DHL staff may be forgiven for being a trifle hazy on details of Asian mega-facilities. These days, DHL’s top brass have plenty of opportunities in Asia to toast the opening of new strategic facilities. The Korean forwarding hub follows the inauguration of a new DHL Express hub in Shanghai in July and a new distribution and consolidation center in Hong Kong that came on stream in May.
By late October or early November, the company will also celebrate the expansion of its bonded airfreight facility in Shanghai. The airfreight expansion is designed to upgrade service, particularly for the firm’s clientele in the fashion industry, as space in the old facility was insufficient to meet the requirements of this sector for value-added services, a spokesperson for DHL remarked.
The flurry of expansion activities indicates that DHL’s top management is bullish on Asia, the region’s struggle to keep its exporting momentum notwithstanding. On a recent visit to Asia, Deutsche Post DHL CEO Frank Appel declared that the company aims to generate one third of its revenues in the Asia-Pacific region by 2017. Last year, this part of the world accounted for 19 percent of the integrator’s revenues.
Asia has been going strong for DHL this year. Management identified it as the chief driver behind a 7.3-percent growth in revenues in the second quarter; express revenues surged by 10.7 percent to $3.9 billion. China is at the heart of DHL’s expansion drive in Asia, as management views it as the most important regional and global engine for growth for years to come. Already the company generates more than half of its Asian revenues, more than €4.2 billion, in China.
To position the company for future growth in the region, DHL has earmarked €400 million for investment in the area in the coming years, which may include some smaller, ‘bolt-on’ acquisitions to strengthen its position in some segments, Appel revealed.
The $175 million North Asia Hub at Shanghai is a central plank in the growth strategy, a 288,640-square-foot facility that can process up to 20,000 documents and 20,000 parcels per hour. DHL intends to invest $132 million over the next two years to add eight dedicated aircraft to cover high demand routes between Shanghai and North Asia, Europe and the U.S. Over the next months, direct flights are planned from Shanghai to Seoul, Taipei and several destinations in China.
For the company’s forwarding and supply chain divisions, this hub will be of little direct relevance. “The DHL North Asia hub in Shanghai is purpose-built for the express business, and not for DHL Global Forwarding,” the company spokesperson commented. The expansion of the bonded airfreight facility should go some way towards meeting the needs of the forwarding division, which should also stand to benefit from capacity on the new flights in the region.