American Shipper

DHL, Air Hong Kong renew block-space agreement

DHL Express and Air Hong Kong will extend their partnership another 15 years as Central Asia capacity out of Hong Kong continues to grow.

   DHL Express has extended its partnership with Air Hong Kong via a new 15-year block-space agreement starting Jan. 1, 2019.
   As part of the deal, DHL will sell its 40 percent stake in Air Hong Kong to majority-owner Cathay Pacific, and purchase eight of Air Hong Kong’s A300-600F cargo planes which will then be leased back to the carrier. According to DHL, the arrangement will provide a stable revenue stream to Air Hong Kong and a predictable cost base for DHL. The new agreement takes effect in 2019 when the original agreement with DHL expires.
   “Asia is expected to experience exponential trade growth and our renewed block space agreement with Air Hong Kong forms a natural complement to DHL’s broader growth strategy in Asia Pacific to meet continually strong market demand,” said Ken Allen, CEO of DHL Express. “Air Hong Kong has provided the backbone of our air express capabilities in Hong Kong for 15 years since 2002, and the latest agreement with Cathay Pacific will allow it to reach even greater heights as we consolidate its operations for maximal efficiency and availability.”
   Ken Lee, CEO of DHL Express Asia Pacific, noted that the new agreement will keep the same capacity allotment but for greater flexibility in aircraft deployment and route selection. “This new block space agreement reinforces the successful and longstanding collaboration between DHL Express and Air Hong Kong as we gear up for ongoing growth in Asia Pacific trade, guaranteeing capacity on many of our critical routes that use Hong Kong as a logistics hub,” said Lee.
   “With Hong Kong’s merchandise exports between January and September 2017 growing by 8.5 percent compared to last year, we’re keenly aware of the upward momentum that the region’s trade lanes are facing. Our renewed partnership with Air Hong Kong, combined with the new leaseback deal governing its fleet, gives us greater flexibility to add new routes and optimize our aircraft utilization in the face of unpredictable changes or sudden increases in demand,” Lee said.
   DHL Express also announced the expansion of its Central Asia Hub at the Hong Kong International Airport, which will add an additional 8,000 square meters of space. The facility will have access to technology such as automated X-ray inspection machines and material handling systems. According to DHL, the Central Asia Hub has seen shipping volumes grow 12 percent year-over-year for the past decade and currently handles more than 40 percent of all DHL shipments in Asia Pacific. When operating at its full capacity, the annual throughput of the expanded hub is expected to go up by 50 percent to 1.06 million metric tons per year.