DHL expanding operations in Shanghai duty free zone

Express and logistics provider DHL has launched operations at a 3.6 mln usd logistics facility at the Waigaoqiao Bonded Logistics Zone (WBLZ) in Shanghai, as part of the further expansion of its forwarding operations on the mainland, the company said.

The new warehouse and logistics facility boosts DHL Global Forwarding’s current investment in China to 30 mln usd. The DHL group’s total investment in the past few years is around 315 mln, it said.

DHL Global Forwarding will also invest an additional 20 mln usd in the next few years to further enhance the company’s network infrastructure, staffing, products and services to meet anticipated growth in China, it said.

Peter Landsiedel, Asia Pacific chief executive of DHL Global Forwarding, told XFN Asia the company had been experiencing 50 pct annual growth in China in recent years and it expected continued levels of growth this year.

He would not make a longer-term forecast but said: ‘Barring any catastrophic development,’ specifically copncerninfg oil prices, ‘we are pretty optimistic of continuing with double digit growth.’

‘Particularly for 2006 we are expecting to continue on the same growth pattern that we have now.’

While the company is considering acquisitions to grow its forwarding business in Asia, Landsiedel said it would primarily be expanding organically in China – even though it expects a consolidation of the numerous domestic businesses in the industry.

In China, he said, most of the existing freight forwarders are too small to be considered for acquisition and would not bring much value to DHL.

‘For the most part these small companies are local heroes… they are very much focused on a handful of accounts and these accounts are not very big accounts … so it really would not bring any value for us to acquire such freight forwarding companies.’

However, he added that the company was considering acquisitions elsewhere in the region.

‘We constantly have our ears to the ground to see if there are any opportunities out there for regional players or country-specific strong players (for acquisition),’ he said.

‘We are looking pretty much everywhere,’ he added, noting that it was looking at prospects in India, South Asia and Southeast Asia.

Greater China accounts for more than half of DHL’s Asia-Pacific revenue from forwarding operations, with the mainland accounting for 24 pct or regional revenue, Hong Kong 23 pct and Taiwan 5 pct. The next two largest zones are Singapore with 10 pct and Japan with 9 pct.

The new center is over 10,100 square meters, is the first of its kind and is the largest bonded logistic zone in China. DHL now has nine facilities in Waigaoqiao – measuring a total area of more than 50,500 square meters.

Recent investments by DHL Global Forwarding in China include warehouses in free trade zones in Shanghai, Guangzhou and Shenzhen as well as facilities in Beijing, Nanjing, Shanghai Pudong, Songjiang, Jiuting, and Shenzhen Nanshan.

The freight forwarding unit of DHL claims an existing network in China of more that 44 locations with coverage extended to 23 cities. By 2007, DHL Global Forwarding will further bolster its presence in China when it extends its coverage to 37 cities, it said.

The forwarding business in one of DHL’s four businesses. The others are express services, freight and supply chain management.

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