THE CARGO LETTER 
Air & Ocean Freight Forwarder - Customs Broker News
6 January 1997
Good Monday Morning and Happy New Year of The Ox from our Observation
Deck...... overlooking the officially designated "Cargo City" area
and....... Runway 25-Right at Los Angeles International Airport.
Welcome new members of the Airforwarders Association !!
China's YEAR OF THE OX will be one of change.........as we mark that there
are but 6 months left until the transfer of Hong Kong and a mere 79 week ends
until the so-called "millennium bug" may disable our computers and
data bases unless software patches are used before year 2000. [We suggest you
re-review our article "Forwarders & Brokers Need To Beat The
Clock" in The Cargo Letter  of October 1996]
None among us has ever faced the dawn of a new millennium. but the year 2000 is
Who would have imagined that 1997......or any year could begin with M/V
Carnival Destiny, the largest passenger ship ever built, setting the world
record when it left Miami on 22 Dec. with an amazing 3,269 passengers aboard!
It's a GREAT time to be in our transportation industry!
Contribute your knowledge & information........by e-mail to The
Michael S. McDaniel, Editor
NOTE: The Cargo Letter is designed & sized to be read using a 12 point
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INDEX to The Cargo Letter:
- OUR "A" Section: FF World Trade, Financial & Inland News
- Freight Forwarder Trade Briefs
OUR "B" Section: FF World Air News
- Pan Am Back From Airline Graveyard?
- New Code Share With AeroPeru
- JFK-San Juan Service Started Yesterday
- FF World Air Briefs
OUR "C" Section: FF World Ocean News
- FF World Ocean Briefs
OUR "D" Section: FF in Cyberspace
- The Cargo Letter "Cyber Ports Of Call"
OUR "E" Section: The Forwarder/Broker World
- Notice Of Domestic Air Loss & Damage Claims
OUR "A" Section: FF World Trade, Financial & Inland News
- Expect 1999 "Euro-Dollars"...........as EU leaders voted
last month to establish a uniform currency. The monetary union is planned to
start in two years.
- It Will Be A "Good-Year" For Circle............ as
Goodyear Tire and Rubber Company has selected Circle International as the
single authorized logistics provider for all air & ocean shipments
moving to and from the US. Circle also will provide CHB service and manage
all international intra-company air freight shipments. The company approved
a semi-annual cash dividend of US$.12 per share at a meeting on December 16.
- American Shipper Magazine Warns FFs & CHBs ...............as
its November 1996 issue cited two major issues for the new year with
articles entitled: 1.] The 'Forwarders' Achilles Heel' - A lack of adequate
liability insurance coverage to protect FFs & CHBs from claims for
damaged or misdelivered goods; and 2.] 'Another Concern about NATAP' -
Broker concern that implementation of NATAP (North American Free Trade
Prototype) is coming at the expense of ACE (Automated Commercial
Environment), as several ACE Customs officials have moved to NATAP. The
Cargo Letter stresses YOUR need fo r proper liability insurance to protect
business, freight and business relationships. Sadly, we remember the FFs who
lacked proper protection when T HAT ONE BIG CLAIM was received. Many of
these were great companies.
- No Info Tech Product Duties By Year 2000...........as 28 countries,
representing 84% of world trade voted last month to endorse the Information
Technology Agreement (ITA). ITA will eliminate customs duties on information
technology products (i.e. computers, chips, communications equip.) by year
2000 when finally adopted by 90% of the trading nations as expected. The EU
had been a hold out, but supporting countries included the U.S., U.K.,
Japan, Korea, Singapore & Canada.
