Global boardrooms watch India, expectations high, says DHL Express

The administration has done a great job through national logistics policy. Naturally, businesses are thinking that they can stay in China, but they want to be in India as well, said DHL Express CEO

The top management of DHL Express — including Global Chief Executive Officer (CEO) John Pearson, Asia-Pacific CEO Ken Lee, and Senior Vice-President for South Asia R S Subramanian — remains optimistic about easing tariff turbulence and India’s growing prominence in logistics and manufacturing. They attribute this optimism to the country’s ongoing infrastructure push and supportive policy initiatives. In an interview with Prachi Pisal, the trio said India features prominently in the global firms' (companies across the globe) expansion plans. Edited excerpts: 

For your sector, how have you observed India changing over the years? 

John Pearson: I think India is the best place, as it has become more interested and capable of playing on the world stage of logistics and manufacturing. We've seen more development of infrastructure, locations, and facilities.

 

The administration has done a great job through the National Logistics Policy. Naturally, businesses are thinking that they can stay in China, but they want to be in India as well.

 

There have been some geopolitical developments that have favoured India, and no doubt some that haven't.

 

India is featuring very heavily in companies’ expansion plans and their board meetings. It needs to live up to those expectations, where infrastructure and the digital environment need to be good.

 

What’s your view on the tariffs? 

Pearson: I really hope the tariffs get sorted out quickly, and I'm sure they will. India is the last on the block of negotiating and reaching a deal, and that's not a bad or a good thing.

 

There are high expectations that it'll be done before Christmas. India and the US are very strong trading partners. The Trump administration has much respect for Modi and the Indian government, and much the other way.

 

A lot of people are selling goods and services to the US at a higher price. We'll have to see how this all plays out.

 

What opportunities do you see for India to scale up its game, particularly in this global context? 

R S Subramanian: The inherent strength of the country's economic foundation doesn't go away. We have a skill base, labour, and the infrastructure is improving. The capacity that we have in each of the product categories is not going away.

 

The terrain in India is also increasingly tilting towards becoming a manufacturing hub. It happened in certain sectors like automobiles; now it's moving into tech and already strong pharmaceuticals.

 

None of the tariff changes is taking away that strong base. The problem with the trade lane will get sorted out. India will continue to play to its inherent strength.

 

Ken Lee: Because of the tariffs, India may see some short-term volatility. I'm sure it will sort itself out in the long run. But unavoidably, the global trade pattern has moved a little away from single-country dependency. One cannot deny that India is a very attractive alternative.

 

It’s because of its strategic location, strong and rapidly expanding manufacturing base, and strong initiatives like PM Gati Shakti, Make in India, and the National Logistics Policy.

 

India has a very strong domestic market. Its SMEs contribute more than 40 per cent of exports.

 

India has a very attractive production base and demand centre. It is playing a key part in helping to reshape the global trade group. It will be a very exciting time for India and Asia as well.

 

What changes are you observing in global supply chains amid these uncertain times? 

Pearson: There is a lot to wait and see. After about three months into tariffs, most companies can live with some of those tariffs for a while. As companies get into the next year, they'll be really ready to mobilise and decide what they want to do.

 

Concentrations of manufacturing have not changed. But that will happen slowly over time. Countries like Malaysia, Vietnam, and Saudi Arabia are winning out.

 

China is selling more to Asia. Now that's a little bit of a concern too, because one can wonder whether there will be price dumping, and so many good-quality Chinese products coming into ASEAN may mean some of their own producers don't benefit as much. One might say that's good and bad, but I think time will tell. Supply chains are pretty resilient.

 

Is the concentration of manufacturing hubs changing slowly? 

Pearson: Well, no. But it may change from one country to another. There are some promises made by companies to move to the US, but I think it's too early to say.

 

Concentrations of manufacturing are the interesting thing to watch, but building a plant isn't the work of moments. Companies are modifying their supply chains. It's a good opportunity to sell to new markets, or principally to sell to new markets.

 

Some countries that have a lower tariff than China or other Asian countries are definitely seizing their opportunity to ship into the US, which is still a consuming market.

 

Christmas is coming, and tariff deals are yet to be sorted out. What impact are you seeing? 

Pearson: Christmas will be rather the same, similar to how it has been every other Christmas. Prices might be a bit higher; some people might bring their prices down to keep their trade lanes flowing.

 

We're planning a peak season. We have a demand surcharge, and we've got enough capacity to give high-quality service to our customers.

 

If you have to sum it all up, what's your outlook? Do you see this uncertainty going down? 

Pearson: Things come and go. The real question is whether the tariff turbulence will finally settle into some harmony. The Israel–Gaza situation is improving, but the Russia–Ukraine conflict hasn’t seen much change.

 

People typically see the new year as a new start. How much of a new start it is, I don't know. But I think we're over the bottom of the bathtub. We'll see what sort of peak season (Christmas) we have and whether we go into quarter one more strongly. That would be a good judge.

 

Quarter one this year was very strong. Trade was going quite nicely. I don't think anyone will want to live in the current situation forever. There may be a few surprises there also.

 

Increasing regional trade — is that going to be the strategy for countries? 

Pearson: Well, no.

 

There is regional trade. But when one balances that out against long-distance and international trade, there is no evidence whatsoever that the world is becoming more regionalised. Trade is still travelling 5,300 kilometres.

 

Mathematically and empirically, if that's the case, the world is not becoming more regionalised. It doesn't mean there are no important regional flows, but that's separate.

 

Lee: Our investments are guided by where the customer wants to be. We are forced into a new trade flow because of whatever is happening. While we will continue to build capabilities in all sectors and all trade flows, ultimately, our focus will have to zoom in on where the trade flows evolve.

 

Which are the emerging global trade corridors, according to you? 

Pearson: We have picked 20 markets that we consider to be geographic tailwind countries, including India and China. These 20 countries are also growing in terms of trade lines.

 

These markets are likely to grow faster on an axis of speed and scale over the next five years. We're the market leader in all of them. They are expected to grow by 4–5 percentage points faster than the other 200 countries. The growth is more moderate at the moment, while all this tariff issue sorts itself out.

 

There are five growth diamonds of DHL Group — new energy, life sciences, the 20 markets that we have identified, e-commerce, and digital selling. We seek to be a player in all these segments, and with this strategy, the company strives for 50 per cent revenue growth by 2030 compared to 2023.

 

Technology and artificial intelligence have disrupted almost all sectors. How have they impacted your sector? 

Pearson: We take advantage of technology; there’s an internal aspect and an external aspect. Internally, we've got a lot of projects running on agentic AI in customers' processes, hiring people, and the supply chain.

 

In customer service, we're investing in agentic AI from many different group initiatives and work streams, but we're being cautious and sensible about that.

 

Externally, we're making sure that whether it's a data centre or anything within our electronic customers, we're in a good position to capture it so it's not disruptive to us.