Air and parcel shipping: Former DHL air hub may be donated to Clinton County Ohio
Jeff Berman, Group News Editor -- Logistics Management, 1/6/2010
WILMINGTON, Ohio-Roughly six months after express delivery and logistics services provider DHL Express moved its U.S hub operations from the Ohio-based Wilmington Air Park to the Kentucky-based Cincinnati/Northern Kentucky International Airport, it appears that deal may soon be struck in which the former DHL Air Park may be donated to Clinton County Ohio, according to various sources.
A joint statement issued this week by DHL, the Clinton County Port Authority (CCPA), and the City of Wilmington said that a final agreement has not been reached, adding that a few details need to be settled due to project complexity.
"Talks between DHL and the CCPA continue to be constructive and are progressing," the statement read. "However DHL and the CCPA are subject to confidentiality with respect to details of the ongoing discussions and will issue further details upon resolution of these discussions. DHL Express and the CCPA are pleased about the prospects of this solution supporting the region and people of Wilmington and are very hopeful that such a donation could serve as a stimulus for redevelopment and future commerce in Southwestern Ohio."
While DHL may eventually donate the air park to the city of Wilmington, the Dayton Daily News quoted Wilmington Mayor David Raizk as saying that DHL might retain 700 acres of farmland near the airport to be sold separately. The report added that the airport is comprised of roughly 1,500 acres, has two runways, a control tower, dozens of buildings and more than 1 million square-feet of cargo-sorting space.
DHL initially set up shop in Wilmington in 2005, following its 2003 acquisition of Seattle-based Airborne Inc. for $1.05 billion. When that deal was inked, DHL acquired all of Airborne's services, customers, and assets, except for its airline operations. The airline became an independent company called ABX Air, DHL with chartering and leased ABX's aircraft under what it termed an "arm's length" agreement.
The last ABX Air Flight out of Wilmington lifted off the JFK Airport in New York on July 24, 2009. Negotiations are still ongoing between DHL and ABX going forward for air transport of their shipments in the U.S., according to an industry source.
Mayor Raizk also serves as co-chairman of the Economic Task Force for the DHL Hub in Wilmington, a concern made up of city, county, state, and national government officials, as well as representatives from ABX Air and ASTAR Cargo, whom both provided U.S.-based air carrier service to DHL out of the Wilmington Air Park. Ohio Lieutenant Governor Lee Fisher also serves as a co-chairman with Raizk.
The Task Force was established in June 2008, when DHL was in negotiations with UPS to establish a 10-year/$10 billion partnership in which DHL Express would have worked with UPS for airlift capacity in an effort to reduce its ground infrastructure costs. UPS would have also provided all airlift services for DHL Express U.S. domestic and international shipments from airport to airport within North America, which would have given DHL a single airline partner in the U.S. The deal was originally expected to be completed by the end of 2008, but it was officially tabled in May 2009 due to declining volumes.
In an interview with LM, CCPA President John J. Limbert said if this deal is consummated the strategy-or vision-for the air park's future would be to create an economic platform for Southwest Ohio that encourages multi-user growth.
"Historically, the air park has been a one-client employer," said Limbert. "And I think the go forward strategy would be to focus on more multiple employers; some may be tied to logistics and airfreight, and some may be technology- or defense-related. The clear lessons learned-not that the area did not benefit from DHL and ABX-is the need to develop multiple users so we have a diverse employment base."
Jerry Hempstead, president of Orlando-based Hempstead Consulting, said that it is imperative for DHL to get the air park off its books for various reasons, including that the economic value of the property without it being an air hub for DHL is low, coupled with the fact DHL is never returning to Clinton County, yet they have to maintain the airport and pay insurance, among other things.
"If they can give it to the county or the state or the port authority or the city then they can walk away and put Airborne entirely behind them," said Hempstead. "This is the last vestige of the puzzle save for negotiating a lift agreement with ABX Air-or some other airline like Polar (DHL owns 49% of Polar and 49% of Astar, which I do not see as likely."
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