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>> We're watching to see how those

negotiations may begin over the next 24

hours with the US delegation on their

way to Pakistan. But one of the concrete

consequences of the war has been of

course the disruption to energy markets

and part of that leading to higher jet

fuel costs that are forcing airlines to

curtail their schedules. KLM Lufanza and

Cafe a Pacific are among the carriers

who are pruning their flight timetables

due to higher cost. That's the passenger

side of the business. But what does it

mean for air freight? Joining us now in

the Brussels radio studio to discuss is

Tobias Meyer, CEO of the DHL Group. Good

morning. Great to see you with us. Can

you talk to us about what sort of impact

you've seen so far from these increases

in oil prices and and as a result in jet

fuel? Firstly, the crisis obviously

impacted our direct operations in the

Middle East that has now um not fully

normalized but at least we have much

better state and I think that's very

important to us. We have quite a number

of colleagues in the region. So it's

good to see that the military activity

has uh come down. Now what hasn't

changed indeed is that the world is

lacking 10 12 million barrels of crude

oil supply every day and also um natural

gas is needed in in many economies in

Asia in Europe a critical supply of that

also coming uh through that straight. We

have uh seen some impact in Asian

airports and we also see I'm most

concerned about the supply of jet fuel

in Asia. Um in Europe so far our

suppliers tell us that uh for the coming

weeks maybe even months there is

security of supply. Um but in Asia the

situation is more fragile. You also see

this in the prices which I believe is

important that in in this situation

prices need to steer uh how the shortage

is managed. uh prices need to steer uh

where the supply is going uh to satisfy

essential demand that is not crippling

leading to crippling effects those

shortages potential shortages of the

global economy. So that remains a

concern.

>> How much visibility do you have? uh

you're talking about there being

situation being okay in Europe for the

next couple of weeks. But but when do

you are are you starting to worry that

you know if there isn't a resolution and

a greater resumption to supplies that

there will have to be greater

curtailments to your services? Well,

there hasn't been any curtailment and we

wouldn't expect that because what we do

um is quite essential. Uh we are not

transporting tourists that might have a

greater sensitivity to price. uh our

customers especially in the express

segment need those goods to be shipped

and logistics cost is often only a small

fraction of the price of goods and

especially the price of those goods not

being available if you think about

electronics if you think about spare

parts um so those costs are quite high

and this is why our uh willingness our

need to pay um is there um so uh we

would absolutely do the utmost that we

can uh to keep supply of the essential

commodity of jet fuel going. Um but it's

not always in our hands. We do not

control refineries. We do not control

the jet fuel systems in a lot of

airports. Some airports which are um

where we have very large operations.

Leip our central European and global hub

for instance we have our own fuel farm.

So there we have greater degree of

control but that's not the case in all

locations we operate. I mean how much do

you have a sense of how much pricing

power you have? Obviously the costs have

to go up and you pointed to the

essential nature of of the deliveries uh

to your customers. I mean you know how

high can freight costs go? Well, I mean,

we have seen a substantial rise um on

Asia, Europe, especially the um

shortfall of capacity, the Middle

Eastern hub carriers not being available

and those um both having full freighter

operations that are now partially

suspended, but also a lot of capacity as

belly freight on passenger aircraft.

That capacity has uh fallen away and

that is lacking now. that has led

already over the last weeks to very

elevated freight rates um Asia to

Europe, India to Europe, Southeast Asia

to Europe. So uh we have seen that that

spill over already. Now as it relates to

uh the jet fuel prices that is an

important component of intercontinental

flying especially on the regional side

it is relevant but it's not as big of a

part of the cost structure. Um we have

seen spikes uh Stephen in you know we

had oil prices of 100 120 before so that

is not a level that causes a big concern

but I'm not sure whether markets are

pricing in that even if the straight of

Hamus reopens partially or completely at

some point in time it will take weeks uh

for that crude oil to be shipped for

that crude oil to be processed for that

those products to arrive uh where they

need it and that is something where it's

doubtful whether that is uh really taken

to account when it comes to also the

resiliency measures of governments.

