DHL raises parcel prices for customers across the board

Dive Brief:

DHL said it has increased parcel prices across all segments of customers. The company double downed on its decision to increase underlying prices for parcel, versus relying primarily on surcharges as it has done in the past. Prices will vary by country, Chief Financial Officer Melanie Kreis said in an earnings call this week.
Rates for airfreight normalized for the Europe-China trade lane, but are still "above the prior-year level on most trade lanes," according to the company's quarterly statement. Although airfreight volume continues to be down for the year, airfreight revenue increased by 22% YoY in Q3.
DHL's Supply Chain division added additional contracts worth 407 million euro ($481 million) in Q3, primarily as retail and healthcare shippers seek supply chain partners and solutions.

Dive Insight:

The continued surge in e-commerce and strain on capacity is keeping airfreight rates high, while carriers see growth in revenue and look to create new price structures for the coming year. Most shippers saw increased prices, and rates are expected to remain elevated.

DHL's third quarter earnings report comes on the heels of an October press release that announced the company's expectation of a 50% increase in inbound volume to the Americas this peak season, compared to last year.

"What's driving the business? Obviously, e-commerce," Martin Ziegenbalg, head of investor relations, said in a DHL Q3 2020 results wrap-up video. He added that e-commerce is the single largest industry vertical this year, and it is providing profitable growth.

And while it has helped DHL's bottom line, these historic high rates have pushed shippers to look for alternatives, many turning to local carriers in order to find lower rates in getting their products to market.

FedEx has claimed that it is protecting small shippers from surcharges, hoping to pass costs along in other ways.

DHL is not following suit and has raised pricing across the board. "We have increased prices, not only for small customers, but also for midsized and larger customers," Kreis said. DHL plans to regularly review pricing in parcel to adjust base prices and "not to work so much via surcharges," Kreis said.

UPS and FedEx also noted strong growth in their recent earnings reports — all crediting the precipitous increase in e-commerce this year for revenue growth. And as limited capacity continues to push up rates, peak season volume and the approval of a COVID-19 vaccine could further cramp capacity, leaving no respite in sight for shippers.