DHL invests €50m in Thai supply chain operations
DHL Supply Chain has announced a €50 million investment in its Thailand operations. Over the next two and a half years, the company plans to build new facilities, investing in new technology in addition to creating 2000 jobs.
In an online statement, DHL outlined plans for the investment, which will enable DHL to expand their fleet of trucks in Thailand in addition to its current automotive facilities in Rayong. In addition to this, DHL plans to intensify its training and development programmes as well as creating a new transport management system and opening new warehousing facilities.
Paul Graham, DHL Supply Chain CEO for Asia Pacific, said, "Thailand is one of the fastest growing markets for our business with our footprint growing 30 percent in the last year. We want to be ready to grow with our customers as they expand within the market."
"To achieve this, we are launching several projects in 2013, including an Automotive campus on the eastern seaboard to leverage our automotive operations, a new warehouse facility at Bangna to support our retail sector, an expansion of our truck fleet and a new transport management system to create greater efficiencies in our distribution capabilities. We will also create 2,000 new positions on top of our existing headcount of 9,500 to support these enhancements to our in-country network," added Oscar De Bok, CEO South and South East Asia.
New facilities in 2013
Next year DHL Supply Chain will also launch a new facility at Bangna to support its continual growth in the retail, fashion, and consumer sectors. The new facility consolidates the company's key strategic accounts, offering customers an optimized operating environment and greater efficiencies in the face of growing business demands. The facility will also be retrofitted with energy efficient specifications to achieve DHL's GoGreen aspirations, as well as stringent security features.
Mr. Burrell continued, "According to recent reports, The Thai Retailers Association (TRA) expects the retail industry to grow by 12 percent this year, the highest in three years and exceeding its earlier projection of 8 percent. We are also expecting healthy retail growth, and the new facility will help us innovate and develop better and more efficient supply chain processes. Our customer's pain points are our pain points. We constantly invest in new processes or technologies to help customers run their businesses more efficiently in an ever increasing competitive environment."
In showing its dedication to the country's retail sector growth, DHL Supply Chain will expand its transportation fleet. The fleet, which currently consists of over 1,000 vehicles, is capable of averaging more than 1,200 trips per day and covering over 11 million kilometers every month. Over the next few years, the company will continue to invest in its fleet and increase subcontractor partnerships to support growth in this dynamic sector.
Investments in this area also include the training of drivers. Before taking to the road, all new drivers undergo an intensive training program that covers classroom and yard exercises, simulation activities and on the road driving practice. These on-the-road skills are constantly refreshed. All drivers graduate from the DHL Supply Chain Thailand Transport Driver Training School located at a distribution center in Bang Yai.
Apart from the investment into its business operations, DHL Supply Chain Thailand is fully committed to continuing its people development initiatives. Thailand has pioneered a School of Excellence where world-class employee training programs covering major areas of its operations (Note 5) are developed for the whole Asia Pacific business.
DHL Supply Chain will also invest further in creating value added supply chain services, specifically in the area of crisis management. Most recently, with experience gained from the floods in Thailand, and the Japan and New Zealand earthquakes, the School of Excellence has developed a program on ‘Business Continuity Management and Disaster Response’.
DHL Supply Chain first began operations in Thailand in 1995. Today, it has a market leading position in the retail and consumer sector and is growing fast in the life sciences, automotive and technology sectors.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector