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DHL Global Forwarding’s Airfreight Team Celebrates 2016 and Looks Towards a Strong Future

2016 was a year full of major events that left behind many economic and political instabilities around the world. Both international affairs and the economics around them had an impact on the demand for consumer goods, which in turn led to the demand for logistics services slowing down as well. The airfreight industry especially has felt the effect of this fluctuation in demand. At the same time, the growth of world’s population and economic policies being established helps drive up demand for consumer goods, and are factors to consider when predicting the outlook of the logistics industry in 2017.

In this issue of AFL, we had the opportunity to speak with Ms. Suwanna Sumritkij, Head of Airfreight DHL Global Forwarding (Thailand). Ms. Suwanna shared with us her expert airfreight perspective on what transpired in 2016, and the likelihood of growth for the industry in 2017.

A Year of Inconsistency and Changes

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Ms. Suwanna Sumritkij, Head of Airfreight DHL Global Forwarding (Thailand)

Ms. Suwanna and her DHL Airfreight team started by describing the multitude of challenges they faced in 2016 that was rooted in the world’s economic instability. She began by speaking about the inconsistency in seasonal figures for airfreight demand. For example, the quiet new year holiday season with no significant increase in demand. “Overall in 2016, the airfreight industry behaved rather statically. There weren’t any significant spikes of demand, unlike in 2015. However, we did see a small decrease in demand for transportation towards the end of the year, which was the result of the fall in demand for consumer goods. Therefore, the seasonal figure for the airfreight industry during the holiday season in 2016 was small in comparison to the holiday season of the year prior,” said Ms. Suwanna.

However, the logistics industry was not the only industry to have faced this change in demand. Many other manufacturers of consumer goods also received thinner demands than usual. Ms. Suwanna continued, “We found that many manufacturers from different industries were also not picking up the usual demands they would during the holiday season. Although strangely low demands were the majority, we also found that some manufacturers were receiving a hike in orders. This made it hard for us to pinpoint the cause of last year’s demand inconsistency. The figures we saw were difficult to compare and analyze compared to previous years.”

Thus, the cause of last year’s change in airfreight dynamics may not have only stemmed from economic changes within the ASEAN community or Asia alone, but could also have been influenced by other regional economic dynamics. In 2016, the United States of America was one of the countries whose policies influenced Thai manufacturers and exporters. Last year, the US government granted Thai manufacturers and exporters more chances to export their goods from Thailand to the US. Although this helped slowly improve the export channel between the two countries, it also meant that Thailand had to face fierce competition amongst its neighboring exporters whose goods come at a lower retail price. At their relatively higher price point, Thai manufacturers and exporters lost some of their market share to neighbor exporters, and this downturn in demand was felt throughout the logistics industry.

Challenges to Overcome

Besides the unpredictable change in seasonal demand, the DHL Airfreight team also faced other industry-specific challenges that tested the team’s ability to adapt. One particular challenge Ms. Suwanna emphasized was the change in airfreight customers’ behavior. The need for information and service visibility has grown to become a standardized requirement for which the airfreight team must answer. The adoption of technological system and solutions was the team’s only way to step up to the competition and answer the specific demands of DHL’s diverse clientele.

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The Airfreight Team, DHL Global Forwarding (Thailand)

“To combat the challenges we face, the DHL team is committed to constantly improving our services. To help us achieve the goals we set, we recently launched our Real Time Visibility solution, which is a real-time tracking system for detailed location and status updates for our airfreight clients’ cargo. The system is a value-added service we like to provide for our clients. They are able to track in real-time the location and status of their shipped cargo at any point, from the pick-up to the delivery stage,” said Ms. Suwanna. “Additionally, DHL has many operational applications to offer because of our investment in digital solutions. Thailand is one of the first countries in Asia-Pacific that will have a test run for a barcode-scanning solution, which will be properly launched in early 2017.”

To combat the challenges we face, the DHL team is committed to constantly improving our services. To help us achieve the goals we set, we recently launched our Real Time Visibility solution, which is a real-time tracking system for detailed location and status updates for our airfreight clients’ cargo.

