DHL to expand Asian operations

“Double-digit” growth prompts plans to further increase coverage in Asia during 2009 despite the economic downturn.

“Double-digit” growth prompts plans to further increase coverage in Asia during 2009 despite the economic downturn.

Amadou Diallo, CEO of DHL’s forwarding division in south Asia, said that forwarding revenues and volumes in Asia saw “double-digit” growth year-on-year in 2008.

“Asia Pacific is still a growing market for us,” he said.

“We did much better than expected. India was up 20%, Indonesia grew 50% and Australia was up about 15%.

“We’ve also been expanding in Vietnam and Malaysia.” Business was still brisk enough at the end of January that exporting customers in Malaysia were only closing for “a couple of days” over Chinese New Year because demand remained strong, he said.

“People might not be buying in Europe but they are buying in emerging markets such as the Middle East and Africa.

“Our volumes out of Asia to emerging markets increased by close to 200% last year.” Diallo admitted that customers in Asia became more focussed on costs as 2008 came to a close, with sea freight options being favoured over air – although this varied by country and industry sector.

But he claimed falling ocean freight rates had favoured bigger forwarders such as DHL, which are able to offer lines larger volumes out of Asia.

“We’ve been able to renegotiate our rates with carriers to get the best deals for our customers,” he said.”All-in” ocean freight rates from lines had “complicated” the process of purchasing slots for shippers.

“We can benchmark between carriers and negotiate with them,” he said. “We expect to increase volumes because we can get better rates for shippers by dealing with the carriers for them.” Following investment of around $2.2bn over the last seven years, DHL’s forwarding division now generated over 50% of DHL’s transported volumes out of the Asia Pacific region, where the company has offices in 41 countries, employs over 50,000 people and earns some €7bn($9.08bn) a year. We’re clear market leaders and we anticipate consolidating our position,” he said.

“Our forwarding volumes here have more than doubled in the last four years, mainly because we’ve increased our footprint in India, we’ve extended our presence in Vietnam and Indonesia, and because China has been going very well.

“In China, we have gone from zero to generating over $1bn of revenue in seven years.” Diallo predicted that capacity cuts in both the air and ocean sectors would see rates start to climb again by mid-year.

“Air freight was performing in terms of volumes until September. Then the volumes started to drop. We were able to take advantage of this by getting better rates for our customers who have to use air freight.

“We expect volumes will grow again in the second quarter as warehouses empty in Europe.” Further growth is also predicted in India, where integration of the company’s expanding forwarding business will be completed this year, and new warehouses were recently opened in Chennai and Bangalore.

Further investment is also planned.

“India’s GDP will grow 7% this year so we expect this will mean about 15% expansion in forwarding demand for us,” he said.

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