Q&A: DHL Express U.S. CEO Greg Hewitt

With global express delivery and logistics services provider DHL Express recently celebrating its 50th birthday, Logistics Management Group News Editor Jeff Berman recently caught up with DHL Express U.S. CEO Greg Hewitt to discuss various topics, including DHL’s growth in the U.S. and globally, the evolution of shipping, and logistics trends, among other topics. A transcript of their conversation is below. 

Logistics Management (LM): What are the biggest changes, or developments, in logistics since DHL entered the U.S. market in 1969, from a general and DHL perspective?

Greg Hewitt: If you go back to September 25, 1969, you have got these three entrepreneurs––Adrian Dalsey, Larry Hillblom, and Robert Lynn––really pioneering the international air express industry to solve a problem that a lot of businesses faced, which was when they were shipping products overseas with ocean freighters. They were seeing ocean tie-ups and issues with clearance in getting those freighters off the dock and into the market. DHL came up with the idea of sending bills of lading and documents over ahead of those ships so the wheels would be in motion so that when the ocean freight arrived, it would clear quickly. It was all about taking one of the pain points a customer has and then trying to solve it. I think if you track that through to today, there are certain key points along the road and that has still held true.

LM: In what ways:

Hewitt: At different times, there are different problems that we looked to solve, that we were pioneers in, to help move the industry along. And along that same timeline there were other strong companies globally like UPS, FedEx, and TNT also working on that. But it started with this idea of how do you get freight to pass through Customs faster on the spectrum of logistics and supply chain services across a number of business units.

When I look at a timeline in the early days, it moved from things like clearance documents to the next big users, which would be banks and financial services, where you were moving contracts and trade documents around the globe to facilitate early forms of trade, not in products but in contracts and executing documents. That was where the business was built. In those early days, you were leveraging a more manual system using colored bags to differentiate couriers flying with different airlines…and it was really a mindset of wherever the customer needed us. It was those early routes of globalization before that was a thing, where you were opening up these markets around the world that were difficult to get to, where this express service could help to facilitate trade  

LM: In terms of the biggest advancements the company has made over the years, what are some that truly stand out?

Hewitt: Aside from the DHL Express business starting in the late 1960’s, it would be in the late 1970s and early 1980s when we built our own computer, the DHL 1000 Word Processor, to automate preparation of customs documentation. It was a matter of how do we speed up the creation of customs documents and labels and make things easier for the customer to move documents.

The next big one was in the early 1990s through the 2000s, with the rise and the start of scanning technology. And that centered around getting physical updates on single packages and reducing the need to rely on people to get those updates from couriers or what we now know today as checkpoints. You also had the advent of scanning technologies and it started to occur within facilities as part of material handling equipment and definitely on the road as couriers capture the checkpoint…and obviously capture the signature digitally for the first time. That ties into the growth of the Internet and this start of access to information becoming very important in our business. And that launched the idea that customers are now demanding and wanting real-time information on the status of their shipments. That is tied into a time in the 1980s, moving from just documents to parcels and physical content…now it is not just a case of paper, it is actual physical goods with value. So, of course, the demand for information goes higher and higher.

That includes just before that the rise and fall of fax machines and telex machines, kind of like that in-between piece for transmitting and sharing information, then scanning technology and then the age of the Internet, where people see information and interact with us and want information on their shipments.

