DHL stays open throughout pandemic keeping Bangladesh connected

Bangladesh was virtually cut off from the rest of the world when it suspended all commercial flights in late March in the face of the raging coronavirus. But a few companies were there to help the country bring in and send abroad shipments vital for cross-border trade and DHL Express Bangladesh is one of them. 

The local subsidiary of Bonn, Germany-based Deutsche Post DHL Group, the world's leading logistics company, has not shut its door for a single day although its own business took a massive hit in the early days of the pandemic along with the rest of the country.

"We consider that this is an emergency service, so we did not cancel our service for a single day during the pandemic," said Miarul Haque, managing director of DHL Express Bangladesh.

The company decided to keep the operations up and running since it is an important part of the supply chain and connects the country with the rest of the world.

Much Before Bangladesh went for the lockdown on March 26, the company had raised awareness among the employees in line with World Health Organisation guidelines, prepared them mentally for the tough battle that ensued, cleaned the facilities, put in place hygiene practices and took preparation to work from home.

It did not stop there.

In the last four decades of operation in Bangladesh, no chartered flights from DHL came to Bangladesh. But during the pandemic, one of the company's flights flew in to serve customers.

"We decided that we will have to support our customers even that means managing aviation capacity at higher costs," Haque said.  

"I always say to my employees: you are not just picking up or delivering a shipment; maybe you are saving someone's life or maybe you are bringing luck to someone or allowing an opportunity for someone to grow," he told The Daily Star during a virtual interview recently.

Emergency medicines and items related to the coronavirus disease and used by law enforcing agencies came through the company during the pandemic.

DHL Express has been operating in Bangladesh since 1979.  Initially, it ran through agent operations before opening a full-fledged subsidiary in 2008, in an endorsement to the country's growing importance.

It handles around 70 per cent of all inbound shipments, thus becoming the largest international air courier in the country. The rest is handled by two other international companies represented by local agents and about 30 to 40 local companies.

Air express companies handle more than 3.5 million shipments every year, with 60 per cent coming into the country and 40 per cent going out. Garment and leather manufacturers, ICT companies and banks are the major clients.

DHL Express Bangladesh delivers time-sensitive and high value but impactful small parcels and documents within a short time, which support trade facilitation and manufacturing. Currently, it employs more than 550 people.

Haque said the first quarter of 2020 for the company was good and shipments started to collapse in April and subsequent months. As a result, there had been 80 per cent dip in business because of a huge drop in garment exports.

"The good news is the worst for the company might have passed. We have started to go back to normal," Haque said.

 A business graduate from the Institute of Business Administration under the Dhaka University, Haque began his career with British American Tobacco Bangladesh.

In 2001, he joined DHL Express Bangladesh's sales team. He is a seasoned corporate executive with almost 25 years of experience working at multinational companies.

He talked about Vietnam overtaking Bangladesh's in global apparel exports and the key factors behind it from his experience of working in this country for a significant period.

In 2012, he moved for a network assignment in DHL Express Vietnam and worked as head of the commercial function for five and a half years. 

There had been talks for a while that Vietnam would surpass Bangladesh in apparel exports and it came true in the last fiscal year concluding in June. 

The pandemic played a major role as it brought Bangladesh's garment industry to ground to a halt amid a collapse in global demand.

Vietnam has managed the pandemic very well, becoming an example for the globe although it shares a border with China, where the virus originated.

Vietnam is strategically located, having proximity to major sourcing locations and access to the end markets. It can source anything from China and Hong Kong just the next day. This will happen in 90 per cent of cases.

It may take a whole week door to door if one compares it with Bangladesh, Haque said.

Bangladesh does not have a deep seaport, whereas Vietnam has got multiple of them along with more than 2,000km coastal belt, said Haque, who has been serving as the managing director of DHL Express Bangladesh since July 2017.

Bangladesh also faces obstacles when it sends products to buyers.

Bangladesh's major apparel destination is Europe, accounting for about 57 per cent of garment items shipped.

If Vietnam exports any items to Europe using air express service, the buyers would get the delivery within two days. From Bangladesh, a certain percentage of shipment may reach the buyers within two days, but in many cases, it would take more than two days.

"Bangladesh just has to accept the reality, where things are uncontrollable like proximity," Haque said. 

"Rather, Bangladesh should look at things that it can control, in terms of policies and regulatory infrastructure."

Haque talked about the challenges from the perspective of logistics, especially air express business.

In terms of goods being cleared and delivered, a lot of difference is made, he said.

When he was in Vietnam, a flight of DHL Express would touch down the airport of Hochi Minh City at 5:45 am.

Vietnam can recover the containers within 60 minutes to 90 minutes consistently. After the recovery of the containers at the air site operations at the airport, having them de-consolidated, scanned, customs released, bringing them to the service centre for sorting, vehicle loading all these activities used to be completed by 8:00 am in the morning.

By 8:00 am, local couriers would set off to deliver the products to the recipients.

 "In Bangladesh, depending on flight arrival, the recovery process of containers is longer," said Haque.

The recovery of containers from the flight that arrives in the afternoon would take place the following day. Hazrat Shahjalal International Airport allows the recovery until 4:00 pm.

"We lose a day in case of many flights."

DHL Express Bangladesh can't bring its flight to the country because the airport does not offer air site operations and volume-wise also may not be feasible at the moment. In Bangladesh, DHL Express depends on completely commercial airlines.

In Vietnam, it launched the first flight in around 2011 in the Ho Chi Minh City International Airport. It added a flight from Hanoi in 2014.

