DHL prepares for next decade with USD850m Asian plan

DHL, Asia’s biggest express operator by sales, is to double the size of its parcel handling centre at the airport as part of an USD850 million expansion which the carrier expects to satisfy demand for the next decade.

The expansion, to be completed by 2007, will build in a higher level of automation at its Central Asia hub, increasing the speed at which the European express firm can process the millions of packages it handles each year in Hong Kong.

“The expansion will create the first fully automated facility of its size in the Asia-Pacific region,” said Scott Price, chief executive (Asia-Pacific) for DHL Express. “It will be built to handle our projections of 90 million shipments a year by 2015 and should satisfy the capacity needs of even our most aggressive growth scenario. It is a long-term commitment to the Hong Kong area.”

DHL moved about 30 million shipments through Hong Kong last year, meaning that it expects its business at the airport to triple over the next decade. Volume is expected to reach 40 million units by 2008 alone.

“We are opting for full automation which means a full document and auto-sort process that will increase by about 25 per cent the speed at which we can handle shipments,” Mr Price said.

“Because in our business, automation is not always related to cost-savings, it is related to the amount of shipments we can put through the hub in that very tight window before the planes take off at three each morning.”

DHL feeds cargo into the Asian hub primarily through a regional network of flights offered by pure freight carrier Air Hong Kong, its minority held joint-venture airline with Cathay Pacific Airways.

Air Hong Kong’s fleet of 47-tonne capacity A300-600F aircraft brings cargo into the hub for a night-time sorting process before redistribution to cities from Shanghai to Singapore for the start of the next business day.

Mr Price said the shift to a fully automated facility would not lead to a downsizing of the near 2,000-strong workforce it has in Hong Kong.

“Based on our calculations of the growth levels, we will not have to retrench anyone during this expansion process because we are seeing such strong growth in the heavyweight sector of our business, the non-conveyable segment that cannot go through the auto-sort process,” he said.

Yesterday’s announcement, which pushes DHL’s original expansion plans for the hub ahead by six years, followed just two months after rival Federal Express said it would invest USD150 million in an Asia-Pacific hub in Guangzhou – its biggest outside the United States – which will be operational before 2009.

According to New York-based marketing firm MRM Worldwide, DHL controls 40 per cent of Asia-Pacific express market moved by the four global integrators.