DHL has won a three-year logistics contract worth €10.6 million to transport 25 millionaerospace parts from around the world to Singapore and to enlarge its aerospace hub there to
consolidate them.The DHL Supply Chain deal is with KPMG, which was appointed administrator of insolvent UKcompany Aero Inventory in 2009 and is trying to revive it. A key measure is to centralise thecompany’s aerospace parts, which are currently spread over 100 locations around the world and havean estimated value of €300 million.
As part of the agreement, DHL will expand its Aerospace Hub in Singapore by 55% to 70,000 squarefeet to provide the capacity to store the large number of parts.
DHL will create three gateways in Canada, Hong Kong and Japan to consolidate parts released fromAero Inventory worldwide and then ship them to Aero Inventory’s single, global hub which DHL willrun out of its Aerospace Hub – set up in 2007 – in Singapore to supply airline clients all over theworld.
The solution, which will require the services of DHL’s Global Forwarding and Express divisionsas well, leverages the company’s vast global network and experience, to withdraw all parts fromcustomer locations worldwide – including Australia, Canada, China, Indonesia, Japan and the USA –and have them distributed out of a global hub in Singapore. Singapore was chosen as the locationfor the hub for better inventory management with key drivers for that decision being warehousingand freight costs, operational and sales strategies and access to major air routes.
Under the complex logistics plan, DHL Supply Chain will maintain Aero Inventory’s global hub;DHL Global Forwarding will ship the parts in through its various gateways and DHL Express will sendmany of the components via Express service to airline customers. The hub will start receivinginventory from January 2011 and sales will become operational in April.
DHL aims to consolidate the entire inventory in Singapore by January 2012. The DHLAerospace Hub would then host one of the world’s largest inventories of aircraft parts, capable ofsupporting the major aircraft fleets of many of the world’s airlines and MROs.
Andrew Mitchell, Vice President, Business Development, Asia Pacific, DHL Supply Chain, said: “Weare absolutely delighted to be partnering with KPMG and Aero Inventory in this exciting and uniqueventure. As the administrator, KPMG has engaged us to establish a robust supply chain for thefuture incarnation of Aero Inventory. We look forward to bringing our worldwide logistics andwarehousing solutions experience to this project and are confident we can help to make the AeroInventory business a growing one once again.”
He added: “We had no reservations about rising to the challenge and taking up this project. Ourdedicated DHL team has developed an excellent supply chain prototype, and this is a classic case ofclose internal collaboration between DHL’s specialist business units where we have been able toleverage our expertise across DHL Supply Chain, DHL Global Forwarding and DHL Express.”
Jim Tucker, joint administrator of Aero Inventory and restructuring partner at KPMG, said:“Signing the deal with DHL, one of the best known names in logistics, shows our commitment tore-launching Aero Inventory as a world leader in the sale of consumables and expendables (C&E)to the airline industry. Since our appointment as administrators in November 2009, we havebeen restructuring Aero Inventory to put it on a solid footing for the future. Reconcilingthe massive inventory spread across the world to the central hub in Singapore is the focus of therestructuring process and will give Aero Inventory’s customers clear visibility of available stockand trace documentation.”
KPMG are administrators for Aero Inventory, a company that up until November 2009 offeredairlines and MROs such as Qantas, All Nippon Airways, Air Canada and Haeco, a unique serviceinvolving buying, storing, leasing and maintaining an inventory of various consumables andexpendables for aircraft components such as airframe structures, engines, wheels, brakes,electronics and interiors. Aero Inventory purchased stocks of components from customer airlines andas part of a unique service offering in the industry, sold them back to the airline at the point intime when they were needed.
