The scenario could not be more unstable: Donald Trump has started a trade war this year with still uncertain consequences, the price of oil has been in a constant slumber since tensions erupted in the Middle East, the world is still dealing with the consequences of the war in Ukraine or the shock of the pandemic that turned online shopping upside down. And despite all this, the Dutchman Oscar de Bok (1967), Global CEO of DHL Supply Chain, the world's largest logistics operator, is deeply optimistic. Any geopolitical tension eventually impacts their business in some way, making it increasingly complex, but De Bok explains to Actualidad Económica that it is precisely in the most difficult circumstances, when the tide rises the most, that they can provide the most value to their customers. "I love complexity," he confesses.
How are all these geopolitical tensions affecting DHL?
There are two key elements. In the last five years, it has been constant to experience something unexpected around the corner, always with a common element: everything has had an effect on logistics. It has been incredible. So, we have had to make some changes.
What changes?
It has made us, both us and our clients and the sector, much more agile and flexible to respond to these situations. The speed at which we can now adapt and act is much greater than five or six years ago.
Do you get used to uncertainty?
Exactly. One gets used to it, but it also means that you need to be constantly reading, not so much about politics itself, but about its impact on the supply chain and, consequently, what that means for our clients and how we can help them. Because these things happen immediately.
Is there a before and after the 'Day of Liberation'?
When the so-called Day of Liberation arrived and tariffs began, we immediately had major clients who started thinking: "I have production in China and the Middle East. What if I start sending what I produce in the Middle East to the US and what I produce in China to the Middle East?" That has a drastic impact on logistics. It is a smart idea to avoid some of the imposed tariffs. It's just an example, but these kinds of things happen continuously.
How agile can a shift like this be?
For a company to do that, it needs to change its supply chain and needs different solutions. For example, there is now a high demand for customs warehouses...
Excuse me, what are customs warehouses?
These are warehouses that are under customs control and allow delaying the payment of tariffs. There is now a high demand in that area, and we have to see how we expand and extend our licenses of this type.
Is there congestion at customs?
An example that made the news and had a great impact was when the US eliminated the de minimis threshold. They raised it from $800 to $2,000, but at the same time, they eliminated the simplified process that existed. That meant that for all those shipments, we had to make customs declarations piece by piece, including the final recipient's tax number, which was impossible to handle.
You had to stop shipments...
Yes. We had to stop shipments because it was not viable. Then the authorities reversed course, and everything started flowing again. It is a good example of how every small change shows that logistics is right at the center of everything that is happening.
Do you think that the trade war between the US, China, and the EU is benefiting other regions? I ask because you have just announced a significant investment package in the Middle East...
Yes, it is. We manage a commercial radar, where we measure -we do it together with a university in New York- global trade flows. And the interesting thing observed is that global trade continues to grow, although its flows are changing. There is an increase towards Latin America and Southeast Asia. So yes, it is having an impact and changing global flows.
How wounded is globalization?
Global trade is like water, it always finds its way. It takes time, but it finds its way and changes supply chains. And that makes our business very exciting. We love complexity: the more complex, the more value we can add.
Now, with the crisis due to the incursion in Iran and its impact on oil, do you rule out a short or medium-term horizon without instability?
Instability will not disappear. There will always be something new around the corner. A compromise can be reached on one issue, but then another problem will arise. This is what we see in conversations with our clients: supply chains must be organized in such a way that they never depend on a single scenario. And this had already started before all the trade war.
With the pandemic?Yes, it started with Covid, when everyone began to realize that depending on a single point of origin for your key components does not work.Then talk began about reshoring, but isn't that scenario also outdated today?We started talking about reshoring with the pandemic, but today we talk about omnishoring because it is necessary to source from more than one point and from more than one continent. If you completely depend on a single continent... There is an example, not pleasant, but illustrative: when the war in Ukraine started, there were automotive companies that were getting all their cables from Ukraine, and suddenly all their factories worldwide had problems. It was a great lesson: you can't do that, and you have to change your sources of supply.
DHL seems to have focused on the pharmaceutical sector as a pillar of growth: you have announced an investment of over 2,000 million, created a specific brand, acquired companies...
It is a very good example of a supply chain in full transition regardless of the political agenda.
What has changed in this sector to modify its supply flow?
Simplifying, in the old healthcare supply chain, you had over-the-counter medicines and prescription medicines, and those medicines went to the pharmacy, which was in a hospital. Some medicines required temperature control, others did not. And that was the supply chain. Now, the sector is rapidly evolving towards specific treatments for each patient. For example, if you take cell and gene therapy, it only works for you and not for me because they are your cells. That means that the supply chain changes drastically. It is more expensive, very sensitive, temperature control is super important, and it does not allow any mistakes. You cannot mix, you cannot miss the deadline, or fail. So, that entire supply chain is evolving rapidly. We have made some acquisitions in the sector because we want to ensure that we cover certain capability gaps so that we can really help our clients navigate that transition. Because what happens with a transition is that we all know where it is going, but no one knows how fast it will get there.
In what other sectors, besides health, are you bolstering your growth?
