DHL survey examines global issues and challenges impacting SME shippers

A new survey issued by global logistics and express delivery provider DHL takes an in-depth look at how global issues and challenges are impacting small and medium-sized enterprises (SME). Entitled the “DHL 2022 Mid-Year SME Survey,” the survey’s findings are based on feedback from more than 4,000 United States-based SMEs, including DHL customers.

Greg Hewitt, CEO of DHL Express U.S, told Logistics Management that the company’s goal in conducting the survey was based on how DHL recognizes it has very strong and good relationships with its largest customers, at a country and C-executive level through its sales organization.

“We have done a lot of work surveying and gathering information from those customers on how Covid and supply challenges, or turmoil, was impacting them and also the workforce, or ‘Great Resignation,’ and inflation [and other things] were as well,” he said. “We had great information, we felt, from our big customers that do drive a large part of our business. What we wanted to do with this survey is say ‘is it different for SME and are they seeing things differently and they facing maybe different challenges that we are not appreciating?’”

What’s more, Hewitt added that the idea, or sprit, behind the survey was making sure DHL was there to make sure it is there to support its SME customers and their challenges. And he added that in looking through the survey’s findings he was not “shocked” by the findings, calling them fairly consistent with the same challenges big companies are facing.

Survey’s findings: A major takeaway highlighted in the survey’s findings was that 61% of respondents indicated that supply chain delays are expected to be their biggest challenge for the remainder of the year, up from 54% a year ago.

As for the root causes of these challenges, 42% of respondents pointed to logistics costs, 32% noted product availability, 15% said Customs compliance, and 11% cited varying laws in international markets. And, to overcomes these challenges, the survey found that 37% of respondents have placed an emphasis on making new international business contacts—in the form of manufacturers and distributors, among others—to help SME conduct business and ship product more efficiently.

“The original pinch in Covid around the supply chain was that as travel reduced dramatically and the number of commercial flights between the U.S. and Asia and Asia and Europe dramatically reduced,” he said. “Most of our customers would always be on planes flying to China to do tours of warehouses and factories. This was part of the economy, and those flights carried a large amount of cargo. What we haven’t seen is—and this is part of the product of how China is approaching Covid versus the Western world—still requiring massive quarantine lockdowns and shutdowns, which you have not seen come back.”

Taking that a step further, Hewitt explained that passenger air travel has not come back to China at a level where there is enough capacity and capability in the air to alleviate the pressure on fixed networks and the large air cargo carriers, in turn keeping the price point per kilo at a very high level. He also observed that the Russia-Ukraine conflict has had a big impact on oil and fuel prices, bringing added pressure to SME, with companies like DHL passing through those increases in fuel surcharges, which are much higher, and putting more cost pressures on them.

Another change, from 2021 to 2022, Hewitt observed, is that in 2021 the constraint around both air and, at that time, on the ocean, coming out of the Suez Canal crisis and some of the challenges in the ports, there was a real lack of capacity on the ocean, which, while somewhat better now, is not back to normal and easy.

“It was like product was staged and ready to come to us,” said Hewitt. “It just needed an avenue. So, for us, when we added at 12% capacity in air last year, I felt very good going into Peak Season. We were going to give great service, which we did, but people said they were hearing a different story from [shippers] being worried about Peak, because they did not want us to carry 12%, they wanted me to take 20% or 30% growth. We just limited the capacity, because they have product to move. What we are seeing now is that this has hit production harder this time. With Shanghai opening up now off of some of the Covid restrictions, we would have historically seen a flood of volume come to us right away, just sitting on the warehouse dock, waiting for us to say we could pick it up, and we have not seen that in May.”

With things coming back more slowly, Hewitt observed that serves as an indication that it has hit the supply chain further down, with logistics costs still too high at 42%, in the survey and 32% pointing to product availability. That shows how the production side has been hit harder in 2022.

Another key survey finding was that 65% of SME respondents said that they are planning earlier for the holidays, due to expected supply chain delays. It also found that: 31% of respondents are planning 1-to-3 months earlier than they would in a typical year without supply chain concerns; 23% are planning 4-to-7 months earlier; and 11% are planning 8-to-12 months earlier.

Hewitt viewed the 65% figure as a little reactive and a little bit of lessons learned over the last couple of years that if shippers are not planning early and do not align and make sure they have the capacity and capability needed, they could find themselves left out in the fourth quarter.

“One of the things we did effectively last year was communicate that we were adding capacity and capability on the ground, in terms of the number of routes, agents, clearance staff, and call center staff,” he said. “We were boosting up by expanding and creating some NCY (for non conveyable or larger shipments that don’t fit nicely on DHL’s conveyor belt systems) facilities in Los Angeles, New York, and Cincinnati that would help us to move about 18% more pieces through what is often a choke point with the hub and gateway network. And we added about 12% lift to be able to accommodate it. We communicated that and said ‘well, here is what it means to you; it means we can probably take a 20% increase from your company and move that effectively. But what that means is you cannot have a peak where you go up 60% or 100% on your normal patterns. If you are planning that, we need to plan for that in advance, so we can allocate you some space and work with you.”

That is something Hewitt said can be done a little bit more effectively with customers with more flexibility in their supply chain and understand their demand and orders a little better, and also put pressure on production to make sure they can deliver it a little more smoothly through a longer period.

“The hard part for the SME group was that they found themselves with, whether it was from DHL or other carriers, limits and controls during peak that made them feel like they could not get everything they could have sold or gotten across in and out. They are saying that they need to look at this and get stuff in earlier so they don’t face those challenges during Peak Season.”

Other key findings from the survey included:

• 50% of respondents said staffing was not a challenge, 38% not impacted by the talent shortage, 18% investing in robotics and new tech, 17% investing in an online presence versus brick and mortar, and nearly one-third having invested in employee perks/bonuses;
• 42% have experienced changes in their international sales due to inflation, with 26% seeing a decrease on international sales as a result of inflation, with 16% seeing an increase; and 30% of respondents impacted by inflation; and
• 42% of respondents saying that they will never accept digital currency as a form of payment, whereas 11% are accepting it, 24% plan to accept it, and 23% plan to accept it in the next 2-to-3 years

To read the complete survey, please click here.