TRANS-PACIFIC AIR CARGO BOOMING, BUT NO RATE HIKES EXPECTED SOON

TRANS-PACIFIC AIR CARGO BOOMING, BUT NO RATE HIKES EXPECTED SOON

Air cargo imports from Asia are skyrocketing, but major trans-Pacific carriers don't expect to be able to push rates up anytime soon.

Too many new freighters, including a batch of 747s once leased to Pan American World Airways, are entering the trans-Pacific to sustain an immediate rate increase, cargo executives said.The decision of Continental Airlines to end daily flights to Australia and New Zealand in November may strengthen the market, but not enough to boost rates, they said.

The surge in cargo traffic stands in marked contrast to the situation last year, when a 7.5 percent drop in shipments from recession-plagued Japan offset growth in other parts of Asia, driving total volume for the year down by a half percent.

The current pickup appears to be the result of a heavier-than-expected back-to-school shipping season, executives indicated. They are hoping it continues into the coming holiday air-cargo rush - which was practically nonexistent last year.

"Moving into peak season, there have been some inbound backlogs, but overall capacity across the Pacific isn't anywhere near filled," said Barry Richard, pricing director for Expediters International, a Seattle forwarder. ''It would be unrealistic for the airlines to try to raise the rates."

In the meantime, outbound trans-Pacific volumes remain near last year's relatively weak levels, cargo managers said.

Hisaaki Matsuyama, Japan Airlines' vice president for North American cargo, acknowledged that JAL had hoped to seek a rate increase this month, but said unfilled capacity and an action by the International Air Transport Association prompted JAL to defer the proposal.

IATA is seeking an increase of 15 cents a kilogram (7 cents a pound) on most international air shipments. Rates now average $3.70 a kilogram worldwide, industry sources said.

JAL intends to wait until the U.S. Department of Transportation rules on economic justification filings for that increase, then see if other major cargo carriers are prepared to push for higher trans-Pacific rates as well, Mr. Matsuyama said.

Peter Diefenbach, cargo marketing manager for Nippon Cargo Airlines in New York, said Nippon Cargo also decided against any near-term rate increase.

''There's definitely a need for a rate increase, but we took one in July and to try again would be premature," he said. "We don't see anything happening until after the first of the year."

K.J. Kohe, Korean Air's assistant general manager for U.S. cargo marketing, also said it's too early for any rate increase.

"We're just going to wait and see what happens on the IATA proposal," he said.

Northwest Airlines also has no immediate plans to seek a rate increase, said John Williams, managing director of cargo for North America.

Spot backlogs of air cargo just before Labor Day may have led some to believe that rates could rise, but the number of freighters being deployed on the Pacific for the first time precludes that, forwarders said.

Polar Air Cargo of Long Beach recently tripled its weekly capacity to six flights a week. The carrier flies low-cost 747-100s that were once leased to Pan Am, where they were fitted out to handle cargo as part of the Civil Reserve Air Fleet program.

Meanwhile, Air Hong and Tower Air also began a new joint trans-Pacific freighter service, while other carriers, including EVA Airways of Taiwan and Asiana Airlines of South Korea, are expanding services, too.