Tue, Jun 11, 2002 page17

• Asian air cargo sales extend gains

  • BLOOMBERG
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  EVA Airways Corp (長榮航空) and other air freight handlers in Asia reported higher demand in May as manufacturers shipped more electronics and clothes to the US.

  EVA Airways, Taiwan's No. 2 carrier, said cargo revenue rose about 30 percent in May from a year earlier, according to preliminary figures. Korean Air Co, the world's fourth-largest cargo airline, shipped about 7 percent more freight, including semiconductors, with the biggest increase coming from Southeast Asia to US routes, said Kim Soo-yeon, an official at the carrier's cargo strategy and alliance team.

  Air-freight movements are an early indicator of both airline traffic and wider business conditions, especially for electronics.

  Even with May's gains, however, companies say increases will need to be sustained well into the second half of the year for the recovery from last year's economic slowdown and disruption after September's terrorist attacks to be complete.

  "It's not the time to break out Evian water, much less the champagne yet," said Mark Noske, Singapore-based operations manager at Emery Worldwide, a freight unit of California-based CNF Inc. "In April and May, companies were restoring inventory. By the third quarter we will know just how strong the recovery is."

  Noske said the company's operations in southern Asia saw a 3 percent volume increase in May, short of the 9 percent needed before he would call the gains a complete rebound.

  Asiana Airlines Inc, South Korea's second-largest carrier, also reported gains for May.

  It shipped 40,027 tons of cargo on its international flights in May, filling 78 percent of space and raising 56.5 billion won (US$46 million) in sales. This result compares with 32,259 tons of cargo shipped in May last year, when it filled 67.1 percent of space and earned 46.1 billion won.

  Even with the recent gains, some big customers of air cargo report poor demand.

  Intel Corp, the world's biggest semiconductor maker, last week lowered its second-quarter sales forecast on reduced personal-computer chip demand in Europe. Its Chief Financial Officer Andy Bryant said there were no signs of recovering demand from corporate clients, with chips sold ending up in computer makers' inventories.

  Asia is home to Taiwan Semiconductor Manufacturing Co (台積電), the world's biggest chipmaker, and other large computer parts makers.

  In volume terms, though, cargo companies said they are preparing for increases in the second half of the year, partly because of seasonal increases in demand ahead of the year-end holiday shopping period.

  Singapore Airlines Ltd (新加坡航空), Asia's third-largest carrier, will increase cargo capacity by 10 percent in its business year ending March 2003. Rival Cathay Pacific Airways Ltd (國泰航空) of Hong Kong said last month it will resume flying five passenger planes and one freight service by August.

  "This year's cargo volume is definitely better than last year," said Eric Lin, a spokesman for EVA Airways, which counts on shipping cargo for almost half of its revenue. "There will be further growth in the second half and we expect to bring on an additional freighter in July."

  Taiwan's exports rose at their fastest pace in 15 months in May, as demand rose for mobile phones, computer chips and digital cameras. EVA Airways is expecting to return to a profit of NT$1.25 billion (US$37 million) this year, compared with a loss of NT$3.1 billion last year.

  One response by carriers to rising demand may be increases in freight rates, some companies said.

  "Airlines are planning rate increases due to the recovering demand from the US," said Spencer Lam, company director of Hong Kong-based freight company On Time Express Ltd, Lam's company, reported a 30 percent gain in the volume of cargo shipped to the US in May, and a 15 percent gain to Europe from a year ago.

  For your information

  May turnaround

  * EVA Airways said cargo revenue rose about 30 percent in May from a year earlier. * Emery Worldwide's southern-Asia operations saw a 3 percent volume increase in May. * Singapore Airlines will increase cargo capacity by 10 percent in its business year ending March 2003. * On Time Express had a 30 percent gain in cargo volume shipped to the US in May.
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