complex series of customer requirements. DHL offers express delivery service,
regardless of distance, to its customers in Europe. It stands alone as the global leader and is
differentiated from its competitors by placing a consistent emphasis on customer care and an
individualized service. With advanced technology and the largest geographical reach, combined
with later pick up and earlier delivery times, a wide range of products and services are available.
DHL delivers and collects from 60 locations in Europe and is preparing for increased demand in
the next millennium by investing $600 million to improve technology and infrastructure in Europe.
The biggest and most advanced hub in Europe is the Brussels Super Hub, often described as
“DHL’s gateway to Europe.” Opened in July 1985, as the first fully functional air express hub, it
handles distribution and delivery from the rest of the world. The hub doubled in size in 1993 when
DHL took over Federal Express’s sorting center.
The Super Hub currently sorts more than 80,000 packages an hour with over 1,000 employees
working around the clock and handles more than 400 tons (110,000 shipments) a night in Europe.
Strategically based in Europe, the hub is able to meet the growing demands within the logistics
and express field.

Western Europe
As well as its major distribution centres - its hubs, DHL has created a number of Gateways
providing links through its hubs throughout the world. Gateway facilities have been expanded and
improved in Dublin, Copenhagen and in joint alliance with Lufthansa, DHL has moved into a new
purpose built cargo centre in Frankfurt. An urgent parcel or document which is collected before
04.45h will arrive in Frankfurt before the close of business the same day. Alternatively, DHL
collects from anywhere in the UK to deliver to major European destinations by the following
morning.
DHL was the first air express carrier to explore the East European market. A changing political
landscape has meant rapid growth, with DHL offering levels of customer service and operational
capability equal to those offered in the West. It led the way in 1983, by opening a Yugoslavian
office. Since 1989, $50 million has been invested in Central and Eastern Europe by DHL as a
commitment to the growing part logistics has to play. Half of this sum has been used to develop
and invest in aircraft, vehicles, staff training and state-of-the-art computer technology. In 1995, a
new dedicated line haul to Bucharest, Romania and
Sofia in Bulgaria was introduced. Prague, Warsaw and Budapest saw a significant upgrade and
improvement in capacity because of the growth of volumes. DHL has already led the way
forward, developing an effective air express network for the fast growing economies of Eastern
Europe.
Servicing the USA
In the USA, DHL’s US-based fleet comprises 87 aircraft, including five DC-8 aircraft. In
November 1995, a new $20 million international gateway facility was opened at John F Kennedy
Airport to serve as the international express network’s largest transfer point for shipments between
North America and Europe, Africa and the Middle East.
Next-day Worldwide Documents Express and Next-Day Worldwide Parcel Express offers
customers requiring the delivery of documents and packages from the UK to the US a next day
door-to-door service to the USA.
 Core products
The following products comprise DHL’s core business products in the international express
delivery industry:

• DOX Worldwide Document Express - an international door-to-door delivery service for

documents and non-dutiable items weighing up to 50kg per piece and 250kg per shipment.
• WPX Worldwide Parcel Express - an express international delivery service for dutiable and
declarable goods of up to 50kg per piece and 250kg per shipment.
• EUX European Union Express – a next day, door-to-door delivery service for documents and
goods to the EU.
• WorldMail An international business mail service. It provides a simple and cost-effective method
for UK companies to send large quantities of mail to the rest of the world.
• Import Express A convenient and flexible inbound door-to-door delivery service of freight from
37 countries into the UK.
Complementary Services
In addition to its core products, DHL has a range of complementary services such as customer
automation, export assistance, insurance services, help desks, weekend collections and deliveries.
In order to maximize the quality of its service, DHL has invested heavily in information
technology. Examples of some of these services are:
• EasyShip Designed for high volume customers, this comprehensive kit produces airwaybills
(documents required for sending goods by air), as well as management reports for customers which
can be linked into DHL’s international data network to access shipment transit details.
• EDI Through Electronic Data Interchange, customers are now linked to DHL. This transmits and
receives information electronically rather than using paperwork to increase efficiency, reduce
inventories, speed up deliveries and improve cash flow.
• Internet/World Wide Web Service for International Shippers Recently (April 1996) DHL enhanced
its home page (http://www.dhl.com) on the World Wide Web (WWW) section of the Internet, to
include world-wide tracking of shipments and regularly updated news about the network’s
operations in more than 220 countries.
To track a shipment, a customer need only enter the shipment’s 10 digit airwaybill number and
country of origin. The screen will then display the date and time of delivery, along with the name
of the person who signed for receipt of the shipment. For shipments in transit, the screen will detail
the shipment status and the various scan points throughout the shipment’s journey.
To provide details on the latest global activities and service enhancements of the DHL Worldwide
Express network, a new section, “DHL News” has also been added to the site. This section features
DHL news releases from around the world, with information on global network expansion, new
products and company announcements.
Just-in-time
When faced with the problem of how to deliver a perishable cancer detection kit to doctors’
surgeries around Europe, the choice of leading
health care company Bard was clear: they chose
DHL. The Bard Bladder Tumour Antigen (BTA)
test is a five-minute urine test for monitoring
bladder cancer, the fourth most common cancer
in men. This disease is usually successfully
treated if found early, but life threatening if
undetected until it reaches advanced stages. The
Bard BTA kit is a potential life-saver.
The Bard BTA test is currently being sent directly
to doctors around Europe on a trial basis.
However, as the product is perishable, it needs to
reach doctors’ surgeries within 72 hours, after which it can be refrigerated. Bard started sending
the Bard BTA test to its key European markets - Spain, Italy, France and Germany - in early 1995.
The Bard BTA test was launched globally in 1996.
DHL is able to make two collections every day from Bard’s Clacton-on-Sea warehouse, as well as
being “on-call” to make pick-ups at short notice. Bard now sends over 100 products abroad per
month with DHL. The advantages of using DHL include pick-up and door-to-door delivery,
coupled with the ability to generate paper-work instantly and to track deliveries through the
Internet. International exporters such as Bard know that they can rely on a single air express carrier,
rather than a multitude of distribution suppliers. This simplifies administration and offers greater
control over the time of delivery. It also dramatically lowers costs, through reduced inventory
holding.
Just-in-time delivery services are now a common feature within total logistics chains serving the
requirements of manufacturing, retail and service industries. It is the reliability of delivery by air
express companies, such as DHL, that has led to considerable growth in the requirement for such
logistical facilities and DHL is now being used by all of the top companies listed in the FT’s Top
100 Exporters.
Conclusion
This case study has highlighted the way in which DHL has filled an important gap in the market
in express delivery services. To conclude, therefore, it is helpful to provide an example of how
effective and important this service is. This service is exemplified by the way it has supported
medical treatments by getting medicines and supplies to where they are most urgently needed.
Source:http://businesscasestudies.co.uk/dhl/the-number-1-express-carrier/conclusion.html
 Expanded Tertiary Education Equivalency and Accreditation Program
(ETEEAP)

