DHL says customers continue to diversify production amid geopolitical uncertainty
The logistics giant's CEO Tobias Meyer tells CNA that Chinese manufacturers are broadening their production base to hedge against geopolitical volatility, while new European import rules are another area of concern.
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German logistics giant DHL Group continues to see customers diversifying their manufacturing footprint globally as they respond to geopolitical risks, CEO Tobias Meyer said.
Speaking to CNA's Roland Lim on Wednesday (Aug 5), Meyer said the trend includes Chinese manufacturers that have expanded internationally over the past decade and are now "distributing their manufacturing footprint to hedge themselves against geopolitical volatility, including tariffs".
His comments came after the group reported stronger-than-expected second-quarter results and raised its full-year earnings guidance.
DHL said second-quarter revenue rose 13 per cent year-on-year to 22.4 billion euros (US$25.8 billion), while operating profit (EBIT) increased 30 per cent to 1.9 billion euros.
The company said revenue growth was driven mainly by higher shipment weight, capacity constraints in the international air freight market and the pass-through of higher fuel costs.
It also raised its full-year EBIT guidance to more than 6.5 billion euros, from more than 6.2 billion euros previously.
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IMPACT OF US TARIFFS, EU LAWS
Meyer said the second quarter was the first year-on-year comparison in which the impact of reciprocal tariffs introduced in early 2025 by United States President Donald Trump had largely cycled out.
"As relates to the United States, we now have the second quarter – the first quarter that year-on-year did not have a significant impact from incremental tariffs," he said.
"Most tariffs came into place in February, March and April of last year, so now that's cycled out on an annual basis."
He said the replacement of the temporary US Section 122 tariffs with Section 301 tariffs in July had largely maintained the same overall levels.
“That's what customers and consumers in the United States have gotten used to. So not a significant change from that perspective,” he added.
Instead, Meyer said DHL is paying closer attention to changes in the European Union's rules for low-value e-commerce imports, which could affect business in the third quarter.
On Jul 1, the EU introduced a temporary 3 euro customs duty on parcels worth up to 150 euros imported from outside the bloc as part of efforts to create fairer competition for European businesses.
"That's one of those risk factors that we still weigh when we look at the full year," Meyer said.
He added that the company also continues to monitor broader geopolitical developments, including the conflict in the Middle East, which has increased fuel, insurance and rerouting costs.
Meyer said DHL passes those additional costs on to customers and has been able to manage its global network despite the volatility, leading to higher utilisation in the second quarter.
He noted that insurance costs for flights into Israel had at times exceeded the operating cost of the aircraft itself.
“So that's why risk premiums are justified. But similar to fuel, it is a cost recovery mechanism. We make our money on good service, on the base rates, and that's what we want to continue to do,” Meyer said.
Despite the conflict, Meyer added that DHL remains committed to investing more than US$500 million in the Middle East through 2030.
He said that the company is confident in the region's long-term growth prospects.
“It is a region that unfortunately has to bear with those turbulences and conflicts. But it's also a region that is very dynamic, that has a relatively young, increasingly well-educated population, that has pro-business regulation, and that will continue to drive growth and demand for our services."
DATA CENTRE LOGISTICS AND HEALTHCARE
Beyond navigating geopolitical risks, Meyer said DHL continues to invest in sectors it expects will drive long-term growth.
DHL announced in March that it would establish 10 dedicated warehouse sites in North America as part of its expansion into data centre logistics.
Meyer said the group is seeing strong demand from large-scale data centre operators that require warehousing and logistics support.
Healthcare remains another growth area for the company, he added, with DHL continuing to invest in temperature-controlled logistics for pharmaceuticals and biotechnology products.
"We remain focused on the strategic sectors that will grow for another decade at least," he said.
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