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Abu Dhabi, UAESaturday 15 December 2018

DHL expands Dubai logistics hub on regional growth forecasts

Rise of Gulf e-commerce sector is significant driver of firm’s expansion strategy, says global chief executive

Amazon flags and Deutsche Post's DHL trailers outside the new Amazon logistic centre in Dortmund, Germany. DHL is expanding its Dubai operations. Thilo Schmuelgen/Reuters
Amazon flags and Deutsche Post's DHL trailers outside the new Amazon logistic centre in Dortmund, Germany. DHL is expanding its Dubai operations. Thilo Schmuelgen/Reuters

DHL Express, the global delivery firm that is part of Germany’s Deutsche Post, opened a US$18 million expansion to its logistics facility at Dubai International Airport (DXB) on Thursday, with its global chief executive predicting strong growth for the Middle East in 2018.

Ken Allen, board member at Deutsche Post AG, DHL Express Division, told The National he forecast upwards of 15 per cent year-on-year growth for the region next year, driven by an expanding e-commerce sector and uptick in global business sentiment.

“Globally, the firm has recorded [at least] 26 consecutive quarters of growth over 8 per cent, and the Middle East – one of our fastest-growing regions – has seen higher growth than this, of around 10 to 15 per cent and we expect this to continue, and even get better, from 2018 onwards,” Mr Allen said.

In the past decade, global crises such as the collapse of Lehman Brothers, euro-zone uncertainty and the end of the Chinese boom in 2015/16, which caused commodity prices to plummet, have all hit businesses with a knock-on impact on international shipments.

Now, said Mr Allen, “we are entering a golden era where global business opportunities are set to grow around five or six times faster than they have done for years, driven in part by the e-commerce revolution.”

With the launch of Mohammed Alabbar’s UAE e-commerce venture Noon this year, as well as Amazon’s acquisition of the UAE’s souq.com and a rise in start-up activity, “where entrepreneurs have instant access to a global market via the internet”, said Mr Allen, e-commerce was a “big proportion or our decision to expand our operations in Dubai”.

The expanded facility at Dubai’s Terminal 2 spans 13,100 square metres and is planned to serve 70,000 customers across the Middle East and North Africa, managing an estimated 5,000 shipments per hour – double its current capacity of 2,500 shipments per hour.

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The facility is intended to support the region’s economic growth by facilitating global trade to and from DHL’s UAE hub.

Announcing the opening, Mr Allen said: “The expansion of our facility at Terminal 2 in Dubai is the latest investment by DHL to support economic growth in the country and wider.

“We are confident the new facility will be able to adequately meet increasing demand for faster shipment deliveries, especially with the boom in e-commerce.”

DHL Express plans to expand its global aircraft fleet by an average of four extra freighters per year in line with projected 8 per cent year-on-year growth for the company as a whole, Mr Allen said, adding that many of those new planes would cross through the UAE.

The company is also looking at new opportunities to expand elsewhere in the Arabian Gulf, particularly in Saudi Arabia, where it has already opened three new hubs in the past few years to accommodate growth.

There are no plans for acquisitions at present, Mr Allen added. “We are more interested in investing in our own infrastructure than picking up something else for no good reason; we see adequate growth within our own business for now,” he said.