DHL Worldwide set to build pioneer BOT express cargo terminal at airport

PUBLISHED : Wednesday, 28 August, 2002, 12:00am
UPDATED : Wednesday, 28 August, 2002, 12:00am

The Airport Authority is about to enter into a deal to develop a new express cargo terminal at Chek Lap Kok that is shaping up as a radical departure from its traditional franchises.

The deal with DHL Worldwide Express apparently calls for a build-operate-transfer (BOT) arrangement that could see the authority eventually taking back control of the facility, sources close to the negotiations said.

The pact describes the relationship between the authority and DHL as a business partnership rather than a franchise arrangement, as has been the case with previous deals for airport operations - such as with Hong Kong Aircraft Engineering Co (Haeco) for aircraft maintenance and the two general cargo terminal operators, Hongkong Air Cargo Terminals (Hactl) and Asia Airfreight Terminal (AAT).

Sources said the difference in the wording of the new deal with DHL might imply that the authority planned to take a more prominent role in the terminal's operations going forward.

'Materially, this is a fundamental change in the authority's strategy with respect to how it sees itself benefiting from some of the companies that operate at the airport,' one source said.

It is believed that the agreement with DHL, which submitted its original proposal to develop the facility in March, could be inked as soon as tomorrow.

'I believe that August 29 has been selected as the target date for the signing ceremony,' one source confirmed.

Another source said the talks were, to all intents and purposes, concluded, with final drafts of the contract nearly ready for signing.

An authority official who declined to be named acknowledged that charging DHL for the right to operate the new facility would be significantly different from past franchise agreements.

But he said that was more a function of the uniqueness of the express cargo industry than a change in the airport's philosophy.

'It is quite a complex agreement . . . for a very different type of industry. That is why some things, such as the charging, etcetera, need to be different,' the official said.

However, he would not confirm the signing ceremony date, saying that minor issues still remained to be addressed.

Some of the differences are believed to have been pushed by DHL, which argued that it considered the new facility as a cost centre rather than a profit-generating business as in the case of Hactl and AAT.

'A big difference is that Hactl and AAT charge for the use of their terminal and the airport can easily tax that transaction,' a source said.

'But DHL invoices customers for the packages they deliver. So how do you accurately account for the value of the facility towards that transaction?'