>> What what I mean how much do you think

is that being underpriced? What's the

potential that's not yet in the price?

Well, I mean, if you see the extent of

shortfall, 10 12 million barrels on 90

million barrels, roughly 100 million of

total demand and supply that is

substantial and historically um I

alluded to that um we have seen higher

prices. I'm not an expert in the trade

of crude oil. uh but also if you see the

reactions of other markets equity

markets included I'm not sure whether

markets are well prepared um

psychologically for this on off which we

have seen here in the case of uh Iran

but we've also seen in other situations

like the tariffs um whether markets are

really factoring in what this could

entail with a certain probability in the

mid to long term Um

>> in terms of your practical operations in

the Middle East, where is your capacity

now versus before the war started?

>> We are fully operational and uh I'm very

glad and proud I can say that it was the

uh really great work of our colleagues

in the region to keep goods moving to

keep supply chains running. Uh we

couldn't use our hop in Bahrain which

has served us well for so many years. uh

but uh we use Riad, we used Musket for

uh air operations. We have or we've had

since 40 years now very good trucking

network across the regions. We've

secured additional trucking capacity to

move uh ocean freight containers from

Oman ports from um the Saudi uh Westside

ports, the Red Sea ports uh across to

other GCC countries. Um and that uh has

allowed us to serve our customers well

over the last weeks

>> to some of the matters you're here in

Brussels um to some of the matters I

suppose focusing in focus for the

European economy as well. The 1 of June

is going to see the end of the EU's

dimminimous threshold for packages. So a

similar move to what the United States

has already done. I mean do you see that

having a major impact on on e-commerce

and is it something that's going to

affect EU consumers significantly? Yeah,

first I if you allow me I would

contradict in saying it's similar to

what the US has done because the US came

from a very different situation. We do

not have a true dimminimus in Europe

since many years. We had an import VAT

um that was also applied for uh lower

value shipments uh already. Um there was

some rules for really low value

shipments to to make this a little bit

simpler. But by and large uh we had

import VAT already which the US didn't.

The US had a true dimminimus uh where

neither duties nor taxes were applied.

So the economic impact the economic

change before and after in Europe is

more limited. What we see more as

problematic is a very European theme

again uh that Europe makes it very

bureaucratic. Uh additional data

elements to be gathered addition

different types of fees. we not only

going to have uh the minimum duty to be

applied to every article uh but we're

also supposed to have a handling fee

then in November um I mean it's good

that at least we don't have a

fragmentation across EU member states

everybody inventing their own um but you

ask yourself why do we need two

instruments handling fee and um the

minimum uh duty for every article and

why do we need again an extremely

bureaucratic solution

Um

>> and have you told the European

Commission this? Have you been engaging

with them on this subject?

>> Sure. And they have listened to some

elements. Um for instance, the

collection method um the original ideas

were entirely decoupled from the

existing VAT as it relates to who's

supposed to pay and how the payment is

going to happen. So some of those

procedural elements uh people have

listened but it is still a big problem

here in Brussels that people make it as

bureaucratic as they like.

>> So no no ef the drive here in Brussels

is for simplification as they they like

to call it. No sign of that in in this

particular side of the business.

>> No I think it's it's you know clearly

this year will add significant

bureaucracy in Europe. uh and it is just

not true if people I mean it's fair for

people to share the intent but we also

need to be honest what's happening on

the ground

>> what's the cost of that

>> well there's a whole wave it's not only

the dimminimus if you think about um the

pay gap directive for instance extremely

bureaucratic for large companies

extremely difficult to fulfill this will

lead to significantly more legal

disputes uh with employees we have a

packaging guideline that comes into

place extremely bureaucratic. Um there

are other elements also if you now think

about uh the industrial policy um again

you know by Europe uh with you know

proof of of the entire value chain

extremely bureaucratic. So I think

people really need to wake up and say

how do we make things the impla?