Air freight on move, rate hike in doubt - Brief Article

Business Asia, Feb 11, 2000

The air freight industry in Australia is beginning the year 2000 more positive than a year ago because of a recovery in key Asian export markets, but sea freight is looming as a bigger threat, a Reuters survey shows.

Airlines and forwarders said they expected higher export volumes than in 1999, but they were divided as to whether this would allow an overall increase in rates.

"The first half of the year will be pretty good in the export market. What's driving that is the perishables business, particularly pork. The lifting of the Asian economy is having an effect on the Australian export performance," said a spokesman for Air Express International.

He said Qantas Airways' forecast of an improvement in Japanese tourism indicated buoyant demand from the world's second-largest economy for high-value products such as Atlantic salmon, asparagus, sweet corn and possibly beef.

Demand leading into Chinese New Year grew strongly in January with supermarkets and hotels in Hong Kong and Singapore importing Australian grapes, stone fruits and high-value items such as sugar plums.

The spokesman added: "There's almost been a moratorium on rates in the last two to three years. It's imminent that there will be some sort of increase."

Danzas national product manager perishables and general cargo Mike O'Neil said he expected his business to maintain its growth of more than 10 per cent a year.

One freight forwarder said sea freight was emerging as a tougher competitor to air freight, having improved refrigeration systems, travel and transit times, and undercutting airline rates.

Cathay Pacific cargo manager Australia Mike Courtney said he hoped business levels in 2000 would match those of 1999, when Cathay's business grew about 3 per cent in a weaker market.

He said cargo business ahead of Chinese New Year had been "good", with all ex-Australia flights full.

He said sea freight was gaining market share at the expense of the airlines, with sailing times between Sydney and Hong Kong cut to 10 days from three to four weeks previously.

Singapore Airlines cargo manager Australia Barry Loughnan said the airline would be "well up there" to achieve double-digit business growth in 2000 from 1999.

No major capacity increases were planned this year, but the airline may put on another Boeing 747-400 freighter, its first additional freighter in Australia for more than two years.

Malaysia Airlines cargo sales and operations manager for New South Wales Peter Hewett said business in 2000 would match if not exceed 1999 levels as the Malaysian economy recovered from the regional economic downturn.

United Airlines Australian cargo sales and service manager John McLure said the airline expected to carry more freight in 2000 because of the introduction of non-stop Melbourne-Los Angeles flights, leaving out a stop in Auckland.

But he said extra freighter capacity from new entrants including Cargolux and China Airlines was making rates "more competitive", especially in quieter times.