Good Monday Morning From World Port L.A. ! Hapag-Lloyd no longer to be "German"? End of "The U. S. Border Broker"? Here's todays freight forwarder news!!! Please CONTRIBUTE! McD
Despite a flurry of debate over the "Ocean Shipping Reform Act of 1995", specific details of this dramatic proposal do not appear fully understood by the freight forwarding community. Accordingly, The Cargo Letter provides highlights of the proposed law (H.R. 2149), as follows:
-- (a) Elimination of the U.S. Federal Maritime Commission (FMC) and transfer of its remaining functions such as safety to the U.S. Department of Transportation;
-- (b) Anti-Trust immunity for carrier conferences will continue, but control over independent action by member lines is significantly weakened;
-- (c) "Service Contracts" are phased out in favor of "Ocean Transportation Contracts" which are to be unregulated as to content. (Certain exceptions will apply);
-- (d) Conferences will lose their right to control service contracts offered by individual member lines who, in turn, would be permitted to negotiate and execute separate contracts;
--(e) The new "Ocean Transportation Contracts" can be made confidential by their terms so that neither competitors of the shipper or the carrier nor fellow conference members can learn specifics of the contract;
-- (f) So-called "loyalty" contracts would be permitted;
-- (g) The term "NVOCC" would cease to exist and be redefined as "ocean freight forwarder", although previous use of the term answered the question of whether a house bill had been issued, or not;
-- (h) These "Ocean Freight Forwarders" in the United States would be required to possess a U.S. license and maintain either proof of liability insurance or post a bond;
-- (i) Mandatory tariff filing would be eliminated and replaced by privately published schedules of transportation rates applicable to common carrier applications;
-- (j) Although "unreasonable" discrimination against shippers and others by all common carriers is still prohibited, the anti-rebating provisions are eliminated, thus apparently leaving carriers free to deviate from their schedules of rates by paying rebates or providing other concessions;
-- (k) No prior notice requirement for rate increases would be specified under the new regulations.
Even if passed by the U.S. Congress, there is every reason to believe that certain of these provisions could be eliminated and others added as the political process continues. Many commentators continue to believe that the new legislation would likely benefit non-U.S. forwarders, carriersand high-volume shippers. It is the U.S. forwarder and small shipper who are seen by many to be at risk. Naturally, passage of the "Ocean Shipping Reform Act of 1995" will not disturb existing regulations for port-to-port U.S. domestic ocean shipping.
........The opinions expressed here are merly the ones received. Please
contribute YOUR opinion. From Crowley American Transport
Here are a couple points in support of a regulated maritime industry:
a. Ocean carriers conduct business with anti- trust immunity. This privledge is given by the highest courts in the land because it has proven to be the better of two extreams. Historically, exporters and importers have supported stability in ocean rates so they can better conduct their trade knowing (in most cases) that the rates will maintain a certain level for a period of time. The alternative to this system has shown to be worse for the exporter-importer. From the days of the sailing ships and a deregulated trade, there have been cycles which prove that "price fixing" as you call it, is the most appropriate method of promoting trade. The cycle works like this...In a deregulated trade carriers tend to undercut competition. The short term beneficiary is the shipper...in time the financially weaker carriers discontinue service and competition slides. As this happens a upward trend in rates occur until higher ocean revenues attract new carriers and the cycle starts up again... Carriers would not have been granted the ability to meet, discuss, and set ocean rates unless there was a very good reason. By the way...I don't believe this upcoming change to the Shippng Act will take the anti-trust immunity away from carriers??
b. The second pieces of support for a conference enviornment is that the shipper benefits. In most trade-lanes ocean rates are lower today then 5 and 10 years ago. Generally there is not evidence of abuse. Carriers meanwhile are faced with the same rising costs of doing business all industries are...but they have not passed on these increases to the trade. Shipping is basically based on the old saying "what the market will bear". This is a side of an argument which is a tough one to sell to someone on the opposite side who think conferences and carriers meeting is smoke filled rooms is basically EVIL.
