Head of Consumer & Retail, Fashion and E-Commerce for Europe at DHL Express, Assia Belkhodja is at the helm of the express delivery provider’s luxury business. She talks to Luxe Packaging Insight about how the pandemic has been a boon to DHL’s business and what measures it is putting into place to be a more sustainable operation.
What trends are you seeing in the luxury realm from your perspective as a transport specialist?
E-commerce is of course a major issue. Online shopping has long been a subject that we pushed with our clients as we have seen for a few years now that the channel was becoming paramount, especially in fashion. Luxury brands, however, took a much more cautious approach, which is natural given their attention to detail and need for customer experience. Needless to say, replicating those aspects in the delivery experience is a real challenge.
Today, in the context of the pandemic, online shopping has clearly become a priority for these brands. Pre-Covid there were a lot of discussions and brainstorming sessions, but since the pandemic, things have gone into acceleration mode. Brands that were extremely reticent to sell online have either already launched their e-commerce operations or are in the last stages of fine-tuning. Yet luxury brands, especially the major players, are going beyond e-commerce to take a much more omni-channel approach. And as a transport logistics expert, we are a critical part of that supply chain.
Given the significant increase in online sales, has the crisis been an opportunity for DHL?
As an international express carrier, we can’t deny that the crisis has had a positive impact on our business. The volume of packages that transit through our networks are huge, so much so that we have been challenged when it comes to absorbing the quantities, while maintaining the same lead times for our clients. Currently, 60% of our Fashion segment business is in e-commerce, versus just 30% before the crisis. It’s difficult to foresee if e-commerce will stay as strong as today, but clearly the consumer adopted certain shopping habits during the pandemic, and those are likely to persist.
In the luxury arena, the crisis has boosted our activity in deliveries to the end consumer, but also the transport needs linked to the sourcing business and the shipping of materials, prototypes and other items that they entail. While e-commerce and omni-channel is the big trend, we mustn’t forget the work that is done upstream regarding product conception, where express services are key in assuring the early stages of production and distribution.
Brands also have to integrate the sustainability question into their e-commerce strategy.
Indeed, it’s about the client experience coupled with their sustainability expectations. This makes it an even more challenging topic for a luxury brand as opposed to a less premium player.
Our clients are very concerned about the initiatives their carriers are putting into place and how they can obtain visibility on their carbon footprint. At DHL we provide information on their CO2 emissions that we share with them on a regular basis as well as insetting and offsetting actions.
How do you reconcile sustainability and express transport’s carbon footprint?
We launched our Go Green service in 2008, which remains the cornerstone of our strategy and our aim is to have zero carbon emissions logistics by 2050, which is an extremely ambitious target.
This will include investing €7bn through 2030 to reduce our greenhouse gas emissions to under 29MT and thereby commit to the Science-Based Targets initiative.
What will these investments entail?
We aim to use more than 30% Sustainable Aviation Fuel blend by 2030 in our DHL EXPRESS and DHL Global Forwarding businesses and electrify around 60% of our last mile delivery vehicles also by 2030. Carbon neutral design will be applied on all new DHL constructions, while the remaining CO2 will be neutralized. We will also offer green alternatives for all our core products/solutions.
Traditionally our luxury clients were more comfortable with air transport versus road, which is more at risk of crime and theft. But when you look at the risk/benefit by taking into account sustainability demands, luxury brands are looking to find the right compromise.
In a bid to lower the impact of DHL’s air freight, you’ve launched a sustainable aviation fuel program (SAF).
Yes, given that in an express model, flying is our transport of choice, we have had to find alternative ways to compensate, and SAF is one of these (editor’s note: SAF is fuel made from sustainable feedstocks or solid waste). Our clients will soon be able to opt in for a Sustainable Aviation Fuel service, which, needless to say, will come at a cost. It allows us to gauge our clients’ environmental commitments.
Which sectors are ready to invest in the SAF option?
It’s early days yet. We’ve shared the option with certain clients, and it appears that the fashion and luxury sectors could be interested in this technology.
How does packaging fit into your strategy?
While as a transporter packaging is not our core business, we must take it into account, both in terms of quality and how products are packed, as it’s an integral part of the consumer and sales experience — notably in luxury.
We are currently working on developing packaging solutions for e-commerce that would be reusable. There are economies of scale to be had here and the sustainable advantages are clear.
However, this kind of solution would require the end-consumer to be present for the delivery, which is not always the case. Brands need to put their different priorities into play: sustainability, security, speed and convenience. Our job is to work on solutions to help brands fine-tune the consumer experience and the durability of their product.