DHL Express on Wednesday moved to expand its air network and reduce delivery time with new investments in Europe and South America.
The parcel and logistics giant announced the groundbreaking on a $105.7 million gateway at Munich Airport, which will be seven times larger than the current facility it rents in the cargo center, and began direct freighter service between the U.S. and Brazil for the first time to support growing two-way trade between the countries.
The airport warehouse in Munich will cover more than 118,000 square feet and have direct access to aircraft parked on the ramp. Two pickup and delivery wings will have room for 65 vehicles at once, reducing wait times and allowing faster package delivery in the Bavaria region. The building also will be outfitted with the latest energy and emissions-saving technologies, including solar panels to power equipment and computers, and 32 electric vehicle charging stations in the truck zone, DHL said.
Gateways are smaller airports that feed into hubs. The new facility will have space for two aircraft, according to an artists rendering.
DHL is leasing the land from the Munich Airport operator and will be responsible for building the facility expected to open toward the end of 2024. When complete, the new cargo warehouse will employ more than 140 people, double the current staff at the airport.
“Our old processing area can’t keep pace with the growth in import and export volumes, given current digitalization and globalization trends,” said Markus Reckling, managing director DHL Express Germany, in a news release.
The new facility will serve as a ground terminal for regional deliveries in Germany and an international air gateway. A daily flight currently connects Munich to DHL’s international hub in Leipzig. Other connections include East Midlands Airport in the U.K. four times per week and Malpensa International Airport in Italy once a week.
Brazil service upgrade
DHL also announced the launching of direct cargo flights from its expanded hub in Miami to Sao Paulo for the first time. The new route, which will return via Bogota, Colombia, is operated by Canada-based contractor Cargojet six times per week with a Boeing 767 freighter.
DHL said the flight, which adds about 310 tons of weekly cargo capacity in each direction, will improve transit time and reliability year-round because it won’t depend anymore on airline partners to provide airlift.
Cargojet provides more than a dozen dedicated aircraft for DHL, along with crews and maintenance, under a long-term strategic partnership that recently resulted in DHL obtaining rights to buy up to 9.5% of the airline’s shares.
“During the past few years, we’ve witnessed unprecedented shipping demand from our customers in the Americas, in both the B2C and B2B segments,” said Mike Parra, CEO of DHL Express Americas. “This network upgrade along the U.S.-Brazil trade lane represents a huge opportunity for importers and exporters to grow their global businesses while receiving unparalleled levels of speed to key markets within the Americas region.”
Freight forwarder DSV recently commenced weekly flights from Huntsville, Alabama, to Brazil, through a lease arrangement with LATAM Airlines, for similar reasons.
Trade between the U.S. and Brazil reached $78 billion last year, up from $58 billion in 2020 when the COVID-19 crisis suppressed the global economy, and $74 billion in 2019, according to U.S. Census Bureau figures. The U.S. exports more to Brazil than it imports by value. Agricultural, automotive, technology and chemical products are among American exports sought in Latin America, according to trade experts.
The new service to Brazil is part of DHL Express’ broader expansion plan in the Americas, which includes more than $360 million in investments from 2020-22 to help it keep up with rising demand for cross-border freight transport and e-commerce fulfillment.
The integrated logistics company is expected to open a large aircraft ramp and sort facility at Atlanta’s Hartsfield-Jackson International Airport during the third quarter to handle more flights from Europe and Asia.
DHL Express has introduced several new U.S. routes in 2022, including between Vietnam and Japan with large 777 cargo jets. Last year, it began flying to Chile six times per week.
Last fall, DHL Express opened an expanded international parcel hub at Paris-Charles de Gaulle Airport. The $200 million site is 10 times larger than the original facility. In September 2020, the company transformed the gateway in Milan, Italy, into a regional hub for $123 million. The express carrier this summer also tripled the size of the parcel hub at Incheon International Airport in South Korea and expects to complete a major expansion of its Hong Kong hub in the fourth quarter.
Strong profits at parent company Deutsche Post (OTCUS: DPSGY) are enabling DHL to continue large capital investments. In the first quarter, earnings before interest and taxes rose to more than $2.3 billion from $2 billion. Revenue rose nearly 20% to nearly $23.8 billion.