Once you get into the 2000s, we then see the rise of e-commerce, which was more in the mid-2000s to 2010 and it starts to grow with the rise of the trend of globalization. We use the Internet because customers want information from us on scanned information and shipments, but it is also the rise of consumers starting to go online to buy goods…from markets they may not have had access to before. So now there is another big step up in our industry’s evolution, because we are now not just moving pieces of the supply chain and moving goods locally. We start to move goods around the globe, based on speed and availability because people could not order online. And our systems and those of our competitors, were tied into companies or marketplaces and offering a place for people to buy goods anywhere in the world. Where we kind of sit today is this race to integrate and make sure services and capabilities are literally intertwined across a plethora of platforms that are all designed to add value to the seller and the buyer. So whether it is the ability to generate compliant labels, the ability to provide real-time cost information, including visibility for duties and taxes in any market around the world, the ability to provide links for customer service…this move from the seller owning and wanting to control operations shifting to today’s world so that they can give that access to their buyer so that buyer on its own can go online and track the status of a shipment, follow it through to destination, maybe update it with their own preferences for whether it is put in a locker or leave it on the doorstep for a signature, or hold it at a station. It is a transfer of power by having that whole visibility and transparency to the buyer so that they can control that whole shipment’s lifecycle. It is what we refer to on-demand delivery in our system.

LM: How do you define that?

Hewitt: It is a real fluid move that kind of ties e-commerce to globalization together…and I think within the same timeline, a little bit different but equally important as it starts to grow, is the idea of sustainability. As climate change becomes talked about in the early 2000s, you see organizations wanting to partner with and work with businesses that understand the impact they have on the planet and are looking for companies that have the values to integrate environmental protection into their corporate strategy    

LM: What does that mean from a DHL perspective?

Hewitt: For us, that meant using 2007 as a baseline commitment to improve CO2 target efficiencies by 50% by 2020 at the time. We wound up doing that a lot earlier and that led to us coming up with a 0% emissions goal by 2015 with interim targets in 2025. This idea that sustainability is now important trend speaks to how while we all want things at the speed of light in the Internet era, we also want a more healthy value system around sustainability. Where we see it going next is this idea of digitalization to see more faster developments in which we can leverage technology to either run our business more efficiently, improve the lives of our customers and employees, and drive costs out of our system.

LM: What are some examples of that?

Hewitt: That is more for things like machine learning and robotic process automation that allow simple tasks to be done faster and better by robots and allowing your human resources to focus on more challenging problems. It is the rise of AI and saying how can we be more proactive and predictive around issues and give access to that capability to customers through tools in customer service, leading to the rise of Google, Siri, and Alexa to help you the customer in leveraging technology that way. We see it working with new disruptive technologies like Uber and Waze that are coming in to allow us to more effectively…to have the best couriers, and the most efficient information so customers can follow a package like they have come to expect.

For our team, we can leverage that technology so we don’t have to rely on 30 years of knowledge of a courier route, and with technology we can look at the best traffic patterns and the most efficient and effective route, in terms of mileage, traffic patterns, and consumption of fuel. We see those optimizing capabilities going into our business. Down the road, it might be things like drone services or AVs that are being tested now but not taking over deliveries.

LM: What are the next steps on the technology front, in your opinion?

Hewitt: Technology and digitalization will continue to grow. I also think that ways in which we use data like IoT will continue to grow….the idea behind that is to take data from a whole bunch of different points to give you insight for change. A lot of that is happening around safety, where we use technology on our vehicles to give our couriers real-time feedback on their acceleration patterns, braking, cornering, all of the things that can be autocorrect and self-correct and led to accidents going down. We are also giving [staffers] equipment on their belts that is allowing them to get real-time feedback on their range of motion, when they are lifting, twisting, bending, turning with packages. If they are not doing it in the safest way, it gives them feedback that will ultimately reduce sprains, strains and wear and tear…that is an example of taking changing data points, as well as machine learning and AI. We try to give customers advance warning if we see something in our chain that has caused a delay or disruption; it is almost like a prediction of what our team has done over time.

LM: What about on the globalization front?

Hewitt: Globalization was early on, and we were well positioned from our history in the U.S. E-commerce came fast and furious, and we were in a good position because we were well set up…and we needed to really invest in technology to keep up with trends that were growing. We saw sustainability as a trend emerge and we were one of the early leaders in the early thoughts of reducing carbon emissions. Our zero emissions goal statement has targets for 2025 of improving efficiency by 50% compared to our 2007 baseline, and 50% of our sales incorporate green logistics and we are operating 70% of our first and last mile service with green pickup and delivery solutions and certifying 80% of our employees as “go green specialists. We made a real statement showing sustainability is important and will continue to be important as we grow. And the newest one is digitalization in which we are trying to find tangible ways to leverage the latest trends to drive value. That is happening through working on 3D printing and blockchain, which are ideas we are interested in growing in our industry in which those of us that are willing to adapt are going to be in the best positions to help customers and our employees, which will drive better service.

