Issue 444, June 2, 2004
The annual 'peak season' on the Asia Pacific to U.S. trade lane - the fastest-growing airfreight market worldwide -is upon us. Economic activity has rebounded in the United States and has substantially accelerated in Asia Pacific - now considered the world's manufacturing center.

During the last few months, for example, note the recent economic growth in the People's Republic of China (9.1% GDP growth), followed by Thailand, Singapore, Hong Kong, Malaysia, South Korea, Taiwan, the Philippines and Japan, all with 4% to 7% GDP growth. In addition to this, a growing amount of finished goods - in some cases a result of delayed production and/or missing logistics planning - must be flown into the U.S in between August and November, known as 'peak season'.

Major origins, in particular Hong Kong and Shanghai, loaded an extraordinary cargo tonnage during the brief and sharp peak season 2003. The same applies for transit hubs such as South Korea, Taiwan, Japan and Singapore, which benefited from respective indirect routings. The market consensus is anticipating a much-intensified situation this fall. Airfreight carriers are challenged to accommodate above-market behaviours by adding or shifting capacity due to long-term and established landing rights/slots and rotation of aircraft.

In addition, various charter aircraft providers face a substantial downsizing of their fleets in 2004 due to financial problems and/or commitments to military support. Significant additional market demand, combined with stable or slight changes in transportation capacity results in airfreight rate increases. Cargo space guarantees are put at a premium. Due to the accumulated growth over the last few months, as well as the outlined underlying market forces, the peak season in 2004 is anticipated to be substantial and prolonged.

We at DHL Danzas Air & Ocean - the industry's leading airfreight forwarder - are well positioned to use our extensive buying power, capacity portfolio, based on blocked space agreements and carrier relationships to minimize or mitigate the full impact of these rate increases. Nevertheless, peak season represents an extraordinary market situation, which forces our industry to fairly allocate the unavoidable extra cost to the end-users. Under these circumstances, the institution of a temporary Transpac airfreight peak season surcharge, or PSS, for selected Asian origins with respective price surcharges (see below) is unavoidable.

Origin	Surcharge #1	Effective date	Surcharge #2	Effective date
Hong Kong (HKG)	15%	Aug 15, 2004	12%	Sep 16, 2004
Vietnam (SGN, HAN)	15%	Aug 1, 2004
Cambodia (PNH)	N/A	N/A
China (PEK)	25%	Sep 15, 2004
China (SHA)	25%	Sep 15, 2004
Taiwan (TPE)	15%	Aug 15, 2004
Philippines (MNL)	USD 0.20	Aug 1, 2004
Korea (SEL)	15%	Sep 1, 2004
Malaysia (PEN, KUL)		to be confirmed
Singapore (SIN)	10%	Sep 1, 2004
Thailand (BKK)		to be confirmed
Japan (TYO, OSA)	N/A	N/A
Indonesia (JKT)	15%	Aug 15, 2004

Should you have any questions, please do not hesitate to contact your DHL Danzas Air & Ocean account manager. We will inform you in a timely manner should situations warrant and will make every effort to further improve our valuable partnership with you. We want to assist in your supply-chain planning (i.e. avoidance of back-logs) to optimize your cost calculation for the 2nd half of this year, as well as to minimize avoidable disruptions within your supply chains.

Sincerely,

Brian Lindholm
Executive Vice President and COO
North America
DHL Danzas Air & Ocean

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.