This is not really ment to pursuade but to inform. Thanks for listening...
Barney T. McGale
Manager, Government Services
Crowley American Transport
barneymcg@delphi.com
From Congressman Menendez
"This bill is a radical restructuring of the shipping industry. This language could mean the end of small ports as we know them. Like airline deregulation, ocean commerce may focus on mega-hubs and thereby reduce the number of ports to as few as four, like New York, Miami, Los Angeles and Seattle. This bill is not deregulation, it is the 'cartel-ing' of ocean transport."
Hon. Robert Menendez
Member, U.S. Congress
(Dem - New Jersey)
From Thomas Harrelson
My personal opinion is it will create a bloodbath among the carriers over the next 3 to 5 years as rate wars will spring up due to the hunt for market share with no knowledge of competitors rates. Also, medium and small shippers will suffer, with many dropping out of the export market, because they will not be competitive rate wise with the mega-shippers. This is not a good proposal and needs to be exposed to the light of day via open public heariings in the Congress.
Thomas Harrelson
U.S. Dept of Transp/Maritime Admin
tharrels@mailstorm.dot.gov
LAREDO - The Cargo Letter - 10 Nov 1995 - It could be the biggest transportation change to hit the U.S. border since a railroad arrived at Laredo in 1881. Life for the "border broker" will not end, but it may certainly change. This 18 December 1995 will mark the start of standardized transport rules for all three NAFTA countries, Canada, Mexico and the U.S. Now inland carriers from each country will be able to travel cross border and inland for the purpose of delivering and picking up loads without the seeming inefficiency and expense of transloading, temporary warehouse storage at the border........tasks of a transportation professional known as the "U.S. border broker".
Unlike the usual U.S. concept of a CHB, the border broker presides over a tranportation world in miniature, performing all the industry functions of carrier, warehouse, customs broker and often packer & distributor. Freight stops at the river. Each side of the Rio Grande (Mexico calls it the Rio Bravo) has staked out it's "turf". Now,the march of NAFTA could return the border broker to the less complex functions of mere customs broker.
Across the series of bridges which define Laredo as a principal Mexico port of entry, untold legions of trucks constantly shuttle in a 24 hour a day effort to effect the "portage" between U.S. long haul carriers and their counterpatrs in the Republic of Mexico. Huge warehouses are stuffed with cargo as all international freight comes to a stop at Laredo while the "border broker" process works to allow movement to final destination.
When The Cargo Letter visited Laredo last week, concern was that U.S. truckers would attack south under the new NAFTA rules starting on 18 December 1995, only to be met by Mexican truckers at barricades with the will to force a show down. Cooler heads suggest these dramatic NAFTA rules will follow a more modest course of actual change as each side continues to respect "turf" of the other. Even Washington cannot transform the U.S. border before it is ready to change. There is a certain beauty and wisdom in the old ways.
It may well take years for this well establised system to change. Certainly U.S. truckers are not anxious to send expensive equipment south along roads felt dangerous by American standards. The extra wear and tear to U.S. trucks is a true caution, not to mention certain new vehicle laws being put in force by Mexico just to dampen U.S. interest. Meanwhile, Mexican truckers face the very real problem of upgrading their equipment to meet U.S. Department of Transportation standards where saftey equipment and load specifications are concerned. Certainly the U.S. insurance requirement has already dashed many Mexican hopes of long hauls to The Streets of Laredo.
The Cargo Letter has more on the subject and will continue to follow this interesting story. PLEASE CONTRIBUTE YOUR THOUGHTS.
Here are today's Stock Watch Report AND progress on our "Cargo Letter 10" portfolio. [Portfolio represents $l000 purchase of each stock at closeon 3 Nov 1995]
[KEY TO STOCK LIST: 1st & 2nd Number are last price & last daily change............3rd & 4th Number represent how our $1000 investment in each stock is doing and our win/loss to date.]
