• Fri
  • Aug 22, 2014
  • Updated: 9:04am
Business
AIR FREIGHT

Net trades keep DHL profit in express lane

Surge in online shopping helps boost globalair couriers amid drop in freight demand

PUBLISHED : Saturday, 18 May, 2013, 12:00am
UPDATED : Saturday, 18 May, 2013, 3:41am

Joyce Chan, a seasoned online shopper in Hong Kong, spends up to six hours and between HK$8,000 and HK$18,000 each month shopping for handbags and apparel from Europe and the United States.

Chan's virtual shopping trips and her demand for swift shipping make her one of the growing millions of people international air couriers are depending on to counter a decline in overall air freight volume in the face of flagging global trade and faltering economic growth.

"Online shopping accounts for 80 per cent of my total spending per month now," Chan said. "I don't need the assistance from shopkeepers who would pressure me.

"I won't feel guilty when I press the refund button after trying out the clothing at home."

Speedy delivery and free returns, which are standard for online shops to remain competitive, have become crucial to courier services.

Ken Lee, the managing director of DHL Express (Hong Kong), says the surge in online retail activity has helped his firm maintain double-digit growth.

The Express division of Deutsche Post DHL saw shipments increase 10 per cent year on year in the first quarter while operating earnings also grew 10 per cent to €254 million (HK$2.54 billion).

Online shopping accounts for 80 per cent of my total spending per month now. I don't need the assistance from shopkeepers who would pressure me

The growth in express business compares with a drop in global air freight traffic.

The latest data from the International Air Transport Association shows global air freight traffic fell 2.3 per cent year on year in March, a second consecutive month of decline after a 7.2 per cent fall in February.

Carriers in the Asia-Pacific experienced most of the weakness in March, suffering a 3.3 per cent drop in cargo traffic.

Not only are the internet shoppers themselves helping counter this downward trend, so too are the tighter inventories retailers kept in the face of surging operating costs. Their smaller orders and shorter restocking cycles benefit express delivery operators.

Meanwhile, the growing number of online shops, set up to combat higher rental and labour costs, further helped the express industry, Lee said.

Net-A-Porter Group, one of the pioneers in luxury online retailing founded by Natalie Massenet in 2000, saw sales soar 55 per cent last year. It set up a new distribution centre in Tsing Yi last year to cater for the growth in demand from Hong Kong and the mainland.

Net-A-Porter said its weekly online editorial attracted 2.5 million women viewers a month.

Sa Sa International, the largest cosmetic and personal care retailer in Hong Kong, also posted stellar growth in its online business. Online sales jumped 40 per cent to HK$180 million in the six months to September last year while total sales grew 20 per cent to HK$2.8 billion.

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