NAME: Cristopher Danlog DATE: February 10, 2021

PROGRAM: BSBA - Operations PROF.: Mr. Brandy I. Valdez
Management______

Instruction: Answer each question in a clear and organized paragraph.

CASE FORMAT
1. Define specific problems that the company is currently experiencing.
➢ In this case study, there is no information indicating DHL is currently experiencing
specific problems. It would be interesting though to investigate and study, what are the
possible challenges and how DHL can deal with it.
➢ DHL thriving during this covid-19 pandemic. Source: News and Current Events
2. In your chosen problem, discuss the areas of the company you would consider in order to
come up with a good statement of the problem.

➢ DHL services and products are being transported via express air freight and because of
the lockdowns and some of its sorting hub/gateways worldwide most especially in
Europe are closed and some are not fully operational due to this pandemic, logistics
companies including DHL- What are they struggles and current situation? Are they
being impacted big time just like the others or actually profiting from the pandemic?

3. Discuss the case SWOT analysis (Enumerate at least 5 SWOT statement)

Strengths Weaknesses
1. Exemplary level of customer 1. This pandemic never happened before
satisfaction. 2. Temporary Time Adjustments
2. Reliable suppliers 3. Too much disruptions
3. Good numbers of Hub/Gateways across 4. Demand identification
the world. 5. Contingency plan
4. State of the Art Facilities
5. Innovative product and services
Opportunities Threats
1. INBOUND LOGISTICS 1. Liability laws in different countries
2. DISTRIBUTION 2. Currency fluctuations
3. SORTING and QUALITY CHECK 3. Governments faced a range of different
4. Inventory Management transport challenges (PPE
5. DISTRIBUTION AND LAST MILE transportation/shortages).
4. Unpredictable supply in terms of
volume, quality and delivery time. (PPE,
Vaccines and Medical Good
5. Employee risk of acquiring covid-19

4. Create an Alternative Courses of Action (Possible solution to the problem)

Alternative Courses of Advantages Disadvantages

Action (ACA)
World-wide coverage by Easier access to broad Bigger investment in tools
establishing logistics transportation-worldwide ang labor.
 infrastructures for and could prevent
intercontinental shipments. disruptions and temporary
adjustments

Extensive experience in Need to hire more people

Extensive local footprints
Contingency plan.
Resilience to maintain
operations under
challenging circumstances,
crisis or pandemic.
local warehousing and in- and requires bigger
country logistics across investment.
different economies and
geographies can help the
supply chain survive
especially in this
pandemic.
No need to start from It may require trainings
scratch anymore, starting (employees) therefore
from an experience would productivity and staffing
be very advantageous as can be slightly affected.
key point are already there.

5. What can you recommend to the company to address the problem?

(Possible Recommendations, choose from your ACA.)

➢ In unprecedented time like this, a logistic company should stay resilient by having a
defined contingency plan that will help them deliver the goods and services expected
from various countries like having a worldwide sorting hub and gateways. A wide
network of suppliers with global production and a broad range of transportation. For
a logistics partner to go on, to deliver what is expected, to be responsive and to
prevent temporary time adjustments and disruptions. An established infrastructure for
intercontinental shipments is an advantage.

6. Conclusion

➢ Is DHL company being impacted big time just like the others or actually profiting from
the pandemic? After researching and studying the pandemic and what it brought. I
therefore conclude that just like the other logistics companies, DHL also struggled at
some point however due to their resiliency they are now coping up. DHL played a vital
role in transporting medical goods across the globe and hopefully, they'd do the same
once the vaccine is available for the general public.