Like many other countries, Vietnam has allowed major players in the air express business to operate at the airport site. Through air site operations, air express businesses run round the clock operation.

They will have all equipment such as scanners and space needed to carry out airport-related processes in their facilities. Within the facilities of air express businesses, customs also operate. Air express businesses have data integration with the customs system.

There is a process of immediate clearance carried out in line with the guidelines of the World Customs Organisation.

The company's airport team categorises all shipments using its own systems before they land at the airport based on the category definition set by local customs. Nobody would touch the goods that would go through the green channel because information about them has already been transferred to the customs system with a very limited random exception.

Most of the shipments in the air express services are mostly low-value shipments.

Vietnam's airport allowed consolidated clearance. This means, for example, 1,000 shipments would be inserted into the customs system under a single bill of entry, instead of submitting 1,000 sets of documents for the 1,000 shipments.

"This saves a lot of time," Haque said. 

 In Bangladesh, there is no data integration.

 Haque regularly meets the top officials of major sourcing companies.

He said Bangladesh has to import fabrics and accessories mostly. By the time, suppliers develop the samples by bringing in fabrics and accessories from outside of the country, the bidding process closes.

Because of this, Bangladesh loses business opportunities worth $1 billion per year to Vietnam and Cambodia, two top buyers told Haque.

In Vietnam, 90 per cent of the air express shipments are cleared immediately through green channels under a rule called De minimis clearance, known as immediate clearance. In Bangladesh, although such provisions are allowed as per the customs laws of the country it is yet to have an effective process that meets the requirements of businesses.

"It's great that Bangladesh has made a few significant revisions in the last couple of years about De minimis law like revising value threshold from Tk 1,000 to Tk 2,000 and defined the value as intrinsic."

In Bangladesh, around 80 per cent of the air express shipments would have an invoice value of less than Tk 2,000, or about $23. 

The ideal practice should be: If there are thousands of shipments with an invoice value of less than Tk 2,000, then all of them would be condensed into a single bill of entry and cleared through simplified manifested information.

In September last year, the National Board of Revenue published a statutory regulatory order, putting De minimis rule into practice. But there has been a very limited clearance using it as of now due to lack of effective process on the ground, he said.

In Vietnam, all shipments under invoice value of less than $45 would be cleared immediately under De minimis clearance.

There are also challenges in the outbound flow of shipments.

One of them is the European Union has put Bangladesh on the list of high-risk countries in terms of operating cargo services destined to or transiting through EU countries since 2016, labelling it a "Red Country" as its security standards don't meet those of the economic bloc. Vietnam has no such problem.

The labelling means Bangladesh can't send any shipment to the EU directly. Rather, businesses have to require re-screening of their goods at a third airport in a green country en route to an EU country.

As a result, buyers face delays when it comes to time and cost.

"Ultimately, buyers would take the obstacles into consideration while reviewing competitiveness before placing orders with Bangladeshi suppliers."

A time-bound action plan has to be prepared to move out of the red labelling, Haque said. 

Bangladesh has put in place an automated explosive detection system at the Dhaka airport. "Now we need to ensure that the system is run efficiently, with the required capacity, with adequately trained resource and operated uninterrupted."

The processing centre of DHL Express Bangladesh has all security machines including automated explosive detection system (EDS) and maintains the required security standards thus RA3 (Regulatory Agent 3rd Country) certified by the EU nominated auditors.

However, despite having the certified standards, DHL Express Bangladesh is not able to transfer the benefits to the business community for not having the scope for air site operation at the airport.

He said because of the slow pace of improvement in competitiveness, Bangladesh would lose its attractiveness.

"Buyers explore competitive and efficient sourcing origins all the time. So, Bangladesh would remain very vulnerable."   

He said Bangladesh has introduced authorized economic operators (AEO) for exports. Now, the country needs to explore how it can encourage and extend this to different operators offering the intended benefits and especially for imports where the biggest challenges lie.

He said Bangladesh's success would depend on how quickly it can enforce rules and regulations in the highest simplified form. Simplification of processes is also important to attract foreign direct investment.

"Implementation would be such that meets the requirements of businesses so that it can facilitate trade and can improve the country's competitiveness."

Bangladesh should see how it can release 90 per cent of the air express shipment from the airport within 3-4 hours of the arrival of a flight, he said.

Duties and taxes collected on air express shipment are likely to be less than 1 per cent of all the revenues generated at all the ports, he said.

Bangladesh, for example, collects Tk 200 crore in revenues from air express shipments. If the country makes the processes even more complicated, it can earn another Tk 2 crore. But while chasing the Tk 2 crore, the country may potentially lose orders worth $5 billion, or Tk 45,000 crore.

The country may forego Tk 100 crore because of the simplification of rules and procedures. But it would potentially fetch orders worth $10 billion because the process is a gateway to bring in about $40 billion worth of export orders at the moment.

"That's why it is very, very important, we consider the big picture."

Under Haque's leadership, DHL Express Bangladesh has been awarded as the "Great place to Work" three years in a row by the Great place to Work Institute, a global authority on building, sustaining and recognising high-trust, high-performing workplace cultures based in the US.

According to Haque, the company has learnt several things from the pandemic.

The pandemic gives a lesson that there is no alternative to global trade, he said.

"DHL's purpose statement is "Connecting people, improving lives" and the pandemic situation is the best moment to live with the purpose statement." 

"The third lesson is: if there are a well-thought-out plan and coordination at all levels, investment and business continuity can be maintained despite a difficult period."

DHL is continuously investing in Bangladesh because it believes in the potential of the country, Haque said.   "We will continue to do that."