Good Morning from World Port L.A. ! This week.......Fed Ex remains on the
move [at least until 25 Nov.] and Fritz leads our "The Cargo Letter
10" stock watch.......word of a nasty computer virus for AOL users
........are P.R.C. barriers really falling? The trend WE see continues to be
carrier consolidation.....away from the FF. PLEASE CONTRIBUTE YOUR *NEWS &
OPINIONS*. >Join OUR FF correspondants around the world !
by Pete Bower, The Cargo Letter, S. Africa
In a move which has angered hauliers, forwarders & shippers alike, SA Customs has abolished the concession whereby cargo transiting SA to neighbouring countries is carried *In Bond* by hauliers arranging necessary Road Bonds with Customs authorities. Forwarders & hauliers carrying overborder cargo must now pay duty to the value of *125%* of the tariff rate, as well as Vat and excises on transit traffic. Duty free items will still attract Vat (14% at 125% of the value).
Once cargo has exited SA (at one of only two designated border posts, being Beit Bridge between SA and Zimbabwe and Komatipoort between SA and Mozambique) clearance docs can be submitted to Customs for return of the duty payment ......much like the newly imposed Mexican procedure. No word yet on the time expected for refund.
It is unclear at this stage whether border crossings via other points, eg into Botswana or Swaziland, will be permitted. Observers say the new Customs move will *severely* affect viability of SA ports for cargo destined to neighbouring states such as Zimbabwe, Zambia, Malawi and Mozambique and even Zaire and Rwanda. (Botswana, Lesotho, Swaziland and Namibia are all members of the SA Customs union and are therefore unaffected by the development.)
Customs has introduced this measure because of widespread frauds facilitated by a woeful lack of manpower and skills within the Customs authority. The "pay now" concept of "In Bond" duty handling is a burden on int'l trade and to be discouraged. Are FFs to be the "BANKERS"?
.........In past weeks The Cargo Letter has featured deregulation opinions from FIATA, both American & overseas FFs, carriers and various government representatives. Today Mr.Willie Jefferson gives a different slant on the subject...against deregulation. Lengthly, but worth the read. WHAT IS *YOUR* OPINION? Contribute !
by Willie Jefferson, Dart Maritime Service, Inc
As a registered tariff publisher and someone who has been in this segment of the industry since 1983, I have seen the costs associated with tariff regulatory compliance drop significantly over the last decade. Prior to the Shipping Act of 1984, carriers use to have to file:
- Index of Origin
- Index of Destination
- Commodity Index
- Check Sheet
- Commodity Rate
- Trucker Concurrence
- Table of Contents
These, for every new shipment that took place. File multiple new shipments and this really got out of control. The Shipping Act of 1984 did away with all those requirements at the request and advice of carriers. The regulatory burden was eased.
When ATFI started in 1991 (conversion from text-to-data around 1992/93), the regulatory requirement changed again with the information filed becoming more useful. Granted, the tariff data filed MUST have a commercial significance to be of value or it is a unnecessary burden From my perspective, the problem isn't the tariff filing requirement, it's the expense and use, or non-use, of the information. Tariff publishing now has become cheaper than it's ever been. I have customers paying single digits for rate filings that use to pay $22.00 per filing barely 10 years ago, all at an increased cost to the tariff publisher.
If tariff data is used properly, it should be a part of the commercial process. Even if the FMC and tariff filing goes away, rates will still be quoted to shippers, databased, documented, updated and distributed. There is a COST associated with this process. If the present data is integrated into the process, carriers are already paying for the labor. Compare the cost of tariff publishing versus adding someone to the staff to do it yourself. A "good" employee may run (depending on geography) $20,000/yr, NOT including benefits, holidays and lost work days due to illness. Now add the technology to keep this up to date and maybe it doesn't look so bad. These are the "hidden" costs that a tariff publisher covers.
In regard to recent comments concerning use of "tariffed" matter by shippers, I'd like to add the following. Dart Maritime gets calls all the time from shippers looking for information concerning rates. They don't use the tariffs for to two (2) reasons: 1). They don't know it's available, and 2). They hope they are already getting a "good" deal.
