Abstract
This article presents in-depth insights into DHL’s internal and external business environment. The analysis provides information about DHL’s competitive positioning, its core competencies, improvement seeking areas, and overall industry environment in which the firm operates. Strategic management researchers, students, teachers and anyone interested in knowing about DHL can get latest company and industry information by reading this article.
1. Introduction
DHL is one of the world’s most famous logistics firm, serving more than 220 countries around the world. Currently, DHL is navigating through various internal and external challenges.
This SWOT Analysis of DHL presents an evaluation of company’s internal strengths and weaknesses, as well as external opportunities and threats.
2. About DHL Company
| Company name | Dalsey Hillblom Lynn (DHL) |
| Parent company | Deutsche Post DHL Group |
| Founding year | September 25, 1969 |
| Headquarters | Bonn, Germany |
| CEO | John Pearson |
| Industry | Logistics and shipping |
| Number of countries | 220 countries |
| Revenue DHL Group 2022 | $100 billion (15.5% rise from 2021) |
| Net income 2022 | $6.07 billion (5.9% rise from 2021) |
| Market capitalization 2023 | $59.01 billion |
DHL products/services| International express delivery, freight transportation, supply chain solutions, e-commerce solutions, industry solutions, warehouse and distribution services, global mail service, consulting and project management
DHL competitors| United Parcel Services, FedEx, Amazon Logistics
3. DHL SWOT Analysis
3.1. DHL Strengths
3.1.1. Strong financial performance
DHL Group has strong financial health. In 2022, DHL recorded $100 billion revenue (15.5% rise from 2021), and $6.07 billion net income (5.9% rise from 2021). It has $59.01 billion market capitalization.
Following graph shows the consistent growth in DHL revenue from 2006 to 2021:
Source: Statista
3.1.2. Global reach
With +590,000 employees, DHL is present in 220 countries around the world. Strong global reach enables the DHL to accelerate business growth by leveraging opportunities available in emerging economies.
3.1.3. Digital transformation
DHL heavily invests on innovative technologies. In 2022, DHL invested $150 million on warehouse robots, and plans to invest $15 million further on warehouse automation.
DHL express is investing $2.25 billion on digital transformation to drive the efficiency and increase productivity.
3.1.4. Well-diverse portfolio
DHL has a well-diverse portfolio with strong growth:
Source: Statista
Portfolio diversification saves the DHL from market volatility.
3.1.5. Strong market position
In 2022, DHL achieved 12th rank in list of top 100 logistics firms. In 2023, DHL was ranked 92nd in list of world’s most valuable brands with strong market position.
3.1.6. Wide logistics network
With DHL express service, company picks up and delivers customers’ urgent parcels and documents around the world. DHL express network comprises 320 aircrafts with more than 2,300 daily flights, and serves +3 million customers.
3.1.7. Strong CSR performance
DHL earns above average ESG (environmental, social and governance) score, as depicted in following graph:
Source: CSR Hub
3.1.8. Sustainable business practices
• In 2019, DHL deployed 30 trucks with rooftop solar mats, which reduced the fuel consumption by 5%.
• In 2022, the company deployed 67 more solar panels to limit carbon emission, and save fuel costs.
• By 2030, DHL aim to triple its electric vans, reaching 80,000 EV fleet size.
• Currently, DHL’s EVs make 18% of overall company fleet.
3.1.9. Unique value proposition
DHL business model offers unique selling proposition to its customers. DHL USP includes – bulk shipments, fast, reliable and customized services, with strong network around the world.
3.2. DHL Weaknesses
3.2.1. Stagnant growth in ecommerce
DHL ecommerce revenue remains high, but has become stagnant, as shown in following graph:
Source: ecommerce DB
3.2.2. Complex supply chain
Supply chain complexity is one of the key challenges faced by DHL. Although, a vast supply chain is DHL’s key strength, managing huge supply chain involves complex regulatory issues. It also increases the company’s vulnerability to external disruptions.
In 2021, Suez Canal blockage disrupted the DHL’s supply chain operations. Read full story here.
3.2.3. Driver shortage
DHL is currently dealing with the driver shortage issue. Although, the company is trying to compensate the driver shortage with teleoperation; but the issue still persists, and seeks management attention.
3.2.4. Employee unionization
A report by Guardian revealed that workers at DHL are unionizing to protest against low pay packages and unsafe work conditions. As of 2023, DHL employs 3,000 workers in its CVG global hub, out of which, 900 workers are seeking to form the union.
