Air Ship : California Exporters Are Paying a Lot to Bypass Slow Boats to China, Sending Most Cargo Overseas by Jet
When customers in Europe clamor for its computers, AST Research in Irvine wastes no time with ocean-going ships--AST computers take the plane instead.
It’s an expensive proposition, however. Shipping by air costs 10 times more than shipping by a combination of trucks and ocean-going ships, said Casey Kleindienst, AST’s transportation manager. But an airborne load of personal computers arrives at AST’s London distribution center within three to four days, compared to four weeks by sea and land.
Currently, 80% of AST’s computers destined for Europe leave California by jet plane. “When customers say ‘we need this product and we need this product now,’ ” Kleindienst said, “we will ship by air.”
From computer makers to cattle ranchers, more and more firms are relying on speedy jumbo jets instead of lumbering ships when it comes to exporting products overseas. In fact, most of California’s exports--on a dollar basis--leave the state on board jets.
Ocean-going freighters--long associated with international trade--still haul more tons of goods by far between nations, analysts say. Large bulky items--such as autos--or relatively inexpensive commodities--such as grains--still move by ship.
But when it comes to expensive, highly sensitive or perishable items--such as X-ray machines or asparagus--that need to be at the other end of the globe fast, many firms turn to a cargo jet.
“All the precious stuff moves by air,” said Paul J. Hyman, director of cargo services for the Air Transport Assn., which estimates about 30% of American exports are transported by plane. “There has been tremendous growth and change in the past few years.”
Recently, the declining value of the dollar--which makes American goods less expensive overseas--has spurred an increase in U.S exports, by sea as well as air. As a result, air freight firms have seen demand surge for space on board their cargo jets, allowing them the luxury to raise rates after years of price cutting.
Speed Is the Key
“They don’t care when the plane leaves--they just want the space,” said John Sina, director of Lufthansa airline’s cargo operations in Los Angeles. The West German airline--which receives about 30% of its West Coast revenue from air freight--just completed an $8-million cargo terminal to handle increasing demand.
The main attraction of air freight is speed. An ocean-going shipment of equipment headed to Osaka, Japan, from Los Angeles can take about 45 days door to door--that includes traveling time and customs inspection, according to Los Angeles-based Flying Tigers, the nation’s largest air freight firm. In contrast, Flying Tigers says the same shipment can be completed in five to seven days by plane.
Without speedy jets, for example, the foreign sales of California strawberry growers would dry up. “They can’t go by boat because it takes too long,” said Matthew Kawamura, president of Western Marketing Co., a Fullerton grower and distributor of strawberries.
At L.A. Gear--a maker of trendy shoes and apparel--80% of the firm’s exported merchandise leaves in jet planes. “It’s much more expensive,” said Tara Clark. But, “the shipping line can take a month and by air it takes less than a week.”
The sharp increase in exports by air is seen at Los Angeles International Airport. During 1987, Los Angeles International--the world’s third busiest cargo airport--said international air freight lines have moved 192,363 tons through the airport. That’s up more than 35% from the year before.
From Los Angeles, Boeing 747 cargo jets--capable of carrying up to 125 tons, roughly equivalent to about 125 compact cars--leave with aircraft parts and computer software bound for Sydney, Australia, or sportswear and navigational equipment to Frankfurt, West Germany.
More Exotic Goods
Batches of computer chips from the Silicon Valley near San Jose leave the country through San Francisco on their way to assembly plants in Kuala Lumpur, Malaysia. There, the chips are built into computers, which are many times flown back to the United States as finished products.
Although high-tech equipment and machinery dominates California’s airborne exports, there are other more exotic goods, such as sea urchins harvested off the California coast and then flown to pricey Tokyo restaurants. Inland, ranchers from the San Joaquin Valley load live cattle on cargo jets bound for Japan, where a pound of beef sells for $40 and up.
All told, 50.9% of California’s $32.8 billion in 1986 exports left the state by air, according to the California World Trade Commission. Exports by air should continue to grow, trade experts say.
“With the emphasis on miniaturization, one could expect air cargo to become the preferred method of transport,” said Greg Mignano, executive director of the trade commission.
Multinational firms with assembly plants and offices spread across the globe “have tended to use more air freight as the mode of transportation,” said James A. Cronin, president of Los Angeles-based Flying Tigers, the nation’s largest all-cargo airline.
Flying Tigers--which depends on international air freight for 85% of its business has seen its overseas shipments increase 30% to 40% in 1987. The airlines’s Boeing 747 jets bound for Asia are now usually 70% full, compared to 50% a year ago. “The demand for the product is outstripping capacity,” Cronin said.
Freight forwarders have also seen a surge in customers who want their products shipped by air.
Consolidated Freightways of Palo Alto said its international shipments during the first three months of this year are up 25% and sales up 45%. “That is pretty spectacular,” said Ron Berger, president of Consolidated Freightways. “I think there is a higher awareness of the potential of greater sales through export,” he said.
Want Equal Access
Despite the increased demand, air freight firms must compete against passenger airlines--which are flying more and more cargo--and foreign air freight carriers. Flying Tigers’s Berger complains that foreign carrier can much readily expand their operations here while U.S. firms face a long battle to open new facilities overseas.
For example, it took Flying Tigers eight years before it was granted permission to build its own freight-handling terminal in Seoul, South Korea. “We want to see equal access and equal consideration,” Berger said.
Flying Tigers and other freight carriers see growing business between California and other fast developing nations, such as India, Indonesia, Sri Lanka, Thailand and mainland China.
At home, demand for speedy air freight will continue to come from firms such as AST Research, which is willing to pay more money for fast service rather than pay for lost sales. “We don’t want to take that risk,” said at AST’s Kleindienst
