Scaling the Heights of Express Logistics Business in East Africa. The case of DHL Express Retail Network

DHL Express, the global leader in express logistics has tripled its retail footprint in the East African market over the last six months, thanks to a growing demand occasioned by discovery of natural resources and multinational firms setting shop in the region.

The company is investing in partnerships with other service delivery firms in the regional market to address increasing demand in areas far away from capitals and major towns as was the case previously.

In an exclusive interview with EABW, DHL Express Retail Manager for East and Central Africa Ms. Dorothy Chlystun-Githae said the company is well positioned to seize the emerging market opportunities posed by the buoyant economic environment and political stability in the East African region.

“DHL Express has been and will remain a key partner in the economic development of this region. We have streamlined our retail operations to meet growing market demand.  Currently, East African economies are growing at five per cent and above annually; more and more international businesses are setting up regional offices in East Africa demonstrating the business potential and international appeal of this region to the world and urbanization (concentrated buying power) is growing at a pace of about four per cent. East African governments are committed to moving their countries forward in terms of socio-economic development for example; Kenya’s Vision 2030 and its new government projected moving economic growth from the current 4.5 per cent to a possible 10 per cent in the next two years. We are well positioned to tap into this potential,” said Ms. Githae.

 

Currently, DHL Express is the market leader despite increasing industry competition a fact that Ms. Githae attributes to the company’s retail agent model that builds on strategic partnerships with small, medium and large size businesses to provide its services. These partnerships include entities like IRC Travel in Nairobi’s Eastleigh area, Simba Telecom in Uganda and Fargo Courier in Kenya.  These outlets serve as DHL Express collection and delivery centres, greatly boosting the company’s last mile delivery challenge.

“We invest heavily in training our retail partners. We strive to equip them with our in-house service delivery standards and attitudes,” she said.

According to her, the company invests a lot of resources and focus on its retail footprint in view of the changing market dynamics in the region.

“The East African countries are dynamic and rapidly evolving markets. Gone are the days when the capital cities were the only places that business is conducted. Business is growing and booming in towns and areas outside the capital city.  With this in mind, it’s imperative for DHL Express that we are readily accessible to connect these business and towns with markets across the country, across borders and internationally,” adds Ms. Githae.

Presently, DHL Express commands 216 retail outlets in Kenya, 56 in Uganda and 50 in Tanzania with plans to expand the retail footprint to meet the demands of the growing customer base.

In terms of technology, the company has also deployed e-commerce tools which allow the retail outlets to process shipments electronically. For example, the retail partner can scan a shipment once it has been processed for shipping with DHL, in a matter of minutes the customer or recipient can track movement of their shipment using the ‘DHL airwaybill’ number via our website: www.dhl.com  from anywhere in the world.

As is the case with other businesses in the region, Githae admits that DHL Express has its fair share of challenges. Key among them limited infrastructure and transportation. A research conducted recently in Sub-Saharan Africa revealed that reducing in-land travel by simply one day resulted in a seven per cent increase in exports. (Research conducted by Freund and Rocha in 2011). Transport costs can make up 50-75% of the retail price of goods in Malawi, Rwanda and Uganda. An international publication highlighted that shipping a car from China to Tanzania costs $4000 but getting it from there to Uganda is another $5000.

Dorothy says the complex borders, customs and various taxes in the region hinder a seamless environment for business. In addition, she says traffic congestion in major cities like Nairobi, Dar-es-Salaam and Kampala pose a challenge for a business that is time-sensitive like DHL Express.

Going forward, the company is counting on its recently deployed “Certified International Specialists” programme to drive business through reinforcement and reinvigoration of its corporate culture. The programme aims to equip employees with fundamental skills in cross-border shipping and focus their attention on international growth.  Additionally, the company has launched a new competitive and simplified bundled pricing-approach product referred to as Express Easy in all retail outlets in East Africa. The product offers customers the same DHL Express service that they rely on and trust at a more competitive price.