3.2.5. Capacity constraints
A report by Reuters mentioned that despite handling more than 8 million parcels a day, DHL is failing to cope with the growing demand due to capacity constraints.
3.2.6. Slow pandemic recovery
DHL’s head of freight forwarding unit said that its supply chain may not recover to the pre-pandemic level in 2023, as conditions are slowly improving, and recovery will take more time than anticipated- Bloomberg reports.
3.3. DHL Opportunities
3.3.1. Re-globalization trend
As per World Economic Forum, DHL global connectedness index signals resilient global flows. This resilience can serve as a foundation for ‘re-globalization’, as depicted in following graph:
Source: World Economic Forum
The re-globalization can benefit DHL by accelerating international trade.
3.3.2. Automated and digitized warehousing
Automation and warehouse market will expand from $29.6 billion (2020) to $69 billion (2025):
Source: Parcel and Post technology
It will directly benefit the logistics industry. DHL is already investing on automation and robotics, and can further capture this trend to boost the revenue and reduce warehousing costs.
3.3.3. Last mile delivery market
Technological innovations like last-mile delivery solutions are revolutionizing the logistics industry, as depicted in following graph:
Source: PR Newswire
Investment on last mile delivery solutions can increase customer satisfaction, and bring flexibility and operational efficiencies to DHL.
In 2021, DHL partnered with Fiat Professional to electrify its last-mile delivery.
3.3.4. Drone deliveries
Drone delivery trend is on rise in the global logistics industry:
Source: Statista
DHL is already investing on the drone technology, and intends to make drones a key aspect of company’s future logistics network.
3.3.5. Digital twins
The rise of digital twin technology is bringing transformational changes in global logistics and transportation industry. From 2023 to 2028, the global digital twin market will grow with 61.3% CAGR:
Source: Markets and Markets.com
Following graph shows the use cases of digital twin technology from 2021 to 2027:
Source: KBV Research.com
In a recent report, DHL shared its plans of investing on the digital twins technology to optimize the logistics operations.
3.3.6. Sustainable logistics
Due to consumers’ growing sustainability concerns, global sustainable/green logistics market will grow with 6.1% CAGR from 2021 to 2030:
Source: Facts and Factors
DHL is already capturing this opportunity by expanding the green logistics fleet (see section 3.1.8)
3.3.7. Ecommerce boom
Pandemic has accelerated the e-commerce growth. Positive ecommerce growth projections (as shown in below graph) offer exciting growth opportunities to logistics industry:
Source: Lich-fields
3.4. DHL Threats
3.4.1. Pessimist economic indicators
The Russia-Ukraine war has affected the European economy. European macroeconomic indicators present a pessimistic look, recording only 3.5% GDP growth, and 10% inflation. The skyrocketing inflation is increasing the risk of economic recession.
In economic recession, DHL could face reduced demand due to decreased spending, and cutback in supply chain activities.
3.4.2. Declined production
Declined production is the direct result of high inflation. The production decline has affected the European road freight market, as depicted in following graph:
Source: DHL Freight
The production decline directly affects the DHL freight revenue.
3.4.3. Intense competition from online players
E-commerce boom has attracted many new market players that intensified the competition in global logistics industry. For instance, online players like Amazon are building their own logistics infrastructure, which can directly hit the DHL.
3.4.4. Small courier companies
There is an influx of small courier companies that are stealing market share from big players like DHL.
3.4.5. Growing port congestion
Growing port congestion has become a major issue in logistics and transportation industry. A report by CNBC revealed that other than operational inefficiencies and driver shortage, port congestion is a major problem for logistics firms.
3.4.6. Cyber-attacks
Logistics and transportation is the 7th most targeted industry by cyberattacks:
Source: OTEEMO
Alike other market players, DHL is vulnerable to the cyber-attacks, making security a key business concern.
4. Recommendations
Based on SWOT analysis of DHL, the article proposes following recommendations:
• Expand strategic partnerships to strengthen presence in ecommerce logistics industry
• Resolve workers’ issues by addressing their concerns
• Expand capacity by investing on emerging digital technologies
• Invest more on digital twins, drone delivery and last mile delivery solutions
• Expand EV fleet to accelerate the green logistics efforts
• Invest on robotics and automation to reduce dependence on drivers
• Improve cyber security to reduce vulnerability to cyber-attacks
5. Conclusion
To sum up, DHL has strong logistics network. While company faces challenges like competition, cyber-security, and economic situation, it has opportunities in ecommerce, sustainability and technological innovation. DHL can maintain strong leadership position by leveraging strengths, addressing weaknesses, capturing available opportunities, and mitigating threats.
