The Conversation: John Pearson, Global CEO, DHL Express

With €24.9 billion revenues, the world’s leading express service provider, DHL Express, is the biggest division within the €81.8 billion logistics giant DHL Group. Its main product, Time Definite International, a cross-border transport and delivery service with predefined, standardised transit times transported around 288 million shipments in 2023. John Pearson, global CEO, DHL Express, explains global trends in logistics and why it is too early to rule out growth of global trade. Interview by Joe C. Mathew

COVID & GLOBALISATION

Pandemic-triggered economic pangs are far from over. Many countries are under recession, some are turning protectionist, while some are facing geo-political conflicts. As a global logistics player, how do you assess the situation? Is globalisation on the back foot? ⁽¹⁾

The world has gone through quite a change since Covid. Inflation, rising energy prices, change in behaviour of markets, etc., are making it challenging for many global companies. As a result, global trade and economy are weaker than before. But it’s a cyclical thing and we will emerge out of it. We have been in India for 37 years and have seen a number of these (global economic cycles). And there are bright spots even within that. India is one such spot, growing in double digits. DHL is present in 220 markets. There is always some region, some industry or some country that is growing well. We see that in India, we see that in (other divisions) of the group. During the pandemic, no capacity was available. Airfreight has normalised now. People are flying again, belly space has become available, air freight prices have come down.

Since the world is normalising, demand for logistics services will be a little less than before. We have seen such cycles before. Not all regions and industries are suffering the same way. In fact, part of our network in Middle East, North Africa, Sub-Saharan Africa and India is growing very strongly. It has been difficult but spring is coming.

So, there has been no reversal in globalisation?

Globalisation is at a record high. It has not given way to regionalisation. Regional fracturing among different allied blocks must be there but corporate globalisation is at an all-time high.⁽²⁾ India is at the centre of many people’s expansion plans. They are seeing how they can include India into their supply chain network and satisfy demand of their customers.

India is growing, but in terms of global trade, its share is still less than 2%. How big is the country’s growth potential?

When you take an economy the size of India, the population it has, whether it (share of global trade) is 2% or 20% today doesn’t matter. You have a large economy which is growing fast and attracting investments. Most capital flows will go into equipment to manufacture for the domestic economy but exports are also growing as the logistics environment is becoming easier and more efficient for companies. The 2% number would rapidly be something else. India is 62 in global connectivity index because of the size of its economy. But that 62 will become 52, then 42, and then 32 soon. The prognosis for India is very positive.

Post pandemic and US-China trade friction, there was a push towards China + 1 strategy by several multinational corporations. Is it making a difference?

India is a beneficiary of the China +1 set-up. It is not often mentioned in the same way as Vietnam, Philippines and Indonesia because it is such a successful market and economy in itself. In fact, India has never been more ready to welcome investment. FDI into India is second only to U.S. People don’t put money on a horse if they don’t think it’s going to win!

As a logistics player, you offer climate-friendly solutions or green logistics. How does it work?

We recognise that the Express division is the largest emitter. Hence, buying sustainable aviation fuel is important to us. Last year, we signed two of the largest-ever sustainable aviation fuel (SAF) deals to source more than 800 million litres SAF from BP and Neste.

LOGISTICS TRENDS

Is the logistics sector also sensing this China+1 trend?

There is no doubt it is happening but one by one. Let’s not underestimate the scale and foundation of the Chinese economy. The moves are in relative terms a fraction of their base. But companies are setting up (outside China). The other day I found a Chinese company setting up in Thailand and Egypt. I liked this example because China +1 is not about American, British or German companies saying we don’t want to be only in China, we want to be in Indonesia, Philippines, Malaysia and India, too. It is also about Chinese companies wanting to be closer to their consumers, including in India. We are placing Chinese salespeople in Jakarta (Indonesia), we already have them in Hanoi (Vietnam) and we are going to put Chinese salespeople in Northern Mexico for U.S. Now, you might ask, Northern Mexico is quite a long way away, but it is such a good example of near-shoring. Near-shoring has been talked about for 20 years but North Mexico is probably the only real example in the fabric of supply chains on global trade. That is happening and we see it. We have put Chinese salespeople in Mexico to welcome those (Chinese customers) off the plane.