German transport and logistics giant Deutsche Post DHL Group said yesterday it will commence a $137 million expansion of its U.S. e-commerce fulfillment center network to accommodate the burgeoning cross-border e-commerce market.
The global market for e-commerce business-to-consumer shipments crossing borders is forecast to grow from $400 billion today to $1 trillion in 2020, with U.S. online merchants taking the leading role, Bonn-based DHL said.
In an effort to capture a larger share of the logistics services for that market, the company said its DHL eCommerce group would build eight order fulfillment centers in New Jersey and other U.S. locations by 2020. The company will also use the funds to enhance two similar facilities it recently opened in Columbus, Ohio, and Los Angeles.
In addition, the investment will expand day-definite deliveries and enhance DHL's domestic and international services, including warehousing and transportation, Charles Brewer, CEO of DHL eCommerce, said in a statement.
"There is barely any other industry that provides such a promising outlook than the e-commerce business," Brewer said. "It is expected that one billion people will shop online and across borders by 2020, with the U.S. being the most popular origin for 25 percent of consumers worldwide."
DHL's announcement is a way to capitalize on the global e-commerce boom by providing more localized expertise and resources, said John Santagate, research manager for supply chain execution at IDC Manufacturing Insights, an analyst group based in Framingham, Mass.
"Globalization has given opportunities for consumers to source product from anywhere and, from a vendor perspective, opened up previously unattainable markets," Santagate said. "This appears to be partially a play for DHL to provide that localized exposure and expertise for consumers and international businesses to have greater access to the U.S. markets, from both a supply and demand perspective."
DHL withdrew from domestic U.S. service in January 2009, and today serves the U.S. as part of its international network. However, the company has recently been pouring money into its U.S. operations to capitalize on the projected global e-commerce boom. DHL invested $108 million in June 2015 to upgrade its U.S. hub in Cincinnati. It moved its Memphis-based express operations to a larger facility in a $2.5 million move in January. Yesterday, it announced the opening of a 38,000-square-foot service center in Chicago.
DHL did not respond to a request for additional comment on yesterday's developments.