DHL announced that it has successfully completed the transaction to form a strategic partnership with Polar Air Cargo Worldwide, Inc., a wholly owned unit of Atlas Air Worldwide Holdings, Inc. (AAWW), a leading provider of global air cargo services. As part of this transaction, DHL Express will invest US$150 million for a 49% stake and 25% of voting rights in Polar Air Cargo Worldwide.
The transaction also includes a commercial arrangement that gives DHL Express guaranteed access to Polar Air Cargo’s aircraft capacity in key global markets over a period of 20 years, with a potential revenue stream to the AAWW companies of US$3.5 billion. In addition, DHL Express will have access to additional available aircraft capacity from Atlas Air, Inc., another subsidiary of AAWW, as agreed between the parties. The long-term access and greater capacity will significantly improve service to DHL Express’ customers who ship goods between Asia Pacific and the US ’ reducing transit times and increasing reliability of delivery on the trans-Pacific air routes. The investment in Polar signals another major commitment to the US market and represents a major milestone in DHL’s strategy to provide a compelling alternative in the US domestic express delivery market.
‘We are pleased with the completion of this partnership with Polar Air Cargo, which is a strategic thrust instrumental in positioning DHL as the global express and logistics provider of choice,’ said John Mullen, Global CEO of DHL Express. ‘It shows that recognizing and responding to the needs of customers are a reiterative process for DHL - we understand the importance of broadening the scope of our service offerings to stay ahead of the curve in view of the increasing demand for cargo routes between Asia Pacific and the US.’
Asia Pacific is going through a period of intense growth, fuelled by several growth drivers including the burgeoning economies of China and India. The trade flow for the trans-Pacific routes has been growing steadily in recent years. According to Boeing’s World Air Cargo Forecast 2006/2007, Asia-US trade is forecasted to expand at an annual average of 7.1 percent, compared to 6.9 percent for Asia-Europe. The overall share of world air trade connected to Asia’s markets, including the domestic markets of China and Japan and the international markets, is expected to increase from 50.8 percent in 2005 to 63.3 percent in 2025.
‘The new partnership improves trade lanes between the regions, fulfilling DHL’s trade facilitation role. We have shortened the global supply chain for our customers by connecting the major markets on both sides of the Pacific, providing excellent direct access for imports and exports to and from markets new and old,” noted Charles Graham, Chief Executive Officer, Aviation, DHL Express. ‘We are now ideally positioned for even greater growth in Asia Pacific and the US’.
DHL has been an active champion of growth for the Asia Pacific, its fastest-growing region in the world. It has been investing heavily on capacity expansion in Asia Pacific to anticipate the growth since early 2000. This partnership also serves as a testament to DHL’s pursuit of providing best-in-class product and service offerings to secure customers’ loyalty in the region. It will not only ensure capacity for future growth, but will also provide its customers with quicker time-to-market capabilities between the regions.
‘We are pleased to close on this significant transaction,’ said William J. Flynn, President and CEO of AAWW. ‘We welcome DHL Express as an anchor customer for Polar and the opportunity to be a sizeable supplier of air cargo capacity to a dominant player in the express business. At the same time, we look forward to building on this relationship to meet the demands for future growth on some of the world’s most important trade routes.’
Polar Air Cargo will continue to operate as an independent company and there will be no integration with DHL or any of its business units.