DHL Express gets local approval for California air hub

July 21, 2023

DHL Express is a large step closer to establishing an air hub on the West Coast by mid-decade after the Ontario International Airport Authority last month voted for a large cargo project previously associated with the parcel logistics company.

The airport commission approved the development of the South Airport Cargo Center, as well as numerous environmental mitigation measures to meet California requirements for industrial developments, at its June meeting, according to the minutes.

The increasing shift by consumers to online shopping and robust cross-border trade is driving the infrastructure investment. DHL inaugurated a Southeast air hub in Atlanta last September and officially celebrated its opening earlier this month.

The authority’s staff report for the June meeting didn’t identify the project applicant, but the commission in October authorized airport CEO Atif Elkadi to conduct exclusive negotiations for a lease with DHL Express USA. FreightWaves reported in February 2022 that DHL had its eye on Ontario for a West Coast hub. A source familiar with the project confirmed that DHL will be the tenant and pay for construction of the cargo center.

The first phase of the project on 62 acres is estimated to begin operations in 2025, with a smaller expansion ready by 2029. At full buildout, the facility would have 857,762 square feet of warehouse and office space.

The South Airport Cargo Center still needs to undergo a federal environmental review. The Federal Aviation Administration is the lead agency for that process and must first determine what level of review is required, an FAA spokesperson said.

DHL’s main U.S. air hub and sort center is at Cincinnati/Northern Kentucky International Airport.

Ontario airport is in the Inland Empire, a region east of Los Angeles dominated by distribution centers. FedEx Express opened a major operation center there in November 2020 that tripled its footprint. UPS also has an air hub at the airport. Amazon Air uses the airport for limited point-to-point flights but recently opened a West Coast hub of its own at nearby San Bernardino International Airport.

In 2022, the Ontario airport handled nearly 797,000 tons of freight, a 5.4% contraction from 2021. Year-to-date freight tonnage through June is down 11%.

Ontario would eventually replace Los Angeles International Airport as DHL’s main West Coast hub because landlocked LAX doesn’t have room to grow, Greg Hewitt, CEO of DHL Express U.S., said in an interview early last year.

“Los Angeles is a major air hub for commercial airlines. So long term, our plan would be to keep commercial lift [booked on other airlines] through Los Angeles and the network flights, with the big DHL birds going into Ontario,” he said.

Since mid-2021, DHL has invested in major upgrades for air facilities in Miami; Paris; Milan, Italy; Seoul, South Korea; and Hamilton, Ontario.

Environmental protections DHL must follow under the state process include:

The use of all-electric cargo handling equipment such as yard trucks, belt loaders and pallet jacks.

Use of zero-emission or near-zero-emission trucks for at least 25% of the fleet serving the facility and half the fleet by 2029 to the extent feasible.

Encouraging the use of a single engine for aircraft taxiing as well as installation of electric plugs for refrigerated containers.

Pre-construction monitoring for burrowing owls, nesting birds and bats to avoid disturbing wildlife.

Equipping new aircraft parking positions with ground power and pre-conditioned air to reduce the need for auxiliary power units.

Including electric aircraft in the fleet operating from the cargo center. DHL previously ordered 12 electric cargo jets from Eviation Aircraft.

The City of Chino asked the board to add formal procedures for residents to request noise mitigation measures, said Deputy Manager Vivian Castro. She said pilots and air traffic control personnel often ignore departure procedures designed to minimize noise from low-flying cargo aircraft at night and early morning.

Finland

In related news, DHL Express last month announced it will build a technologically advanced logistics center with adjacent aircraft parking at Helsinki-Vantaa Airport for $111 million. All inbound and outbound express shipments in Finland will be handled in the logistics center, which is scheduled to be completed in the second half of 2025.

DHL said the investment in greater processing capacity is in response to growing shipment volumes in Finland, especially for cross-border e-commerce. The new, 170,000-square foot facility is more than double the size of the current gateway in Vantaa. It will include an automated sorting system able to handle about 6,500 packages per hour. Ninety direct loading bays will enable efficient sorting of shipments directly from the conveyor to the delivery vans and all bays will be equipped with charging stations for e-vehicles, the company said.

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Twitter: @ericreports / LinkedIn: Eric Kulisch / ekulisch@freightwaves.com