U.S. Air Exports on Pace for Record Year in 2005 - Colography Group

U.S. shipping seen falling short of high water mark in 2000; export tonnage seen coming close to all-time record

February 28, 2006

U.S. shipping seen falling short of high water mark in 2000; export tonnage seen coming close to all-time record

Atlanta, GA — February 28, 2006 — The U.S. air export market in 2005 appears poised to break all-time records for shipments and revenue, The Colography Group forecast recently in releasing a report tracking U.S. air cargo activity through the first nine months of last year.

Through September 2005, 67.97 million shipments moved in U.S. air export service. If fourth quarter 2005 shipping matched the 22.3 million shipments moved in the fourth quarter of 2004, the 2005 total will exceed 90 million shipments, surpassing the 88.7 million shipment record set in calendar 2000.

Air export revenue in 2005 is also projected to shatter the all-time record of $8.5 billion set in 2004. Revenue for the first nine months of 2005 surpassed $6.9 million. Should the market just match the $2.2 billion in revenue reported for the fourth quarter of 2004, it will crack the $9 billion revenue barrier for the first time in history.

Further, based on The Colography Group's projections, air export tonnage will come close to bettering the all-time record of 6.1 billion pounds, again set in 2000. The fourth quarter is historically the strongest period of the year because of the accelerated activity surrounding the peak holiday season.

Domestic air shipping in 2005 is projected to exceed 2004 results, but likely to fall short of records set in 2000. Through the first nine months of 2005, 1.85 billion air shipments weighing 12.6 billion pounds moved in U.S. commerce. However, it would take the most remarkable quarterly performance in the industry's history to match or exceed the records of 2.93 billion shipments and 20.5 billion pounds established in 2000.

In addition, it would take $9.6 billion in fourth-quarter domestic revenue — a highly unlikely occurrence based on historical patterns — to surpass the revenue record of nearly $40 billion set in 2000.

The Colography Group does not publish final data until 90 days after the close of each financial reporting quarter. Thus, official fourth quarter and full-year 2005 results will not be available until early April.

"The effects of a weak U.S. dollar, a resilient U.S. economy and a rebounding global marketplace will make 2005 a strong and, in the case of U.S. air exports, a record-setting year for air cargo," said Ted Scherck, president of The Colography Group. "Though we do not yet have final results for the fourth quarter of 2005, there is no reason to believe it should be any weaker than the quarters that preceded it."

Among the key findings in the third quarter 2005 edition of "U.S. Domestic and Export Air Traffic and Yield Analysis by Competitor and Market Segment":

On the domestic front in 2005, quarterly revenue and tonnage gained on a sequential basis. However, shipment volumes declined by more than 10 million from the second to the third quarter, driven by continued diversion of lightweight, short-haul air traffic to the ground.

DHL Express reported sequential gains in domestic air shipment share from 10.2 percent in the first quarter to 11.4 percent in the third quarter.

USPS held the largest domestic shipment share through the first nine months. However, its share of the market declined with each quarter, from 37.9 percent in the first quarter to 36.1 percent in the third quarter. FedEx Express' share declined by 0.5 percent over that period, while DHL's and UPS' shares increased.

On the U.S. air export side, the six main competitors — FedEx, UPS, USPS, DHL, EGL Inc. and BAX Global — controlled 77.3 percent of the shipment market during the third quarter of 2005. By contrast, the "all other competitors" category — comprised mostly of airlines and freight forwarders — saw their shipment share decline to 22.7 percent as of the end of 2005's third quarter from 24.8 percent in the first quarter of 2004.

The Colography Group's "U.S. Domestic and Export Air Traffic and Yield Analysis by Competitor and Market Segment, along with its companion publication, "U.S. Domestic Surface Traffic and Yield Analysis by Competitor And Market Segment," provide quarterly and annual estimates of the results for the leading companies that transport goods by air and ground in the domestic markets, and by air in the U.S. air export market. The reports are used to study competitive trends, analyze changes in the mix of business, measure share and growth by market segment and/or level of service, and identify competitor strengths and weaknesses.

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