Pandemic Prompts DHL To Beef Up Expedited LCL Services

Transport and logistics giant DHL said it has upgraded its time-definite less-than-containerload (LCL) sea freight delivery service as supply chain demands arising from the coronavirus pandemic push it to offer fast-cycle global shipping alternatives to expensive airfreight.

DHL's weekly LCL Expedited Service launched in 2007 to connect major hubs in the Asia-Pacific region with U.S. destinations. The upgraded service now adds European origin points into the U.S., DHL said. Los Angeles and New York serve as the principal gateways where shipments are cleared and then trans-shipped via expedited truck services throughout the U.S, the Bonn, Germany-based firm said.

According to DHL, the program cuts 14 days off the standard 30-day door-to-door delivery times for LCL service between Shanghai and the U.S. East Coast. As part of the service improvements, the company has reduced container dwell times at Shanghai to two days and now offers a one-day turnaround at Los Angeles from vessel arrival to product departure. Once released, goods will be trucked from Los Angeles and New York to any continental U.S. destination within three to five days.

Container ships at the Port of Long Beach (Photo: Jim Allen/FreightWaves)

The service utilizes smaller ships because they require less traveling time to navigate ocean waters, DHL said. The focus is on smaller, high-value consignments that would typically be ideal commodities for airfreight services, DHL said. As with less-than-truckload (LTL) services in the U.S., the LCL service aggregates traffic from multiple shippers which individually don't have enough volumes to fill a full container. Cargo is cleared at U.S. Customs while the vessel is being unloaded, eliminating the need to divert shipments to a warehouse location before release, the company said. Customers can track their shipments in real time from origin to door, DHL said.

LCL services, which have been around for years, are designed to capture the middle ground between faster but more costly airfreight and cheaper but slower ocean freight services. A hybrid sea-air service, in which goods are typically shipped by sea from Asia to the U.S. and then flown to Latin America or Europe for delivery, is another attempt to provide some degree of speed at a price well below that of airfreight.

The coronavirus pandemic served as the catalyst for the upgrades, as customer demand has spiked for an upgraded service that could complement the airfreight mode in managing urgent deliveries, DHL said. The expedited LCL service is expected to play a critical role in distributing vaccines, vials and other equipment if and when a vaccine is approved. 

DHL, which has long experience in life science logistics, plans to use the LCL service alongside airfreight at the front end of the distribution process, according to David Goldberg, CEO of the U.S. arm of DHL Global Forwarding, DHL's freight forwarding unit which is overseeing the vaccine distribution efforts.

Boeing 777 freighter. DHL

In a webinar on Wednesday, DHL executives said the early surge in demand for personal protective equipment (PPE) has abated, and there is now sufficient buffer stock to address end-user needs. The company's clinical trials logistics segment that isn't related to COVID-19 activity experienced a downturn in the first half of the year due to a focus on the coronavirus and patients' reluctance to travel to facilities to participate in the trials. Clinical trials enrollment in the first six months was off 65% from the same period a year ago, according to DHL data. 

However, the company said it expects a rapid pickup in its broad healthcare segment during the second half of 2020 due to pent-up demand for elective procedures that had been postponed or canceled due to the pandemic.

Besides accelerated activity from its traditional health care base, DHL said it is being contacted by non-health care companies interested in developing COVID-19 preventative measures for their workforces. Down the road, DHL is working on logistics solutions to respond to the growing demand for telemedicine services that began during the pandemic, executives said. This could entail more deliveries of medical supplies or equipment to a patient's residence rather than the traditional drop-offs at doctor's offices or clinics, executives said.

To handle the need, DHL Supply Chain, the company's contract logistics unit, said Thursday that it will spend $70 million to develop additional specialized warehousing infrastructure and technologies for its North American pharmaceutical and medical device customers. 

Separately, DHL has added the U.S. and Vietnam to a sea-air delivery network, Multi-Modal Express, which was launched last year to connect China and Latin America. DHL also added a hub in Shenzhen, China, to boost connections from the southern tier of China and Vietnam.

Photo: DHL