DHL leads Asia’s largest SAF purchase to drive aviation decarbonization. (Photo: DHL)
Global courier company DHL is continuing to scale up its use of sustainable aviation fuel (SAF), recently securing the largest SAF purchase in Asia from Finnish oil company Neste.
However, with renewable fuel prices falling and competition for feedstock intensifying, SAF producers are facing shrinking profit margins which makes stable demand a critical factor for industry growth.
DHL expands SAF procurement in Asia with record deal
During a visit to the Changi Airfreight Centre on Aug. 7, Christopher Ong, Managing Director of DHL Express Singapore, said that while SAF is more expensive than conventional jet fuel, failing to invest now will lead to far higher costs in the future as global warming worsens.
In July, DHL signed an agreement with Neste to supply SAF for its cargo flights departing from Changi Airport. The SAF will be locally produced by Neste, totaling 7,400 tonnes (around 9.5 million liters), covering 35–40% of fuel consumption for DHL’s five Boeing 777 freighters. It is the largest single SAF purchase in Asia to date.
Ong added that 90% of DHL Express’s carbon emissions come from flight operations, and SAF is a key lever for decarbonization. He acknowledged that SAF will remain more expensive than conventional fuel in the short term, and customers should be prepared to pay more for low-carbon air transport.
DHL said the cost of SAF remains higher than conventional jet fuel in the short term, and consumers should be prepared to pay more for low-carbon air transport. (Image: iStock)
Neste calls for demand certainty to reduce risk
Driven by government mandates and industry pledges, airlines have begun using blended SAF. Yet in recent years, weak demand, falling renewable fuel prices, and rising feedstock costs have eroded manufacturers’ profits. Growing competition from rivals producing higher volumes and quality is also adding pressure.
For example, French energy major TotalEnergies is ramping up SAF capacity, targeting annual output of 500,000 tonnes by 2028, 10% of Europe’s market, achieving its 6% market share goal ahead of schedule.
Steven Bartholomeusz, Neste’s Head of Public and Regulatory Affairs for Asia-Pacific, stressed that securing demand is vital for the sector’s growth. “You can’t make that kind of investment purely on the basis that you will have a company like DHL come along and take our volume,” he said.
Neste has already invested €1.6 billion (about USD 1.86 billion) in expanding its Singapore plant. Its Tuas refinery, with an annual output of 1 million tonnes, is the world’s largest of its kind.
Beyond Neste, energy majors such as Shell, low-carbon solutions provider World Energy, and BP have also signed SAF supply deals with DHL.
On its website, DHL notes the SAF market is trapped in a vicious cycle: high costs depress demand, and without demand, producers cannot scale up to reduce costs. DHL says it is taking the lead by partnering with like-minded companies to accelerate aviation decarbonization.
Source: The Straits Times, TotalEnergies, DHL
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