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DHL to Boost Asean Investment as Growth Bolsters Shipping

DHL to Boost Asean Investment on Economic Growth
The bulk of DHL’s investments will be in Indonesia because of the country’s growth. Photographer: Wolfgang von Brauchitsch/Bloomberg

DHL, the courier and freight company of Deutsche Post AG, plans to spend $181 million in the next two years building warehouses and adding workers in Southeast Asia as economic growth spurs consumption by the middle class.

DHL’s Southeast Asia warehouse capacity will surge 50 percent while the number of people employed in the region will increase by 65 percent to 25,000, Oscar de Bok, head of DHL Supply Chain for South and Southeast Asia, said in an interview with Susan Li on Bloomberg Television’s “First Up” yesterday.

Economic growth in Indonesia, Vietnam and Thailand has stoked consumption in Southeast Asia, attracting investments from companies including phone maker Nokia Oyj and carmaker Ford Motor Co. Most of Southeast Asia’s 600 million people -- the combined population of the U.S., Germany and Brazil -- will be middle class by 2020, and that will boost demand for food, beverages and other goods, according to Bain & Co.

“There’s a great development of the middle class,” de Bok said in Singapore. “The market is maturing, therefore requiring a more mature and more sophisticated supply chain. Southeast Asia is an important focus.”

The 10-member Association of Southeast Asian Nations is expected to expand 5.5 percent in 2013, compared with 0.2 percent shrinkage in the euro area, the International Monetary Fund forecast in April. Asean includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. Formed in 1967, it has a combined gross domestic product of more than $1 trillion.

Indonesia’s Growth

The bulk of DHL’s investments will be in Indonesia because of the country’s growth, de Bok said. Southeast Asia’s largest economy may expand 6.2 percent this year, Indonesia’s Finance Minister Chatib Basri said May 21.

Rising demand in the retail sector and automotive industries will spur DHL’s investments in Thailand and Vietnam, de Bok said. The company will also “substantially increase its transport fleet,” it said in a statement today, without elaboration.

“The rapid expansion of the middle-class in the coming years will trigger growth in consumer-related industries,” said Eugene Leow, an economist at DBS Group Holdings Ltd. in Singapore. “Logistical services have to keep up with the increasing demand.”

Asian airports are also expanding warehousing capabilities because of economic growth. Cathay Pacific Airways Ltd. earlier this year began operating its first independently owned goods terminal at its base in Hong Kong. The city is home to the world’s biggest cargo airport, according to the Airports Council International.

Changi’s Cargo

Changi Airport, Southeast Asia’s largest freight airfield, may process 7 percent more cargo volume for pharmaceutical products such vaccine and test drugs, as well as perishable goods, said James Fong, assistant vice president of cargo and logistics development at Changi Airport Group (Singapore) Pte., in an interview earlier this month.

FedEx Corp. opened its South Pacific regional hub at Changi Airport in October, the first and only express transportation facility in Singapore.

Nokia, the Finnish mobile-phone maker trying to win back users from Apple Inc., in 2011 announced plans to invest 200 million euros ($258 million) to set up a factory near Vietnam’s capital to make low-end phones.

Toyota Motor Corp., Honda Motor Co. and other Japanese carmakers already use Thailand as an export base for their automobiles.

Aggressive Plan

Ford, along with Japanese automakers, sees Southeast Asia as a salve for slowing sales in markets like Europe, and has said its expansion in Thailand is part of an “aggressive growth plan” for the region.

DHL has already announced investments totaling 200 million euros across South and Southeast Asia since November. The company plans to open seven new facilities in Southeast Asia by the end of this year, including a 17,000 square-meter (183,000 square-foot) warehouse in Indonesia to store shipments earlier this year.

“Southeast Asia has a lot of potential,” de Bok said. “Southeast Asia shows, by itself, a compelling case to make those investments.”

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