Air Freight Capacity Tightens in Asia

Improving economic conditions in most regions of the world are driving increased use of contract logistics services, according to Exel. In a conference call preceding its quarterly earnings release at the end of July, Exel executives said new contract rates for the logistics giant were ahead of the same period in 2003. Volumes have increased, especially in airfreight, where the company said it had seen a 17% rise during the 2004 first quarter. “We are seeing a 20% plus volume growth in Asia Pacific, and that remained a very strong area of growth in Asia Pacific,” said John Coghlan, deputy chief executive and group finance director. The Americas volumes were up 15% in the first quarter, he continued. European volumes were also up by 10%.

In terms of airfreight rates, the purchasing price that Exel pays airlines hasn’t changed materially from the first months of the year, Coghlan added. Restrictions in capacity in the Asia-Pacific region have put more pressure on margins there, he noted. “We expect [the price pressures] to continue for a little bit longer whilst the additional capacity is either introduced or made available from other parts of the air freight network.”

Sea freight volumes are not measured as accurately as the air side because many of Exel’s logistics customers ship directly, however, Coghlan said the sea freight segment remains strong, building on last year’s growth.

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