Public tariff filing is a benefit to the shipping public, but like so many things our U.S. government does, no one knows about it. If shippers knew about ATFI and it's database of tariffs and used it properly, carriers would be in trouble. I know of no other U.S. industry that puts so much information into the public sector for it's benefit. Tariff filing has gotten a bad rap because of a good idea that isn't being used properly.
I'd like to see more carriers, forwarders, consolidators and the like use the information available to reduce costs and streamline efforts. Killing the FMC and public filing won't change anything on the commercial side. You'll still need the rates, quote the rates, wonder what the competition charges and if you're getting the best deal for your cargo (if you are a NVOCC). If tariff filing goes, the ocean carriers can do what they want, they own the ships! They could quote a NVOCC a rate on Tuesday and change it on Friday, without recourse! Contracts will only work if you are a BIG shipper, NVOCC or if you can "find" a sweet deal. If you have sporadic shipments, you're in trouble. Look at the service contract "me-too" provision (another FMC regulation). We helped a nameless NVOCC get a contract with a Conference that was $800.00 a box cheaper than what they were being quoted because of regulations. We found an excellent contract "buried" with the other 200 being filed at the same time that they could easily match. The other competing NVOCCs got nailed because they didn't know about the contract that was given to a shipper directly from the Conference. In this case, the "me-too" rule worked. If deregulation goes through, "me-toos" will be "me-won'ts", because the contracts will be secret.
Finally, I agree with the "all or nothing" comment. If deregulation comes, then deregulate everything, including anti-trust for steamship lines. Let's make it a "free for all" and see who's left standing after the dust settles. Maritime transportation is a different animal than the airline, rail and trucking industries because of the non-U.S. firms involved and roles of each nation. Look at what the E.U. did to T.A.C.A. (North Atlantic Conference) regarding inland rate setting! Looks like regulatory control to me. Anyway, hopefully everything will work itself out. It's not our fight, it belongs to the Gladiators!
Dart Maritime Service, Inc.
OSAKA, Japan - 19 Nov - China took the lead Sunday in announcing intended trade barrier reductions at the Asia-Pacific Economic Cooperatioin forum. Plans for NEXT YEAR include: 1.) Shanghai...already the home of 207 *new* wholesale markets... will be designated a "PILOT BASE" for foreign joint ventures, 2.) 30% percent of existing quota items will be eliminated from restriction, 3.) continuing tariffs on approx 4,000 items will be reduced an average 30%. Foreign ventures jumped 30% this year, generating almost US$10 billion, or 38% of national trade. China's Golden Door seems opening wider.
Meanwhile, Japan was less committal, stating that it would accelerate its Uruguay Round tariff cuts by two years (4/96 instead of 4/98) for areas including steel, chemicals and textiles "Trade conflicts and protectionism exist even in this region so we have to work together to curb the dangers," said Japan's Prime Minister Tomiichi Murayama. The PM also pointed to reductions on 55 fishery & agricultural products this year and plans to streamline animal inport/quarentine procedures.
These observations having been made, all agreements under APEC are **strictly voluntary**.
Here are today's Stock Watch Report AND progress on our "The Cargo Letter 10" portfolio. [Portfolio represents US$l000 purchase of each stock at market close on 3 Nov 1995]
[INDEX: 1st & 2nd Number are last price & daily change............3rd & 4th Number represent how our $1000 investment in each stock is doing and our win/loss to date.]
Our "The Cargo Letter 10" winner THUS FAR is clearly Fritz Companies,Inc. which earned a full $177 on our investment...or 17.7%! Sorry Intercargo..........our winner last week now brings up the rear.
