HONG KONG: DHL, the German express group, is investing US$110m to, double the capacity of its cargo-handling hub in Hong Kong six years ahead of schedule, as its business in mainland China grows.
The move, announced recently and due to be completed in 2007, will make Hong Kong DHL's largest hub outside the US, with capacity to move 75,000 pieces an hour. Scott Price, DHL Express chief executive for Asia-Pacific, called the expansion a "very significant, long-term commitment to Hong Kong".
DHL's investment is the latest development in an increasingly fierce competition between the world's largest express carriers in China.
In July, FedEx announced plans to spend US$150m to move its Asia-Pacific hub from Subic Bay in the Philippines to Guangzhou, 174km north of Hong Kong. United Parcel Service announced plans to build a hub in Shanghai the same month.
The DHL move represents a victory for Hong Kong, which is keen to develop its logistics sector.
DHL and FedEx have chosen to locate their hubs in the south to be closer to the Pearl River Delta, the string of industrial cities that were opened to foreign investors after China's economic reforms began in 1978.
The region produces about a third of China's exports and is home to Wal-Mart's global sourcing headquarters.
Mr Price said the company experienced 50-60 per cent revenue growth in China last year, compared with an average of 35-45 per cent in the previous several years.
"We believe that China, even at an average, will still look at 7.0-8.0 per cent GDP growth over the next decade. The outsourcing of manufacturing, in particular industries like high-tech, textiles, automotive ... is going to be huge. "
Hong Kong is one of DHL's three global "SuperHubs", processing goods from around Asia. The others are in Wilmington, Delaware, and Brussels, although this facility is moving to Leipzig, Germany. DHL also has five smaller hubs around Asia.
The group, a unit of Deutsche Post, plans to increase the level of automation as it expands the hub from 18,200 square metres to 35,000 square metres so it can move shipments more quickly.
DHL opened the facility, which cost $100m to build, last year. It had originally planned to enlarge it in two phases in 2009 and 2013.
The group has a joint venture with Air Hong Kong, a joint venture cargo airline with Cathay Pacific Airways.