DHL agrees to buy 49 percent stake in Polar Air Support Services
DHL, the express delivery arm of Deutsche Post, has agreed to buy a 49 per cent stake in US-owned Polar Air Cargo to strengthen its presence in the trans-Pacific parcel and freight markets.
The deal represents a challenge to UPS and FedEx, the US express delivery groups, which currently dominate the tightly regulated market between Asia and the US.
DHL has a large parcel network in Asia and is also investing heavily in the US but before yesterday’s deal it lacked its own air capacity between the two markets.
Demand for trans-Pacific express delivery services is increasing sharply as trade between the US and China soars.
In return for its Dollars 150m investment in Polar, DHL will secure guaranteed capacity on the airline’s routes across the Pacific for up to 20 years.
“This key strategic partnership ensures we can meet the rapidly rising demand for air cargo capacities between the US and Asian destinations,” said John Mullen, chief executive of DHL’s express division.
UPS and FedEx each have more than 20 weekly flights between the US and China and the routes have become a powerful source of growth.
The US groups have each ordered 10 Airbus A-380 superjumbos to increase capacity across the Pacific.
DHL’s investment in Polar is part of a broader battle for global dominance among the large express delivery groups.
DHL is seeking to break the stranglehold held by UPS and FedEx in North America, while the US giants are challenging DHL’s leadership in Europe and Asia.
The German company’s expansion in the US has been marred by a series of missteps and heavy losses but yesterday’s deal signals its commitment to the strategy.
Polar, one of the largest US cargo airlines, is owned by New York-based Atlas Air Worldwide Holdings.
The deal requires regulatory approval and could face close scrutiny given recent political concerns in the US about foreign investment in American companies.
The German government owns a large minority stake in Deutsche Post, which has expanded beyond mail into a range of global parcel, freight and logistics services.
