DHL Opens Larger Hub in Bid to Grow U.S. Share

Rip Watson
Transport Topics
June 21, 2013
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DHL Express officially opened the $46 million expansion of its U.S. air hub here in an effort to build market share and sustain double-digit package and express volume growth.

“This is a major step forward for us,” said Ian Clough, CEO of DHL Express U.S., speaking on June 13 at DHL’s facility at Cincinnati/Northern Kentucky International Airport. “The U.S. is a significant part of our global market. This will position us for growth for the next five years.”

U.S. volume growth was 11% last year over 2011, after an 18% jump the previous year, DHL said.

In the four years since DHL located its hub in the Cincinnati area, the Germany-based postal, freight, express and logistics operator has spent more than $100 million to create a location that handles about 125,000 packages daily. With the expansion, capacity is 240,000 packages a day.

Clough told Transport Topics the expansion also will help DHL significantly expand its capacity for loading cargo containers more efficiently. He wouldn’t give specific targets but said the company doesn’t expect to add more aircraft in proportion to the capacity increase.

The ceremony included a ribbon- cutting by Deutsche Post DHL CEO Frank Appel and Kentucky Gov. Steve Beshear, as well as tours of the new 180,000-square-foot sorting facility, which has the capacity to handle at least 10% annual express shipment growth for the next five years.

“We have grown the business very successfully,” Appel said. “We definitely expect this expansion will help us to grow the business incrementally. We have gained market share from UPS and FedEx.”

DHL’s U.S. presence is focused on Cincinnati as its hub airport, where nearly 40% of its 5,500 U.S. employees work.

DHL exited the U.S. domestic package business in 2009, ending a five-year experiment that cost the company close to $10 billion and forced it to trim more than 9,000 jobs. Its U.S. air hub at Wilmington, Ohio, was relocated to Cincinnati as the company kept its international service to and from the United States.

Clough told TT the express unit expansion would not make any changes in DHL’s ground freight operations, other than handling more packages and freight. The company uses its own delivery fleet, except in remote areas, where it deploys contractors.

Growth in the United States has been fueled by growing trade with Australia and selected European markets, such as Germany, and includes products such as auto parts, electronics and e-commerce, Clough said.

The U.S. market accounts for about 50% of DHL Express revenue in the Americas, Clough said. In the first quarter, DHL revenue in North and South America was about $700 million, or 16% of total DHL Express revenue.

Also last week, DHL announced a temperature-controlled airfreight service called Thermonet, which targets health care and related industries and has 24-hour monitoring. The new offering will be part of DHL’s existing service to that market.

DHL’s largest holding in the United States is Exel, Westerville, Ohio, the logistics operator that ranks No. 1 on the Transport Topics Top 50 companies in that sector.

DHL also owns Standard Forwarding, a regional less-than-truckload carrier based in Illinois that was acquired in 2011. It is part of the DHL Freight unit.

Total Deutsche Post corporate revenue in the first quarter was $17 billion, including nearly $5 billion from the postal operation. By comparison, UPS Inc., which ranks No. 1 on the TT Top 100 list of for-hire carriers, had first-quarter revenue of $13.4 billion.

However, UPS’ operating profit outpaced Deutsche Post’s performance, with operating income of $1.58 billion at the U.S. company, compared with 711 million euros, or $925 million, at Deutsche Post.

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