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July 07, 2014

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DHL EXPRESS IS a rare breed among air cargo carriers these days: While others are losing cargo to ocean transportation, the Plantation, Florida-based division of Germany's Deutsche Post DHL is seeing growth in air freight. And, unlike many of its competitors, DHL is adding capacity to its global network — in the air and on the ground — to keep up with growth in international volumes. "If anything, we are starting to see an uptick in air cargo volumes shifting back from ocean to air since 2010 and 2011 in the middle of the recession," Mike Parra, CEO of DHL Express USA, told the JOC. "We are adding capacity, and our busi- ness is growing, so we have not seen the effect of growing ocean on our business." DHL Express is adding five Boeing 737-400 aircraft this year to expand its service within the Americas as part of an extended multiyear agreement with U.S. cargo carrier Southern Air. "They are far more fuel-efficient and have more capac- ity than the 727s they replace," Parra said. The primary driver for inbound growth into the U.S. and the Americas as a whole is coming from the Asia-Pacific region, where volumes are growing at double-digit rates year-over-year, and from Europe, where volumes are grow- ing just above 10 percent. The inbound growth is coming from China, Hong Kong, Italy and Germany. Outbound growth from the U.S. is into Australia, Canada, the U.K., China and Japan. In Latin America, DHL is seeing dou- ble-digit growth in inbound Asia-Pacific cargo and in the single-digits from every- where else. Latin America-bound cargoes move through its hubs in Miami, Panama City and Cincinnati for transshipment throughout Central and South America. Its expanded Miami hub handles 25 direct flights from the Asia-Pacific region a day at its Miami hub for shipment into Central and South America. DHL also operates direct flights from its Madrid hub into Chile and Brazil and to Barbados for shipment into Central America. Parra said the fastest-growing inbound air cargo markets are Chile, Colombia, Guatemala, Honduras and El Salvador. The primary growth in Mexico is inbound from Europe, but outbound cargo is down. DHL recently opened a new gate- way for inbound cargo from Europe at Rio de Janeiro for the Brazilian market. It operates direct flights from Miami to Rio, Sao Paulo, Curitiba, Puerto Allegre, Bela Horizonte and Manaos. On July 14, it will launch five direct flights daily from Miami to Viracopos. Brazil's volume growth is primarily on the inbound leg from Asia. "With the World Cup right now and the Olympics (in 2016), there's a lot of inbound trade," Parra said. DHL started adding its five new 737- 400 freighters in the Americas region in April and will take the last one by August. Two of the new planes are based in Ven- ezuela where they are beefing up routes from Caracas to the Caribbean, Colombia and Panama, and three are being posi- tioned at DHL's expanded super-hub at Cincinnati Airport, where they will serve routes to the Northeast and Midwest. In the last year, DHL Express has increased its already double-digit share of the U.S. air cargo market by 1 percent, Parra said. DH L ha s invested more t ha n $105 million in the last five years to expand its Cincinnati super-hub, which handles an average of up to 175,000 packages each night from transshipment to and from routes throughout the Americas. The hub handles 42 arrivals and departures every night. Parra said growth is so strong that DHL soon will announce plans to further automate the facility with the addition of more material-handling equipment. To cut delivery times in major U.S. markets, DHL also is adding helicopter service from Los Angeles International Airport to downtown Los Angeles and from O'Hare International Airport to downtown Chicago. It will beef up ser - vice to Canada in September with direct service to Calgary and Edmonton and back to Milwaukee and Cincinnati with Boeing 767 freighters during peak season. It also is increasing the size of the air- craft on its routes from Hong Kong to the U.S. and Europe from Boeing 747-400s, adding two new Boeing Dreamliners, the 747-800s, which brings its total global fleet of those aircraft to four. DHL also is experiencing double- digit growth in inbound cargo in such troubled markets as Ukraine, Iraq, Ven- ezuela and Argentina. "During times of instability, people tend to come to us," Parra said. "In Venezuela and Ukraine, it's a lot of consumer goods. In Iraq, it's a lot of parts, which the government, our biggest customer, continues to import into Baghdad and Basra." JOC Contact Peter Leach at and follow him on Twitter: @petertleach. LATIN AMERICA TAKES OFF DHL Express beefs up air cargo capacity in the Americas to meet growing demand 40 THE JOURNAL OF COMMERCE JULY 7.2014 LATIN AMERICA TRADE AND LOGISTICS SPECIAL REPORT By Peter T. Leach

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