Shorter delivery times and reliable capacities: The air cargo network strategy of DHL
The market for international express services has been growing dynamically for years as a result of the accelerated pace of globalization. More and more goods are being shipped from one continent to another as air or sea freight. Increased production in emerging markets in particular has also generated a greater demand for logistics capacities. The cargo volume from Asia to Europe and to North America has grown considerably in recent years.
Express service providers such as DHL are profiting from the growing customer demand for reliable overnight and two-day air cargo deliveries. Next-day express deliveries at least between the major urban areas are now increasingly requested in intercontinental transport as well. Secure access to reliable air freight capacities, which can be managed according to the specific requirements and quality standards of the own logistics network, has thus become an important competitive factor for express service providers.
For these reasons DHL has adopted a strategy of expanding reliable air freight capacities for international express services. The focus here is on augmenting resources on the most important intercontinental routes between Europe and Asia, Europe and North America and on transpacific routes between North America and Asia. In the past DHL often relied on the freight capacities of passenger aircraft. The utilization of cargo aircraft was not economically feasible in view of the comparatively low freight volume. But the situation has now changed. Intercontinental cargo volume is steadily growing and more efficient, longer-range aircraft have now made it feasible to use cargo aircraft for express services on intercontinental routes.
Growing demand for express services on transpacific routes
Prior to today's announcement of plans to form a joint air freight company with Lufthansa Cargo, DHL had already taken several steps to expand its destinations and secure higher cargo capacities while shortening delivery times on major intercontinental routes. For example, in June 2007 Deutsche Post World Net acquired a 49-percent stake in Polar Air Cargo Worldwide Inc., an air freight service provider headquartered in the USA. The stake in Polar Air Cargo gives DHL reliable, long-term access to air freight capacities on transpacific routes between North America and Asia. The demand for express services on these routes is growing rapidly, and this partnership makes it possible for DHL, as the market leader in Asia, to offer customers both reliable capacities and shorter delivery times. Polar Air Cargo is making six high-capacity Boeing 747-400 cargo aircraft available to DHL in conjunction with this partnership.
Until now DHL has operated transatlantic routes and conducted express business between Europe and Asia through a strategic alliance with Lufthansa Cargo established in 2004. The arrangement consists of three routes to the USA and two routes to Asia. This has been one of the most extensive cooperations between an air cargo carrier and an express and logistics service provider already prior to today's announcement.
At the beginning of 2007 DHL also announced plans to order six new Boeing 767 ER cargo aircraft. They will be used on transatlantic routes beginning in 2008.
The air network strategy of DHL calls for the increasing utilization of cargo capacities which are reliably available on booming intercontinental routes while being efficient and improving the quality of the customer service. This will allow DHL to benefit more than ever before from the high demand and further solidify its position as the global quality leader in the express services business.