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Cathay Pacific

DHL set to boost capacity from city

PUBLISHED : Wednesday, 01 June, 2011, 12:00am
UPDATED : Wednesday, 01 June, 2011, 12:00am

DHL Express, the courier division of one of the world's largest transportation companies, will boost its air cargo carrying capacity from Hong Kong to several key Asian cities with the addition of three Boeing 747-400 freighters.

The move is part of a wider strengthening of the company's freighter fleet and investment in new facilities to meet the expected growth in regional and international express parcels traffic.

The plans include the launch of a third flight from Hong Kong to the firm's hub in Cincinnati in the United States from June 6; a direct flight between Hong Kong and Ho Chi Minh City; plus the opening next year of its Euro142.2 million North Asia hub at Shanghai.

Charlie Dobbie, the firm's executive vice-president for global network operations and aviation, said the three 747-400 freighters will have a cargo carrying capacity of 70 tonnes. This is more than 50 per cent more than the 45 tonnes capacity Airbus A300s they replace.

All will be operated by Air Hong Kong, DHL's joint-venture cargo airline with Cathay Pacific Airways in which DHL holds a 40 per cent stake.

The first aircraft has just entered service between Hong Kong and Singapore, while the second aircraft will be introduced on the Hong Kong-Narita route and the third freighter will fly between Hong Kong and Shanghai.

All the 747-400s are passenger to freighter conversions formerly operated by Cathay Pacific and they will be operating 'by the end of this year', Dobbie added.

Asked if Cathay Pacific was seeking an easy way to dispose of the aircraft before the arrival of more sophisticated and fuel efficient Boeing 747-8 freighters later this year, Dobbie said it was DHL's decision to use the larger aircraft. 'It's our call as to what happens on the route and schedule front,' he said.

The Airbus freighters will be redeployed on routes between Hong Kong and Beijing and Hong Kong and Manila where they will increase capacity and improve fuel and operating efficiencies.

Turning to the Shanghai complex, Dobbie said the 55,000 square metres hub at Shanghai's Pudong airport would become operational in April or May. The complex would mainly handle shipments from Japan, South Korea and the Yangtze River delta and complement DHL's central Asia hub in Hong Kong.

Ken Allen, chief executive of DHL Express, said the investments were being made in anticipation of further growth in cargo volumes. He declined to give actual figures but said the increase in express cargo volumes are typically one and a half or twice a country's GDP growth.

Outlining prospects for this year, Allen said after a record-breaking 2010, this year was emerging as a 'more normal type of year' with a weaker first quarter followed by progressively stronger growth.

'For the five months [of this year], the progression of volume growth has been good,' Allen said, adding there was not any sign of a drop-off in business similar to the trade collapse in 2008-2009.

He said DHL Express aimed to increase earnings before interest and tax (ebit) by 13-15 per cent a year to Euro1 billion (HK$11.1 billion) by 2015. 'I'd like to do it sooner rather than later,' Allen said. By comparison DHL Express generated ebit of Euro216 million in the first quarter.