DHL Express opens up North Asia Hub

Express delivery and logistics services provider DHL Express said this week it has opened up its $175 million DHL Express North Asia Hub at Shanghai Pudong International Airport.

Covering roughly 13 acres, company officials said the hub can process up to 20,000 documents and 20,000 parcels per hour, adding that it is part of its multi-hub Asian network which is comprised of four hubs in Shanghai, Hong Kong, Bangkok, and Singapore and connect to more than 70 DHL Express gateways in Asia. They added that DHL’s infrastructural network is served by a comprehensive air network of over 40 aircraft covering 40 countries and territories, and utilizing approximately 690 commercial flights per day in Asia Pacific.

“DHL Express North Asia Hub is a logistics milestone in DHL’s Asia Pacific network and the culmination of a multi-hub and aviation strategy that cements our leadership position in terms of connections, convenience and cost-effectiveness,” said Frank Appel, CEO of Deutsche Post DHL, in a statement. “With Asia’s leading economies fast integrating and free trade agreements reducing barriers to international commerce, logistics companies need capabilities that are ahead of the curve and offer simplicity, speed and service.”

A company spokesman cited various services upgrades and enhancements this new facility provides, including:
-reinforcing DHL’s multi-hub strategy in Asia Pacific;
- complimenting the Hubs in Bangkok, Hong Kong and Singapore that are collectively linked to close to 70 DHL Express Gateways strategically located throughout Asia Pacific;
-advanced technology for increased speed and accuracy, and huge volumes, providing unrivalled services;
-the length of the sorters and conveyors is 5.8 kilometres – almost one-and-a half times the length of Shanghai Pudong airport’s biggest runway (4km);
-a cutting-edge automated sorting system that maximizes operational capability, enhancing efficiency and speed in cargo processing to provide customers with even better time-to-market capabilities;
-the capacity to sort conveyable shipments to a peak capacity of up to 20,000 parcels and 20,000 documents per hour;
-50 truck docks and a security system including around 300 CCTV cameras; and
-24/7 Quality Control Center (QCC) that proactively monitors shipments in the air and on the ground around the clock.

“The North Asia Hub will directly benefit a significant number of customers in China, in particular in the Yangtze River Delta area, but also customers throughout the world doing business with this area, which is growing in economic importance,” a DHL official told LM.

Looking ahead, DHL said it plans to spend $132 million over the next two years to increase the dedicated capacity of its Asia Air network by deploying eight freighter aircraft between Shanghai and North Asia, Europe, and the U.S. These flights will be operated by DHL’s partner and equity-held airlines: Polar Air, Aerologic, and DHL Air UK, among others.

DHL also plans to leverage its existing direct connections between the North Asia Hub to Hong Kong, Osaka, Tokyo, and its global hubs in Leipzig and Cincinnati, with the $132 million investment geared towards enhancing capacity on those routes, coupled with new connections between Shanghai to East Midlands, UK. And it said it plans to further expand capacity on routes between the North Asia Hub and other cities in China and Taiwan, as well as add direct connections in the coming months to Incheon, Taipei, and China-based Dalian and Qingdao and Beijing and Xiamen expected in 2013.

This announcement came prior to the latest economic data from the Chinese government released today, which stated that China’s economy grew 7.6 percent in the April-June quarter from a year earlier, marking the slowest pace since the January-March quarter of 2009, and matching up with market expectations for a 7.6 percent rise. While the Chinese economy is growing, its rate of growth has slowed for six straight quarters, when compared to annual growth at 8.1 percent in the first quarter of this year

“When it comes to speed DHL has been playing catch up [in Asia] with FedEx for some time,” said Jerry Hempstead, principal of Hempstead Consulting. “This spend unfortunately comes when Asia is suffering a slow down in activity. “Data also indicates that shippers have been trading down service level in exchange for lower costs because the economy is struggling. When you operate an expensive express network it squeezes margins when shippers trade down the premium products.”

Despite that somewhat somber backdrop, Hempstead noted that fourth quarter express demand could “take off” with Apple’s upcoming iPad Mini release, as these types of releases often take up a lot of capacity when they have a major launch and historically the capacity has been spread among the carriers.