- Int'l Pressure On Myanmar (Burma) Continues...........as recent
U.S. sanctions have now been followed by the withdrawl of benefits of the
European Union's (EU's) generalized system of preferences (GSP) in the
- Harry Wu Calls For Boycott Of China Toys.............as the former
PRC political prisoner made a pre-Christmas plea for Americans to remember
that slave labor is allegedly used. 1997 also brings a new law for the State
of California which bans import of slave labor produced goods from any
- China Curbs Legal Wave............as this month brings tight new
regulations on the march of foreign law firms to establish offices in the
PRC, severely limiting their ability to hire local & foreign staff. The
Ministry of Justice move is seen as a response to complaints from local
Chinese firms. >>NOTE: Because of Chinese court decisions viewed by
some as either "uncertain" or unfair to foreign freight forwarders
& shippers, an unusual trend is emerging toward avoidance of the Chinese
legal system where possible. For example, when facing claim from a
government-owned Chinese company and the prospect of being named as a
defendant in a Chinese court.........certain forwarders & their
underwriters have simply elected to initiate resolution of the dispute by
the filing their own lawsuit in a U.S. or Commonwealth court so that a fair
decision will be rendered. Indeed, it is unusual to see lawsuits being filed
by potential defendants, instead of the claimant. However, fear of
potentially one-sided justice is suggested when the government owned
companies are said by sources to prevail much of the time in PRC courts.
- Precious Int'l Cargo For Brinks Armored Car ........as it has
purchased Custodia Y Traslado De Valores C.A. ("Custravalca"), the
largest armored car company in Venezuela, for approximately US$58M. Brinks
now sets a new trend for seamless "secure" service with world
markets. In turn, Custravalca is major owner of Brinks Peru, S.A. The
Pittston Company, owner of Brinks, provides logistical services through
Burlington Air Express Inc., its Pittston Burlington Group.
- Clinton Pressured To Reverse Mexican Truckers...........as the 1
year anniversary arrives of the date when U.S. officials refused to
implement open border trucking provisions of NAFTA. Pressure comes from U.S.
manufactures & carriers seeking lower rates, but concern continues over
safety issues by groups including U.S. insurance underwriters. Expect
- America Continues (Not) To Love NAFTA........as a recent survey
shows that 57% of U.S. citizens believe the U.S. government should not
approve new trade pacts with Latin American countries.
OUR "B" Section: FF World Air News
- New Code Share With AeroPeru
- JFK-San Juan Service Started Yesterday
-- by Michael S. McDaniel, Esq. for The Cargo Letter
LAX - 6 Jan 97 --It was THE U.S. flagship airline and the world's
most-revered carrier before going bankrupt in 1991. Now a new Pan American World
Airways.......marks its 4th month of service since rebirth in Sept. 1996.
The new Pan Am has just applied to the U.S. DOT for code share authority with
Peru's flag carrier and largest airline, AeroPeru for JFK/MIA flights. This code
share will be the first Pan Am has established with its growing list of industry
partners....... and allows AeroPeru to place itscode (PL) on Pan Am flights
between JFK and MIA, thus giving AeroPeru easier access to the New York market.
Other member airlines in the Pan Am marketing partnership include Viasa of
Venezuela, Icelandair, Royal Jordanian, Cayman Airways, EgyptAir, Air Ukraine,
Taesa of Mexico, Aero Costa Rica, Spain's Air Europa, Asiana of Korea, BWIA
International, Faucett of Peru, Finnair, SAETA of Ecuador and Virgin Atlantic
Airways. Pan Am says it is projecting to generate nearly 30% of its traffic from
Now headquartered at Miami, Pan Am is flying Airbus A300s between New
York-Los Angeles, New York-Miami, Miami-San Juan, and starting yesterday .
.......New York-San Juan nonstop. Additional A300s are said on order. In
addition to practically "inventing" U.S. long haul commercial
aviation........ the original Pan Am began the first link to Puerto Rico 68
years ago this month is 1929 and was the first with 707 & 747 service to the
island. Welcome Back Pan Am (but you've got to get back to Boeing aircraft!) !
- Boeing 737-F Rumor Real...........as last month The Cargo Letter
was the first publication (one day before the Wall Street Journal) to report
industry disruption by potential grounding of B-737-F freighters, converted
from passenger craft. Major portions of the U.S. cargo fleet would be
involved, for example 22% of FedEx aircraft and up to 50% of the U.S.
overnite delivery service industry. It is now understood that the need for
any corrective action on possible door/floor/bulkhead problems will not be
decided until meetings between the FAA, Boeing and the affected cargo
carriers in late January 1997. Sources report that FAA might
"economically ground" the planes by limiting cargo loads to 3K
Lbs. per pallet from as much as 10K Lbs. until modifications are made.
