DHL Pours $410 Million Into Hong Kong Global Hub
A slow third quarter for DHL amid the wider freight recession isn’t stopping the German logistics giant from scaling its global distribution capabilities.
DHL unveiled its newly expanded Central Asia Hub (CAH) in Hong Kong Tuesday, a week after announcing it would extend robotics to four more warehouses.
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DHL Express, the company’s international shipping division, invested $3.2 billion Hong Kong dollars ($409.7 million) into the hub’s expansion, with the warehouse’s total space increasing 50 percent to 533,000 square feet.
With the buildout and the introduction of an automated material handling system, the site’s peak handling capacity has increased by almost 70 percent to 125,000 shipments per hour, handling close to 20 percent of DHL Express global shipment volume.
Additionally, the annual total throughput is expected to increase by 50 percent to 1.1 million tons per year when operating at full capacity. This is six times the shipment volume of when the hub was first established in 2004.
The newly expanded express cargo facility handles more than 200 dedicated flights per week.
To date, the total investment for Central Asia Hub has reached 562 million euros ($611.8 million) since its establishment two decades ago. The facility is one of three global DHL Express hubs worldwide, alongside sites in Cincinnati and Leipzig, Germany, and the only global hub in the Asia Pacific region.
DHL Express initiated the warehouse expansion to complement the launch of the Hong Kong International Airport’s three-runway system, set to be completed by 2024.
The hub is a four-hour flight from the Pan-Pearl River Delta region in southern China. DHL Express’ Asia Pacific air network operates on a multi-hub strategy, supported by four regional hubs: the Central Asia Hub in Hong Kong, North Asia Hub in Shanghai, South Asia Hub in Singapore and Bangkok Hub, linking to approximately 900 DHL Express facilities in the region.
“Even as global trade normalizes after the pandemic, we have seen over 30 percent growth in throughput between Asia and other continents in the first three quarters of 2023 when compared with the same period in 2019, far exceeding the pre-Covid level,” said Ken Lee, CEO for Asia Pacific, DHL Express. “Additionally, the strategic location of the Hub in Hong Kong opens doors to many opportunities for our customers in this region. We are confident that the expanded CAH will foster interconnectivity and underpin Asia’s status as a powerhouse of global growth.”
While DHL Express is scaling its overseas presence, the company’s contract logistics division, DHL Supply Chain, is expanding its partnership with robotics technology company AutoStore beyond its nine current warehouse deployments in the U.S., Germany and Singapore.
AutoStore, which specializes in automated storage and retrieval systems (AS/RS), is currently planning to bring its robotics technology to four more DHL warehouses in the U.S., Australia, Germany and Poland. DHL intends to construct five further facilities that will use AutoStore’s automated solutions in addition to those already in operation or planning.
The nine existing systems effectively operate 800,000 bins across the warehouses, with the forthcoming four systems elevating the total number of bins to 1.2 million.
This AS/RS technology has been developed to efficiently manage and optimize inventory using reduced space within warehouses. Its modular and scalable design makes it a preferred solution for e-commerce and businesses handling smaller products such as fashion and tech items, DHL says.
DHL says the ongoing collaboration has already led to expansions at all operational sites, with more than 1,000 robots having been deployed worldwide.
Markus Voss, chief operating officer and chief information officer at DHL Supply Chain, said the company will be able to drive down implementation times as they standardize the introduction of the robotics tech.
“AutoStore’s standardized and modular technology perfectly aligns with our aim to make our operations more efficient, enabling swift scalability and adaptability across various use cases and end-markets—a crucial factor for us as a third-party logistics provider,” Voss said. “Additionally, AutoStore’s network of partners is invaluable in supporting our growth strategy across multiple geographies.”
The upgrades across DHL’s warehousing network come as the global logistics firm saw revenue decline 19.3 percent in the third quarter to 19.4 billion euros ($21 billion), while net profit for the company fell 36.5 percent to 847 million euros ($918.8 million).
Last month, DHL Supply Chain revealed it would close a fulfillment center in Groveport, Ohio after one of its customers discontinued service with the company. The facility will cease operations on Dec. 31, with most layoffs having started on Oct. 31. As a result of the closure, 264 employees will be let go.
