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Monday, December 23, 2024
Logistics

DHL Express’ Miami air hub meets the moment for peak season

MIAMI – DHL Express’ parcel volumes during the peak season are expected to grow 1% year over year in the U.S. and 4% to 5% in Latin America, according to company officials. That growth wouldn’t be possible without the delivery company’s strategic air hub at Miami International Airport (MIA), which connects Central and South America, as well as the eastern Caribbean, to the rest of DHL’s global network.

DHL operates 14 daily flights from Miami with its Panama-based cargo airline DHL Aero Expreso and partner carriers such as ABX Air, Atlas Air, Cargojet and Polar Air Cargo. It also buys space for parcels on 17 commercial flights per day to increase the reach of its network.

The busiest time of year for DHL Express is between Cyber Monday and Dec. 23, when volumes are typically 40% more than on a normal day in the middle of the year. 

In anticipation of the surge, DHL’s sales team works closely with customers to understand their shipping forecasts and, if necessary, cap their volumes so the network isn’t overwhelmed, said Andrew Williams, CEO of DHL Express (Americas), during a virtual media briefing in October. Investments this decade, including a Miami terminal expansion and more automated sorting systems, are paying off during peak shipping periods. 

Small and medium-size enterprises in Latin America form the largest customer demographic for DHL Express in Latin America. The rapid growth of smaller customers has enabled DHL to take more than 50% of the market share in Colombia and Chile, and nearly 75% of the express market in Peru, said Williams. One of DHL’s big export customers is Amazon.

Peak season in Latin America doesn’t exhibit the hockey stick spike in volumes seen in the United States or Canada, with volumes typically increasing 15% to 20% versus a normal run rate, but that is changing with the increased popularity of e-commerce and DHL’s investment in retail stores that make it easier to send personal packages, the regional chief said.

In the past two years, DHL Express has added direct freighter flights out of Miami to support shippers in Brazil, Chile, Ecuador and Argentina, and to grow business faster. Previously, a large portion of parcels were tendered to commercial airlines. The company also made a $5.3 million investment in its inbound gateway at Viracopos International Airport in Sao Paulo.

In Mexico, DHL Express anticipates a 10% to 15% bump in volumes during the holiday season, Williams said. Mexico is a major growth market because of increased nearshoring by manufacturers looking to reduce costs and transport time for exports to the United States. The integrated parcel logistics provider is spending more than $100 million to fully automate a hub in Carretero, Mexico, and opening more retail stores to handle the increased demand.

In Central America, peak season runs about 20% to 25% above the normal run rate and is expected this year to be about 4.5% above the 2023 level as consumers buy more online internationally and small businesses pursue their own global distribution, Williams told reporters.

One of the most heavily utilized lanes this year, with load factors exceeding 90%, is Miami-Viracopos. Mario Ho, director of Miami hub operations, told FreightWaves during an on-site visit last month that most of the demand is for heavy freight, which is booked by logistics specialists, deconsolidated at third-party warehouses and delivered to customers by motor carriers rather than parcels going through the DHL sorting network.

“The demand into Brazil has been insane,” Ho said. DHL is receiving more B2B general cargo because the freighters offer better transit times than passenger airlines and it has superior customs clearance processes that minimize collection delays. State-owned Brazil Post is the leading parcel courier in the country. 

DHL Express saw volumes to Viracopos spike last month when shipments overwhelmed cargo terminals in Guarulhos Airport in Sao Paulo, resulting in major bottlenecks. Many shippers in Europe began rerouting goods to Miami to bypass the congestion at Sao Paulo’s main airport. Earlier this year, a surge in ocean shipping clogged some Brazilian ports, resulting in some freight diversion to DHL’s air network, Ho explained. Typical commodities on the Miami-Sao Paul corridor include aircraft parts, medical equipment and machinery.

The global courier typically reserves the largest amount of freighter space for its core time-definite international product. It also offers guaranteed capacity to large shippers through block space agreements. Any spare capacity is sold on the spot market. Ho said good planning ensures that contract customers rarely get shipments pushed from a flight by parcels. In Miami, 90% of shipments from contract customers are flown as booked. Sales teams constantly monitor the volumes and make sure not to overcommit with outside bookings.

This year, the Miami operation has implemented significant process improvements, such as denser packing of containers, to squeeze more utilization from its aircraft.

