German express delivery firm DHL Express has continued to grow its business in spite of economic woes in the euro zone. Chief executive Ken Allen tells Claire Valdini why his services could be the key to solving the economic downturn
Ken Allen has a hidden talent. In addition to managing one of the world’s most international companies, the German express delivery firm DHL Express, he is also a bit of a closet singer.
His rendition of the hit classic ‘Ain’t No Mountain High Enough’, used in the firm’s 2011 advertising campaign, might not be quite as good as the Marvin Gaye version but it certainly emphasises his point about investing in brand awareness.
“We invest heavily in our brand,” he explains. “The reason why we do the brand advertising — the deal with Manchester United [for example] — is really so the small to medium sized companies see our name and when they need to import or export, they call us first.”
It is a strategy that appears to be working. The division of Europe’s biggest mail and express delivery group, Deutsche Post DHL, posted revenues of 11.8bn ($14.7bn), a rise of 5.9 percent compared to the previous year, in spite of severe economic conditions.
Coming from a firm that is widely regarded as a bellwether of the global economy, Allen says the current economic outlook is brighter than most newspaper headlines would have you believe. “It’s really hard at the moment to try and cut through all on the doom and gloom you read about in the newspapers every day versus what actual companies are reporting,” he says.
“With a lot of our customers, the general reaction at the moment is that they are not too worried about 2012 because we are already six or seven months into the year, but don’t ask about 2013 because they just don’t know what is going to happen.”
In spite of the uncertainty in the euro zone and the gloomy economic backdrop in the US, DHL has continued to grow its business amid resilient expansion in Asia and increased demand for express delivery services globally. Parent company Deutsche Post said in May that first-quarter net profit had jumped by two thirds to 533m ($664.43m), exceeding analysts’ expectations. Revenue during the same period at DHL Express increased 7.5-8 percent.
“We are still seeing good growth in Asia, with the exception of the tech sector,” finance chief Larry Rosen said. “Things are a bit different than for our competitors because we have a broad network with which we benefit from intra-Asian trade,” he added.
In addition to rising demand in Asia, Allen says many small-to-medium-sized enterprises in Europe and the Middle East are keen to expand their business abroad. “What seems to be happening at the moment is that a lot of the small-to-medium-sized business in the Middle East and China are now looking to export to new markets,” he explains.
“We are also seeing a lot of European companies… starting to export more to get out of the current issues they are in. Spain, for example, is doing exceptionally well — mostly from Spain to Asia and a little bit to the Middle East.”
“I honestly believe that the way out of this [economic] mess is [through international trade]. The world has got so much better over the last years, especially since World War II, through international trade. It’s the greatest thing that we can do, it opens up so many markets and so many opportunities and it’s a massive driver of wealth creation, innovation and opportunity and that’s why we feel quite proud to be part of it. If you are a small business sometimes it’s really hard to think about how to get something into or out of India or China or Brazil so that’s a lot of what we are trying to do,” he adds.
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