DHL Supply Chain on Tuesday (Oct 17) announced it will invest 350 million euros (S$504.9 million) in South-east Asia over the next five years to expand its warehousing capacity, workforce and sustainability efforts.

This is part of a series of strategic investments by DHL Supply Chain – the supply chain unit of German logistics giant DHL – over the past year, which add up to 1.35 billion euros globally.

Under the latest investment, DHL Supply Chain will increase its warehouse space in South-east Asia by 400,000 square metres (sq m) to reach two million sq m.

The investment includes two key projects in the western region of Singapore: the acquisition of 60,000 sq m of space on Jurong Pier Road from a local business, and the development of DHL West Hub in Pioneer Sector 1 – a 17,000 sq m single-floor facility.

DHL Supply Chain said that its warehouse capacity in Singapore is projected to grow by over 50 per cent by the end of 2023, exceeding 230,000 sq m. 

Among the other big projects under the investment are a 40,000 sq m green logistics facility in Indonesia’s West Java province, an 18,000 sq m logistics hub in Penang, and a 50,000 sq m built-to-suit facility in the Philippines.

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All in, the investment will create over 3,000 jobs across South-east Asia by 2024, with 300 of those in Singapore, said DHL in a statement on Tuesday.

At a separate media interview, DHL Supply Chain chief executive Oscar de Bok said that despite the generally softer market environment, the company was committed to this investment to stay ahead of the curve.

He observed that in recent years, the complexity of supply chains has increased due to the pandemic, ongoing conflicts and geopolitical tensions. He added that companies these days are no longer betting on a single market, and are instead diversifying their production across multiple markets.

“One of the big elements of the supply chains of tomorrow is the agility to respond quickly to changes,” he said.

He added that South-east Asia, with its efficient work environment and effective trade agreements such as the China-Asean free trade agreement, stands to benefit the most.

The latest investment will go towards expanding warehouses, developing digitisation solutions, and training employees to optimise these facilities.

DHL Supply Chain said it is continuously testing out robotics and data-driven solutions in selected markets, including auto-stores, automated storage and retrieval systems, and automated guided vehicles. 

The company cited the new Penang Logistics Hub 5 in Malaysia, which is pioneering the use of an automated pallet storage and retrieval system, along with goods-to-person robotics technology, to handle small-parts picking.

The company sees great potential in South-east Asia due to the interconnectivity of the countries underpinned by a network of trade agreements, said Andries Retief, the CEO of DHL Supply Chain South-east Asia.

“There is a very good microcosm of different capabilities,” he said.

Commenting on the growing competition within the logistics space in South-east Asia, with regional players such as Alibaba’s Cainiao and Indonesia’s J&T filing for initial public offerings, de Bok said that DHL’s edge was its extensive global footprint and ability to quickly replicate its supply chain solutions in different places.

“The whole supply chain outsourcing market has huge potential,” he said.