Deutsche Post DHL has taken another step in developing its cross-border business, this time in partnership with Austrian Post, with interesting implications for parcel delivery in Slovakia and the Czech Republic.
The German delivery giant has its own European cross-border network, called DHL Parcel Connect. While most core European markets are served directly by DHL Parcel companies, several markets are managed by partners. In Croatia, for example, DHL parcels for Croatian addresses are delivered by Croatian Post, while in the Baltics its partner is Itella.
More recently, Deutsche Post DHL and Austrian Post entered into a long-term partnership whereby Austrian Post will deliver DHL parcels in Austria; this marks a dramatic change from prior attempts by the German parcel giant to enter the Austrian market in direct competition to Austrian Post.
Building on that relationship with the Austrian postal operator, the two former competitors will collaborate in last-mile parcel delivery in Slovakia and the Czech Republic.
Under the agreement, In Time s.r.o., a subsidiary of Austrian Post, will deliver parcels sent by DHL customers to Slovakia, while Deutsche Post DHL Group’s Czech subsidiary, PPL CZ s.r.o., will deliver parcels sent by Austrian Post customers to the Czech Republic.
“With e-commerce on the rise and growing parcel volumes, high quality and best-in-class customer experience in last-mile-delivery becomes increasingly a key differentiator and with this cooperation we will lay the right foundation for this,” said Petr Horak, managing director PPL CZ s.r.o. & DHL Parcel Slovensko.
Deutsche Post adds that the collaboration will allow both parties to create further profitable growth and tap the potential of the growing cross-border e-commerce business.
It stresses that the agreement has no impact on the business activities of DHL Express, DHL Global Forwarding, Freight and DHL Supply Chain in Slovakia and Czech Republic.
“We are confident that we will be able to convince the DHL customers thanks to our quality in last-mile delivery and are pleased to have found a professional partner in the Czech Republic for our growing cross-border e-commerce business,” added Carsten Wallmann, SVP Turkey and Central, Eastern Europe Parcel, Austrian Post.
There are a few interesting elements to this story. First and foremost, Austrian Post (via its Slovak Parcel Service subsidiary) is the UPS franchisee for Slovakia… and holds a very strong market position. Working with two integrators in one territory simultaneously is a new one for us. Secondly, Deutsche Post only just set up its Slovak parcel service (in 2015).
Thirdly, there’s the question of ownership. In Time’s Czech operations seem destined for a change in shareholder, which may have influenced the decision to use Deutsche Post DHL’s Czech subsidiary for inbound cross-border deliveries in the Czech Republic.
While this move would probably make sense for both parties on a short-term profit basis, it seems to represent a new tack at DHL and we would assume that it is one of Ken Allen’s first strategic decisions. The move will, we imagine, effectively cease DHL Parcel’s own activities in Slovakia but give new ‘Austro-Slovak’ parcels to the Czech PPL business. This would seem to suggest retrenchment by DP/DHL and a focus on short-term profitability as opposed to expansion.
It will be interesting to see how this develops and we cannot imagine that UPS will be happy to hear that its arch rival has just become a strategic partner of its own partner in Slovakia. Moreover, PPL has experienced some loss of direction in recent years and one may question whether this windfall gain will be the solution for their problems.
Let’s see if this also leads to a more asset light strategy by DP/DHL in non-core markets, or whether this is part of a much more aggressive (and more complicated) plan to tie up with Austrian Post. Those of us who remember Ken Allen’s time at DHL Express can only anticipate that this will happen – and fast. Is this the right way forward? We aren’t sure at this stage, but it will certainly liven things up in this already vibrant sector.
Ian Kerr is the founder and host of the Postal Hub Podcast, the weekly podcast for the postal and delivery sectors.
Marek Różycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory.
Ian Kerr will moderate the conference workshops PUDOs & Lockers: the New Power in the Last Mile and Social Media & Communications at Parcel+Post Expo Conference 2019. Marek Różyck will moderate the panel Intelligent Self-Service Solutions and the PUDOs & Lockers: the New Power in the Last Mile workshop.