Yup. deflation is coming straight at me, or at least some of my assets. Run fast, silent, into the darkness, away from the crowd, now ...
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Monday, July 16, 2001
DHL sees option in Shenzhen for expansion move
biz.scmp.com
JOSEPH LO
DHL Worldwide Express will consider moving some of its operations away from Chek Lap Kok if it fails to reduce operating costs for its planned expansion.
The United States-based express cargo carrier said it was negotiating with the Airport Authority (AA) to secure sufficient land to develop a new handling facility three times the size of its present one.
"We are looking at linking the top 12 Asian capitals from one location," said Ross Allen, DHL operations director for Asia-Pacific and the Middle East.
The company hopes to develop its own intra-Asian hub in Hong Kong and expand facilities for dealing with traffic from southern China and the SAR.
DHL leases its present facilities from Hong Kong Air Cargo Terminals (Hactl), one of two cargo-handling firms at the airport.
But Hactl's high charges may prove an impediment to DHL's expansion plans at Chek Lap Kok.
Operating costs were a prime consideration for the location of the new facility, Mr Allen said.
Facility fees at Chek Lap Kok had been astronomical because of the airport's Government-mandated need to break even over a shorter time than most large-scale infrastructure projects around the world, he said.
"To move forward with our expansion, we will need to have more cost efficient facilities," he said.
Facility charges at Chek Lap Kok were four times those at DHL's similar operation at Changi Airport in Singapore.
This might lead to DHL following its competitor, FedEx Corp, and setting up a separate hub at Shenzhen airport to deal with express cargo from the Pearl River Delta region.
Packages from Shenzhen would then be trucked to Chek Lap Kok for shipping overseas.
"If we cannot gain access to more reasonably priced facilities in Hong Kong, it is feasible for us to move some of our operations to Shenzhen," Mr Allen said.
"I would not want to compare Chek Lap Kok with Shenzhen, it is not an apples to apples comparison; but the economics of such a move would work.
"It is very cheap in Shenzhen."
An AA spokesman said he could not comment on DHL's situation, as the company was not a direct customer.
"They rent their space from Hactl," he said.
Landing and parking fees at the airport were reduced in January by the authority after a group of airlines and cargo companies threatened to sue, charging that the authorities' tariffs were anti-competitive and would harm Chek Lap Kok's development as an aviation hub.
DHL's growth plans are linked to the expansion plans of its partner airlines.
Unlike competitors which operate large fleets, DHL relies to a large degree on commercial carriers for transport.
Last week, DHL signed an alliance with Northwest Airlines Cargo that will expand its trans-Pacific capacity.
It also has a commercial arrangement with Cathay Pacific Cargo.
"China is one of our key markets. It has been growing at a rate of 25 per cent for us this year and we are putting 12 new offices in the country over the next six months," Mr Allen said.
The new facility, which will have a land footprint of about 18,000 to 20,000 square metres, would be expected to provide sufficient space for the company's expected traffic growth in the region until about 2008, Mr Allen said.
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