The other major sector is, obviously, e-commerce. Because we almost forget, but not long ago -probably in 2019- e-commerce was only a fraction of what it is today. The older generation, if I take my own parents as an example, who now buy everything online, didn't even know how to do it.
How far will it continue to grow?
It has evolved enormously and with that has created a great deal of complexity in supply chains. There are no wholesalers, resellers, distributors, or physical stores. All those points of sale that used to absorb seasonal demand peaks no longer exist. Now you have fulfillment centers and then directly to the consumer. So, there are many more fluctuations in supply chains. Complexity and seasonality have evolved enormously. So, e-commerce is a huge growth engine for us, both in B2C and B2B.
And how is the issue of returns evolving? Aren't they a headache for the sector?
Yes. The flow of returns has grown enormously. In fact, we have made another acquisition related to this because, yes, it is a headache for the sector. It responds to people's behavior. I don't do it, but when my daughter orders clothes, she usually orders several sizes and then returns the ones that don't fit her well. Which is... well, it's the same as in a physical store. But it also happens in the B2B part.
For example?
I learned it in the healthcare sector, for repairs of large medical machines. When an engineer goes to do a repair, he requests all the parts he thinks he may need because there is no time to lose since that machine has to be up and running again in a few hours. And then there is a whole flow of returns of the unused parts. So, in B2B, you also see a much higher flow of returns.
You talk about sectors with growth potential, but aren't there others in decline? How is the automotive industry, for example?
There are other sectors that are in transition. For example, the automotive sector, yes. In simple terms, the number of parts in a conventional car is about 100 times greater than the number of parts needed to manufacture an electric vehicle.
And that impacts you directly, of course.
Just that already implies a complete change in the supply chain. Both in the manufacturing and maintenance parts. It also means that the dealership network needs completely different requirements because the repairs are different. And that also impacts how these cars are sold.
Now you see that some brands are on the main streets of cities just to showcase the product, but then the car is ordered online. It is a sector in full transition; on one hand, it still has to provide parts and be able to repair all the vehicles that will be in circulation over the next ten years. And at the same time, it has to compete with the new electric vehicles.
Do they expect less business in the future with them, do I understand?
Actually, after this transition, battery returns and replacements will follow. The entire battery logistics is an interesting supply chain because they are hazardous goods. Used batteries require very specific treatment. So, the entire automotive chain is also in a major transition. The sector's own players are changing.
And technology? It hasn't been long since the great semiconductor crisis...
Yes, another very exciting sector is the technology sector and semiconductors. At DHL, we are very big in semiconductors. They used to be in phones and a bit in cars, but now semiconductors are in everything. A car is basically a computer on wheels. That sector is growing substantially. An average semiconductor crosses about 30 borders before being produced. So, imagine that in today's political agenda... it's another interesting headache.
And what about Spain? How do you see the business here?
We have around 5,000 people here in Spain. And the business grows by 10% each year. For us, it is a really important market with an interesting combination: there is production; at the same time, it has a really important healthcare sector; and it also has a very relevant position in e-commerce. It continues to be a fast-growing business for us.
How did the blackout last April affect you?
It could have happened anywhere.
But it happened in Spain...
The reality is that it was difficult... it was a challenge for us as a company. But we have very solid business continuity plans. We had a very good response in most centers. It's something that is not usually thought about, but when a big problem like this arises, you realize how important it is to have contingency plans, especially in the supply chain.
Sustainability and ecological transition have been sacred goals in recent years for European regulators. Do you perceive a more flexible EU today in this regard in favor of competitiveness?
I understand what you mean. Are we compromising sustainability for competitiveness? I don't think so, although I do have an opinion on the sustainability agenda. I believe that the big answers in that agenda lie in innovation. I see how quickly inventions are advancing and how the cost of sustainable solutions is decreasing: batteries, biofuels, which are now half of what they were two years ago, also the price of wind energy... everything is evolving. And yes, we will have tougher years where we all get nervous, wondering if we will make it or not. But as long as we continue to stimulate and drive companies to progress, even in markets where today it doesn't seem obvious that they will opt for green solutions, it will continue to happen. I am rather optimistic.
Robotization was a revolution in the logistics sector, how is generative AI already impacting?
A lot and quickly. And we have some excellent examples. Right now, we are conducting tests, which have already been successful, robotizing activities such as scheduling shipments. And you might think: "Well, that seems simple." But it actually means that the robot makes the phone call to the store: "Can we deliver on Wednesday at 5:00?" And the person responds: "No, we already have a reservation," and then they have the dialogue until they agree on a date and schedule it. This pilot we have done in North America.
Does it save on personnel?
It may seem that the impact is saving the five employees who used to make those calls, but the real impact is that those calls, which used to take a whole week, are now done in an hour because the robot makes them simultaneously. So, the great benefit is not in replacing people, but in being able to optimize warehouse operations, transportation, and plan much better during the week.
Do you find it difficult to hire?
Not specifically, although there are always challenges when it comes to profiles for certain operations. You are always competing, obviously, in the market, especially where there is a high concentration of labor. The key is to ensure that you are truly a great place to work, a place where young people want to go. And DHL is.