DHL beats hub forecast by four years
DHL Express will open its US$100-million dedicated central Asia hub in Hong Kong this week and it is already clear the terminal’s handling capacity will have to be expanded ahead of schedule.
Chief executive (Asia Pacific) John Mullen said a daily volume target DHL set for 2008 was achieved last week before the facility had even officially opened.
“It doesn’t mean we’ll run out of capacity overnight. But it does indicate our volume projections [made three years ago] were highly conservative,” Mr Mullen said. “We will have to substantially upgrade the hub’s capacity before the original deadline. It will be much, much sooner than that.”
The boom in high-value express products at the airport is increasing the value of Hong Kong’s air trade; it comprised just 1 per cent of trade by volume last year but 30 per cent of trade by value, up three percentage points year on year.
The Airport Authority estimates express products will make up 13 per cent of the airport’s trade volume within five years, up from 8 per cent to 9 per cent this year.
DHL had thought the hub would not hit peak handling levels of 20,000 pieces an hour until 2008. Its daily handling capacity of about 440 tonnes was thought to be sufficient to 2009. This may now be re-evaluated.
Revenue from its mainland express business has jumped 50 per cent to 60 per cent this year; full-year sales billed in China for moving international express products was US$300 million last year.
“You only get one China in your business life,” Mr Mullen said yesterday in Singapore. “It is a phenomenon, and the spillover is touching on virtually every country in Asia.”
He said building of the new hub at the airport had been on schedule and “materially under budget” – just under 10 per cent in dollar terms.
Next month, DHL will launch a dedicated intra-Asia freighter network when it takes delivery of the first of six Airbus aircraft it bought with Cathay Pacific at a cost of US$400 million in 2002.
The aircraft – deliveries will be complete by March next year – will wear the livery of Air Hong Kong and will link the hub to Asia’s key commercial centres, including Bangkok, Osaka, Seoul, Singapore, Taipei and Tokyo.
DHL is hoping that the network will be extended to Shanghai soon pending the outcome of six months of mainland-Hong Kong aviation talks. “Those talks are obviously of great interest to us,” Mr Mullen said.
“Air Hong Kong rights are tied up with [Cathay] and the Hong Kong decision so that could open up an opportunity for us to use our new freighters to Shanghai.”
DHL uses Cathay passenger aircraft at night to serve its growing intra-Asia market. But, because Cathay has no rights to fly to Shanghai, DHL uses Dragonair aircraft to serve the mainland market.
According to group chief executive Uwe Doerken, a dedicated intra-Asia network is one asset that differentiated DHL from rivals such as Federal Express and United Parcel Service.
“Our network is an Asia-based, intra-Asia network. It is a hub and spoke system based in Hong Kong with substantially different characteristics than their [networks],” Mr Doerken told the South China Morning Post last month. “Our US competitors based their business on the import lane to America. They have transpacific networks with some Asian inter-connections. But they don’t have a hub and spoke network that connects Asia.”
