DHL to consolidate airport hubs, add regional sort centers
Express delivery carrier DHL signaled Friday it is ready to challenge FedEx and UPS in the U.S. market, announcing plans to consolidate its two air hubs in Ohio as part of a $1.2-billion strategy to expand its delivery network and service offerings.
The express carrier also plans to add seven new regional sort centers by the end of the year, which it said would increase ground delivery capacity by 60 percent and bring the total number of sorting centers to 19. It will add another five sort centers after 2005. Other investments will focus on information technology systems.
DHL operates an air hub at Greater Cincinnati/Northern Kentucky International Airport and also picked up a second hub in nearby Wilmington when it acquired the third-largest U.S. delivery company, Airborne Express, last August.
“This investment marks an historic turn in the express and ground parcel delivery business as DHL brings a strong alternative to the U.S. shipping market,” said John Fellows, chief executive of DHL Express America, in a statement. Since the merger “we’ve integrated almost all air and ground operations and dramatically improved transit times” to “solidify DHL as a competitive force in the U.S. market.”
The package delivery company said it would migrate operations from the Cincinnati airport to Wilmington during the next 18 months, leaving the Cincinnati facility as a backup sorting center with about 300 employees. DHL said it would expand the Wilmington facility to handle more letter and package sorting and add ramp space for aircraft. According to an ABX Air news release, construction will begin at Wilmington Air Park in August, with full consolidation expected by the fall of 2005.
DHL, based in Brussels, Belgium and owned by Germany’s Deutsche Post World Net, is ABX Air’s largest customer. It previously was the in-house airline of Airborne, but was split off as a separate company because U.S. law prohibits foreign companies from majority control of domestic airlines and now provides dedicated airlift under a wet lease contract. ABX Air also operates a package-sorting hub at Wilmington.
DHL said combining the two hubs in Wilmington will allow it to expand its hours of operation, allowing for earlier arrivals and later departures of aircraft, and thus giving customers more chances to get their freight on a plane for next day delivery. The company also expects to save a significant amount of money by streamlining operations such as automated sorting.
Although the Cincinnati/Northern Kentucky International Airport is a more established air facility, the Wilmington facility gives DHL better control of operational decisions because it is the sole owner and can handle more nighttime flights than a public airport.
The Dayton Daily News reported DHL will cut 900 jobs at the Cincinnati hub as a result of the consolidation.
The Wilmington hub handles 240 aircraft arrivals and departures and sorts about 930,000 packages each night.