BY BRUCE STANLEY
HONG KONG-Optimism about growth in trade, especially between Asia and the U.S., has eroded among executives of small to medium-size enterprises in Asia, according to an annual regional survey by United Parcel Service Inc.
Only 39% of the executives surveyed foresee an increase in trade with U.S. companies this year, compared with 51% in 2007. More than half of the executives interviewed in Indonesia, Hong Kong, South Korea and Singapore worried that their businesses would suffer from a U.S. economic downturn, UPS said Tuesday.
On the other hand, the outlook for commerce among companies within Asia remains robust, and leaders of the small to medium-size enterprises surveyed expect a slight improvement this year in their trade with the Middle East, Europe and Latin America, UPS said.
Such enterprises provide the bulk of UPS's business in Asia, and business sentiment among them is a bellwether for the likely course ahead for the regional as well as global economy.
The survey, the fourth that UPS has conducted, described Asian companies as cautious and challenged. Executives in every market except for India expressed less confidence this year in the ability of their companies to compete. Japanese companies were the least confident, and three out of 10 Japanese executives surveyed said they were likely to shrink the size of their work force this year.
UPS based its findings on a survey of 1,200 executives in 12 geographic markets in Asia. It conducted the interviews between Dec. 18 and Jan. 24, limiting them to executives of companies with up to 250 employees operating in a broad range of industries.
The Atlanta logistics company predicts that the global freight-forwarding industry will grow this year by 8% in cargo tons carrieddown slightly from previous years. Joe Guerrisi, vice president of marketing for UPS in the Asian-Pacific region, told reporters that UPS for now was achieving better than 8% growth in its own freight business in Asia, though he declined to be specific.
However, surcharges that UPS imposes to help defray its surging fuel costs appear to be damping demand somewhat, and more customers are seeking cheaper shipment options, said Derek Woodward, UPS's regional president. For example, instead of paying for an express delivery by 10:30 am, some shippers are opting for less-expensive deliveries by the end of each business day.
Similarly, some Asian customers are shipping freight by air to a big U.S. city and then telling UPS to send it by truck to its final destination within the country, as an alternative to a faster but more-expensive onward domestic flight. Other shippers with more time in their delivery schedules are choosing to send their goods by sea instead of by air, Mr. Woodward said.
A recent bright spot for UPS in Asia has been a higher-than-expected demand for the freighter service it began last week from Anchorage, Alaska, to Nagoya, Japan, the center of the country's automotive industry, and onward from Nagoya to Shanghai, China's financial hub. Another positive development is that demand on some routes in Asia has been strong enough to justify a switch to larger aircraft, Mr. Woodward said.
By contrast, some passenger airlines, including Northwest Airlines and Korean Air Co., have announced plans in recent days to pare back service on some of their routes due to the rising price of jet fuel.
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