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Demand for electronics fuels air cargo growth
( 2003-11-12 13:32) (eastday.com)

Korean Air Co, Taiwan Province's China Airlines and other Asian carriers may ship 10 percent more cargo this year because of demand for electronic goods and other products made on the Chinese mainland.

Manufacturers are flying more DVD players and higher-priced garments to the United States and Europe for the Thanksgiving and Christmas holidays than a year ago, when air freight volumes soared because of a port strike on the US west coast.

"I am expecting at least a 10 percent increase in cargo volume this year, riding on strong Asian exports," said Martin Lau at First State Investments HK Ltd.

Cathay, Taiwan's EVA Airways Corp and other carriers have been relying on cargo gains to reduce the effect on sales of a slump in passengers numbers earlier this year because of severe acute respiratory syndrome. Asian carriers posted losses of more than US$1.5 billion for the quarter ended on June 30 after the viral infection caused demand for travel to plunge.

Cargo revenue makes up 30 to 40 percent of total revenue for airlines in Asia, according to Philip Wickham, an analyst at ING Securities in Hong Kong.

He predicts "flat" profit growth for airlines from cargo this year.

Korean Air reported a 6.4 percent increase in sales from its cargo operations in the first 10 months of the year. It's achieving about 99 percent of its monthly target set for this month for international cargo and 95 percent for domestic cargo, said Lee Hyoung Woo, a Korean Air spokesman.

Singapore Airlines Ltd's cargo unit posted a profit of S$25.8 million (US$14.8 million) for the quarter ended on September 30, compared with S$6.2 million a year ago. Michael Tan, the airline's senior executive vice president of commercial operations, said last week that freight going to the US and Europe from Asia is "fairly good," without providing details.

Cathay operates 16 cargo flights a week to the United States, most of which are full, said Kenny Tang, the Hong Kong airline's general manager of cargo.

Cathay carried a record 87,275 tons of cargo last month, filling 73.9 percent of its available space. That was down from 75.8 percent a year ago.

China Airlines, Taiwan's biggest carrier, had a 43 percent gain in third-quarter profit to NT$1.31 billion (US$39 million) as overseas demand for the island's chips and notebook computers boosted cargo shipments. Philip Wei, China Air's chief executive, said last month he expects a profit of US$30 million this year because of cargo demand.

Delivery companies are pouring money into China, where the economy is forecast to expand 8.5 percent this year, according to the government.

DHL Worldwide Express, which is owned by Deutsche Post AG, plans to invest US$200 million in China in the coming five years.

FedEx Corp, the world's largest overnight-delivery company, plans to expand in 100 Chinese cities in the coming five years.

Danzas Air & Ocean, the freight and logistics unit of Deutsche Post AG, Europe's largest postal service, expects "double digit growth" in air freight for its Asia-Pacific operations this year, said Charles Kaufmann, head of the airfreight business for the region in Singapore.

"China is very strong, and we just opened a new warehouse in the Shanghai airport for the handling of exports and imports because we see strong demand there," Kaufmann said.

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