May 20, 2014 1:00 pm JST

Emerging markets to deliver 30% of sales at Deutsche Post by 2020

TAKAYUKI KATO, Nikkei staff writer

FRANKFURT, Germany -- Deutsche Post is stepping up efforts to bolster its logistics services in emerging countries, with the goal of generating 30% of its sales in such markets in 2020.

     The major global mail and logistics service provider aims to achieve the goal by focusing on shipments of electronics parts and door-to-door parcel deliveries of online store purchases. Emerging countries accounted for 22% of the company's sales in 2013.

     Deutsche Post began rail cargo transportation between Poland and China in May last year. The service connects the central Polish city of Lodz, a key European transshipment hub, with Chengdu in China's Sichuan Province, via the eastern Polish village of Malaszewice.

     The company plans to begin offering an initially small temperature controlled transportation service on the rail link shortly, with the plan to expand it to full-scale operations by the end of year. This service will make sure payloads are kept between minus 25 C and 25 C throughout the year to satisfy the needs of customers shipping goods such as electronics parts.

     Cargo movements between Europe and China have been increasing, partly because European automakers have been ramping up production in China. This has boosted demand for land cargo transportation, but wild temperature fluctuations during the journey could undermine the quality of some goods. Deutsche Post's new service will address this problem.

     In India, the company has set up a distribution center that specializes in pharmaceutical products in Mumbai, with an eye toward meeting the demand from generic drug makers and other companies there. This has boosted Deutsche Post's ability to ship pharmaceutical products to the U.S. and European markets by air.

     Blue Dart Express, a group company and the No. 1 logistic service provider in India, is expected to help Deutsche Post expand operations in the South Asian country, as well as in other strategic markets.

     Another key piece of the company's business growth strategy is to beef up its small-lot distribution services to tap the continuing growth of e-commerce businesses. Its DHL brand door-to-door parcel delivery services generate roughly 23% of Deutsche Post's overall sales today. The company estimates markets for such services will expand by 11% a year in emerging countries between 2011 and 2020, outpacing the 7% growth forecast for Europe and other industrialized countries.

     Deutsche Post is also gearing up to scoop up demand stemming from the increasing popularity of online shopping in emerging countries. The company's goal in this business field is to become the world's No. 1 logistics service company for the e-commerce service sector , CEO Frank Appel said.

     Deutsche Post's sales fell 1% on the year in 2013 to 55.1 billion euros ($75.5 billion). But operating profit climbed 7% to 2.86 billion euros.