Airline Cargo Market Now Has Larger Share Of Shipping Over Marine Transport And Trucking As Cel Phones And High Value Goods Take Precedence In Retail Re-Stocking Wave

• On 11:44 am EDT, Wednesday October 21, 2009

67 WALL STREET, New York - October 21, 2009 - The Wall Street Transcript has just published its TWST Transportation & Logistics Report offering a timely review of the sector to serious investors and industry executives. This 69 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: China Export Tax -- Overcapacity in the Shipping Industry -- Regional Market Balance -- VLCC Traffic Flow -- Asia-Pacific Region Transportation Growth -- US Import/Export Traffic -- Distressed Shipping Balance Sheets -- Terminating Markets -- Tanker Companies Versus Dry Bulk Companies -- Chinese Infrastructure Stimulus -- Real Demand Versus Stimulus Demand -- Monitoring Potential Acquisitions -- Automobile Industry Demand Forecasts -- Demand in Emerging Countries -- Falling Demand -- Future Oversupply -- Growth of Fleets -- Pickups in Infrastructure Spending -- Navigating the Downturn -- Chinese Cell Phones Market Growth -- Affects of Declines in Passenger Flights -- Capacity of Passenger Aircraft -- Improvement in Volumes -- Pricing Margins -- Restructuring and Consolidation -- Chinese Government Ship Building Infrastructure Growth -- Wage Concessions -- Railroad Expansion

Companies include: Federal-Mogul (FDML); CSX (CSX); Con-way (CNW); Danaos (DAC); Delta Air Lines (DAL); Diana Shipping (DSX); DryShips (DRYS); Euroseas (ESEA); Excel (EXM); Expeditors International of Washington (EXPD); Exxon (XOM); FedEx's (FDX); Forward Air (FWD); General Maritime (GMR); Imarex (IMAREX); Maersk (Maersk-A); Navios (NM); Nordic American Tankers (NAT); Norfolk Southern (NSC); Overseas Shipholding Group (OSG); Rand Logistics (RLOG); Seaspan (SSW); SinoHub (SIHI); Star Bulk Carriers (SBLK); Tsakos Energy Navigation (TNP); Union Pacific (UNP); United Parcel Service (UPS); Vale (VALE); YRC Worldwide's (YRCW).

In the following brief excerpt from just one of the in depth interviews in the 69 page report, a Transportation industry expert equity analyst discuss the outlook for the sector and for investors.

David P. Campbell Sr. is Senior Vice President-Research Analyst and Institutional Sales at Thompson, Davis & Company. He received a BS in Economics from the University of Pennsylvania, attended the U.S. Navy Officers Candidate School and served with the Atlantic Fleet Destroyer Squadron from 1959 to 1962. He was with the Investment Department of U.S. Trust Company from 1962 to 1965, Lieber and Company from 1965 to 1970, Wheat and Company from 1970 to 1985, Scott and Stringfellow from 1985 to 2002 and Branch Cabell from 2000 to 2002. He was Founder, Sales and Research at Thompson, Davis & Company in July 2002.

TWST: And pretty good types of goods, or is it fairly broad? I mean is it any particular type of cargo or are they seeing kind of a broad improvement?

Mr. Campbell: Airfreight is always high-valued merchandise and high-valued components of manufacturing. It's not the typical type of freight that moves in sea freight containers normally and it's not commodities with the exception of some perishables and flowers and that sort of cargo. Demand for air cargo is largely in high-valued merchandise. So we are talking electrical components, electronics; we are talking infrastructure parts; we are talking high-valued fashion merchandise, cell phones, and other types of relatively high-valued consumer goods, and importantly, their components in manufacturing.

TWST: You mentioned that rates are softer. Is that a reflection of now too much capacity, is that why we're seeing rates come down?

Mr. Campbell: Capacity didn't come down as fast as the demand, that's for sure. We had an unprecedented global decrease in cargo demand beginning last November, 30%, 40% decreases in tonnage. The capacity to carry that didn't come down that fast. It has come down a lot, but it's still not down as much as the demand. You are also getting substantial changes in where the traffic flow is. In the Asia-Pacific region, for example, exports from this country by air are a lot stronger than imports coming in. Exports have been increasing in air cargo. We are not buying much. Exports as a whole, export traffic, has had lower rates than imports, and so you are getting substantial decreases on balance in airfreight rates.

TWST: What's the industry doing from a capacity point of view then?

Mr. Campbell: Capacity will not change until after the peak. But Air France and KLM have just announced 60% reductions in capacity, most of that will probably come on beginning in December.

TWST: As we look forward, are rates likely to stabilize?

Mr. Campbell: Rates will probably stabilize. They have increased in some markets, temporarily at least, because of the fourth quarter demand. After that, they may just back down again. A lot depends on where the demand for cargo is. If it gets stronger here in the United States, there could be shortages of capacity in the eastbound Asia-Pacific markets.

TWST: That'd be a change?

Mr. Campbell: Yes, that will be a big change.

TWST: Given this environment, what are the companies, as you talk to them, thinking about for 2010-2011?

Mr. Campbell: The companies are not prepared for much of an upturn, which seems to be very remote at this point. The companies have been looking at the huge decreases in demand for their services and they are very reluctant to assume any kind of a significant increase next year. So companies are prepared for a very slow upturn, if there is one.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 69 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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