Deutsche Post AG's DHL unit is adding to its investment at its
air hub in Cincinnati, a sign of confidence in the company's focus
on international airfreight in the U.S.
The carrier announced Friday it will spend $108 million to
expand operations at the Cincinnati/Northern Kentucky International
Airport to accommodate more aircraft and to add space for
warehousing and for sorting shipments. It is the largest investment
in the U.S. air operations since DHL closed a domestic parcel hub
at nearby Wilmington, Ohio, and chose to focus on heavier
international freight shipments in competition with freight
forwarders.
The new investment is "a positive signal that their
intercontinental growth strategy is working." Brian Clancy, a
managing director with Logistics Capital & Strategy, a
Virginia-based transportation consulting firm.
In recent years, parcel-carriers like DHL, FedEx Corp. and
United Parcel Service Inc. have gained a larger share of the market
for express delivery of heavyweight small packages, which refers to
boxes that weigh more than roughly 100 pounds.
Those gains have come at the expense of traditional
freight-forwarding companies like UTi Worldwide Inc. and Panalpina
Inc., said Clancy.
Parcel companies compete with the freight forwarders for shipper
business by keeping shipments without their own distribution
chains, including trucks, drivers and airplane fleets.
Germany-based DHL leases its U.S. fleet because of regulations on
foreign ownership of airlines.
DHL's Cincinnati hub, which processes about 46 million
international shipments each year, is smaller than UPS's nearby hub
in Louisville, Ky., and FedEx's at Memphis, Tenn., but the
Cincinnati hub primarily handles international shipments from Asia
and Europe rather than domestic shipments.
"If DHL is making investments in infrastructure expansion in
Cincinnati, that means they're very confident that they're going to
continue to grow their intercontinental network," Mr. Clancy said.
"They're likely going to add more routes and increasing the size of
some their parking spaces, which means they are probably upgrading
the size of some of their aircraft."
In addition to the Cincinnati expansion, DHL has spent $200
million to double the size of its European hub in Leipzig, Germany,
$85 million on its hub in Singapore and a $177 million expansion in
the Middle East and North Africa, all in the last 18 months, the
company said Friday.
Write to Robbie Whelan at robbie.whelan@wsj.com
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