DHL raised tariffs in Russia after failure to sell business

DHL has sharply increased the cost of its services. Market participants called the increase “unusual”, and although the company has reduced its activities in the country, its share remains significant in the cross-border direction

One of the largest logistics operators in the world, DHL, has increased delivery tariffs in Russia, additional services and fees, as well as customs declaration services by an average of 35% from November 1. This is stated in the letter sent to clients (RBC has it).

“In recent years, the world has faced unprecedented challenges that have required a significant restructuring of supply chains <...>. In accordance with the global pricing policy, DHL Express annually reviews the cost of services, taking into account a number of factors, including inflation , operating and other costs, such as the cost of air transportation, vehicles and their components, fuels and lubricants. ) and fuel, including aviation fuel, an increase in tariffs for airport taxes. All this has a significant impact on the cost of our services,” the letter notes.

Based on the published price list on the carrier’s website, prices for delivery by country per 1 kg of cargo remained the same as before, but the cost of related services has increased. For example, the surcharge for non-standard cargo dimensions increased by 37%, to 4.8 thousand rubles. for one place. Transportation of lithium batteries (can only be transported on cargo planes) - by 72%, up to 2 thousand rubles, delivery to high-risk countries - by 64.6%, up to 2.88 thousand rubles.

The previous time DHL indexed tariffs at the beginning of 2023, but the company did not specify how exactly they changed. According to the founder and head of the customs clearance and logistics service “Ikastoms” Vladimir Aksenov, previously DHL annually indexed prices by a maximum of 10%.

The press service of the Russian DHL only explained that the level of indexation varies from country to country depending on local conditions.

In what form is DHL present in Russia?

DHL's headquarters are located in Germany. The main business for the global company is international express delivery of documents and cargo from door to door, in particular delivery by a certain time (Time Definite International, TDI). According to market intelligence data for 2021, which DHL cited in one of its reports, its share of the global TDI segment was 43%. The main competitors were the American FeDex (including TNT acquired several years ago, 30%) and UPS (20%). At the end of 2022, global DHL revenue amounted to €94.436 billion, in the first half of 2023 - €41.012 billion.

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DHL continues to operate in the Russian market, although it has reduced the volume of services provided: from September 1, 2022, the company stopped delivering parcels within Russia, retaining only transportation abroad. Global DHL's 2022 report shows that the company had intended to sell the local business , but due to changes in the terms of the sale, this "has become impossible." It also noted that DHL's express delivery division continues to deliver “humanitarian and diplomatic items” to Russia.

The main legal entity of the company in Russia is JSC DHL International. Its revenue last year decreased by 50% compared to 2021, to 9.5 billion rubles, and its net profit by 93%, to 158 million rubles, according to data from the Rusprofile service. Half-year data is not provided.

At the same time, DHL's main competitors - FedEx and UPS - completely suspended their activities in Russia after the start of a special military operation in Ukraine . The Russian legal entity UPS is currently in the process of liquidation. There is a warning on the FedEx website that “all FedEx and TNT services for international and domestic transportation to/from/within Russia are temporarily suspended until further notice.”

What will the increase affect?

The general director of the INFOLine-Analytics company, Mikhail Burmistrov, called the current increase in DHL tariffs “unusual.” “DHL still has a significant market share, but it is gradually declining as customers look for alternatives. Russian Post has great potential to take this share, but DHL provided transportation services mainly to European countries, and there it is objectively not very easy for Russian companies to compete,” said Burmistrov.

RBC sent a request to Russian Post.

According to the founder of the Data Insight agency Fedor Virin, those segments in which DHL worked in Russia have declined significantly: “The segment of foreign or Russian companies with foreign counterparties that sent corporate papers abroad has been falling in recent years due to a reduction in paper turnover and significantly fell after February 2022. The segment of sensitive deliveries, where speed and accuracy are important (spare parts for medical devices, for example), is noticeably declining due to the curtailment of operations of some clients. Deliveries for Russian sellers from eBay disappeared after the latter actually left Russia in 2021–2022.”

According to Olga Lutseva-Er, CEO of the research company NeoAnalytics, the volume of the express delivery market in Russia at the end of 2022 amounted to about 156 billion rubles, which is 30% more than in the previous year. She noted that if in 2020 the dynamics of this market were mainly influenced by the growth of purchases in online stores, then the main factor was increased competition for consumers. “In the fight for the client, there is a significant technological transformation of the market; companies are diversifying the existing service offering to satisfy all client needs,” noted Lutseva-Er. According to her, there are several hundred logistics companies of various profiles operating in the market, and in recent years, Russian players have seriously squeezed out foreign ones. According to NeoAnalytics, at the end of 2022 the total share of international companies was 24%, and DHL - 7-8%.

“DHL’s current price increase looks especially high compared to other logistics companies, which increase prices by an average of 5%,” says Vladimir Aksenov. “But customers who value the DHL service with its cargo tracking and express transportation will most likely still remain, because there are few or no worthy replacements for these parameters.” He noted that, depending on the product, logistics costs can be 5–30% of the final price of the product, but since DHL mainly delivers, albeit expensive, but compact goods, the share of logistics in the consumer price is not so high and tariff increases should not will greatly affect her. “Other than that, competition in this segment is only getting fiercer, and it will be more difficult for DHL to withstand it,” said the head of Ikastoms.