Air Transport World

Holding its own: a massive global expansion is keeping DHL well ahead of growing U.S. competition. (DHL Worldwide Express)(includes related articles on DHL Airways Inc.'s Cincinnati, Ohio, hub and electronic services at DHL)

A massive global expansion is keeping DHL well ahead of growing U.S. competition

SAN FRANCISCO--Virtually since it began expanding into the international arena in the early 1970s, DHL Worldwide Express was the leading--and in many areas the only--international overnight express carrier.

DHL was started in 1969 by Adrian Dalsey, Larry Hillblom and Robert Lynn (DH&L), who used their personal credit cards to buy space on commercial airfines to transport shipping documents between San Francisco and Honolulu. The early arrival of the shipping documents allowed ships to unload their cargo, reload and clear the harbor in a fraction of the time needed simply to clear all the paperwork.

This overnight express service was expanded to the banking industry, then into the general business community. In 1971, DHL moved into the Pacific basin, with service to the Philippines, followed by Japan, Hong Kong, Singapore and Australia in 1972.

Europe came in 1974, Latin America in 1977, the Middle East in 1978 and the East Bloc countries in 1983. An international hub was created in Brussels in 1985.

DHL entered the China market in 1980 under an agent agreement with Sinotrans, the Chinese state transportation authority. It would provide the service to and from China, and Sinotrans would provide in-country distribution.

In 1986, DHL formed a full joint-venture partnership with Sinotrans, the first integrator to have its own offices and employees in China.

By then, DHL had become virtually the generic term for overnight express package delivery throughout the world, just as FedEx had become as much a verb as it was a noun in the U.S. Its only real'competitor was TNT.

However, in the mid-1980s, the major U.S. integrators such as FedEx, UPS and Airborne started moving into the areas long dominated by DHL. To meet them--and under a natural expansion program DHL International, Ltd. is investing some $500 million in expanding its Asian operation, as well as committing roughly $1.25 billion in a 4-year worldwide capital spending program.

Money for the expansion and capital-investment programs will come from a combination of cash flow and bank loans, said Patrick Foley, president and CEO of DHL Airways.

Bank loans will be made in the areas in which the money will be used. "In Asia, we borrow from Asian banks. In Europe, we get money from there and in the U.S., we get money from banks in the U.S.," he said.

There is a possibility that DHL will go public and "it wouldn't surprise me if someday that might transpire, both internationally and domestically. We don't have any plans in the immediate future but we have discussed it. …

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