Sunday, August 17, 2003

DHL will be sorting packages faster now

$213M expansion kicks in on weekend

By Randy Tucker
The Cincinnati Enquirer

[IMAGE] DHL Express Worldwide's new building and expanded runway space will allow the company to almost double its package-handling capacity.
(Michael E. Keating photo)
| ZOOM |
DHL Express Worldwide's new $213 million package-sorting facility is becoming fully operational this weekend, resulting in faster transit times and improved delivery options from its main hub at Cincinnati/Northern Kentucky International Airport.

The new building and surrounding runway space will allow DHL to increase its package-handling capacity to 2.1 million pounds, or 250,000 pieces, a night. That's up from 1.2 million pounds, or 140,000 pieces, now at the old building.

DHL also has expanded its ramp capacity to be able to handle up to 62 flights a night, up from 47.

The new operation paves the way for German-based DHL - the world leader in air-freight deliveries - to carve a bigger slice of the domestic air-freight market, dominated by Federal Express and UPS.

It also could result in hundreds of new jobs locally.

"DHL's intent is to continue to grow its business, and we will ensure that we have the appropriate personnel required,'' the company said in a statement.

"As volumes continue to increase, we'll evaluate job growth to support the business.''

In addition to the new package-sorting operation, DHL announced Friday that it had closed the deal to purchase the ground operations of Seattle-based Airborne for $1.05 billion.

Airborne shareholders voted Thursday to approve the merger of the third-largest player in the domestic overnight-express market, commanding 18.2 percent of the market, with DHL.

But while the merger with Airborne could greatly expand DHL's reach, it also throws the role of the local operations into the air.

"While integration decisions have not yet been made detailing how we will combine our ground operations, we will continue to operate from both of our major hubs in Wilmington (Ohio) and Cincinnati,'' DHL said.

'Business as usual'

Joe Hete, president and chief operating officer of ABX Air Inc., a subsidiary of Airborne Express that will be spun off into a separate publicly traded company after the merger with DHL, said: "For us, once separation occurs, it will be business as usual. As for the actual integration, all I know is that we will continue with the service we provide and flying 115 airplanes."

The proposed merger drew federal scrutiny after Federal Express and UPS complained that DHL was attempting to expand its virtual monopoly on the international air-freight market to the United States.

Federal Express and UPS also have challenged the citizenship of DHL Airways, a separate U.S.-based company that runs DHL's air operations.

U.S. law requires airlines that fly point-to-point within the country to be under no more than 25 percent foreign ownership.

The Department of Transportation's inspector general recently recommended that DOT take a closer look at DHL Airways' ownership.

Still distant No. 3

But even if a combined Airborne-DHL survives, it would rank a distant third behind Federal Express and UPS, Morgan Stanley analyst James Valentine said in a research note.

Valentine estimates that the combined company would have less than 10 percent of the domestic market, while together UPS and Federal Express would still have more than 80 percent.


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