SYM Price Change P/L Value ABF 28 1/8 +1/2 -17.45 981.84 AEIC 23 -7/16 +69.76 1,069.73 APS 25 5/8 +5/8 +45.91 1,045.75 DALpC 57 3/8 ---- ---- 998.32 FDX 83 5/8 -1/8 -14.72 985.10 FRTZ 38 -1/2 -6.53 993.32 HARG 17 1/2 -1/2 -20.96 978.25 ICAR 13 1/4 +5/16 +177.76 1,177.66 IPX 17 ---- +14.92 1,014.90 MAX 10 -1/8 +25.64 1,025.60
Our "Cargo Letter 10" winner of the week is _clearly_ Intercargo Insurance Company which earned a full 17.7% gain! Sorry Circle Int'l/Harper...........
ABF [Airborne Express] AEI [Air Express International] APS [American President Lines] DALpC [Delta Airlines] FDX [Federal Express] FRTZ [Fritz Companies, Inc,] HARG [Circle International,Ince/The Harper Group] ICAR [INTERCARGO Insurance Company] IPX [Interpool -IPX] MAX [Mercury Air Cargo]
Capabilities______Fritz Companies Inc. (NASDAQ:FRTZ) has established a new export packing and consolidation service in Charleston, S.C., by acquiring SEPAC Export Packing and Consolidation business from Westinghouse Electric Corp. The new facility/service will operate as Fritz Export Packing Services and 1.) will further Fritz Companies Inc.'s expansion into integrated project logistics services for turnkey infrastructure projects which Fritz is handling for many clients throughout its global network, and 2.) supplement operations currently in Houston, Tulsa and Dallas, providing project clients the ability to work with Fritz Project Logistics regardless of the vendor sourcing strategy the customer implements.
Philipines Will Change Ancient Customs Regs___The Philippines may be the last country to use home consumption value (HCV) as the basis for calculation of duty. HCV bases the charge on the _market price_ of the product at origin and is said to protect against product "dumping". Two stages of change are seen, being 1) initial transition to "Brussels value" -- which computes duties based on the product's _export price_ at origin .......and then..... 2) institution of the more universal transaction value (TV) method which uses actual invoice price as the basis for duties. Invoiced based duty should be in place within the five-year grace period permitted by the World Trade Organization. These changes are seen by many as boosting trade and streamlining the customs process.
U.S. Air Force To Play Santa For The World_____ For the 19th straight year, Alaska's Eielson Air Force Base is helping Santa Claus answer his Christmas mail. The base's operations support squadron will answer children's letters to Santa Claus. To receive a letter from Santa Claus postmarked from the North Pole, send YOUR child's letter and a reply from Santa, along with a stamped envelope addressed to the child to: Santa's Mailbag, 354th Operations Support Squadron-OSW, 1215 Flightline Ave., Suite 100B Eielson AFB, AK 99702-1520. __The squadron must receive the letter before Dec. 10.
After moving to esablish Subic Bay as it's "Memphis of the Pacific" earlier this year, giant Fed Ex has now set it's sights on the world. Fed Ex "Round-The-World Service" will commence 1 May 1996, connecting the U.S. with Dubai & Bombay (via the Fed Ex EU hub at Paris) and proceeding on to the Intra-Asia hub at Subic Bay before a final leg back to the U.S. No carrier has featured such globe spanning flights since the passing of Pan American World Airways. Fed Ex had an earlier Dubai route which was discontinued.
Fed Ex hints that Memphis or Newark are the most likely origin ports for the service which will fly 5 or 6 times per week with MD-11 equipment. There could one hitch to the title of this service in that the Fed Ex "glober" may route back west after reaching Subic.
Delta Upgrades Cargo Operations______Commencing 1 Dec 1995, Delta will merge Cargo opns, administration, marketing and sales into a single, stand alone unit. Delta cites a desire to grow it's US$565 million share of the world cargo market and provide closer support to new services such as two day parcel delivery. The Cargo Letter again points out a carrier step closer to the public and tending away from the FF community.
