DHL Danzas signs three-year agreement to use Hong Kong on-airport facility as logistics base
DHL Danzas Air & Ocean yesterday became the HK$530 million Tradeport facility's second partner after the global forwarder agreed to an initial three-year deal to use the on-airport facility as a base for some of its logistics-related operations.
The deal's value was not disclosed but the company, which in April was merged with Brussels-based DHL Worldwide Express, said it expected to move up to 30 per cent of its business through the facility.
"The intention is for long-term partnership but the length of the tenure will really depend on the success of the co-operation," DHL Danzas managing director (Hong Kong, South China and Macau) Kelvin Leung Kai-yuen said, adding the deal took about six months to put together.
Mr Leung said Tradeport's services would not overlap with those of DHL's US$100 million express facility, to open in the second quarter, as the new deal would focus on the heavier weighted goods sector.
The first of DHL Danzas' clients, which the partners declined to disclose, will move into the 29,000 square metre first phase of the Tradeport facility on August 1.
It is believed the deal has the potential to take up more than half the available capacity of Tradeport, with phase two, and another 9,300 square metres of space, not due until 2006.
Tradeport and DHL Danzas have formed a partnership to bid for goods management and distribution contracts of major shippers, mostly in the electronics sector. The Tradeport facility will be used for value-added logistics services such as inventory management and last-minute assembly, and will also offer traditional services such as warehousing.
While the facility is an on-airport location, Mr Leung did not rule out the possibility it could also be used to add value to products moving by sea.
"Chek Lap Kok is a strategic location so the longer-term strategy took in the possibility of the Hong Kong-Macau-Zhuhai bridge being built," he said. "But initially, the vast majority of the goods we will manage at Tradeport will be airfreight-related."
It is the same sort of partnership Tradeport struck last month with global integrator Federal Express, its first client.
"The plan has always been to have collaborative partners. In this case we are very much working with the Danzas element, rather than the DHL," Tradeport chief executive David Oldridge said.
The two deals must have come as a relief to Mr Oldridge, who had been staring at a lot of expensive empty space in the first six months after Tradeport was officially but quietly launched in January.
But he said yesterday that deals tended to come in bunches in his business and there would be more to come in the near future.
"We only plan to strike deals with two or three more strategic partners, one of which we are on the verge of announcing," he said. "Within two months we could be full, it's that kind of business.
"The Tradeport model is new and therefore it is largely unproven," said Mr Oldridge.
"But it has now been endorsed by two of the best in the business and their customers, and that has to be a promising sign."
Executives at the former Basel-based forwarder Danzas would have been well aware of what Tradelink had to offer during the negotiation period.
Danzas was one of the initial bidders for the Tradeport contract, but it pulled out at a late stage.
Mr Leung said Tradeport was one of the few facilities in Hong Kong which could cater for the needs of the modern logistics industry.
"If we want to make Hong Kong the premier logistics hub for the region, we need more facilities like Tradeport. We hope the government will proceed with other projects of this quality, such as the value-added logistics park it has planned for Tung Chung."
When the government first announced the HK$1.1 billion Tung Chung development in 1999, Danzas was one of the first to express an interest. But the project remains on the drawing board, even though it is expected to create 20,000 jobs.
