Asia's Air Cargo Industry Struggles with High Cost of Fuel

High fuel prices are stunting profit growth for airfreight forwarders and
airlines in Asia, according to Aeroceanetwork.
The group, a network comprised of logistics companies, said in a statement
that the average price for crude oil has increased 40 per cent year on year.
Officials said the fuel bite is being felt most in Asia because air cargo is
growing the fastest along Asia-Pacific routes.

"Fuel surcharges are affecting the freight forwarding industry, factories
and buyers," said Steven Chiu of China-based Aeroceanetwork member firm
Shanghai Rijin Top Express. "Especially within these two months, every two
weeks [carriers have] increased the fuel surcharge. To avoid our own losses,
we should pass on the increases to shipper or consignee accordingly, but
sometimes we can't increase this rate and our profit margins are decreased."

The Association of Asia-Pacific Airlines (AAPA) said high oil prices were
increasingly becoming a concern for Asia-Pacific carriers despite healthy
growth in volumes and capacity.

This was because jet fuel is the second-biggest cost for airlines after
labour. In September the International Air Transport Association increased
its estimate of airline industry losses for 2005 to US$7.4 billion from US$6
billion as oil prices continued to rise.“

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