Mr Uwe Doerken, Chairman and CEO, DHL International

Dr Cheong Choong Kong, Chairman, Singapore Airport Terminal Services

Ladies and Gentlemen

1. I am delighted to join all of you this morning for the official opening of DHL’s Singapore Hub. This is an important milestone in the development of Singapore as a global aviation hub.
2. Building on our historical position as an entrepot seaport, Singapore moved early into the global aviation industry after the Second World War. The old Kallang Airport which also served sea-planes rapidly became too small. Paya Lebar Airport took its place in 1955. In 1975, the Singapore Government, looking into the future, decided that Paya Lebar Airport would eventually become too limited and made the decision to develop Changi Airport even as the facilities in Paya Lebar were still being expanded. I remember well the weekend in 1981 when the Air Force and Civil Aviation swapped facilities. We moved from the Western Apron of the old Changi Airbase via the Tampines backgate into what seemed then to be an enormous facility at Paya Lebar where the runway was 3 km long to accommodate Jumbo jets.
3. Growing from strength to strength since then, Changi Airport has helped secure Singapore’s place on the world aviation map. Singapore developed a reputation as the premier air hub in the region. Last year alone, Changi handled 28.6 million passengers, and 1.7 million tonnes of cargo, making it the busiest airport in the region, and placing it among the top five in Asia. With the recent addition of a new airfreight terminal, and the opening of this new Express Courier Centre 2, Changi Airport has an annual handling capacity of 2.5 million tonnes of cargo and is well-positioned to cater to the longer-term demands of growth in the air cargo industry.
4. DHL has been a strong partner in Singapore’s development for nearly three decades, opening its first office here in 1972, just three years after its founding in 1969. Over the years, DHL has expanded the scope and scale of its activities in Singapore. It now has its regional headquarters in Singapore, four service centres islandwide, as well as an express logistics facility with a call centre. Today, the opening of DHL’s Singapore Hub, its cargo transshipment centre for the Asia-Pacific and the Middle East, will bring under one roof DHL’s inbound, outbound and airport operations. All this will prepare DHL for strong growth in the future.
5. A good airport hub must have excellent connectivity both in terms of destinations served and in the frequency of flights. DHL’s decision to locate its regional hub in Singapore not only demonstrates Changi’s strength as a hub, but will further enhance it. As at the end of October, Changi Airport is host to 64 scheduled airlines handling 3,368 weekly flights, linking Singapore to 146 cities in the world. Capable of handling up to 180,000 tonnes of cargo per year, DHL’s hub in Singapore will enhance Changi Airport’s position as the premier air hub in Asia.
6. Despite short-term setbacks brought about by the global economic downturn and the threat of terrorism, the global airfreight industry, including the air express and air logistics businesses, will continue to grow in the middle and long term. Rapid technological advances have shortened product development cycles. Shorter cycles mean quicker obsolescence of products in many industries. The need to minimise obsolescence costs has resulted in reduced inventory levels and a shift to leaner just-in-time (or JIT) manufacturing systems. All this relies on timely air shipments. In the last 20 years, the global airfreight industry has grown faster than global trade which itself has grown twice as fast as global GDP.
7. Although September 11 has exposed some weaknesses in the JIT model and focused attention on the vulnerability of supply chains to sudden system disruptions, no one is predicting the end of JIT. Rather, the solution is in finding ways to improve the robustness of JIT. We need more, not less, logistic and supply chain management expertise to respond effectively to shocks. In Singapore, we have put in place training and education programmes to broaden and deepen our talent pool in logistics and supply chain management at various levels, from operator levels to postgraduate managerial levels. September 11 and the anthrax scare force all of us to do much more contingency planning. In many ways, civilian logistic management must become more like military logistic management.
8. An air hub can only be successful if the airport services provided behind the scene by players like the Civil Aviation Authority of Singapore and SATS are reliable and competitive. SATS has been a strong partner in the growth of Singapore’s Changi airport. Over the years, it has gone beyond purely providing airport services. For example, it works closely with DHL to establish this Express Courier Centre which houses DHL’s hub operations.
9. Just as manufacturers are moving to an inventory-light approach in their operations, many service companies around the world are also moving towards an asset-light approach in their investment. Many prefer to lease facilities rather than to own them. In this collaboration between DHL and SATS, DHL prefers to be asset-light while SATS is prepared to make the capital investments. In this way, DHL and SATS complement each other’s strengths and capabilities in a win-win partnership. Such partnership help us create a more vibrant enterprise ecosystem in Singapore.
10. This Singapore Hub will be one of the key projects of DHL’s US$300 million expansion into Asia over the next few years. Singapore to DHL will be like a control tower to an expanding airport, controlling an increasing number of flights taking off to a growing network of destinations. Both DHL and Singapore Airport know that now is the time to lay the groundwork for future growth in the region.
11. I congratulate DHL and SATS for the successful completion of this project and wish you every success in the coming years ahead. Thank you.