LM: How do you view DHL’s current market position in the U.S., as well as globally, in terms of things like market differentiators and core strengths and services?

Hewitt: I go back to our bold decision to exit the U.S. domestic market and focus on time-definite international. I think what we recognized is that we were the pioneers of international shipping 50 years ago in 1969, and that is what made DHL Express, as we were the international specialists. We are a company whose DNA and spirit came from opening up the globe to trade and focusing on making DHL the global leader of the international express industry. This was something we were able to do based on our presence and building market share in other global markets. The message we needed to bring to the U.S. market was your customers and your suppliers around the globe need DHL as the most trusted and reliable brand for international logistics and transportation. And we have a network in the U.S. to connect into that through exceptional service, quality, speed, and cost efficiency to compete domestically with our two main competitors. We had to make sure that was set up, and I think that basis of that is easy to look at our network presence in 21 countries and territories around the world. The trucks, planes, the IT architecture, and the automation are the backbone of that. The biggest thing that we did that started this successful trend from 2010 onwards for us in the U.S. what that it had to start with our people. It started with our Certified International Specialist (CIS) Program.

Whether you were a CEO, a manager, a courier, or a customer service agent, or a billing clerk, we all went through a program that educated us on the history of DHL, as well as the history and importance of global trade and the role that we play in it. It has certification modules that we all went through. And based on your position it took a curriculum through which there was a common language and basis of understanding of the business of international, commercially and operationally, clearance and customs. And while it grew out of the U.S., it is applicable throughout the world. So whether you spoke Mandarin, English, French, or Spanish, the common language through this program was the language of DHL. The CIS program, I think, allowed our people at all customer touch points to differentiate themselves from the competition, because International was not just a product, it was what we do and all that we do. And when you overlay that knowledge and training over a great network and infrastructure, it is what has allowed us to grow that time-definite international business and sustain that growth for a number of years now despite not having a domestic presence in every market. Over the last five years, we have overlaid the CIS Program, not just for specialists, and also for senior leadership, but most importantly right down to supervisor level to build a very clear understanding of how to create, cultivate, and foster a culture of feedback so that all of our people at all different levels are comfortable giving motivational and developmental feedback to improve confidence and competence and are comfortable giving and receiving it and recognize that leaders want feedback, too.

And the way we look at our behaviors and this idea of balancing our expected results of these attributes has really built a very strong culture that ensures accountability and a focus on core [things] like speed and getting things done right the first time, a can-do attitude and passion about our customers and our business. When we put those together, it is what makes our business…international is not just part of our business, it is our business. DHL is at home anywhere in the world both culturally and linguistically. When we think about this idea of leveraging a local strength globally, this is what has made us well positioned for globalization and e-commerce. Because of our industry and our presence globally, sustainability had to be part of our strategy and our culture. We continue to adapt with speed to this new S-curve of digitalization to ensure we can stay competitive as the landscape changes. The good news is that over 50 years we have a rich tradition of innovation and sustainability and entrepreneurship that bodes well for the next 50 years.

LM: What is your take on the upcoming Peak Season, as well as the ongoing trade tensions at the moment?

