Sat, Jul 05, 2003 - Page 10 News List

Asian exporters to pay higher air cargo rates, says analyst

LATE DELIVERIES Air freight prices have jumped as much as 15 percent this year as firms try to meet their shipping deadlines despite SARS

BLOOMBERG

Asian exporters will have to pay higher rates for sending cargo by air rather than sea to ensure they meet deadlines after their customers delayed orders because of SARS, said Schenker, a logistics unit of Deutsche Bahn AG.

Air freight rates have risen as much as 15 percent this year, Schenker said. Asian airlines cut more than 1,150 weekly flights as the outbreak of SARS discouraged people from traveling, which also cut cargo hold capacity and pushed up rates.

"We don't see rates falling," even as airlines start restoring flights, Karl-Heinz Matthes, the new chief executive officer of Schenker's Asia Pacific operations, said at a press conference in Singapore. The exporters need to meet their deadlines and that will keep demand high, he said.

Asian exporters normally start shipping cargo to the US and Europe in the third quarter of the year to meet Christmas demand at the end of the year. Air freight rates last October jumped as much as 70 percent after ports on the US West Coast were closed because of labor union disputes, forcing exporters to look for alternative ways to send goods.

Schenker, which counts Hewlett Packard Co as a customer in Asia, expects its total sales in the region to grow more than 10 percent this year, said Ulrich Villinger, the outgoing head of Schenker's Asia Pacific operations. Asia accounts for about a tenth of Schenker's annual sales of 6.4 billion euros (US$7.3 billion), he said.

The company plans to invest US$24 million in the region this year and next year as it adds distribution plants in countries such as Malaysia and India.

Schenker sends freight by sea as well as by air. Its sea freight volumes from North Asia, which accounted for most of the world's SARS cases, will probably see "little growth" in the second half of the year as more customers switch to air freight, said Villinger.

Germany's state-owned Deutsche Bahn runs the country's railway.

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