Deutsche Post DHL Targets $2.2 Billion in Tech Upgrades

By Jennifer Smith 

Deutsche Post DHL Group plans to invest $2.2 billion on digital initiatives through 2025 as the global logistics company looks to e-commerce to drive growth across its business lines.

The investments are part of a push for greater efficiency as parent company Deutsche Post AG focuses on long-term profitability in its core logistics businesses. The company expects the accelerated technology upgrades to help increase operating profit to at least $5.8 billion in 2022.

The new steps include stepping up use of warehouse automation and robotics, applying data analytics to optimize routes and improving volume forecasting and developing technologies for use across the company's business lines," the company said Tuesday.

The German operator's move comes as big freight transportation and logistics providers are pouring millions of dollars into technology, driven in part by digital-focused startups that are trying to siphon away business with technology targeting the shipping world.

Deutsche Post's DHL provides express delivery, freight forwarding and supply-chain services including warehousing and online fulfillment in more than 220 countries. The company also provides post and parcel delivery in Germany. DHL's supply chain and global forwarding divisions together comprised the top global third-party logistics provider in 2018 by gross revenue, according to research firm Armstrong & Associates.

"We are the only company that is able to offer single elements as well as the entire e-commerce supply chain on a global scale," from inbound logistics to fulfillment, delivery and returns, Deutsche Post Chief Executive Frank Appel said. "We need not reinvent ourselves. We will digitalize ourselves."

Technology is transforming the logistics industry, from visibility software that tracks the movement of goods through the supply chain to the proliferation of online marketplaces that use algorithms to connect truckers with shippers looking to move freight.

The advancements, propelled in part by the growing field of startups, are pushing traditional transportation companies to accelerate technology spending "to drive higher productivity as they look to defend or expand market share," Stephens Inc. analyst Jack Atkins wrote in a research note last month.

C.H. Robinson Worldwide Inc., the largest North American freight broker, said last month it plans to spend $1 billion over the next five years to bulk up its technology. And XPO Logistics Inc., one of the largest logistics providers in North America, has increased its capital spending from $504 million in 2017 to a planned $650 million this year, the company said, with much of it going toward technology.

Write to Jennifer Smith at [e-mail]

(END) Dow Jones Newswires

October 01, 2019 17:41 ET (21:41 GMT)

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