Sym Price Change P/L Value ABF 34.91 +5/8 -21.81 $977.48 AEIC 46.50 +1 +93.02 $1,092.98 APS 40.81 -1/8 -5.10 $994.74 DALpC 17.40 +5/8 -4.35 $993.97 FDX 11.78 +1 3/4 -63.31 936.51 FRTZ 26.14 +2 3/8 +117.63 $1,117.48 HARG 55.90 ---- -62.88 $936.32 ICAR 88.88 -1 1/2 -88.88 $911.02 IPX 17.00 +1/8 +22.38 $1,022.36 MAX 102.56 ---- ---- $999.96 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]
U.S. Super Rail Merger Looks Good______So. Pacfic Rail announced friday that 7 U.S. governors now support merger with Union Pacific Rail, a move that would create the largest rail operation in North America. Number 2 rail carrier Burlington Northern Santa Fe [also newly merged] will bless the deal in exchange for sharing 6,000 Km of Union Pacfic track and purchase of another 540 Km of California track. Regulatory passing is expected. *EXPECT future land bridge fees to be HIGHER.*
Christmas Volume Indicators?_____Over same period last year......China fiber exports are down 71%........ HK exports to P.R.C. -Apr-June- for outprocessing & return to HK for sale abroad jumped 25%.....HK domestic imports also rose 25% ..........Guangxi Zhuang Autonomous Region posted an export increase of 47.2 percent over the same period last year.
Guatemala Trade Boost?_____Import taxes on capital goods from outside Central America will drop to 1% from 5%, effective on Dec 1,1995.
Trade Goal of the Week____BEIJING'S TARGET is a telephone in every urban household by 1997. There are now 17,825 public phones in Beijing. Good luck.
VIRUS ALERT For Our AOL Members____The Cargo Letter has been *officially* notified by America On Line that an AOL GOLD virus is currently being circulated. AOL GOLD *IS* a real virus and is directed to those who are using a Windows Computer. If you receive any of the following files: AOLGOLD.ZIP, INSTALL.EXE or WELCOME. EXE., DO NOT DOWNLOAD THEM. Intead, delete the email by choosing the "Delete" button at the bottom of the "New Mail Screen". [For more information about this virus, AOL members may use keyword VIRUS or email EZECHER.]
Baltrans Blames China____The Hong Kong-based freight forwarder is blaming heavy costs in China for earnings this year which fell 13%. >BALTRANS KEY WORD: Excess Capacity.<
Fed Ex Chrsitmas Shutdown Looms___After talks broke down 4 weeks ago [this has been going on for a full year], the Pilots Assn returns to the table today. Fed Ex maintains that the majority of pilots will not participate in any disruption of service, while the union maintains that management has underestimated union *solidarity* .......for a STRIKE starting 25 Nov '95 if no union deal is struck. >>>>FFs.....please COUNT ON ALTERNATE carriers until further notice.<<<<
New EVA Rights For HK & Macau_____It was announced thursday that EVA Air (Taiwan's #2) and TransAsia Air will be granted rights for HK and Macau. EVA will have 16 round-trips per week. The lucrative HK-Taipei route is currently dominated by Cathay Pacific.
Taipei Next Fed Ex Target Hub?______Despite growing regional competition, Taipei's Chiang Kia-shek Int'l Airport believes it can become the air cargo hub for S.E. Asia with the help of Fed Ex. This week the airport announced a three year expansion program. Fed Ex says "Our long term plans require two OR MORE distribution facilities in Asia to support our rapid growth". The Memphis giant added that despite historic focus on Singapore & H.K......."Taiwan's prospects of becoming a regional freight center remain bright", suggesting a base to support Subic Bay by 1988.
New West Coast Asia Cargo Hub?______Although said "preliminary", San Francisco's Moffett Field (once home to the Navy) may become the next air cargo step off point to the Pacific. Location is key, with Moffett being closer to Silicon Valley than existing airports. Fed Ex is said pushing the move because of limited expansion available at Oakland & San Jose, and the nite time use restrictions at those facilities. FF opportunity?
