DHL investing $108m in Americas hub to meet demands of e-commerce growth

 As reported by Post & Parcel:

DHL is investing $108 million to expand its Americas hub facility at the Cincinnati/Northern Kentucky airport (CVG), in order “to meet the demands of continued growth in international e-commerce and global trade”.

In a statement issued yesterday (28 May), DHL said that the expansion will provide more gates to accommodate additional aircraft, warehouse space and new equipment to provide more capacity for sorting shipments as well as unloading and reloading planes.

“This multi-million dollar investment underscores the DHL commitment to the U.S. market and the integral role that our hub here plays in connecting the Cincinnati-Northern Kentucky region to our vast global network,” said Stephen Fenwick, CEO, DHL Express Americas. “The expansion and service enhancements from this investment will provide additional infrastructure and efficiency. This in turn will support the continued growth in international shipments that we’re seeing as well as add to the economic well-being of this region.”

The CVG hub, one of three DHL global hubs, connects the United States to the DHL global network spanning Asia, Europe and the Americas. Processing approximately 46 million international shipments annually, the CVG hub handles shipments bound for the US, Canada, Mexico and Latin America. It also connects nearly 100 service centres, gateways in Los Angeles and New York, and a hub in Miami to more than 220 countries and territories around the world. DHL’s two other global hubs are in Leipzig, Germany and Hong Kong.

DHL said that it had applied to the Kentucky Economic Development Finance Authority for several tax incentives as part of this project, and it received approval from the development authority yesterday (28 May) for a sales and use tax credit on construction costs, building fixtures, electronic processing equipment as well as equipment used in research and development.

DHL will now have invested $280 million in the CVG hub since establishing its US international operations centre at the Cincinnati/Northern Kentucky airport in 2009. Staffing has also grown, from 1,600 in late 2009 to approximately 2,000 currently.

The various expansion and equipment projects covered by this latest investment in the Cincinnati hub should be completed in late 2016.

The expenditure on the US hub is part of a global investment programme. Over the past 18 months, DHL has announced investments of $200 million to double its European hub in Leipzig, $85 million in a new South East Asia Hub in Singapore, and a $177 million expansion programne in the Middle East and North Africa.

It is worth noting that DHL linked the expansion at CVG with the need to “meet the demands of continued growth in international e-commerce”. In his presentation to the Deutsche Post DHL Group Annual General Meeting (AGM) in Frankfurt on Wednesday (27 May), CEO Frank Appel identified this sector of the business as a “strategic priority” and stated: ““We want to be the global market leader in logistics for e-commerce.” The company also emphasized that it was focused on “investing significantly in the optimal positioning of its businesses”, even if this means doing so “at the expense of short-term profit gains”.

Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.