DHL may expand Incheon unit
Published: 12 Aug. 2014, 20:55
Jerry Hsu
“One of our biggest investment plans is to change Korea’s gateway into hub status,” Hsu said in an interview with Korea JoongAng Daily last month. He was in town as part of his routine visits to the 42 countries he covers and to congratulate his Korean colleagues on their performance based on results from the last fiscal year.
“Right now, it is a gateway because it doesn’t have enough throughput yet but we’re looking to the future when we can classify Incheon as a hub. That means more transshipment that doesn’t come to Korea but gets dispatched or distributed from Korea - like from Japan to the United States.”
To expand the Incheon facility into a hub, which Hsu expects will happen within two years, DHL Express will invest about $150 million to $200 million. The exact time frame depends on when Korea’s trade volume will be big enough to warrant the upgrade.
“We have a hub in Shanghai that just opened up two and a half years ago,” Hsu said. “We’re busy filling that hub. But I can see that if the economy grows, business grows, within two years time [the upgrade can happen].”
Based on DHL Express’s forecast, the volume of deliveries will outgrow the capacity of the Incheon facility by 2018.
Hsu said that there’s motivation to make the investment.
“[Korea] is [DHL’s] best performing market in Asia,” he said. “Business here has improved significantly in the fiscal year with revenue growing nearly 10 percent [from last year].”
Q. What are some reasons for that significant growth?
A. There are quite a few very good reasons. I think people in Korea are very disciplined. If you walk around this building, people are well organized, clean and all respectful of what they do. That to me is a very cultural side and a strong part of Korea. Secondly, the economy seems to be coming around a little bit this year - with 4 percent gross domestic product growth. It’s quite a good growth rate. We also have a better process now than before.
Every year we see changes in our process that helps us deliver to our customers. Also, we have a pretty strong history. Since 1977, we’ve been here. So we have a very strong customer base and we have good relationships with all the major chaebol [large conglomerates] in Korea. Last but not least, our management team is very stable. This is important for the business world and to operate in a changing world.
Innovation seems to be key in all businesses now. What elements has Korea contributed to boosting innovation for your business in general?
We are all into innovation. We create a lot of new capabilities and Korea is one of the contributors to our innovation, whether it’s system, process, facility, management skills or management style.
I have seen quite a lot of change over the last few years [in the Korean DHL office]. For instance, women in leadership positions - we’re seeing more female colleagues being put in key positions in Korea. That may not be totally in line with the social trend but we believe diversity is important, to have both males and females operating this company. We do believe in that and Korea is driving that very well.
What makes DHL Express competitive from a customer’s point of view, and as seen by large conglomerates?
We cover the largest market in the world, since we cover 220 [countries]. Korean people have always focused on trade. They need trade facilitation and we are known for being a trade facilitator for companies in the world. We reach more places than any other company in the world.
We are actually bigger than the United Nations in terms of our coverage of the world. Big companies like Samsung and LG focus on exports and they need professionals to help them move the goods to destinations where no others can, whether it be South Africa or South America.
All of the markets Korea is interested in, we’re there. We have knowledge there and we have a good relationship there. We have people there to help open up the market for these companies.
BY Lee Eun-Joo [angie@joongang.co.kr]
with the Korea JoongAng Daily
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