U-Freight said it had not experienced any slowdown in demand in 1998 due to the regional turmoil.

"I do not worry about about 1998 because all of the importers place their orders early in the year, but what is going to happen in 1999?" U-Freight managing director Anthony Fong told a press briefing on Friday.

"I don't expect we will suffer a loss. Probably the profit margin will be trimmed 30, 40 per cent."

U-Freight's planned expansion would not be hindered by a slowdown in demand, Fong said.

"If we do not expand we will be crushed by the big boys."

U-Freight plans to expand its operations in Europe and South America. The company opened new stations in Vancouver, Atlanta and Portland, Oregon, last month.

"Most likely we might enter into a contract with the third largest domestic trucker in the United States," Fong said, declining to name the company.U-Freight also has expansion plans for Asia. In China, the company has A-licences in Beijing, Shanghai and Dalian.

In South Korea, U-Freight hoped to open offices in Pusan in two months' time, adding to existing offices in Seoul.

U-Freight said its operations in Hong Kong registered a loss of HK$1 million in July due to disruptions to the territory's air cargo traffic.

"Historically, in July we always show profit. This year we made a loss of HK$1 million," said Fong.

Hong Kong Air Cargo Terminals Ltd (HACTL), the territory's main freight handler, suspended most of its operations shortly after the opening of the airport at Chek Lap Kok on July 6 due to computer problems.

HACTL, which handles about 80 percent of Hong Kong's aircargo, lifted its restrictions on freight on August 13.

The cargo chaos increased costs as freight had to be diverted to alternative hubs near Hong Kong, Fong said. U-Freight did not lose any clients due to the crisis, he added. The company does not expect to receive any compensation for losses incurred during the cargo disruptions, Fong said.

U-Freight is currently looking for a suitable location for a new warehouse in Hong Kong.

"We are looking for an ideal location, somewhere in the middle between the China boarder and Chek Lap Kok," said Fong.

He said a possible site had been identified but it was too early to say when the warehouse would be built. U-Freight plans to invest HK$30 million to HK$40 million in the new warehouse.