What is DHL Supply Chain’s new European Fulfilment Network?
DHL Supply Chain today launched a new service called European Fulfilment Network (EFN), a nexus of e-fulfilment centres spread across Europe.
The service will benefit the growing number of small and medium retail businesses that now rely heavily on online sales and deliveries amid COVID-19 restrictions to remain a going concern and drive growth - as a result placing themselves in direct competition with the world’s biggest marketplaces and omni-channel retail outfits.
Businesses can leverage DHL’s scale, accelerate and standardise delivery times for end-consumers, and in some cases cut costs through sidestepping international shipping fees and intermediaries. A pilot customer improved its cost to serve across Europe by 30%, DHL reports, mainly due to shipping through domestic rates rather than international ones.
What is the European Fulfilment Network?
At a glance:
- 30 fulfilment centre across Europe
- Key locations: Paris, Moscow, Berlin, Madrid
- Processing, picking, packing and shipping online orders
- Benefits for new Brexit obstacles
The EFN comprises 30 fulfilment centres across continental Europe and the UK. These are part of DHL’s pan-Europe network and have been chosen due to their strategic position in major cities and population centres, including Paris, Moscow, Madrid, Berlin, Rome and Amsterdam. The centres all offer specialisations in processing, picking, packing and shipping online orders and are located in close proximity to other delivery services.
Ultimately the EFN allows SMEs to take advantage of “all of our established services in a way that is flexible and tailored to their needs”, says Hendrik Venter, CEO DHL Supply Chain MLEMEA. “We can support customers across the entire supply chain – from inbound handling and storage, pick and pack, last-mile delivery as well as returns handling.”
This approach will put SMEs on more level footing with multinational ecommerce giants who can afford to operate in multiple markets and commit to next-day deliveries, a timeframe which is fast becoming industry standard and an expectation of consumers. DHL customers can also tailor the service to specific regions or countries as necessary, as well as scale up to match order volumes.
Brexit now poses new hurdles for businesses to clear at EU-UK customs, with regulation and paperwork already impacting supply chains and slowing the transfer of goods. DHL says its service will help businesses on both sides of the equation that require greater supply chain resiliency and the flexibility to react to volume fluctuations.
“Reducing dependency on individual markets and geographies, and having multiple stock points in different countries has been accelerated by the pandemic, and that’s here to stay,” says José Nava, CEO DHL Supply Chain UK & Ireland. “Proximity to the market and having a scalable network solution will bring huge benefits.”
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