ASIA - United Cargo stakes claim on belly cargo advantages for China Service

By: | at 08:00 PM | Channel(s): Air Cargo News  

By Karen E. Thuermer, AJOTFor years, the Asia Pacific region has been critical to United Cargo, particularly when it comes to revenue production. Today, United offers more flights between the United States and the Asia-Pacific region than any other airline. As a result, not including mail, United derived approximately 25% of its overall freight revenues from the South Pacific in 2004.
“China encompass roughly a quarter of that revenue,” reveals Neel Shah, United Cargo vice president of sales and marketing.
United has a dominate position in China with 28 weekly frequencies between that burgeoning nation and the United States —the most of any carrier. In June 2004, United launched weekly service between Beijing and Shanghai and San Francisco and Chicago.
“This is not as many frequencies as we have into Japan,” Shah adds.
United is experienced significant expansion during 2004/2005 by concentrating new service into Asia, especially China, Japan, and Vietnam. In June 2005 the carrier is adding a second daily frequency between Los Angeles and Tokyo Narita as well as three flights per week in additional to daily service between Chicago and Hong Kong.
In April 2005, daily service was commenced between Nagoya and Taipei, supplementing daily frequency in March 2005 between the new central Japan International Airport near Nagoya and San Francisco. In December 2004 new service was launched between San Francisco, Hong Kong, and Ho Chi Minh City, Vietnam. In November 2004, daily frequency was added between Shanghai and Chicago. In June 2004, the Osaka-Chicago route received daily frequency as well as a second daily service between Tokyo and Honolulu. In June 2004, daily frequency began between Beijing and San Francisco.
Still, the carrier is limited by the amount of capacity it has into China.
“We hope to grow that capacity over the next couple of years, if the US Department of Transportation (DOT) awards us additional slots,‰ Shah states.
Fewer challenges
Currently, air service into China is heavily regulated, although the United States and China signed an agreement last year that further opened air space. As a result, the DOT award slots to Northwest and Continental Airlines, which will start flying to China next year.
For the time being, United Cargo has applied for a flight to Guangzhou out of San Francisco. The carrier is awaiting word from the DOT.
“We do not expect to hear whether or not we are awarded this route this year, since the DOT has already completed awards for air rights this year,” Shah says. But United remains optimistic.
United Cargo sees huge benefits to increasing its presence in China first and foremost due to US consumer demand for cheap imports from China, and the fact more traffic is now moving from the United States into China as well.
“We have recently won some business from a couple of major computer component makers to transports parts into China for final assembly,” he reveals.
Helping to add some balance to an heavily inbalanced trade lane is also the weakened US dollar.
“Consequently, our US exports both across the Atlantic and the Pacific have been very strong year-to-date—much stronger than anticipated,” Shah says.
This is good news for a market that has, for years, been confusing and complicated. But today businesses, particularly freight forwarders, are learning the ropes. Their increased suaveness translates over to the air carriers, which work hand-in-glove with their forwarder customers.
“We are all learning how to do business there,” Shah remarks. “Every month it gets easier as we understand the rules and regulations better.”
Still, several layers of bureaucracy exist between shippers and the airlines. “There are agents who hold special licenses, and you can only go through them because they have been endorsed by the government,” Shah states. Add to this the myriad of licensing procedures.
Still, shippers are increasingly involved in logistics decisions, especially the bigg

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American Journal of Transportation