DHL Central to expand freight hubs in Asia

USA
Deutsche Post AG unit DHL plans to set up its fourth operations hub in Asia this year as the global freight firm banks on hopes that demand for trade within Asia will continue to be a key growth engine amid the slowdown in Europe and the U.S.

Recent industry changes have hurt companies with major express delivery operations as many customers have opted for slower-moving, non-premium delivery services in the soft global economy. Illustrating the trend, volume for rival FedEx Corporation's FDX -0.78% international-priority-airfreight business, declined 3% in the company's fourth quarter that ended May 31, after falling 1% in the fiscal third quarter.

Deutsche Post DHL's express division remained solid on the back of strong volume growth in Asia and America, posting revenue of EUR 3.02 billion for the first quarter ended March, up 9.8% from a year earlier. Earnings before interest and taxes rose 7.9% to EUR 231 million during the period.

"Intra-Asia trade is a big portion of our business portfolio and we've been riding on this growth over the years and it'll continue to be an important area of our growth," Mr. Kelvin Leung, Asia-Pacific chief executive at DHL Global Forwarding, told Dow Jones Newswires in a recent interview. Shipments within Asia account for more than a third of the total volumes that DHL Global Forwarding handles in the Asia-Pacific region, he said.

The German mail and logistic giant will soon inaugurate a new operations hub in Asia, adding to its existing centers in Hong Kong, Singapore, and Colombo, as part of efforts to further reduce transit times and save costs by bundling shipments from customers invarious Asian markets before exporting them to the rest of the world, said Mr. Leung.

Mr. Leung said the company is also considering further freight forwarding investment opportunities in Asia, including the development of Qianhai Bay, a 15-square-kilometer development area in the Chinese city of Shenzhen. "We're in discussion with all the parties involved in the development of the Qianhai Bay and we'll keep a very close eye on it," he said, without elaborating.

Mr. Leung said trade within Asia remains relatively resilient, despite a slower growth rate in some of the key markets such as China, India and Brazil. He notes emerging markets such as Indonesia, the Philippines as well as Vietnam will likely continue to record double-digit growth in shipments in the second half.

For the second half, Mr. Leung said he expects sea freight rates to stabilize following a series of rate hikes by container shippers since the start of 2012. He also noted that the air freight market will likely see some improvement in the second half because of a low comparison base a year earlier.

Source:http://www.transreporter.com/