From Used Cars to Jetliners

Nearly 40 years ago three entrepreneurs; Adrian Dalsey, Larry Hillblom and Robert Lynn, came together and created a currier service shuttling bills of lading between San Francisco and Honolulu. Little did its founders know that within the next three decades their little business would become one of the world’s largest and most well-known international cargo carriers.

Their efforts were officially recognized 31 years later when all three men were inducted to The International Air Cargo Association (TIACA) Hall of Fame. TIACA recognized the men posthumously for “their significant contribution to world trade and as a major contributing factor in air cargo transportation.” According to TIACA, Adrian Dalsey, a Wheaton College dropout and sales manager and Larry Hillblom, a law student and currier, came together and were later joined by Robert Lynn to form the company DHL, a combination of their last initials.

In 1969 the company began with a second-hand car and was financed primarily by cash flow and credit cards. The company grew quickly though, and by 1971 DHL became a partner to many companies and had expanded its territory to include the Far East and Pacific Rim. The company continued to reach important milestones, including its formation in 1986 of a joint venture with the People’s Republic of China, becoming the first active express company in the communist country. In 2002 Deutsche Post World Net completed its acquisition of DHL, the same year the company entered into a joint venture with Cathay Pacific for express air cargo. In 2003, DHL increased its share in China’s state-owned import-export company Sinotrans to 5 percent and also launched a $200 million USD investment program to significantly expand its capabilities in China.

“Thanks to our 20-year alliance with Sinotrans in China, we can provide a seamless supply chain, express shipment, air and ocean freight, overland transport and logistics services — all of which adds up to a distinct competitive advantage,” explains Red Alexander, DHL’s vice president of aviation and commercial transportation. “In February 2007, we announced the company will invest more than $100 million USD in our China business over the next few years to further strengthen our market-leading position in anticipation of continued strong growth. DHL has been very successful in implementing its ‘First in China’ strategy, which comprised a series of initiatives launched in April 2006. These included building a new DHL-Sinotrans headquarters for our express operations and increasing our number of branches from 56 to 72 nationwide. We have, in fact, exceeded our target and currently have 73 branches in China.”

Today the company continues to expand and improve its on-time delivery performance to remote areas of the world.

“A strong global network is the lifeblood of our business,” Alexander says. “We operate an unmatched global system covering more than 225 countries and 120,000 destinations. As the world’s largest and most experienced international air express network, DHL was the first to bring international air express services to many key regions, including the Eastern Bloc countries and the People’s Republic of China and we were the first to re-establish service to Kuwait after the Gulf War.”

It was obvious the goals of expansion and firsts have been met and exceeded when the carrier was named winner of Georgia Tech’s annual Great Package Race — a non-scientific study in which DHL competed against rivals UPS and FedEx to deliver packages to isolated destinations such as Yangon in the Union of Myanmar (formerly Burma). DHL not only won the competition with the most completed deliveries, they also proved to be the most economical and were said to have the best customer service department by the students conducting the study.

DHL employs a mixture of ground handling practices in its cargo operations which no doubt played a major role in the on-time deliveries which won it the Georgia Tech race.

“We outsource our ground handling at most of our airport locations, with the exception of our Riverside hub, which is run exclusively by DHL employees,” Alexander says. “In many cases, we have employed a hybrid approach, using both DHL employees and third party ground handlers, for example, we ‘self-handle’ the A-container aircraft at some locations.”

Alexander says managing the company’s GSE network to accommodate both the standard A-container aircraft and DHL’s legacy C-container aircraft is one of the greatest challenges his ground handling department faces. DHL’s A-container is the standard U.S. freight container with a pallet base of 88 feet by 125 feet and is utilized for wide-body aircraft. The C-containers are designed for the DC-9 aircraft and are also used for 767s which have not been converted into a full freighter.

“We have a very diversified fleet,” Alexander says. “In Europe we operate the Boeing 757 freighter and Airbus A-300s. In the Asia pacific region we use A300-600 freighters and in the U.S. we use the A-300, Boeing 727 and 767s, DC-8s and DC-9s. Because we operate various aircraft and containers, we try to get similar GSE materials so we don’t have too many spare parts that are not interchangeable — so we can become more self sufficient and more importantly, the inventory levels do not have to be duplicated. With the completion of our network integration in September 2005, we brought the A-and C-container GSE together in one network.”

According to Alexander, DHL purchases FMC and TLD K-loaders; Tug Technologies (Tug) tractors, air starts and belt loader; Wasp dollies, crew stairs and container sort platforms and Hobart and Tug KVA’s. And judging by the rate at which DHL is expanding globally, it looks like the company will be needing all the equipment it can get. In the spring of this year the company announced it will open a new facility in Vermont, expand its Louisville, Ky. Location, combine its Atlanta operations and inaugurated a $41 million facility at the Kansai International Airport in Japan.

“We are striving to standardize the GSE across our network and will look to further leverage our global purchasing power as a global operator,” Alexander says.

Dalsey, Hillblom and Lynn would surely be amazed at their tiny currier business’ growth.

“Globally, we aim to forge closer links between customers and markets, thereby leveraging the importance of the international flow of goods,” Alexander says. “Thus, we are expanding our intercontinental networks and continue to grow and invest in our international trade lanes, including Transpacific, Transatlantic, between Europe and Asia, and across North America, to assure that we continue to meet our customers’ needs.”