Issue 369, October 3, 2002 - 12:30 EDT
The situation at West Coast USA ports remains unchanged from yesterday. The backlog of over 100 vessels waiting to be off-loaded along the West Coast is expected to increase significantly this weekend as the next round of scheduled vessel rotations hits the ports.

The International Longshore and Warehouse Union, as well as the Pacific Maritime Association, have agreed to meet today with a federal mediator. President Bush is under increased pressure from a number of affected organizations to intervene in the conflict. However, as of this morning, he continues to strongly encourage both sides to use mediation in seeking a negotiated settlement to this bitter dispute.

We anticipate that any back to work legislation enacted without the prospect of a settlement acceptable to both parties will not result in the West Coast logjam being cleared quickly. The Ports will almost certainly face continued challenges to achieve normal levels of productivity. In addition, once the Ports open, peak season volumes will need to be handled on top of a very significant backlog that will take some time to clear.

The airfreight market is feeling the effects of at least some shippers and importers who are moving planned volumes from ocean freight to air. We feel that as inventories are depleted over the next week, there will be high potential for a strong upsurge in demand for airfreight, primarily from Asia to North America. At least some air carriers are scheduling additional full freighter operations, as well as charters, to handle the current and anticipated surge. Northwest Airlines is adding additional capacity from Singapore, Hong Kong and Japan, while China Airlines plans additional flights from Taipei to Los Angeles. What is not clear is whether the demand for air capacity from converted ocean freight will exceed the supply, even with the additional space being brought to market by some carriers. Market conditions will result in this additional capacity being offered at premium rates. Danzas AEI Intercontinental will continue to work closely with Customers who wish to evaluate these alternatives.

In summary, we expect the very unsettled conditions affecting the Transpacific market to persist, in varying degrees, for some period of time. We urge our Customers to follow events closely, and be prepared to act quickly on contingencies to the extent they are available.

As always, we will continue to update our Customers on developments related to this issue. For specific information or assistance, please do not hesitate to contact your Danzas AEI Intercontinental representatives.

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.