DHL Business Park in Vantaa, Finland. Photo: Sakari Manninen.
When it comes to the movement of freight into, out of and through Finland, there is nothing like speaking to an integrator of air, sea and land freight-movements to get the full picture.
It also helps when the freight operation possesses its own aircraft fleet. Helsinki Business Hub speaks to: Peter Ervasalo, Managing Director, DHL Express, Finland, which owns and operates its own fleet; and Mikko Lehtinen, Managing Director, DHL Global Forwarding, Finland.
DHL – part of Deutsche Post DHL – is a mammoth operation. Present in more than 220 countries and territories, with 285,000 employees and operating a fleet of 80,000 vehicles, this logistics provider has numerous tranches to its strategy. It excels at express deliveries worldwide, drawing on the aircraft fleet operated by DHL Aviation which in turn is managed by DHL Express; it is also expert at freight forwarding across air, sea and land; furthermore it offers warehousing services that include packaging and value-added services; it is additionally a celebrated provider of international mail deliveries; and it is renowned for its customized and specialized shipping.
Perhaps DHL Express (one of four DHL divisions) comes to mind first, especially to the consumer. From the DHL Express point of view, “It is all about next day business,” says Peter Ervasalo. “We have more than 220 countries in the network so we have to own our own aircraft. The German Leipzig hub, one of the three global air hubs in the DHL Time Definite air network, serves DHL’s European Express operations, including Helsinki.”
DHL Express owns DHL Aviation which, in turn, owns or has interests in various freighter airlines that supply the air lift for DHL Express’s operations. DHL-owned airline European Air Transport operates the Helsinki to Leipzig route. “Our Helsinki location is right next to the Finnair Terminal. In order to achieve a service level of 98% on-time performance, we have to have the airline in our own hands,” comments Ervasalo. Helsinki Airport is served from Leipzig with aircraft type A200-600Fs. A further route is in place from Helsinki to St Petersburg. DHL Aviation also sells aircraft capacity to third-party freight forwarders.
DHL Express owns DHL Aviation which, in turn, owns or has interests in various freighter airlines that supply the air lift for DHL Express’s operations. DHL-owned airline European Air Transport operates the Helsinki to Leipzig route. “Our Helsinki location is right next to the Finnair Terminal. In order to achieve a service level of 98% on-time performance, we have to have the airline in our own hands,” comments Ervasalo. Helsinki Airport is served from Leipzig with aircraft type A200-600Fs. A further route is in place from Helsinki to St Petersburg. DHL Aviation also sells aircraft capacity to third-party freight forwarders.
The DHL air network is constantly under development according to the season, confirms Ervasalo. Every eight to nine weeks the schedule is reviewed to make sure capacities meet the business case and freighters are not flying unfilled. But, happily, freight volumes carried through Helsinki Airport are very much on the up and DHL Express is responding accordingly. “We rent our own facility at Helsinki Airport from Lentoasemakiinteistöt Oyj (LAK) which is part of Finavia,” says Ervasalo. “Since the number of kilos has increased drastically we have been undertaking a business case – which has been approved – to expand the terminal. The handling area will double in size and we have committed to stay in this this location for the next 10 years.”
DHL Express Helsinki location is next to the Finnair Terminal. Photo: Markku Erkamo.
And DHL Express Finland is doing its own ground handling too. “It is vital to have efficient ground handlers,” says Ervasalo, adding that hundreds of express deliveries could be lost every few minutes worldwide if the express freight operator is not in control of this part of the jigsaw.
So what has driven up the number of kilos passing through Helsinki Airport and why does DHL Finland need to enlarge its terminal? “Historically, we have always been a B2B carrier and B2C business was only around 2-3% of the freight we carried. But B2C shipments increased 218% in 2013 compared with 2012,” says Ervasalo. What is driving this hike in shipments to consumers? “Webshops,” responds Ervasalo emphatically. “DHL is the market leader in carrying these shipments from Europe to Finland,” he confirms.
“And the average weight per shipment has significantly increased too, from 7-8kg to 15kg. Customers are looking for an easy next-day service. These are just-in-time deliveries which have moved from consolidated air freight to courier services. It is because of this that expansion is needed. We also need to change the layout of our facility and install a new roller conveyor system.”
However, all ICT systems for tracking freight are designed on a global scale. “All our processes have to be globally approved, regardless of where the shipment is coming from or going to. We never implement something locally – that is a deadly sin,” he says, coming back to the importance of the network and the rejection of local or regional strategies. “We went through all those regional questions many times but, since 2008, it has all been about being part of a global network. There are no clusters any more. There are no different reporting layers. Finland reports to the Head Office. We have Nordic special demands in terms of air fleet; otherwise it is all about the network.”
