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UPDATE 1-TNT raises air freight capacity to China

Published 07/05/2010, 05:15 AM
Updated 07/05/2010, 05:20 AM

* Increases flights to Shanghai, Hong Kong

* Strong demand fueled by high-tech, fashion industries

* TNT shares slightly outperform Amsterdam bourse

(Adds company, analyst comment, details, shares)

AMSTERDAM, July 5 (Reuters) - Dutch logistics group TNT NV said on Monday it would increase air freight capacity to China on strong demand for its services in the world's third-largest economy and Europe's number one trade partner.

Chinese exports to Europe rose almost 50 percent during the five first months of 2010 from a year before, according to the Chinese General Administration of Customs, and TNT has benefited particularly from demand from high-tech and fashion industries, the company said.

Europe's second-largest mail and delivery company said it was doubling its service frequency to six flights per week from Shanghai and adding two more flights to make five per week from Hong Kong after it scheduled an additional Boeing 747-400 ERF aircraft between China and its European air hub in Liege, Belgium.

"TNT has seen a significant increase in customer demand for freight services between the regions. Our current freighters between China and Europe are operating at full capacity," said Iman Stratenus, Managing Director of TNT China.

China, whose economy saw year-on-year growth of 11.9 percent in the first quarter of 2010, has proved a boon for TNT's drive to push its day-definite freight product offerings to emerging markets, with its Hoau domestic service posting a 28 percent underlying revenue growth in the first quarter.

"(The year) 2011 remains a big question mark as confirmed by (Deutsche Post's) DHL, and TNT should be able to counter this by leveraging on its network in South America and Asia," KBC analyst Dieter Furniere wrote in a note.

The decision to expand its services in emerging markets contrasts with the structural decline seen in its domestic Dutch mail market where TNT last week said it would to press on with the largest job-cutting drive in its history as European volumes continue to be eroded by competition.

TNT shares were up 0.2 percent to 20.44 euros at 0901 GMT, outperforming Amsterdam's bluechip index, which was down 0.21 percent. TNT shares are down 5 percent since the start of 2010, whereas the index has dropped more than 8 percent.

(Reporting by Greg Roumeliotis; Editing by Mike Nesbit)

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