Archives



Business, Freight News, Logistics


DHL Looks Beyond ‘China Plus 1’ Strategy

[ February 14, 2025   //   ]

A recent DHL Global Forwarding white paper highlights the importance of multi-shoring strategies to help companies safeguard their supply chains against global disruptions while strengthening their operational flexibility.

                The ocean and air freight division of DHL Group, in China Plus X: The New Global Supply Chain, suggests going beyond the classic “China Plus 1” philosophy to diversify production and suppliers across several countries.

                Geopolitical tensions, trade barriers and the Covid-19 pandemic in recent years have highlighted the fragility of supply chains. Countries in Southeast Asia, Southern and Eastern Europe as well as Middle East and South America could provide strategic alternatives and additions to China, as they offer both infrastructural investment and increasingly trade-friendly regulatory environments, DHL said.

Five Factors of Plus X

                The DHL white paper outlines five essential criteria which play a crucial role in the selection of suitable production and supply chain locations:

                • A robust transportation infrastructure encompasses the capacity, quality, and transit times essential for efficient logistics. Vietnam and Mexico are among countries significantly investing in their transportation networks as the backbone of their supply chains.

                • A comprehensive analysis of the cost structure, including evaluating logistics expenses, labor costs, and the overall return on investment associated with relocating production to a specific country.

                • Quality of a country’s digital and physical infrastructure, including broadband capacity, transportation facilities and anticipated developments such as new airports and rail lines that will support alternative sourcing strategies.

                • Availability of a skilled workforce, particularly as countries like India invest in education to prepare their labor force for emerging industries, such as semiconductors.

                • Understanding the regulatory environment, encompassing taxes, customs, tariffs and participation in trade agreements, which can significantly impact operational efficiencies and costs.

                Emerging Plus X countries seek to establish favorable trade agreements and offer with that increasingly trade-friendly environments to attract foreign investment. In this context, a long-term commitment to these locations is crucial, as establishing a diversified production base often requires substantial upfront investments, the white paper said.

                DHL Global Forwarding said its comprehensive portfolio of services can help companies make their supply chains efficient as well as future-proof. These include multimodal transportation solutions that can reduce costs and optimize delivery times, such as combining ocean and air freight.

                “The future of global supply chains lies in a flexible, sustainable and diversified structure designed for resilience,” said Niki Frank, CEO DHL Global Forwarding Asia Pacific.

                The logistics service provider said it also provides specialized consulting services to analyze and plan their Plus X strategies. This includes evaluating transport capacities in potential destination countries, analyzing regulatory requirements and optimizes warehouse and distribution networks. For instance, DHL’s global network in more than 220 countries and territories as well as local expertise, can develop customized solutions tailored to the individual needs of companies.

                DHL Global Forwarding also uses innovative technologies to improve transparency and efficiency. Digital platforms such as myDHLi gives customers real-time insights into their supply chains, enables shipment tracking and more efficient processes.                 The whitepaper is available for download at https://tinyurl.com/25nppbu6

Tags: