- 29 October 2015
- Transport / Logistics Services
Due to the serious problems with the transformation programme known as the New Forwarding Environment (NFE), Deutsche Post DHL has addressed a potential earnings exposure of €345 million in its Global Forwarding business. It is likely to gently move away from the NFE system altogether in the coming months.
€308 million of this will be a write down of assets capitalised in relation to NFE and €37 million will be for provisions covering expenses for the rollback of NFE in countries where it was piloted.
NFE has caused DHL Global Forwarding major headaches with the CEO of the subsidiary resigning from his role, as well as the transformation chief Zvezdana Seegar being sacked due to the company floundering in the midst of the transformation process. DHL Global Forwarding’s profits have taken a tumble too, with a 38.7% dip in profits in 2015 compared to 2013.
There are signs that NFE will be significantly curtailed if not dropped altogether across the DHL system though the company still denies that it will be completely stopped as there is a strong potential for greater profitability should elements of NFE be continued. The forwarder is seeking to increase its profit margins from around 15% to around 25%, in line with its competitors in the market.
A statement about the write down by DHL said, “This exposure relates mainly to the current reassessment of legal and regulatory aspects in the Post – eCommerce – Parcel (PeP), Express and Global Forwarding, Freight divisions.”
Deutsche Post DHL remains one of the biggest global forwarders in the world, and though there have been issues with the transformation programme, the company is working its way out of the problems it encountered. Normal service should return as it recovers from the issues around the issues around NFE.