DHL dominates market share in the rapidly growing express/freight forwarding/supply chain business in the Asia-Pacific. However, the logistics & express giant, a subsidiary of Deutsche Post World Net, isn’t content to simply match Asian GDP growth from it’s top spot. DHL has established an aggressive strategy that ranges from establishing SuperHubs to investment in a wide range of logistics assets to key partnerships and an intensive training program for the next generation of Asian employees.

By George Lauriat, Editor-in-Chief, AJOT

Over the past three decades, DHL has established itself as the dominant logistics & express company in the Asia-Pacific region. The integrator has benefited from the double-digit GDP growth in the Asia-Pacific region that has, like a rising tide, lifted DHL’s fortunes along with those of other logistics companies.

It is clear from the level of investment, however that DHL’s strategy is to not only keep pace with the organic growth of freight and parcels, but also to secure an even greater market share as supply chains become more complex.

The cornerstone of DHL’s strategy is a large-scale investment in facilities and operations in the Asia-Pacific region. Since 2000, DHL has invested more than US$1.6 billion in the Asia-Pacific region. Much of this expenditure has been on a number of high profile ventures:

  • US$400 million in DHL-Cathay Pacific/Air Hong Kong joint venture;
  • US$210 million in Central Asia SuperHub at Hong Kong International Airport;
  • US$300 million investment in China, including $25 million DHL-Sinotrans headquarters in Beijing;
  • US$250 million in India, including US$163 million for the acquisition of a majority stake in Blue Dart Express.

The Asia-Pacific region is a significant contributor to DHL’s global bottom line. In 2005, the Asia-Pacific region accounted for EUR 6 billion,130 million shipments, (including 125 million express shipments,) 1.7 million tons and over 660,000 teus.

From an organizational perspective DHL is divided into four global services.

Express & Freight divisions are under the Express umbrella, while Global Forwarding & Exel Supply Chain fall under the Logistics unit.

DHL believes that there is tremendous growth potential in the Asian market, particularly in China. On the express side of the business, DHL expects the total volumes to quadruple (based on 2004 totals) by 2015. North East Asia’s (China represents 70% of North East Asia’s total volume) is expected to increase from 975 tons/day to 4,985 tons/day by 2015. China alone represents half of Asia Pacific’s growth opportunity through 2015.

However, China’s growth isn’t an isolated case as India/Subcontinent is also forecast to grow 100 tons/day to 465 tons/day and Southeast Asia’s 405 tons/day to 995 tons/day over the same period. In fact, nearly all the Asia-Pacific nations are in either the high growth (20%-40%) or medium growth (10%-20%) range.

US-China trade has been particularly important to DHL. In 2005 the logistics company handled 32.5 million kilos and over 80,000 teus of exports (China to US) and 11 million kilos and nearly 12,000 teus of import. The top export commodity groupings are electronics, chemicals and retail items such as apparel. Inbound electronics, hi-tech products, machinery & equipment are the principal items.

The future growth rate in Asia may very well be considerably greater than what has been experienced thus far, especially in the small package/express business. Scott Price, DHL’s CEO of the express division for Asia-Pacific pointed out that Japan’s domestic express business has grown substantially over the last few years, outstripping GDP growth. This is an unusual result for a ‘mature’ economy. But Price does not believe this to be an aberration. Price says that the individual national domestic and intra-Asia-Pacific business is growing very fast and potentially could outrun the growth of some of the major trade lanes. The Japan experience could