DHL says China revenue growth slows
DHL has seen revenue growth at its China business slow to around 15 percent during the first seven months of the year from a recent average of over 20 percent, an executive said.
Dan McHugh, Chief Executive of DHL Express Asia Pacific, attributed the slowdown primarily to a decline in shipments abroad over the past 12 to 18 months as U.S. and European demand in particular has dwindled.
DHL has enjoyed 20-23 percent annual growth in China over the last five years.
China’s exports have been hit by a stronger currency and weaker overseas demand. Export growth slowed to 17.6 percent in June, compared with a year earlier, from 25.7 percent in all of 2007.
McHugh declined to comment on how much revenue DHL earned in China, but he said it accounted for a significant chunk of its Asia-Pacific business.
He said it was difficult to say whether the Olympics would be a net positive or negative for revenue.
The Chinese government has put in place a number of restrictions to ensure security at the Olympics and curb air pollution in Beijing, including banning some items from being shipped nationwide, more customs inspections and curbs on vehicles entering the capital.
That has created new hurdles for DHL and rivals such as FedEx Corp and United Parcel Service Inc.
McHugh said the measures were not having a “material” impact on DHL’s China business.
But he said the company was spending about usd 2 million to deal with them, including increasing its fleet around Beijing and buying extra X-ray machines and hiring more staff to facilitate customs inspections.
DHL has seen revenue growth at its China business slow to around 15 percent during the first seven months of the year from a recent average of over 20 percent, an executive said.
Dan McHugh, chief executive of Deutsche Post’s, DHL Express Asia Pacific, attributed the slowdown primarily to a decline in shipments abroad over the past 12 to 18 months as U.S. and European demand in particular has dwindled.
DHL has enjoyed 20-23 percent annual growth in China over the last five years.
“Import volumes are actually still relatively healthy, with economic substitution and investment substitution,” McHugh said in a telephone interview from Shanghai. “We’ve definitely seen a slowdown in air freight coming out of China.”
China’s exports have been hit by a stronger currency and weaker overseas demand. Export growth slowed to 17.6 percent in June, compared with a year earlier, from 25.7 percent in all of 2007.
McHugh declined to comment on how much revenue DHL earned in China, but he said it accounted for a significant chunk of its Asia-Pacific business.
He said it was difficult to say whether the Olympics would be a net positive or negative for revenue.
The Chinese government has put in place a number of restrictions to ensure security at the Olympics and curb air pollution in Beijing, including banning some items from being shipped nationwide, more customs inspections and curbs on vehicles entering the capital.
That has created new hurdles for DHL and rivals such as FedEx Corp and United Parcel Service Inc.
McHugh said the measures were not having a “material” impact on DHL’s China business.
But he said the company was spending about usd 2 million to deal with them, including increasing its fleet around Beijing and buying extra X-ray machines and hiring more staff to facilitate customs inspections.
“This is not an onerous number. It’s just a cost-of-doing-business type of number at this point,” he said. “I think the net benefit of it is that we improve our processes across the country.”
DHL partners in China with Sinotrans Ltd.
Darcie Goodwin, a spokeswoman for FedEx in Shanghai, said that it had also made exhaustive preparations to cushion the impact of Olympics-related curbs.
“It’s all about planning, so this is just sort of ‘uber-planning’,” she said.
