Air traffic set to rise in 2001 - United Parcel Service in Asia - Brief Article

Business Asia, June, 2001

THE US economic slowdown is hitting air cargo traffic from Asia, but Charles Adams, United Parcel Service (UPS) senior vice-president for Asia, expects business to pick up late this year.

Adams said UPS had clocked up 15 per cent volume growth for Asia in 2000, but was not so strong this year.

"This year we are not making our business plan in terms of growth (targets)," Adams said. He emphasised that the company's Asian business was still growing overall.

"Customers are still shipping. They're not shipping as much. We've seen that not just across our products. We've seen a substantial decrease in the volume of cargo we carry. Our core product is express but we do carry a lot of cargo for air freight forwarders and that's gone down significantly," he said.

Electronics, a main component of UPS' revenue mix, had really slowed down, he said, predicting that many companies would have to start rebuilding depleted stocks sooner rather than later.

"Inventory should have burned itself down by the end of the second quarter, the middle of the third quarter," Adams said.

But if people did not start rebuilding inventory by then, economic recovery would be delayed until next year, he added.

Adams said Europe's continued strength had helped to offset the US slowdown. "The demand for volume to Europe has remained fairly strong. (We) haven't seen the downturn in Europe that we've seen in the United States," he said.

Adams also said the decision to set up a fourth Asian hub in the Philippines at the former Clark Air Base put the finishing touch on its Asian network.

"This would be really the last piece of the jigsaw puzzle ... Clark will give us the ability to serve overnight Asia, to every metropolitan city in Asia," Adams said. This did not include Australia and New Zealand, he added.

Rival Federal Express already operates a Philippines hub at Subic Bay, also a former US military facility.

Adams said the Philippines hub was important to UPS' China strategy, providing a link between China and the rest of Asia and between China and the rest of the world.

UPS started flying to China on April 3, operating six Boeing 747 services between the US and China. Not only that, UPS could give overnight or 48-hour service to virtually every metropolitan area in the world, Adams said. UPS hopes to have the facility running by October 28, the date that airlines change to winter timetables.

He was non-committal about the new Airbus A330-200 freighter, the first of which could enter service in 2004. "The A330 (freighter) is an airplane that hasn't been built yet. I think it's going to be a good airplane. It's largely Airbus' answer to the rumour that Boeing's going to convert the 777 into a freighter."