DHL plans Guangzhou cargo center

DHL plans Guangzhou cargo center

DHL Worldwide plans to build an express cargo center at Guangzhou Airport in southern China in addition to its $100 million newly opened hub in Hong Kong, the global courier said on Wednesday.

"We chose the Pearl River Delta for our hub, and Hong Kong is the best option," John Mullen, DHL's chief executive officer for Asia Pacific, told reporters before an opening ceremony for its new facility at Hong Kong's airport.

"But it's not an either or. We will be investing significantly in Guangzhou," he said, adding that costs are lower in the southern Chinese city.

Mullen said booming trade with China was driving demand for express parcel deliveries. Around 40 percent of the country's exports come from the Pearl River Delta, China's export heartland.

Hong Kong's airport is the world's largest handler of international air cargo, and 70 to 80 percent of that freight comes from the Pearl River Delta.

Mullen said that DHL planned to build its own "fairly large" facility at Guangzhou. DHL is still in negotiations, but a decision on the first level of infrastructure will be made in the next couple of months, he said.

Mullen said the Guangzhou investment would be in addition to the $215 million DHL has already earmarked for expansion in China over the next five years.

The express courier said revenue from its China express parcel business totaled around $300 million in 2003 and was expected to grow by a record 50-60 percent this year.

DHL has a 40 percent market share in China, where it has a 50-50 joint venture with freight forwarder Sinotrans.

In Hong Kong, it has a 40 percent stake in cargo carrier Air Hong Kong, while Cathay Pacific Airways owns the remainder. Its new express hub can handle 440 metric tons of cargo a day.