New DHL U.S. CEO on leveraging the strong growth of e-commerce

Greg Hewitt, DHL U.S. CEO, joined Yahoo Finance to discuss leveraging the strong growth of e-commerce.

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SEANA SMITH: Welcome back. Well, international shipping company DHL is out with a new research report. And the results here show that e-commerce will drive electrification. That's going to drive efficiency and eco-friendly materials in supply chains. We want to talk about this report with DHL's US CEO Greg Hewitt.

And Greg, it's great to see you here. When you talk about e-commerce taking the initiative here and leading the way, what's the opportunity that you see not only industry-wide but also that DHL can play in this?

GREG HEWITT: It's nice to see you. And thanks for having me on.

I think this white paper, we saw over the last couple of years, obviously, e-commerce has been a big part of the growth across all of the divisions of DHL. And so we wanted to understand the impact that would have on our sustainability roadmap. As you know, we have some pretty aggressive goals, to be zero emissions by 2050 with science-based targets in the interim by 2030.

So knowing the role e-commerce was playing, we wanted to know, what's the impact on us. And I think what the paper showed was it's not all pessimistic, that this big growth in e-commerce doesn't mean a tragedy to the planet. In fact, there was some feeling that an MIT study had that 36% fewer emissions could come from e-commerce on the optimists' side.

So we started to dig in and look at a couple of key areas in the paper where we think the trends in e-commerce would have an impact on sustainability. That was the last-mile delivery, first and mid-mile, warehousing, packaging, and returns. All of those areas have opportunities for greener solutions.

And as you noted, it would come in the face of three E's. Better use of energy, so the electrification of last-mile, green electricity in warehouses, sustainable alternate fuels. Efficiency, looking at things like routing optimization capacity and packaging reductions. And then the introduction of new eco materials that are better from a sustainability standpoint around packaging.

So that's kind of summing it up in a very quick way. Those were some of the key findings and areas of focus for the study.

JARED BLIKRE: Well, let's hone in on packaging and returns. This is something I've been interested in. I had to buy a lot of stuff because I've moved. I'm finding that when I want to return it, a lot of times, they're just willing to eat the loss. That doesn't seem very efficient. What's the status of this? Because I read reports years ago that Amazon, dealing with returns, you had entire warehouses full of stuff that we're just never going to be used again.

GREG HEWITT: Well, I think it's a fair question around the green side of it because if you have something in our world that's internationally shipped, there have been questions whether it would cost more and be more harmful to the environment to ship that all the way back to origin. So a lot of the returns focus has been on how do you find alternate locations that are closer to where the delivery was to return it back to.

I think on the packaging side, it's how can you find ways to reduce the amount of packaging so that you're using up less cubic space. You're looking at ways of using different materials that are more sustainable in nature. So at very least, you're doing less harm to the planet.

Ultimately, I think any e-tailer is looking at a way to minimize the need for a return by having accuracy up front and really making sure that the product that they're delivering to the consumer is what was requested and required and doing so in the most efficient way and, from a transportation side, getting it there as close as possible to minimize the use of any fossil fuels.

SEANA SMITH: Greg, tell us about the trends that you're seeing within the industry. Is volume what it was going back when we were in the middle of the pandemic? Is it pretty equivalent? Has the increase that we saw really been able to sustain itself?

GREG HEWITT: Yes. In fact, it's actually growing. I think an interesting one is last year, when traditional industries may have been having a difficult time, e-commerce fueled the growth along with this new economy of personal protective equipment.

As we've gone into 2021, e-commerce and those buying trends have not changed. I've heard stats that it's advanced five to seven years. We don't expect those to go back. Consumer buying is there. We're actually seeing businesses look at online buying behaviors and do this new B2B online emerge.

And this year you've seen the re-emergence of traditional industries, like automotive and engineering and manufacturing. Obviously, the need for semiconductors and high-tech, those are all booming as well. So actually, the volumes are heavier this year than they were last year. And we continue to have capacity challenges with passenger airlines not back at full strength. And then of course, the Suez Canal situation ha hit the ocean cargo business. So that means a lot of pressure on fixed cargo networks like ours at DHL Express.