DSV Annual Report 2022

15 DSV Annual Report 2022 Strategy and financial targets = III Trends A need for reliable global supply chains Even before the COVID-19 pandemic, companies sought more reliable and transparent supply chains. That need has only grown, and companies are contingency planning and adjusting their setup to protect against future risks. Geopolitical instability and protectionism Geopolitical instability causes tension and unrest. Global trade flows and economies are impacted by factors like protectionism, trade wars and political and military conflicts. Greener supply chains The demand for greener supply chain solutions is growing - driven by increasing environmental regulations and consumer pressure. The rise of e-commerce Consumer behaviour is becoming increasingly digital, sending fulfilment centre and last-mile delivery activities skyward. Digitalisation and automation Technology has transformed our industry over the past decades. This development will continue and will impact the way we operate and interact with customers and other stakeholders. Their impact Many companies are diversifying outsourced production between China and other East Asian countries. With dual sourcing and with more countries involved, dependencies are reduced, but complexity goes up. Companies are also considering reshoring of production. It is happening for certain products, but so far with limited impact on global trade. For some companies, storing extra buffer inventory closer to the end market can be another way to make supply chains more robust. Across the globe, we continue to see new examples of conflicts, protectionism, changes to tariffs and embargoes. In 2022, the war in Ukraine had both direct and indirect impact on the supply chains of many companies and on transport markets due to the closure of Russian air space and Ukrainian truck drivers leaving the European market. In recent years, the UK Brexit and the "trade war" between China and the US have also had a significant impact on supply chains and our operations. The transport and logistics industry is a major contributor to carbon emissions, and the sector as a whole must make a bigger effort to develop more environmentally sustainable business practices and reduce emissions from its activities. Having a clear sustainability strategy and service offering is increasingly becoming a "license to operate" for transport and logistics companies. COVID-19 lockdowns accelerated the shift in consumers' buying behaviour towards more online shopping. During 2022, e-commerce slowed a little, in line with the economic slowdown. But we still expect high structural growth in this area in the coming years, both for local and cross-border transactions. Across supply chains, the demand for visibility and productivity - often in tight labour markets drives technological development. Customer and vendor interactions are gradually changing from manual and classic EDI based to more modern API connections. And to drive productivity and support the fast-growing e-commerce segment, warehouses are increasingly being fitted with automated storage & retrieval systems. Our response We help our customers optimise their supply chains - suggesting efficiency improvements to increase reliability, cut costs or reduce the environmental impact. By providing supply chain visibility through our digital services, we can support planning and monitoring all the way from purchase order to final delivery. Dual sourcing and more complex supply chains may increase the demand for our services - e.g., purchase order management, cargo consolidation, customs clearance and warehousing. When such changes occur, we and our customers must react quickly to keep supply chains flowing - and to avoid violating any regulation. We offer a strong operational and compliance setup to help customers prepare for and adapt to market changes. Ultimately, we expect the benefits of global supply chains to win out over protectionism, and we believe globalisation is here to stay. There will be examples of more local production, and with our flexible business model we can adapt to such changes in trade flows. In 2022, we continued our efforts to support greener supply chains for our customers through our Green Logistics offerings. This market is still at an early stage, and we expect that the demand for these services will increase in the coming years. We continue to develop our services, and in 2022, we changed our organisation and created new operational and commercial sustainability teams to support this. We continue to see growth potential for DSV in the e-commerce market, and we are continuously devel- oping our services. This includes the roll-out of our automated e-fulfilment factories and customised solutions for large customers. We aim to combine our strong logistics competences with advanced digital solutions. We work with strategic roadmaps to develop our digital and physical infrastructure, and we implement scalable tech- nology across our organisation. Read more about our approach to technology in the following chapter.

View entire presentation