Ms. Suwanna Sumritkij, Head of Airfreight DHL Global Forwarding (Thailand)

Another challenge Ms. Suwanna elaborated on was the fundamental shift in Thailand’s logistics industry, which involves the margin and market share moving among different modes of logistics services. Partially influenced by the merging, acquisitions and alliance forming of many ocean liners, the dynamics in Thailand’s logistics industry is reflected in the cross border regional transportation that have become more convenient, as well as the government investing in expanding the railroad network to reach more industrial zones all over the country. With a wider range of services and network, both local and international businesses are presented more choices in logistics services and shipping through Thailand.

Ms. Suwanna revealed that this challenge was shared among most players in the airfreight industry, including logistics service providers and airlines alike. “Both DHL and our partnering airlines went through equal challenges in 2016. As I’ve mentioned, the airfreight industry did not see spikes or peaks in seasonal demands last year. Higher ocean freight capabilities and more borders opening had taken up a bit of the market share where airfreight dominated. This led to a quieter season when there were normally more clients reaching out to us. This is true, especially when we consider the economic situation where clients are becoming more aware of keeping their overheads low,” said Ms. Suwanna.

What to Watch In 2017

Furthermore, Ms. Suwanna shared DHL Airfreight Team’s perspective on what 2017 will bring to the industry. While airfreight cargo has been growing steadily in the last few years, an area to focus on for real growth is the pharmaceutical and healthcare sector. To cater to the healthcare product trends, which now covers both medicines and health supplemental products, the DHL Airfreight Team has been preparing with training courses in handling this particular type of cargo. “One industry that will still be going strong through 2017 is the pharmaceutical industry. In 2016, DHL launched many specialized services just for pharmaceutical products that are of globally recognized standard. We’ve conducted pharmaceutical product specific training courses with experts from overseas to ready ourselves for the possibility of Thailand becoming an exporter of pharmaceutical and healthcare products.” Ms. Suwanna continued, “In 2017, the trend for pharmaceutical goods will not be limited to medicines, but will also include other healthcare products. This will broaden the range of what businesses may categorize as pharmaceutical products.”

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Ms. Suwanna said another industry that is making a comeback with the airfreight market is the automotive industry. “The automotive industry, which has been in in a tough position, is making a comeback this year for both imports and exports. The volumes of shipment from the automotive industry include both finished cars and car parts, as well as luxury cars that are sent to auto shows in different regions. For luxury cars sent to auto shows, airfreight service is the choice of transportation between destinations and each manufacturer’s homeland, which are mostly in the European countries. Sometimes we see the transportation of prototype cars for exhibitions and product development projects,” Ms. Suwanna explained. For airfreight services, Thailand is at a geographical advantage where the country is located at the center of Southeast Asia. This position allows Thailand to function as the hub to other regions around the world.

In 2017, the trend for pharmaceutical goods will not be limited to medicines, but will also include other healthcare products. This will broaden the range of what businesses may categorize as pharmaceutical products.”

Ms. Suwanna Sumritkij, Head of Airfreight DHL Global Forwarding (Thailand)

Ms. Suwanna said another industry that is making a comeback with the airfreight market is the automotive industry. “The automotive industry, which has been in in a tough position, is making a comeback this year for both imports and exports. The volumes of shipment from the automotive industry include both finished cars and car parts, as well as luxury cars that are sent to auto shows in different regions. For luxury cars sent to auto shows, airfreight service is the choice of transportation between destinations and each manufacturer’s homeland, which are mostly in the European countries. Sometimes we see the transportation of prototype cars for exhibitions and product development projects,” Ms. Suwanna explained. For airfreight services, Thailand is at a geographical advantage where the country is located at the center of Southeast Asia. This position allows Thailand to function as the hub to other regions around the world.

As a leading complete logistics service providers, DHL is fully aware of the increasingly intense competition in 2017 from both local and international fronts, including neighboring ASEAN communities. Ms. Suwanna said that many ASEAN member countries are on in the rush to develop their capabilities in manufacturing, especially Vietnam who aims to become the hub for ocean and air logistics. This should be motivation for Thai players to push their development plans out and improve their service quality to remain at the forefront as the economic and logistics hub of Southeast Asia.

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