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SEPTEMBER 2005

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LOGISTICS


Least
Resistance
Facility development and acquisition in logistics seeks smoothest path.

by ADAM BRUNS
DHL's IT center in Malaysia is just a part of the company's multi-project build-out in that country, which in turn is part of a US$1.1-billion investment plan across the Asia Pacific.

O

n the same day that real estate and logistics executives with UPS Supply Chain Solutions sat down with Site Selection to talk about what's driving their project decisions, the parent company reported a 21-percent rise in profit, driven in part by a 13-percent rise in international deliveries — including a more than doubling of exports from China during the second quarter of 2005.
      But that's nothing. An April Harris Interactive survey, commissioned by UPS, of 70 high-level corporate executives at the annual Longitudes business conference, found that 80 percent of them saw China as important to their growth in the next three years, but only 16 percent could call their Chinese supply chain "highly effective."
      DHL parent company Deutsche Post World Net reported in its mid-year financials that its logistics division's revenue had increased by 11.8 percent over the previous year's first six months. Its outlook? "The company is confident that Logistics will continue to grow and exceed the prior-year earnings of 281 million euros [US$341 million] by 5 to 10 percent."
      A study used to fortify FedEx's logic for expanding in China reported that Asia will remain the world's fastest growing regional air freight market with growth of 8.5 percent each year until 2023. It said air freight volume from China to the U.S. will grow at an average of 9.6 percent a year over the next 20 years, while traffic to Europe is predicted to grow at 9.3 percent.
      No wonder the companies are digging deep and acting fast to build up their hub networks throughout China and Asia Pacific.


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