DHL Outlines Its 2030 Goals

September 26, 2024

Author: Thomas Cullen

The DHL Group remains the largest logistics service provider. However, compared to when it was founded in 1995, its market has undergone significant changes. In 2024, DHL faces competition from expanded container shipping companies and diversified freight forwarders. Although traditional express competitors remain one of its biggest rivals, Amazon has also become a major player in e-commerce logistics services.

DHL’s strategy is undergoing necessary adjustments. In its recently released “2030 Strategy – Accelerating Sustainable Growth,” DHL outlines its growth plans for the next five years and the pace at which it aims to grow.

One of DHL Group’s key features is its continued plan for stock buybacks and generous 5% dividends. This strongly suggests that DHL can generate substantial cash even while maintaining reasonable levels of capital investment. In fact, DHL remains sensitive about over-investing in capital assets. The company states it will continue with moderate acquisitions but seems uninterested in transformative purchases akin to DSV’s recent acquisition of Schenker. Instead, DHL emphasizes its commitment to “return on capital invested” as a strategic metric.

The growth expectations for DHL’s various businesses reflect the company’s sense of maturity. DHL Express may be one of the most valuable segments, yet it only anticipates profit growth that will “outpace volume growth,” with volumes expected at 4-5%. However, its target is to achieve a “mid-teens” margin.

The global freight business is projected to outperform the overall freight forwarding market trend. DHL expects the freight forwarding market to grow in line with global GDP at 2.5-3%. The ‘Supply Chain’ contract logistics segment anticipates average growth of 4-6% for the global contract logistics market and aims to surpass this level, which would be impressive given that DHL Supply Chain is targeting an industry-leading EBIT margin of 6-7%.

The e-commerce sector differs. DHL seeks active investment in this market, which shows “strong growth rates of 6-8% — geographically quite heterogeneous.” In terms of profitability, DHL eCommerce expects “EBIT margins to stabilize at 4-5% during the investment phase (up until 2025); followed by margin expansion to >5%.” In contrast, discussions around Deutsche Post’s parcel business revolve more around “stability,” as the aging Deutsche Post continues to face challenges in transformation.

The goal of the “2030 Strategy” is for revenue in 2030 to be 50% higher than in 2023. However, a deeper analysis reveals that DHL appears to be a group equally focused on stability and profit growth. In today’s market, achieving the former may prove more challenging than the latter.

Source: Ti Insight

Author: Thomas Cullen

Source Website: Transport Intelligence