Australia open for business despite Covid-19, says DHL’s Gary Edstein
Nearly eight months after the first nationwide lockdown in March, key states across Australia are still under varying stages of lockdowns to curb the spread of the Covid-19 pandemic.
Some state borders remain closed while lockdown restrictions in the hardest-hit state of Victoria — the epicenter of the second wave of coronavirus infections in Australia — were lifted in late October.
The multiple waves of enforced lockdowns have come at a great economic cost to residents and businesses that have been bearing the brunt of the coronavirus fallout.
Figures from the Australian Bureau of Statistics indicate a gloomy outlook for the country’s economy which plunged into recession for the first time in 30 years. In the past three months alone, the economy shrank by 7 percent due to the pandemic.
With shops forced to shutter and household spending dramatically reduced, Australia’s businesses have had to find ways to minimize losses and stay operational, all while navigating the restrictions to keep goods flowing.
Logistics of Things catches up with Gary Edstein, CEO and Senior Vice President, DHL Express Oceania, to learn about the situation and how DHL is supporting Australia’s businesses to tide through the pandemic.
What have been the key challenges for Australia’s businesses and how has DHL Express helped?
Edstein: When the pandemic hit, Australia’s exporters' greatest challenge has been securing air freight capacity out of the country.
Before Covid-19, we placed around 60 percent of our total volume on commercial passenger flights. However, with global air travel grinding to a halt since April, freight capacity has tightened considerably, given the sharp reduction in available belly-hold space of passenger aircraft.
We anticipated this and mobilized very quickly by chartering commercial flights in April and May to facilitate the surge in shipment volumes, which caused backlogs in our hubs in Hong Kong, Singapore, and Cincinnati.
Shortly before this surge, we launched our new Boeing 777-200LRF service flying from DHL’s U.S. hub in Cincinnati and the Los Angeles gateway to the South Asia Hub in Singapore via Sydney, Australia.
We’ve since taken the chartered flights in-house, offering the required capacity through our dedicated aviation network's regular scheduled services. Today, we operate around 30 regular DHL services a week, compared to below 10 before the pandemic hit, to serve key trade lanes such as Hong Kong, Japan, New Zealand, Singapore and the U.S. This has helped ensure our customers’ exports and imports can carry on without any major disruptions caused by the pandemic.
What has the impact been on business growth for DHL Express’ customers? Has this led to any growth trends during the pandemic?
Edstein: For our customers, the country’s borders needed to remain open and accessible to the rest of the world.
DHL Express Australia was classified as an essential service immediately after the government imposed lockdown restrictions. Customers were relieved as the operations of several industry providers had already been restricted due to the lack of commercial flights.
Because of our available international flight capacity, we’ve seen small, medium-sized enterprises (SMEs), which would traditionally rely on economy services, switching to express delivery services amid the pandemic. This trend has led to significant growth in our inbound and outbound volume — over 40 percent — since May, largely attributed to the business-to-consumer (B2C) business.
The rise in work-from-home arrangements during the pandemic has highlighted the importance of our existing B2C model, such as our on-demand delivery offering that ensures efficiency and transparency for residential deliveries. This has been a key service attuned to our SME customers’ needs, including safety and convenience, during the coronavirus pandemic.
How did the DHL Express team in Australia cope with the initial wave of restrictions to keep operations running?
Edstein: Since the onset of the pandemic, we’ve kept in close contact with our customers, advising them regularly on the status of our current operations.
One month before the first wave of lockdowns announced by the government, we had already implemented proactive measures to review our operational procedures as part of our business continuity plan.
Throughout all our facilities, we equipped all our staff with personal protective equipment and practiced social distancing to prevent the spread of the coronavirus. Before the lockdown in Victoria, we also decided to close our customer service receptions to limit face-to-face interactions, while offering online alternatives for customers to manage their deliveries.
Our back-office staff were allowed to work from home, while we hired another 120 staff to handle the additional volume across Australia in preparation for the pandemic and the year-end peak season.
DHL Express Australia recently unveiled the new Sydney service center. How will the facility be able to help businesses during this pandemic?
Edstein: The decision to unveil a new service center during a pandemic was not one that we’ve taken lightly, but we wanted the announcement to serve as a rallying call to our customers and the general public that Australia is still well and open for business. If we are going to get out of this economic situation, we have to rely on global trade and the free movement of goods across borders.
We were fortunate to have infrastructure plans in place that coincided with the surge of shipment growth during Covid-19. In light of the upcoming peak season, our newly opened state-of-the-art Sydney service center is also better equipped to manage the demand and process shipments efficiently in larger volumes.
At 8,600 square meters, this facility's total floor space doubles the size of our previous facility, making it our largest in the Oceania region. The latest industry technologies deployed, such as our automated high-speed sorting system that processes up to 4,200 shipments hourly, greatly enhances our operational efficiency and productivity.
So far, our systems have already been put to the test when we were tasked to handle time-critical, essential cargo including PPE and medical equipment for charities and government bodies. In the recent Beirut port blast, for instance, we processed donations of medical supplies to Lebanon through this new facility.
Following the pandemic, the year-end holiday shopping season is almost here. What kind of impact do you think the Covid-19 pandemic will have on it, and why?
Edstein: The seismic shift in shopping habits, from offline to online shopping, during this pandemic is certainly going to have an impact on the year-end holiday shopping season, likely even more significant than what we’ve seen in previous years.
Based on our forecast, we expect a further 30 percent growth on top of what we’re experiencing right now, but we’re ready for this busy festive period.
Preparation is already underway for the Christmas peak season. This includes looking at additional aviation capacity to get shipments into Australia, offering weekend deliveries, and extending our operational hours for our reception centers to cope with the influx.
What are DHL Express’ growth plans for Australia in the next 18 months?
Edstein: The pandemic, though disruptive, will not derail the development plans for DHL Express in Australia as it remains an important market with massive potential for us.
A series of infrastructure developments are key to our plans in 2021, including the opening of upgraded service centers in Brisbane and Melbourne as well as a new gateway planned close to Adelaide Airport potentially in 2022.
In the longer term, we are also keeping close tabs on the government’s development of the Western Sydney Airport, which is set to be a full-service airport operating curfew free, delivering international, domestic, and freight services by 2026.
Finally, what message do you have for Australia’s businesses to tide them through the pandemic?
Edstein: My main message to the country’s businesses is that Australia needs them more than ever before.
Despite the restrictions, we want to help our local businesses continue with their exports, which are essential in helping Australia’s economy to get back on track. To do so seamlessly, businesses have to build on their online and international capabilities, ideally with the support of a reputable logistics provider like DHL Express.