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9th Feb 2015, 01:33
Jammed by West Coast Port Labor Disputes? Fly Asian Airlines - Bloomberg Business (http://www.bloomberg.com/news/articles/2015-02-08/flying-yogurt-for-u-s-army-buoys-asia-airlines-amid-port-crisis)
(Bloomberg) -- The U.S. military ordered yogurt and cottage cheese flown to forces in Japan and South Korea last month as a labor dispute began jamming up West Coast ports.
Honda Motor Co. and Fuji Heavy Industries Ltd. resorted to airlifting parts to U.S. plants to bypass the clogged container terminals. Planes carried potatoes in the other direction so McDonald’s Corp. could end rationing of French fries in Japan.
The shift of seaborne cargo to jets’ bellies shows how Asian airlines including ANA Holdings Inc. and Cathay Pacific Airways Ltd. are benefiting from gridlock at ports in California and Washington state. Loading and unloading of vessels at ports from San Diego to Bellingham, Washington, were suspended from Friday through Monday morning, according to the Pacific Maritime Association.
“We can’t stop our factory in U.S.,” said Masayuki Takeuchi, a spokesman for Tokyo-based manufacturer Hitachi Ltd., said by phone. “West Coast ports are very important gateways for us to move our goods to factories in the U.S. Costs will increase to send by air, but we recognize that it’s necessary.”
Air shipments can be 15 to 20 times as expensive as sea travel, according to Satish Jindel, founder of Sewickley, Pennsylvania-based shipping consultant SJ Consulting Group Inc. A typical strategy for manufacturers is to send some of their parts needs by plane to smooth out any disruptions by ocean, Jindel said.
‘No Space’
“Since autumn last year, ANA cargo flights to the U.S. from Japan has been full, there is no space,” said Motoki Nishinaka, a spokesman at the carrier. “Delays are getting worse and worse, while auto demand in the U.S. is getting higher and higher.”
Fuji Heavy’s Subaru is among the carmakers confronting the prospect of higher bills to ensure components get through. The switch to airfreight from ocean vessels may increase costs by 7 billion yen ($59.6 million) per month, according to Mitsuru Takahashi, the automaker’s chief financial officer.
Cargo is important to carriers in Asia, home to about half of the 10 biggest airlines for airfreight, and is a bigger business than for their U.S. peers. In 2013, freight accounted for about 24 percent of Cathay Pacific’s sales, compared with about 2.5 percent at United Continental Holdings Inc., the U.S. airline with the most cargo revenue, according to data compiled by Bloomberg.
“The airlines could see the benefits of this for up to three months,” said Neel Jones-Shah, a former Delta Air Lines Inc. cargo executive who is now an aviation consultant and freight forwarder in Los Angeles. “A port strike doesn’t turn a bad year into a good year. It could turn a bad month into a good month, maybe a great month.”
(Bloomberg) -- The U.S. military ordered yogurt and cottage cheese flown to forces in Japan and South Korea last month as a labor dispute began jamming up West Coast ports.
Honda Motor Co. and Fuji Heavy Industries Ltd. resorted to airlifting parts to U.S. plants to bypass the clogged container terminals. Planes carried potatoes in the other direction so McDonald’s Corp. could end rationing of French fries in Japan.
The shift of seaborne cargo to jets’ bellies shows how Asian airlines including ANA Holdings Inc. and Cathay Pacific Airways Ltd. are benefiting from gridlock at ports in California and Washington state. Loading and unloading of vessels at ports from San Diego to Bellingham, Washington, were suspended from Friday through Monday morning, according to the Pacific Maritime Association.
“We can’t stop our factory in U.S.,” said Masayuki Takeuchi, a spokesman for Tokyo-based manufacturer Hitachi Ltd., said by phone. “West Coast ports are very important gateways for us to move our goods to factories in the U.S. Costs will increase to send by air, but we recognize that it’s necessary.”
Air shipments can be 15 to 20 times as expensive as sea travel, according to Satish Jindel, founder of Sewickley, Pennsylvania-based shipping consultant SJ Consulting Group Inc. A typical strategy for manufacturers is to send some of their parts needs by plane to smooth out any disruptions by ocean, Jindel said.
‘No Space’
“Since autumn last year, ANA cargo flights to the U.S. from Japan has been full, there is no space,” said Motoki Nishinaka, a spokesman at the carrier. “Delays are getting worse and worse, while auto demand in the U.S. is getting higher and higher.”
Fuji Heavy’s Subaru is among the carmakers confronting the prospect of higher bills to ensure components get through. The switch to airfreight from ocean vessels may increase costs by 7 billion yen ($59.6 million) per month, according to Mitsuru Takahashi, the automaker’s chief financial officer.
Cargo is important to carriers in Asia, home to about half of the 10 biggest airlines for airfreight, and is a bigger business than for their U.S. peers. In 2013, freight accounted for about 24 percent of Cathay Pacific’s sales, compared with about 2.5 percent at United Continental Holdings Inc., the U.S. airline with the most cargo revenue, according to data compiled by Bloomberg.
“The airlines could see the benefits of this for up to three months,” said Neel Jones-Shah, a former Delta Air Lines Inc. cargo executive who is now an aviation consultant and freight forwarder in Los Angeles. “A port strike doesn’t turn a bad year into a good year. It could turn a bad month into a good month, maybe a great month.”