DHL Express crews consolidate packages in large shipping containers at the Miami airport hub. Widebody freighters transport the containers to cities in Latin America and other parts of the world. (Photo: Eric Kulisch/FreightWaves)

The Miami hub sorts 50,000 to 70,000 pieces per day. About 60% of the daily volume is sorted and flown out during the evening window, in large part because that’s when intercontinental flights from Hong Kong and Europe arrive, Ho said. Another bank of flights operates between 6 a.m. and noon. Small packages make up 60% of the product mix, followed by flat packs at 35%. The remaining volume is bulk freight that gets moved to the next flight by forklift rather than moving through the automated conveyor belt system.

A big area of growth in Miami is medical express products. DHL transports umbilical cords, blood samples, urine samples and other biologic substances from Central and South America to Miami, where they are put on planes to DHL’s super hub near Cincinnati and then distributed to laboratories across the Midwest. Many of the shipments are packed in dry ice.

Inside DHL’s Miami operation

The sort control office acts as the nerve center of the Miami hub, tracking all activity throughout the facility as packages move on and off aircraft and through the conveyor system. Specialists use sensors and photo eyes to monitor for safety, control the speed and volume of shipments, determine where to discharge containers for maximum efficiency, make sure parcels are being routed to proper destinations based on their labeling, and detect potential maintenance issues. With thousands of pieces moved per hour, even 30 minutes of downtime to fix a breakdown can cause delays.  

Most parcels get screened for security at local service centers, but the hub facility uses automated X-ray machines – the first of their kind in the DHL network – to scan shipments that will be tendered to passenger airlines. Shipments that are too large or don’t read well are sent to a separate location for manual X-ray inspection.

In the flight control center, another group of specialists monitors flight movements in the DHL network, as well as dangerous weather and other developments that could impact transit time. Information is then shared with customers to help mitigate delays. If another airline carrying DHL packages is late departing MIA, the control center dispatches a truck to recover the shipment at the warehouse, bring it back to the sort center and rebook it with another carrier. The control center is also responsible for dealing with exceptions. About 3% to 5% of shipments have a broken label, missing documentation, regulatory export hold or other issue that prevents them from being processed. 

“We call them hospital areas. They help those sick shipments flow through to their final destination,” Ho said.

The customs group collects inbound flight manifests well before departure and uses the data to electronically provide shipment information to U.S. Customs and Border Protection and other agencies with jurisdiction over specialized products so goods can be cleared in advance. About 94% of international shipments are cleared while they are in the air.

Thousands of parcels per day move through the automated box sorting system at DHL Express’ Miami air hub. (Photo: Eric Kulisch/FreightWaves)

The automated conveyor system is a marvel of industrial engineering that pushes parcels down chutes and onto moving belts until they reach bins designated for loading on aircraft heading to their destination. Every package goes through a high-speed, six-way scanning tunnel. Equipped with eight scales – as well as six-sided barcode readers and radio frequency identification technology – it accurately weighs every piece DHL processes and then assigns it to a destination. If the piece needs an automatic X-ray, it is diverted to that location. Soft bags also have a passive RFID device that transmits information about the contents to a reader. As packages approach the scan tunnel from two main aircraft unloading areas, a piece of equipment called a Singulator makes sure all the packages line up in single file at least 18 inches apart so the labels can be read accurately.

The box sorter can process up to 4,000 units an hour. 

Packages are reweighed at the hub to verify the declared weight and to help with any potential billing disputes.

A picking area allows the trade compliance team to grab parcels that weren’t cleared in advance by U.S. Customs because of missing invoices, certificates of origin, duty exemptions or other documentation. They are held in a caged area while waiting for additional information or inspection. The specialists reach out to importers to get the necessary documentation and then put the packages back in the sorting system.

A separate conveyor system processes letters and flat packs under 10 pounds. It can handle up to 10,000 pieces an hour at full capacity. After they are weighed and scanned, the flats are distributed to large bags, which are sent to an outbound aircraft reload position or truck dock for local delivery when filled.

In the ground-floor reload zone, containers are assigned to different destinations. As packages slide down through chutes, agents scan and load them into their designated container. After the full container is weighed load planners assign it to the correct outbound aircraft. The system associates all the packages with the container and aircraft, and the information populates the manifest that will be presented to customs authorities at the destination airport. 

It seems odd for durable, metal containers to be shrink-wrapped in plastic. Ho explains that because Miami is so prone to heavy rainstorms and containers sometimes sit on the tarmac for five to six hours, the plastic provides an extra layer of protection because the containers aren’t weather-proof.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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