Unprecedented Cargo Demand Decrease Of 30% To 40% That Began Last November Has Ended: Air Freight As Leading Indicator Has Turned Green

• On 3:08 pm EDT, Monday October 5, 2009

67 WALL STREET, New York - October 5, 2009 - The Wall Street Transcript has just published its Transportation and Logistics Report offering a timely review of the sector to serious investors and industry executives. This 81 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 -- Market Balance -- Traffic Flow -- Asia-Pacific Region -- Import/Export Traffic -- Beneficiaries of Financial Strength -- Terminating Markets -- International Business -- Tanker Companies Versus Dry Bulk Companies -- Chinese Stimulus -- Real Demand Versus Stimulus Demand -- Monitoring Potential Acquisitions -- Automobile Industry -- Demand in Emerging Countries -- Falling Demand -- Future Oversupply -- Growth of Fleets -- Pickups in Infrastructure Spending -- Navigating the Downturn -- Supply & Demand -- Chinese Cell Phones -- Mobile Phone Market Growth -- Future Growth -- Stimulus Programs -- Temporary Boosts -- Inventory Stabilization -- Affects of Declines in Passenger Flights -- Capacity of Passenger Aircraft -- Improvement in Volumes -- Pricing & Margins -- Restructuring -- Forms of Consolidation -- Investing in Infrastructure -- Wage Concessions -- Railroad Expansion

Companies include: Diana Shipping (DSX); Star Bulk Carriers (SBLK); Nordic American Tankers (NAT); Overseas Shipholding Group (OSG); General Maritime (GMR); Federal Express (FDX); UPS (UPS); Forward Air (FWRD); Expeditors International (EXPD); Express-1; Tsakos Energy Navigation (TNP); Navios (NM); Vale (VALE); Excel (EXM); Teekay (TK); DryShips (DRYS); UTi Worldwide (UTIW); Old Dominion (ODFL); Arkansas Best (ABFS); J.B. Hunt (JBHT); Con-way (CNW); Atlas Air (AAWW); Air Transport Services Group (ATSG); Norfolk Southern (NSC); Union Pacific (UNP); CSX (CSX); Canadian National Railway (CNI); C.H. Robinson (CHRW); Kuehne and Nagel; Deutsche Post; YRC Worldwide (YRCW); Dynamex (DDMX); Ryder ®

In the following brief excerpt from just one of the 7 interviews in the 81 page report, an equity analyst with over 45 years of experience discusses 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: What is that data telling you at this point?

Mr. Campbell: The data coming from global air cargo markets indicates a recovery, indicates that there may be a seasonal peak this year beginning in September; it actually started at the end of August. That cargo peak was not there last year. It doesn't mean that we have an increase year-to-year in freight just yet, but we are, of course, getting smaller decreases in cargo tonnage in most areas of the world. We do have increases in cargo tonnage year-to-year in the Middle East, in Dubai. It is one of the largest terminals in the world. We are beginning to get increases in the Asia-Pacific region year-to-year in some directions and in some markets, but overall, air cargo is still down.

TWST: So down, but at a slower rate?

Mr. Campbell: It looks like air cargo is getting an increasing share, for the time being, of the overall cargo market.

TWST: Why is that in a tough economy?

Mr. Campbell: The companies that will talk about it think that it's largely due to shortage of inventories, manufacturing components and some consumer goods in some parts of the world and the shippers require delivery of the tonnage sooner than normally, and therefore they are using air cargo. Secondly there's been a big decrease in air cargo rates and so it's a lot less expensive to use than six months or a year ago.

TWST: Are those lower rates pretty much across the board?

Mr. Campbell: The cargo rates are down pretty much across the board, yes.

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.

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 81 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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