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After it effectively shut down its U.S. operations in 2008, DHL is ready to make a comeback in the Americas. Last week, the Germany-based logistics provider announced a $137 million investment plan to service the U.S. domestic and cross-border e-commerce market.
DHL is staking its new claim in the exploding e-commerce B2C market. Cross-border shipments in B2C are expected to grow from $400 billion today to a total global volume of $1 trillion in 2020. Since U.S. online merchants take the leading role in selling internationally, DHL eCommerce will make substantial investments in the United States in the next years and expand its capabilities to serve businesses selling abroad significantly, the company said.
DHL’s first foray into the Americas wasn’t successful. In 2003 it acquired U.S.-based Airborne to compete with FedEx and UPS; by 2008 DHL had taken a restructuring charge of $9.6 billion. The company has since focused on foreign shipments in the U.S.
DHL seems to be banking on the volumes of packages generated by e-commerce. “There is barely any other industry that provides such a promising outlook than the e-commerce business. It is expected that one billion people will shop online and across borders by 2020 with the U.S. being the most popular origin for 25 percent of consumers worldwide. With our investments we lay the foundation to expand our leading role in cross-border e-commerce logistics, serve our U.S. customers with the best possible infrastructure and solutions, and gain future market shares,” said Charles Brewer, CEO DHL eCommerce, in a release.
DHL eCommerce is looking to profit from these developments and to increase its e-commerce footprint in the United States. After the first order fulfillment center opened in Columbus, Ohio, last year and followed by a facility in Los Angeles, DHL eCommerce will establish further regional centers of this kind in New Jersey and other locations in 2017. DHL Express also opened a new, $1.3 million service center facility in Chicago to meet heavy demand from e-commerce customers; and one year ago DHL Global Forwarding opened up a $35 million distribution center in Chicago.
Today’s global B2C cross-border e-commerce market comprises approximately $400 billion and is expected to expand rapidly. Emerging markets are going to fuel the estimated annual growth rate of 28 percent, followed by Western Europe and North America. Thanks to China’s growing middle class, which will reach 630 million people by 2022, most of the purchasing power will come from Asia-Pacific and equal about 48 percent of the total volume, according to DHL. Research shows that consumers increasingly buy products online that are either unavailable or too expensive in their home country. The biggest share of these cross-border purchases will revert back to U.S. e-commerce businesses, among other reasons because consumers covet products tagged with the “Made in the U.S.” label. DHL is looking to benefit from these developments and increase its e-commerce footprint in the United States.
The planned expenditure of $137 million until the end of 2020 will be used for the further expansion of fulfillment capabilities by adding eight distribution centers and enhancing two existing facilities in Los Angeles and Columbus, Ohio. The new investment will also expand day definite deliveries and enhancements to support domestic and international services. “We provide the most comprehensive e-commerce platform for international trading ventures, thanks to our different divisions’ expertise along the entire supply chain, whether it is warehousing or transportation. For consumers shopping abroad, and also for businesses, it is of utmost importance that international deliveries are reliable, safe and convenient. We provide that with our network every day in every way,” Brewer continued.
In North America, DHL operates 20 distribution centers, including four international gateways and one center each in Toronto and Mexico City. Further facilities in Latin America are to follow next year. In the U.S., DHL eCommerce operates 18 distribution centers and is one of the largest partners of domestic provider USPS.
