Issue 457, December 28, 2004

Peak Season 2004 has been one of unprecedented growth and development for DHL Danzas Air & Ocean and the overall export market from Asia Pacific to the US. Not since the Peak Season of 1999, in anticipation of Y2K, have we seen such strength on these important trade lanes.

Certainly, the work slowdowns, labor shortages, and heavy congestion experienced this fall at the USWC ports, particularly Long Beach, have been a core driver in the extremely tight market for space. The intermodal rail terminal labor and equipment issues have also contributed to the bottleneck. Even ocean to air conversions of some traffic by Logistics Managers have had an effect on the market.

This said, as the year draws to the close, we are experiencing changes in the market. Please review the table below which reflects our current view of the situation:

Origin	Surcharge	Action	Date & Status
Hong Kong (HKG)	27%	Maintain	Feb. 14, 2005 - Review
Vietnam (SGN, HAN)	15%	Remove	Jan. 01, 2005 - Remove
China (PEK, SHA)	25%	Maintain	Feb. 14, 2005 - Review
Taiwan (TPE)	30%	Maintain	Feb. 14, 2005 - Review
Philippines (MNL)	USD 0.20/kg	Remove	Dec. 15, 2005 - Remove
Korea (SEL)	15%	Maintain	Feb. 14, 2005 - Review
Malaysia (KUL, PEN)	10%	Remove	Jan. 01, 2005 - Remove
Singapore (SIN)	10%	Maintain	Feb. 14, 2005 - Review
Thailand (BKK)	20%	Maintain	Feb. 14, 2005 - Review
Indonesia (JKT)	15%	Remove	Jan. 01, 2005 - Remove

For certain markets like VN, PH, MY, ID we intend to withdraw the PSS effective January 1, 2004. However, in other markets like China and Hong Kong for example where the market is still very tight we will maintain the surcharge until Chinese New Year (Mid Feb. 2005).

We believe one of the main contributing factors driving this continued strong market is the removal of the World Trade Organization (WTO) Textile Quota system which takes effective January 1, 2005. From this date onward, the established system of tariff controls and restrictions on textile manufacturing will be lifted. The upswing in demand caused by this dramatic change in the regulatory environment is expected to have a major impact on the continuing demand for space on these lanes, effectively prolonging the peak season in these markets until after Chinese New Year.

We at DHL Danzas Air & Ocean will continue to monitor the market situation closely, and keep you updated with regards to any changes we feel will effect you-our customers. As always our goal is to to provide a transparent and clear appraisal of the market situation on these important routes. Should you have any questions, please do not hesitate to contact your DHL Danzas Air & Ocean account manager.

Sincerely,

Brian Lindholm
Executive VP & C.O.O., 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.