China’s rising appetite for consumer products is now bringing more balance to East-West air freight lanes.
     At least, that is how Michael D. Hansen, Managing Director of DSV Air & Sea Ltd, views the evolution of China’s economy and the impact its burgeoning middle class is having on domestic consumption rates.
     Hansen told FlyingTypers that a number of factors, including the internal migration of manufacturing centers as OEMs seek out lower land and labor costs and access to fast growing tier 2 and 3 cities, was changing the nature of air freight flows to and from China.
     “A few years ago the ratio for air was about 4 kilos out of China for every kilo coming in,” he said.      “Today our air import volumes are greater than export volumes.
     “These import volumes reflect a mix of automotive/industrial components, retail cargo, wines, and luxury cars.”
     This about-face is being prompted by China’s shift away from a dependency on export manufacturing and towards domestic consumption, as it develops a more self-sustaining economy, he said.
     “This, equally, has an influence on 3PLs like DSV, where the previous focus on export ocean/air is becoming more balanced with inbound activities, and involvement in domestic transport and distribution.”
     At DSV the investment to actively pursue these expanding opportunities in China has been a long-term process—the Denmark-based company already covers many of the main airports in China and employs over 1,000 people across China and Hong Kong in 34 locations, including Western China, where it boasts representation in Chongqing, Wuhan, and Chengdu. DSV China is also active in warehousing and logistics, and now has a presence in domestic transportation where the relevant licenses have been secured.
     “With large scale hi-tech and automotive investments moving into areas like Chongqing, Wuhan, and Chengdu in Western China, airlines have followed by opening up direct routes,” he said.
     “Primarily this has been to cater for outbound volumes. Import retail is still mainly going into Shanghai and Beijing, where the relevant infrastructure is in place for domestic distribution.”
     The DSV Group is headquartered in Denmark but has offices in more than 70 countries. Of its 22,000 employees, 6,300 work in the DSV Air & Sea division, which handled 259,000 tons of airfreight in 2013. Although volumes in 2013 were in line with 2012, the company was encouraged by 7 percent growth in Q4 2013.
     “We expect to carry increased volumes of both imports and exports into Asia, especially China, in 2014,” said Hansen.
     DSV purchased Columbia-based Airmar Cargo last year to boost its presence in Latin America, a region the firm has identified as one with high potential. The company also acquired SBS Worldwide in 2013, greatly strengthening its presence in the UK-North America market and putting it into the top five airfreight forwarders on the trade lane and one of the top ten air freight forwarders in the UK overall.
     “We expect to attract more business and more customers for any trade lane out of the UK as we have the volumes to provide highly competitive pricing as well as the expertise to offer top class customer service,” he said.
     “DSV Air & Sea has a specialist team for handling projects and out of gauge cargo and has also recently introduced its global temperature-controlled service to the UK market under the name DSV Fresh. Express and courier shipments are handled by DSV Xpress.
     “In the UK, our aim at the start of 2013 was to restructure our UK air management team, operations, and processes so we are better prepared for growth, business retention, customer service, and improved carrier relations.
     “We realized we needed to raise our profile in the airfreight sector as DSV has traditionally been regarded primarily as a European hauler or a Far East ocean import specialist. The acquisition of SBS Worldwide in September 2013 has greatly strengthened our presence in the North Atlantic airfreight market.
     “Also in 2013 we raised the bar on our service levels, reduced the number of carriers we were working with, and focused on improving our offering to always be flexible enough to meet customer needs and respond quickly to changing market conditions.
     “In my opinion, and having spoken to a lot of airline people during 2013, there is a tendency around LHR to say ‘Well that’s the way it is.’ At DSV we will challenge ‘the way it is’ in order to better deliver to our customers and shareholders.”
     Hansen said DSV was now also actively targeting perishables markets, both in the UK and beyond.      “We expect our new UK perishables product, DSV Fresh, to surpass expectations,” he explained.      “While it may be new to us, across the DSV Group—both internationally and in the other divisions in the UK— we have a wide range of experience and expertise in handling temperature controlled products. We have also recruited specialist personnel to run DSV Fresh.
     “We have already secured significant contracts to carry salmon from the Faroe Islands, Scotland, Iceland, and Norway, primarily to Asia and the US, and expect to carry one million kilos of fish per month by the end of the year.”
      And Hansen said DSV’s XPress product continued to be a key driver of the business. “With the combined SBS Worldwide courier volumes and additional post room management expertise we now have within the business, it will become an ever more important part of our portfolio,” he said.
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