The world is on the “cusp of a second wave of global expansion” driven by technology-enabled e-commerce, said DHL Express CEO Ken Allen as he announced a €335 million doubling of its Central Asia Hub (CAH) in Hong Kong.
“The growth we are seeing around the globe, but especially out of Asia has just been phenomenal over the last few years,” Allen said. “I think we’re on the cusp of a second wave of global expansion, because it’s now possible due to broadband and mobile technology for every single person in the world to be connected and that’s going to drive a boom in e-commerce.
“Commerce now, for the first time in history, is going to be decided by the consumer,” Allen added, noting that e-commerce globally has been growing at around 25 per cent a year. And with International Monetary Fund (IMF) figures indicating the Asia Pacific region’s GDP to grow by 5.5 per cent in 2018, the Asia Pacific region is expected to become the world’s largest cross-border e-commerce market by 2022 with China generating the lion’s share of growth, according to Ken Lee, CEO of DHL Express Asia Pacific.
“Hong Kong being China’s second largest trading partner behind the US will remain the preferred international gateway to Chinese consumers,” Lee said, adding that Hong Kong’s exports are also “exhilarating” in the first three quarters of 2017 with Hong Kong’s merchandise exports group up an “enviable” 8.5 per cent compared to the same period last year. Another key advantage is the fact that 50 per cent of the world’s population is within reach of a five-hour flight from Hong Kong.
When completed in 2020, coinciding with Hong Kong International Airport’s opening of its desperately needed third runway, the expanded CAH will be have a capacity of 1.06 million tonnes a year – representing a full quarter of HKIA’s current cargo volumes. With an enhanced material handling system, productivity will jump significantly with the hub’s throughput capacity rising from the current 75,000 shipment pieces per hour to 125,000 pieces per hour.
“Given the expected rise in international e-commerce and intra-Asian trade, DHL is committed to strengthening our global network and services,” said Allen. “Based in a strategically important location to DHL, the expanded Central Asia Hub in Hong Kong will not only bolster our operational capacity in Asia Pacific, but also facilitate the rapidly growing international trade demands in the region and around the world.”
Indeed, it’s more than just e-commerce, which in reality only makes up about 20 per cent of DHL Express volumes currently, that is driving business at the Deutsche Post DHL’s division – which globally has seen 26 consecutive quarters of growth of at least 7.0 per cent and around an average of 9.0 per cent per quarter, according to Allen.
Intra-Asia demand has been robust, with business growing nearly 20 per cent year-on-year, driven – as the global business similarly is – by the more ‘traditional’ express cargo covering a wide range of sectors and shipments. This includes automotive, consumer, chemicals, energy, engineering and manufacturing, technology, textiles, financial services and retail.
The expansion is clearly timely as CAH has recorded an average 12 per cent year-on-year growth in its shipping volume in the past decade. As one of three global hubs for DHL – the other two being Leipzig in Germany and Cincinnati in the US – the expanded CAH will continue to act as the core hub of the DHL Express global and Asia Pacific regional network. Currently the hub handles more than 40 per cent of DHL Express’ total Asia Pacific volumes.
Lee said: “Connecting with more than 70 DHL Express gateways in the region, the Central Asia Hub plays a significant role in strengthening our existing network of hubs in Asia Pacific, including Shanghai, Singapore and Bangkok.
“The expansion will also help us capitalise the growth in intra-Asia trade lane that currently contributes to 40 per cent of our revenue in Asia Pacific. Equipped with fully automated X-ray inspection machines, it will increase the speed of our shipment inspection by three times – enabling us to expedite the processing speed of shipments that come through the CAH.”
The CAH will also get a boost once the 55 km Hong Kong–Zhuhai–Macau Bridge (HKZMB) is operational from early next year. The complex project involving a series of three cable-stayed bridges and one undersea tunnel, connects Hong Kong with Macau and Zhuhai, both major cities on the Pearl River Delta in China.
As Tony Khan, general manager, Central Asia Hub, DHL Aviation Hong Kong noted, the volume from China is growing and Hong Kong is benefiting and later this year when the bridge opens, the current 4-5 hours of trucking from Zhuhai, to Shenzhen and then into Hong Kong, will be slashed to less than one hour’s drive. “So that volume, if we connected from here, is going to be amazing,” he said.
The Airport Authority Hong Kong (AAHK) also pledged its ongoing support to both DHL Express and the wider cargo industry, with the Authority’s CEO Fred Lam saying the airport is continuing to enhance the support facilities for the air cargo Industry which it has been undertaking in the last two years. “We are also expanding the parking space for cargo flights and we’re working with the Civil Aviation Authority to increase the ATC movements for cargo and we will continue to do that as we see very strong growth for air cargo in the year to come and I’m pretty sure the years to come,” Lam said.
With this latest expansion the CAH, which saw its first expansion in 2008, will handle six times more shipment volume than when it was first established in 2004 and brings DHL’s investment in this strategic hub to over €520 million, making it the largest infrastructural investment by DHL Express in Asia Pacific to date.
The current facility is already a TAPA Class A-certified facility, as will be the expansion which will nearly double floor space to 47,000 sqm. and will boast a state-of-the-art security system with a total of 520 CCTV cameras and an advanced access control system.
The CAH also features a Quality Control Center (QCC) which monitors flight uplift/landing times in real time, reporting any irregularities on the spot, which in turn enables DHL to proactively notify customers in the event of flight delays or cancellations. The QCC is linked to the Asia Pacific Network Control Centre in Hong Kong and more than 70 gateways and over 500 service centres in over 40 cities in other Asian countries.