First, please accept our sincere appreciation for your tremendous support of Star Asia International. Second, this is not a letter promoting the IATA rate increases set to take effect on October 1st, 2002. The purpose of this letter is keep each of you updated on the state of the airline industry and our abilities to work within it so you can be better prepared to manage your business.
There is a plan approved by IATA's (International Air Transport Association) Cargo Tariff Coordinating Committee that will change the conversion rate for volumetric freight from 6,000 to 5,000 cubic centimeters per kilo as of Oct. 1. This revised formula could result in a rate increase of up to 20 percent for some cargo. The plan, originally adopted at an IATA meeting in Geneva in late May but not widely disseminated until early July, calls for shifting the formula from 6,000 cubic centimeters per kilogram to 5,000 centimeters. The result would enable carriers to generate more revenue from low-weight cargo that typically carries a lot of packaging, such as laptop computers, pharmaceuticals and computer chips.
International airfreight tumbled nearly 7 percent in 2001, according to World Air Transport Statistics 2002, the annual review published by the International Air Transport Association. International air-cargo volume fell 8.1 percent for North American carriers, 7.7 percent for Asia-Pacific carriers and 6.9 percent for European airlines. The most affected markets were the trans-Pacific and Trans-Atlantic, followed by the intra-Asia market. The Europe-Far East, Europe-Mideast and intra-European trades experienced relatively little disruption. IATA described 2001 as the worst year in the history of air transport.
The above reports coupled with sharply rising insurance and liability costs indicate that changes will soon come about in the airline industry. IATA was originally planning to submit its paperwork to DOT by mid- to late August. IATA is now not expected to file its plan with the DOT until late September or early October. As a result, there is no way that it will be able to implement the shift by its original target date of Oct. 1, at least on shipments to or from the United States. As we hear more information on this and other issues that impact your supply chain we will update you accordingly. Please feel free to visit www.star-asia.com often for up to date information and issues that impact your supply chain management process.
Best Regards,Star Asia International