AIC Expands In Islands______American International Cargo (AIC) unveiled it's new $4.2 million, 48,000-square-foot cargo facility at Honolulu International Airport friday. AIC will also add a dedicated B-727 freighter for inter-lsland use, in addition to existing B-747 routes ex-LAX & SFO, through Hawaii to the far east. The company is only three years old and grew 30% in1995. Sister company, American Int'l Freight is a domestic U.S. forwarder.
Hapag-Lloyd AG, "Germany's" leading ocean carrier, has now confirmed plans to spend more than $700 million on new containerships and containers. Hapag-Lloyd hopes to increase its annual container volume by nearly a third, to 1.3 million TEUs, by the year 2000. Note that the money will not be spent for personnel.
Although not widely reported in the U.S., The Cargo Letter has learned that Hapag-Lloyd also this week determined it's intention to switch to a "flag of conveniece" in order to reduce costs and lay off at least 150 German ocean workers. The carrier was unable to convince the German govt to help off set costs. The new "home country" has not been announced, but re-registration is said begin in 1998 and as new vessels come in to service.
Lykes Out Of Conference______ Lykes Bros. Steamship Co. told the Southern European American Conference on Nov. 1. that it is leaving. Lykes cited the need for flexibility in rate setting. Lykes only serves one country, Italy, that this particular conference covers. The bankruptcy is said NOT to have been a factor.
Zim Beefs East-West Routes______Zim Navigation Co. is adding three more container ships to its east-west service, for both Atlantic and Pacific service. The 3,400 TEU ships are being built in Germany. They are similar to seven ships delivered in 1992 and five delivering from June,1996, to November, 1997. The total cost of the 15 ships, including containers and other items, is about $900 million.
Russia & Iran After100 Years_____That's how long it's been since a water cargo route has existed between the countries. The Caspian Sea commercial trade link will now reopen according to Tehran.
China Declares New Port_____Construction has begun on the Port of Shanhaiguan, Hebei Province, China. The port will have eight berths with a total annual handling capacity of 10 million metric tons. The first phase is building a 35,000 ton general berth with an annual handling capacity of 900,000 metric tons. The construction will take three years and cost 290 million yuan (US$33 million).
Freighter Crew Jumps "To Conclusion"______One crewman was killed and four were injured (one with head injuries) after they jumped from the M/V Glory Cape (Panamanian-registry bulk cargo carrier) on Oct. 31 after a dispute. The ship was 11 miles off Dampier, Western Australia. The dispute may have been over pay, or lack thereof. The ship has been kept from sailing pending an investigation.
The Cargo Loss Report_______The freighter M/V Maria is lost, with 1 dead and 7 missing. The German-owned freighter sank Nov. 3 in a North Sea storm between Denmark and Norway. One person was found dead on a waterlogged raft amid wreckage, 40 miles off Hirtshals, Denmark, in the Skagerrak Strait, heading from Norway, to a Baltic port in Germany. The sinking is thought the result of _cargo shifting_. which caused the vessel to roll over. PLEASE show this article to your customers as another reason to buy "all risk" cargo marine cargo insurance. Protect yourself!
Carib Freight After The Blow_____Tecmarine Lines Inc. has relocated its cargo activities from Phillipsburg, St. Maarten, to Marigot, St. Martin. Hurricane Luis destroyed much of Phillipsburg. A 200 ton container crane has been set-up in Marigot for ctnr use.
Indeed, when it comes to world freight news for the week of 13 November...........YOUR attention must turn to the U.S. Great Lakes......
This week is the 20th anniversary of the M/V EDMUND FITZGERALD's loss........a cargo vessel sinking which has unlike no other inspired songs and legend. Also this week, the 82nd anniversary of the "Big Storm" of 1913 - the most powerful and destructive storm ever recorded on the Great Lakes. Over 250 sailors lost their lives and 23 cargo vessels were either lost or suffered major damage.
Information provided by The Cargo Letter [an error occurred while processing this directive]