Analysis 2007, an annual report from Seattlebased aviation consulting firm Air Cargo Management Group (ACMG). "U.S. domestic air freight and express industry revenues reached $32.49 billion in 2006, a 3.8-percent increase over 2005 and a new record for the industry," reports Robert Dahl, ACMG project director. "Gains in 2006, split about equally between the express and non-express segments of the industry, resulted from rate increases implemented by express carriers and from fuel surcharge impacts," he adds. Traffic volume for the industry totaled 15.21 billion ton-miles, up only 0.5 percent year-over-year from 2005, while the number of domestic shipments moving through the major express networks - 6.7 million per day - decreased 1.3 percent versus 2005, the report finds. Many of the changes that have taken place recently in the domestic market can be traced to consolidation in the express area, according to ACMG. Airborne Express, for example, was acquired by DHL in 2003; UPS snatched up Menlo Worldwide Forwarding in 2004; and BAX Global became part of Deutsche Bahn/Schenker in 2005. Last year, however, was void of major acquisition deals in this sector. "No major developments of this type took place in 2006," Dahl notes, "but in the first half of 2007, DHL announced it is buying a stake in ASTAR Air Cargo, and ASTAR is attempting to acquire ABX Air. It remains to be seen how these moves, if consummated, will impact the industry." One element of the industry that has not been impacted is FedEx's position as the leader in the express market - in 2006, FedEx retained a 42.2-percent share of daily shipments. UPS came in a close second, with 37.5 percent of shipments, while DHL, which does not provide shipment count reports, is estimated to hold a 16.3- percent share. The integrated express companies as a group generated $29.09 billion, or 89.5%, of the industry's total revenue in 2006. Domestic freight handled by combination carriers and freight forwarders amounted to $3 billion - 9.2 percent of the total revenue amount - and domestic mail (exclusive of the major USPS-FedEx contract) represented $399 million, a mere 1.3 percent of the total. Partial-year results for 2007 indicate that this year is following the same pattern as 2005 and 2006, with positive financial results despite flat traffic levels. "High fuel prices, and the surcharges that result, continue to inhibit air cargo growth, and encourage shippers to look at less-expensive transportation alternatives now available in the form of expedited trucking services," notes Dahl. The U.S. market, however, remains the largest single air freight/express market in the world.

International air cargo rates will be under pressure in 2008 due to overcapacity in lift, particularly on the key China-U.S. route.
Freighters, from brand new triple 7s to ancient (by airline standards) 747-200s, will be taking to the skies in record numbers, making needed rate increases difficult to bestow or sustain. This is the prediction of Chris Coppersmith, President & CEO at Target Logistic Services, a Carson, CA-based logistics provider with domestic and international freight forwarding operations. "Before shippers congratulate themselves in benefiting from low rates, they should realize higher fuel and security surcharges are expected next year which will raise overall

transportation costs. With oil approaching $100 a barrel and new, onerous security regulations anticipated, fuel and security surcharges may actually run higher than actual shipping rates on a number of routes," stated Coppersmith. The Target executive noted that while air cargo volume between China and the U.S. will increase in 2008, "the number of aircraft serving this single most important air cargo route may increase even faster. New cargo airlines like Jade Cargo, Cargoitalia and Cargo B are rushing to offer service between China, the U.S. and Europe. Combined with increased capacity by the legacy carriers serving China, conditions may arise where too many airplanes are chasing too little cargo." Coppersmith sees a healthy trend accelerating in 2008 with shippers renewed interest in service. "Thoughtful shippers increasingly realize that low, noncompensatory rates are meaningless if cargo does not arrive on time, in good condition and with no hassles," stated the cargo veteran who has led Target since its founding 37 years ago. "The successful forwarder in '08 will be the one with the skill and experience to have customer cargo arrive at destination when promised despite changing lift conditions, onerous security restrictions and ground obstacles," affirmed Coppersmith. Domestic air cargo will continue to struggle in 2008, with either flat or declining volume," believes the Target chief. "The bankruptcy and recent liquidation of Kitty Hawk, a major domestic cargo airline, is another indication of the difficult status of domestic air freight," commented Coppersmith. "Target, like other forwarders, increasingly are turning to less expensive yet time definite surface transportation that fit into customers' production and distribution schedules," said Coppersmith. "We are fulfilling that need," he emphasized. Coppersmith also noted that air freight volume traditionally has been tied to the health of the U.S. economy. "Economic signals are mixed for the coming year," he averred. A number of economists is predicting a continuation of GDP growth at about 2 to 3 per cent. Others are expecting a 'mild' recession. If our economy continues to grow, I expect an increase in international air cargo volume at about the 4 per cent level. If our economy stops growing, air freight will be flat," Coppersmith concluded.

Cargo Airport Services USA has been awarded the cargo warehouse handling contract with Cargolux and EVA at Seattle’s Sea-Tac International Airport. This is the first expansion opportunity for CAS in the West who currently operate in IAH and SAT. Cargolux, based in Luxembourg, is Europe’s largest all-cargo

airline, operating a modern fleet of 14 B747-400 freighters on a worldwide network, covering 90 destinations, 60 of which are served on scheduled all-cargo flights. Ian Morgan, Vice President The Americas for Cargolux, commented that “CAS has proven themselves as an efficient partner for Cargolux, and the expansion of the relationship in SEA is further proof of our confidence in them as a long term service provider. Michael Duffy, President of CAS said “We are excited about our operations in the West and are pleased to be associated with Cargolux who is a highly respected cargo operator and our current customer in Houston Intercontinental Airport”. Our current relationship with CV and the support from the Cargolux management team was instrumental in extending our partnership to Sea-Tac. CAS is also proud to add another EVA handling location for the Taiwan based Carrier. CAS currently handles EVA at JFK and EWR providing cargo warehouse handling and cargo ramp handling for passenger and freighter operations. Earlier this year CAS acquired Genesis Aircraft Support based in Houston, Texas and the Cargo Zone Group of Companies based in Montreal, Canada, with operations in Toronto and Montreal. With the addition of Seattle CAS will have operations at 14 locations throughout the US and Canada, with a leading cargo handling position in most of the markets it serves.

The air freight industry expects to save up to $1.2 billion every year when paper documents are completely replaced by electronic information. The first stage in developing an international system is a set of six pilot projects initiated by the International Air Transport

Association. In cooperation with cargo airlines, freight forwarders and ground handling agents, IATA on Monday launched the projects on key trade routes connecting Canada, Hong Kong, the Netherlands, Singapore, Sweden and the U.K. "The paper-free era for air freight begins today," said Giovanni Bisignani, director general and CEO of IATA. The pilot projects are designed to test common standards, processes, procedures and systems. During the initial phase, selected shipments will travel without the house and master airwaybills. The six pilot locations were selected for their technical and legal ability to exchange information. "High oil prices and cumbersome processing requirements are handicapping Breaking News