DHL Express said Wednesday it is investing more than $360 million in facilities and new air capacity for the Americas region through 2022 to support parcel growth fueled by demand for e-commerce transactions.
The new infrastructure, which includes technologies to improve operational efficiency, will increase network capacity in North and South America by nearly 30%, DHL said. More capacity means faster shipment processing and earlier deliveries for customers.
Express delivery companies have experienced phenomenal growth in parcel volumes during the past 18 months as online shopping soared in popularity. DHL said it handled 33% more shipments per day in the first quarter compared to the same period last year because of business-to-business and business-to-consumer e-commerce orders. For the U.S. alone, shipment volumes grew 41% in the first quarter.
“With an ever increasing number of consumers shifting their shopping activities online, and the sharp rise in businesses selling their goods in the global marketplace, we need to continue the critical investments in our network infrastructure to meet the growth demands in international e-commerce and global trade,” said Mike Parra, chief executive of DHL Express Americas, in a statement.
The express carrier has added some pop-up retail stores in the U.S. and some electric vehicles since 2020, but most of the investments scheduled over a three-year period are still to come, officials said.
Many of the investments are for new facilities or to expand existing ones. Work is already underway to enlarge DHL’s modern hub in Miami, which serves as a transfer point to and from Latin America and other regions, and should be completed this year, said spokesperson Pamela Duque.
Last month, DHL relocated its Kansas City, Missouri, operation to a new building that is more than twice the size of the previous location. The $5 million facility is near Kansas City International Airport.
A new 244,000 square-foot automated hub in Hamilton, Ontario, is also planned. Once completed it will be four times the size of the current facility.
DHL Express said it will also be adding new service centers and upgrading other ones to support pickup and delivery operations throughout the Americas. Gateways that manage imports and exports will receive enhancements and and it will expand its retail footprint in key markets in South America.
In Mexico, significant investments will support time-definite domestic service, DHL Express said. To support shipment processing, 105 self-service kiosks will be installed at retail counters for customer convenience this year. Hubs and gateways will be upgraded with automated sort capabilities in Mexico City, Guadalajara and Monterrey. Service centers will also be expanded in key markets throughout the country.
In Brazil, the Viracops Gateway in Campinas will be upgraded to expedite the processing of international shipments. Expansions are also taking place in other South American countries, including new retail service point locations in Chile and Colombia, and an expanded gateway in Lima, Peru.
DHL Express is also introducing more direct flights and adding aircraft to its fleet to maintain network fluidity. The express division of Deutsche Post DHL(DIX: DPW) is receiving four new 777 freighters from Boeing (NYSE: BA) this year, completing an order for 14 of the aircraft. The aircraft are used worldwide, including in the Americas. DHL earlier this year placed an order for eight additional 777 freighters.
The company has also increased its third-party airlift serving the Americas, as well as directly leasing additional aircraft, some of which will be deployed to partner airlines in the U.S. The renewal of existing aircraft lease arrangements and bringing on new operators in the Americas will help maintain high service levels, DHL said.
Canada’s Cargojet (TSX: CJT) in recent months added three Boeing 767 converted freighters to haul more packages for DHL. Last year, DHL contracted with MasAir Cargo to provide service between Los Angeles and Mexico. Other airlines that fly in the DHL Express network in the Americas include 21 Air, ABX Air and Phoenix-based regional carrier Mesa Airlines (NASDAQ: MESA).
In May, DHL agreed to lease four additional Boeing 767-300 converted freighters from the leasing arm of Air Transport Services Group (NASDAQ: ATSG). The leases are for a term of seven years and three of the four aircraft are scheduled to be delivered in the second half of 2021, with the fourth delivery set for early next year. ABX Air is an ATSG subsidiary.
The new investments will open up new job opportunities, with DHL expecting to fill more than 2,600 jobs in the U.S. alone this year. These new jobs will include 1,100 new positions at the DHL Americas Hub at Cincinnati/Northern Kentucky Airport and nearly 200 at the expanded hub in Miami, Florida.
E-commerce is spurring expansion for DHL Express around the world. In May, the company added more direct flights and upgauged aircraft in Southeast Asia. It is also creating a new cargo airline in Austria and expanding long-haul routes operated through its U.K. hub.
FedEx Express (NYSE: FDX) recently announced plans to buy 20 new Boeing 767 freighters because of robust demand in e-commerce shipments.
DHL’s investment announcement came the same day the parent company said it was raising guidance for 2021 after releasing preliminary second-quarter results that showed a record operating profit of more than $2.3 billion. Pre-tax earnings in the Express division reached $1.3 billion compared to $633 million in the same quarter a year ago.