DHL sees no slowdown in Asian traffic
Updated: 2011-10-18 11:42
DHL Express, Asia's largest cargo delivery company, isn't seeing signs of a slowdown in the region despite recent warnings from rivals about poor business conditions.
Larry Rosen, chief financial officer of DHL parent Deutsche Post said that the freight and logistics specialist doesn't plan to cut capacity and is in fact adding routes to its network, half of which starts or ends in Asia.
Asia, previously the industry's most robust market, has seen a marked slowdown from last year's buoyant growth.
Rival FedEx Corp recently warned of a slide in demand from Asia that started in July, leading them to cut capacity amid weak orders from sectors such as consumer electronics.
Hong Kong, the world's largest air cargo centre, has seen double-digit declines in cargo traffic compared with last year and, though DHL has a hub in the city, Rosen said its business mix has protected the company from such falls.
DHL has a more extensive intra-Asia business than FedEx and United Parcel Service (UPS), both of which are more focused on longer-haul routes from the region to Europe and North America.
Deutsche Post also provides warehousing and logistics support, and Rosen said the signs are similar for the supply chain unit, though its freight-forwarding business – combining shipments and buying transport by air or sea – had been softer.
"We haven't seen a slowdown in the volumes moving through our warehouses," Rosen said, with electronics, fashion and life science-related businesses all holding up.
The executive said that while business hasn't declined, it is too early to determine the strength of the key peak holiday shopping season. Goods traveling by sea to US retailers in time for Christmas are just starting to move, while air cargo deliveries won't start for a few weeks.
Transport executives in the US have said they expect at best a muted peak season because of weak consumer sentiment denting demand for PCs, laptops and TVs.
Rosen's upbeat commentary extended to the domestic German mail market, despite the slowdown in the country's export-driven expansion as the European debt crisis intensifies.
Asia has emerged as a key strength for the DHL unit after an unsuccessful foray into the domestic US express market, where it lost hundreds of millions of dollars in an unsuccessful effort to break the duopoly of FedEx and UPS.
A new hub in Shanghai is due to open next year alongside the Hong Kong facility, supporting the westward march of China's economic expansion.
DHL also pulled out of domestic China deliveries, mirroring the retrenchment seen in the US and the UK......
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