Deutsche To Invest Billions In Automation, Analytics

German shipping and logistics company Deutsche Post DHL has investment and expansion plans to capitalize on the growing eCommerce space worldwide, according to a report from Reuters.

The company set a target for an operating profit of $5.77 billion by 2022 after missing targets last year. It aims to see better profits by restructuring and raising prices to raise its 2019 forecast, despite potential global trade difficulties ahead.

Deutsche Post has seen growth in parcel shipping, but also a rise in costs stemming from a difficult labor market and tolls on trucks in the country. The company’s five-year plan includes an operating profit of five billion euros by 2020.

“We need not reinvent ourselves. We will digitalize,” said Chief Executive Frank Appel.

Shares in the company fell 0.5 percent on Tuesday morning (Oct. 1).

“This looks like evolution, not revolution,” said Bernstein Analysts Daniel Roeska and Alex Irving.

According to Finance Chief Melanie Kreis, the guidance would be good for three years and would then move forward one year at a time.

FedEx, a U.S. rival, has also struggled with trade issues and warned that its own estimates would be off-target.

Deutsche Post said it plans to invest somewhere between 8.5 and 9.5 billion euros as it overhauls its IT systems and begins retraining its staff. The company will also apply more data analytics to improve the efficiency of delivery routes and accuracy of parcel volume predictions.

Deutsche Post also plans to invest two billion euros into digitalization, in hopes that it will generate an annual payback of about 1.5 billion euros by the year 2025.

The company has estimated that air freight will grow around 1 to 3 percent per year moving forward.