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Peak season offers mixed prospects

TRANSPORT players are singing different tunes when asked whether the peak season this year is better than last.

Air cargo players are not too happy, many claiming flat growth in cargo volume and sales.

During the peak season – which starts mid July – a 30-40% growth in air cargo volume is normal, according to Global Cargo Carriers, Inc. (GCCI) president Mario Pangan. "But this year, we are not seeing that, " he said.

He offers as proof freight forwarders not being as active in negotiating for space. "They know if there is substantial growth in production. If an increase is looming, forwarders usually start preparing the needed space to accommodate cargoes. This is not the case this year,&; Pangan explained.

And even if semiconductor and electronics companies earlier projected volume increases in the third and fourth quarters, the forecast provides little comfort for the air industry. "There is no guarantee the airlines will benefit because much of the volume is still being carried over sea… even garments," he pointed out.

Pangan is quick to point out that depressed volumes are understandable considering the not-so robust economies of the country's major trading partners, Japan and the US. &;They don't seem to be showing any signs of improvement," he said.

Also, the rates are on the low side this year, he said. "There's a lot of capacity but very little freight. So the rates are really depressed."

Pangan said the flow of goods is also erratic. "All of a sudden it goes up making airlines think the peak is already here. So we try to raise the rates. But the next thing you know the traffic has gone down…"

By now, Pangan said there isn't much to be done by the air cargo industry except to remain optimistic. "At this point, exporters are already shipping – or have shipped – goods that will be sold during Christmas," he said.

The majority of commodities transported during peak season are electronic components and perishables.

Cathay Pacific Cargo assistant manager Ramon I. Joson also expressed doubts about a strong peak season this year. According to him, compared with last year, which players dubbed the "peak of peaks", this year offers weaker prospects.

"First, we have to look at the present situation of the national economy. Both imports and exports to the east and west are showing irresolute growth. The demand especially in the Western part of the world is not that big," he explained.

The Philippine economy also follows that of the country's key trading partners'. "If they're not doing well, that reflects on our local operations," he said.

Unlike last year when the US West Coast port lockout coincided with the peak season – thus giving air cargo carriers a bonanza – the peak season this year is just another season in the business cycle.

For Cathay Pacific Cargo, 2003 is a year of recovery. "We have just resumed in September our frozen flights. From the two (flights) that (were) left when SARS broke out, we now have five. So we have yet to recover lost ground."

Lufthansa Cargo Country Sales Manager Darryl Modelo agreed with Joson that the peak season this year is just another course in the business cycle.

"This is the traditional business cycle. I don't really call it a peak season. That is just normal. I think year on year there has been an increase except for 2002," he noted.

Next year holds better prospects, Modelo said, noting that agents from abroad are continuing to secure capacity from carriers in the Philippines.

"You should also look at the capacity available in the market. Some carriers don't get the demand because that's already been divided in capacities available in the market… so the volume that really comes in is what their capacity can carry," Modelo pointed out.

He stressed players should not only regard peak season as the indicator for growth but rather look at the bigger picture. "It's more political than anything else, if you ask me. As a country, the Philippines should make itself more competitive compared with other countries," he commented.


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