Air cargo companies report up to 40 percent less business in January

CAMBODIA'S air-freight volumes dropped sharply in January, with industry sources reporting 40 percent to 50 percent declines on 2008.

Bangkok Airways said air cargo volumes decreased about 34 percent at the end of January compared to 2008, with revenue down 40 percent - a decline of US$148,000, said Ekkaphon Nanta-O-Sot, deputy communication manager.

"The economic slowdown is having a strong effect on the cargo business," he said. Bangkok Airways, which operates two daily flights from Phnom Penh, said that it is increasing its service to Cambodia despite the slowdown. "We see potential in this market," he said.

The declines in Cambodia come on the back of a global drop in cargo traffic, with the International Air Transport Association (IATA) reporting a 22.6-percent drop for December 2008 compared to the same period in 2007. IATA, which represents 230 airlines worldwide, said that Asia Pacific carriers were the worst performers, showing a 26-percent decline in December 2008, and a 9.7-percent drop in total traffic.

The economic slowdown is having a strong effect on the cargo business.

The Asia Pacific accounts for 26 percent of total international cargo shipments, IATA said.

Cambodia's air cargo industry is especially dependent on the garment industry with 88 percent of Cambodia's exports coming from the sector alone, according to the World Bank.

"Orders are down about 40 percent over last year," said Lee Thai Kit, a spokesman for June Textile, a Phnom Penh garment factory. Lower margins are also pushing factories to favour cheaper sea cargo in place of air freight services, he said, adding that air freight costs run at $3.50 to $4 per kilogram.

A major Phnom Penh freight forwarding company reported air shipments were down more than 50 percent this year. Samdy Smith, managing director of CamFright Services blamed most of the decline on falling garment exports.

"2009 is shaping up to be one of the toughest years ever for international aviation," said Giovanni Bisignani, IATA director general and CEO, in a statement