So what does this B2C express freight comprise? “Fast moving consumer goods, clothes,” he says, adding that a typical shipment might be tennis shoes that could be difficult to buy in a local Finnish shop but they can be bought simply online for delivery by DHL Express the next day. High value electronic goods sold to Finnish consumers comprise part of the shipments DHL Express is bringing into Finland. Textiles and other desirable consumables are very much in demand and volumes keep going up.
The days of Finland’s DHL Express business being built just on high value goods, medical samples and special freight are over and consumers are driving change. “That is why speed is so important – as is ease of use,” says Ervasalo. And the stable network and guaranteed delivery times are exactly what both shippers and consumers are looking for in this new fast-paced world of internet shopping. “Helsinki is a kind of island [in freight terms] but the transit time is still even and smooth,” Ervasalo adds.
DHL Express couriers deliver packages in more than 220 countries globally. Photo: Markku Erkamo.
The DHL Finland ground fleet is as you would expect: vans of all sizes and trailers. Electric vehicles have been tested as well and in future the fleet may be expanded to comprise electric delivery vans, too.
Apart from consumer express freight, are special freight consignments also part of the DHL Express offer? Life sciences shipments are part of the standard DHL offer, confirms Ervasalo. In all DHL Express terminals there are licenced dangerous goods handlers, specialist packaging facilities, restricted areas and refrigeration facilities. “It requires specialist knowledge, but it is everyday business to us,” says Ervasalo.
Then we come to the Russian market. Just how extensive are DHL Express’s freight activities in relation to the Russian market? “It is most important for DHL Express to have good relations with Customs. Our philosophy is always to have those relationships in good order. We have made a big investment in doing this with Russia as the Russian market will keep growing. There is no difference in shipping to Moscow compared with shipping to London from Helsinki. We make sure that these procedures are extremely well handled,” confirms Ervasalo.
Mikko Lehtinen from DHL Global Forwarding concurs: “The EU/Russian border has been very much improved over the years. There are several gateways across the border – six or seven. It is well equipped and you can screen full trucks. It is busy, very efficient and automated in both directions.” In 2008, the transit of freight across the border stood at 1 million movements but that has declined with the recession. The political unrest in the Ukraine has so far made little difference to our freight movements between Russia and Finland, says Lehtinen, but the currency situation is the main problem given the weak rouble.
DHL Global Forwarding, Freight is the freight forwarding division of the DHL business. It is the part of the business a shipper might call to shift a large consignment using whichever means and route is most cost-effective and efficient, be it by air, sea or land. “We are not just about air lift,” says Lehtinen. “We move freight door-to-door, provide warehousing and handle any size of cargo.” And the freight forwarding side of the business does not just harness DHL aircraft. “We use any airlines either serving Helsinki directly or indirectly via another hub.”
Commenting on the downward shift in export volumes from Finland in recent years, Lehtinen points to Nokia. “When Nokia moved production to another country, that had a big impact on volumes.” Otherwise, there has been a downturn but nothing huge from DHL’s point of view. Being a multi-modal freight operator tends to cushion the blow of recession. However, better things are on the horizon, even for air freight, with several requests for whole aircraft charter now coming into the DHL Global Forwarding Helsinki office.
Another sector that is significant to the Nordic market is life sciences and pharma freight. Lehtinen says, as a freight forwarder, he sees some very clear patterns emerging in that market. He says such freight coming into the region is most likely to come from a Swedish or Danish distribution centre by truck to – or through – Finland. However, Helsinki may play a role as a distribution centre if this type of freight is destined for onward carriage by truck to the Russian market – but not always.
Lehtinen emphasises that Helsinki has a special relationship with St Petersburg for the distribution of freight, especially technology goods coming from the Far East. Technology products tend to come into Helsinki Airport and after a week or two in the warehouse they are trucked to St Petersburg, a conurbation of around 8 million people. Volumes of technology freight to Russia vary – especially with currency deflation – but the big picture shows that freight volumes to Russia are generally increasing, according to DHL.
Lehtinen adds, however, that where the final destination for technology freight and consumer goods is Moscow and not St Petersburg, there is a good chance the freight will be distributed via the Baltics and it is less likely to come through Helsinki.
In serving its customer – shippers of significant freight – DHL Global Forwarding calls on the services of any airline, booking space in aircraft holds according to need. Lehtinen comments that Middle East and Far East airlines are often called in for assistance. Going to the broker market to charter a whole freighter might also be necessary; even the giant Russian Antonovs carrying outsized loads can land at Helsinki Airport. There is very little DHL Global Forwarding cannot accommodate.
Lehtinen is bullish about opportunities for conducting business from the Greater Helsinki Region but he is also realistic about the competition. “If we look at this part of the world, our competitors are Sweden and Denmark; but Finland is cheaper in terms of the workforce, land is cheaper and there is more room, especially around the airport,” he says. “We are also a gateway to the east and have plenty of Russian speakers.” In the end, being connected and part of a huge freight network delivers ease of access for shippers of all types of freight as well as satisfied customers. DHL Finland contributes significantly to Helsinki’s ability to be just that: accessible.