This Air Carrier Is Designed To Support FFs _____ American International
Freight_ (incorrectly identified by Cargo Letter as a forwarder on 13 Nov) is a
domestic all cargo airline that specifically serves the forwarder market. AIF
presently serves 29 cities by air overnight from it's Hub in HUF and an
additional 19 cities by road feeder service. AIF represents the forwarder
opportunity to get back into the overnight business after it was abandoned by
the combination airlines. AIF uses 727Fs, DC-8s, and the new L1011Freighter. [by
Jim Foster - Air Forwarders Assn. for Cargo Letter
Air Quote Of The Week___Are there viable air alliances which can be depended upon? "There's almost no such thing as an exclusive alliance. Nobody ever turns down cargo," said Bill Spohrer, president of Challenge Air Cargo, citing a newly formed cargo alliance between American Airlines and Alitalia as an example. Under their agreement, American will act as Alitalia's general sales agent in Latin America, the Caribbean and Canada, while Alitalia will represent the U.S. carrier in Italy and parts of Africa. Despite that agreement, Alitalia, which last month began a weekly freighter service linking Miami with Turin, Italy, also has been in touch with Challenge about handling some of the Italian carrier's cargo. "They may have come to the dance with AA, but they're going to dance with everyone else," Spohrer said. Go figure.
AIR FRANCE BUBBLY____ Air France said Wednesday that it delivered a record of approx 1.06 million bottles of 1995 Beaujolais Nouveau worldwide. This year's volume represents about 853 tons, compared with last year's 1,000 tons, due mainly to a decrease in Japanese shipments. Each ton represents approximately 1,250 bottles...lots of air freight.
Cargo Letter *Ports On Strike*____Yet AGAIN, stevedores at Port Santos, Brazil, plan to strike on Nov. 27 and 28 unless a deal can be struck with unions. Meanwhile, Austrailian talks were said broken down on Fri. for reopening major ports, with over 77 vessels unable to load/discharge on what is now "day 5". Expect a holiday impact, especially as signs were of a slowing Aussie economy before the ill-timed strike. Also...stand-by for more Indonesian instability and port shut downs.
Africa's Leading Operator Enters Joint Venture_____ South Africa's leading shipping line Safmarine and CMB-T, in which Safmarine holds a 49% stake, are to form a joint venture which will be the biggest African shipping operator by far and a leading operator on the world's north/south trades. The venture, as yet unnamed, will have a turnover in excess of USD1 billion and more than 50 ships in its fleet, as well as in excess of 50 000 owned containers. It expects to handle 400 000 full container moves annually.
Because of its stake in CMBT, Safmarine's 51% stake in the joint venture translates into an effective 75% of the equity of the integrated operation, and two Safmarine appointments have already been made, namely Howard Boyd as chief executive and Graham Peirce as his deputy. Boyd current heads up Safmarine's liner division, and Peirce was responsible for turning CMBT around from its loss-making position when Safmarine bought in in 1991. [by Pete Bower of South Africa for The Cargo Letter.]
O.O.C.L. Feeder To H.K. Starts_____A new feeder *has* begun operation between Fuzhou and HK as joint a venture with China National Foreign Trade Transportation Corp. The direct service is ex-Fuzhou on Sat. and Hong Kong on Thurs.
Singapore's Port Charges_____ Increases, begining 1 Jan '96, remain on track despite bitter protest from the Singapore Nat'l Shipping Assn (SNSA). A 9.7% overall impact increase in tariffs is seen, and blamed in part on a weak U.S. dollar. One bright spot is a 9 day free transhipment period, up from 7 days proposed last month. SNSA said the changes would most hurt conventional/break bulk operators.
The Cargo Letter Loss Report_____ The Institute of London Underwriters announced third quarter casualties last week. 40 souls were lost at sea from July to September, compared to 172 dead in the first quarter and 53 dead in the second part of last year. A total of 26 vessels were lost, compared to 20 ships lost in the second quarter, and 18 ships in the first quarter. In the first 9 months of 1995, 64 ships were lost, compared with 75 ships in the same period of 1994. The figures are serious, but DO NOT include figures where cargo containers were lost, but not the vessel. **INSIST your customers buy proper marine cargo insurance!**
..........an interesting question from our member Keith Mixter
..........Questions such as this are best answered after full review of the
shipping docs, L/C, etc......but give this one a try. Send your answers to
Information provided by The Cargo Letter
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