Hewitt: One of our biggest challenges year in and year out is how do we handle Peak. We have a track record of starting early, getting close to our customers and really using their data in the summer months to predict what their needs will be, as well as from late November through the year-end timeframe. That has allowed us to plan particularly our capacity needs, with the aviation piece being a big part of it. If we get that right and plan early, we will have the capacity and also get it at a favorable cost that allows us to run more effectively through Peak. It also allows for lead-time to staff up for any needs on the ground for both gateways and on the road. Also, things like technology and the time to train couriers have improved. We like to bring people in early and give them a chance to give some of our people well-earned time off before Peak Season, because once it comes they are really working around the clock for us. Success for us means our customers will not see any changes in their service levels, and at a time when it is critical for them to be able to grow and capitalize on increased order sizes and increased production runs that we are there to support them. We have done a good job of that over the years.

LM: What are some things you are specifically focusing on for 2019 Peak?

Hewitt: There are two areas that will impact us globally. One is that the Brexit decision has been pushed off until October, right in the heart of Peak, so there will be uncertainty around how the UK and Europe will handle trade. We have prepared ourselves based on our knowledge of what it takes to clear goods formally into those areas. That will likely create more challenges on the European front than the U.S. front. But it will create an issue in terms of plans for Peak.

LM: What about the ongoing trade tensions?

Hewitt: The ongoing issue between the U.S. and China is bigger for us. That is obviously a major trade lane for U.S. companies bringing goods in and a big buying zone for U.S. consumers. The 25% increase in tariffs for the 301s to expand to more commodities leads to a question of will our customers be able to get a good feel for what their needs will be in Peak Season and will they be able to give us accurate forecasts? We are seeing a softening year-over-year on that inbound freight so if we use our historical methods, that would suggest we will not need the same levels of capacity that we have historically needed. The challenge will be to make sure we have the needed capacity. This is all still fairly new. We are being open in sharing what we see coming as in the decrease in volumes and making sure we are there to help our customers as they make changes in their supply chain as they potentially look at new origin points to get goods in. Our expectation is that they will get back to their historical volumes. Although they might come from different origins, they will still need to move goods in and out, and we will use the next few weeks and months to plan accordingly.       

LM: The ongoing emergence of last-mile, Amazon’s push for next-day shipping, as well as other retailers, are all making a quick impact in the market, it seems. Where does DHL fit into all of this?

Hewitt: A lot of that discussion is about getting very close to their domestic customers in offering speed, capabilities, and options up to and including a one-hour delivery window. If you look at what Amazon has done in having invested in starting to build out its U.S. domestic infrastructure, in terms of fulfillment centers, carrier structure, the air hub it is building in Cincinnati, and the airlines, in which we are hoping to work with them as a partner, are all designed to satisfy the needs of their domestic customers. I think what we are uniquely positioned to do, and why it has worked so well with Amazon, is we focused on making sure that anything that needs to be moved internationally, we are there to move for Amazon. Our goal is to remain this time-definite fast mover of goods when you need to move inventory internationally because they may not have it close. We cannot bring one-hour anywhere, but we can offer kind of that one-to-three days anywhere that will build on the denser areas, where they will offer more product lines within their fulfillment centers through local distributors. I think we see ourselves playing a complimentary role. We don’t see them stepping up and trying to build what we have built over the last 50 years in 221 countries and territories. We are focused on being a great partner to them, and it is an important customer of ours. When I look at Amazon specifically we have found ways to develop and grow our relationship in non-traditional avenues like helping out with ground handling on Amazon’s new domestic air network and doing that domestic piece in facilities while they build their own capabilities. Doing things like that has what has kept us as marketplace enablers as retailers change their landscape. And we will always be there to move…the higher end, more valuable, more scarce products that need to move globally and may not be held in bulk in single or multiple spots around the globe. We see businesses like the USPS delivering more packages to residences for e-commerce than any other carrier, and the good news is the DHL e-commerce solutions group sister company is the group we look to for handling our postal relations around the globe. Where ours is a time-definite fixed network with a courier delivering anywhere around the globe in one-to-three days, they help us by building partnerships and offering different customers the option to leverage postal networks around the globe. The customer wants choice and needs different options, and whether you are a marketplace, a traditional retailer, or a facilitator, we are here to connect to that and to find the niche we all fit in and the way we can meet most needs.