Issue 472, May 4, 2005

The capacity and pricing dynamics for International cargo are changing dramatically. Given the buoyancy in the US export market, increased demand to Europe and the South Pacific and the overall reduction of airline capacity, air carriers are imposing major cargo price increases to selective markets.

It's no secret that the airline industry experienced a $6 billion dollar loss last year. Airline passenger travel cost has steadily increased while cargo pricing remained relatively stagnant during 2004 and the first quarter of 2005. However, increased airline operating costs and market inflation has now forced the airlines to impose a general rate increase which ranges anywhere from 5% to 35% to selective markets.

While DHL Danzas is a major customer to most airlines, we too have been assessed with general cargo rate increases. We have taken a proactive approach to these increases by initiating new and longer term blocked Space Agreements with the major airlines. At the same time we've increased the frequency of our "STARBROKER" departures to three, from JFK to our European hub. Each of our "STARBROKER" flights connects with DHL Aviation to provide you with additional service to West Africa and the Middle East. Additionally we are opening new strategic gateways servicing Europe, Africa and the Middle East from the Southeast and Mid Atlantic regions. All of this in an effort to minimize the impact of these recently imposed airline rate increases.

Further, while airlines servicing Canada have not yet increased pricing to Europe, they have reduced capacity to the South Pacific (Australia and New Zealand). At this point in time DHL Danzas has sufficient "Reserved Cargo Space" to accommodate the most recent capacity reduction.

DHL Danzas Air & Ocean cannot absorb these airline increases and therefore we are imposing an overall general rate increase to selective international markets. In view of the fact that the Airline increases are complicated and each airline has used a different methodology, it is our intent to not simply pass on a flat general increase to our customers, but to review each of our existing customer's tariffs individually and only requesting increases where necessary.

Your local DHL Danzas sales executive and/or Global Customer Solutions executive will be contacting you in the very near future to review your existing tariff.

Sincerely,

Brian Lindholm
Excecutive V.P. & 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.