- Oxygen Generators Permanently Banned.......as the U.S. DOT moved in
the wake of ValuJet with a final rule this month ending carriage of the
commodity on all passenger craft, both foreign & domestic, entering,
leaving or operating in the U.S. Proposed extensions of the rule will
include items such as compressed oxygen.
- MIA Animal Scandal? ...........as various groups threaten
investigations after this week's estimate that only about 6% of animal
shipments are actually seen by U.S. Fish & Wildlife Service inspectors
at MIA despite what is said to be a shocking level of inhumane violations in
the sample groups. Animals moving ex-South America, including endangered
species banned from U.S. import, commonly transit MIA for delivery to the EU
and other destinations. Budget constraints are cited for the difficulty in
dealing with the problem. Expect more on this story. In other MIA news, at
the request of Dade County....... the U.S. DOT will now conduct hearings
concerning alleged unreasonable, increased landing fees.
- Airborne Exp & Van Ommeren Proud Parents........of Airborne
Express Netherlands B.V, a joint venture enabling Airborne to consolidate
its int'l air express, air forwarding, ocean services, CHB & logistics
services by utilizing existing warehousing operations located in Amsterdam's
Schiphol Airport. A good month for Airborne, December also saw its US$2.0M
investment in Aramex Int'l, giving Airborne 8.9% ownership of the leading
Midd le East express delivery & forwarding company, with main hubs at
Dubai, London, New York, and Amman. Retail & service consolidation
trends continue in our industry.
- Emery Continues South America Building.........as Valencia,
Venezuela, is opened as a new station, following establishment of a new
operating company in Buenos Aries, Argentina last May.
- Swissair Names Alliance Partners..........joining Delta Air Lines,
Austrian Airlines & Sabena Airlines in a partnership intended to capture
a larger share of the North Atlantic market.
- Good Year For FedEx.......... which reported 1996 net income of
US$103.7M, up from US$89.9M last year.
- Bad Year For The Industry.............as 1996 was deadliest year
ever in terms of airplane crashes with more than 1,185 passengers killed on
commercial jet flights. Encourage your customers to buy quality cargo
insurance. The major losses were:
May 11: ValuJet, near Miami, 110 killed.
July 6: Delta Air Lines, Pensacola, Fla., two killed.
July 17: TWA, East Moriches, N.Y., 230 killed.
July 20: Northern Air Cargo, Russian Mission, Alaska, four killed.
Oct. 22: Millon Air, Manta, Ecuador, 34 killed. (Millon is a U.S. Co.)
Nov. 19: Great Lakes Aviation, Quincy, Ill., 12 killed.
- In Memory Of Our Cargo Family.......... for the loss of an Airborne
Express DC-8 on 22 December which was 20 minutes into a maintenance test
from Greensboro, N.C., to Wilmington, Ohio when the plane fell into a steep
dive over the Virginia mountains and gouged a crater 5 feet deep & 30
feet across at the 3,400 ft. level. All six aboard were killed.
- Good Bye Fokker........as 1996 saw the famous Dutch aircraft
manufacturer go under after 76 years of business for customers that included
the World War I flying ace Red Baron.
- Rumor That Mirabel Close?............is now declared false, but the
Montreal sister port will concentrate its business on serving charter
flights and cargo operations.......according to Aeroports De Montreal
OUR "C" Section: FF World Ocean News
- Nedlloyd - P & O Deal Approved.........as expected action by
the European Commission has approved the epic merger forming P. & O.
Nedlloyd Container Line Ltd. as the world's 3rd largest container carrier
with projected sales of US$4B.
- Hanjin To Speak German?........as it is reported that the leading
Korean shipping company, will become majority shareholder in the German DSR-Senator
Lines, effective this month. Industry consolidation continues.
- Lykes Lines Goes Canadian..........as part of its bankruptcy
reorganization troubled U.S. flag carrier Lykes Bros. Steamship Co. will
sell its "Lykes Line" unit to Canadian Pacific Ltd. Subject to
U.S. court approval, CP will gain 11 vessels (7 of these under charter) to
be operated as a separate company unit. U.S. registration will not be
changed for any ship.
- Oppose New Shanghai Shipping Exchange ? ...........as certain U.S.
groups have urged Washington to protest China's decision to create the new
body, a tariff-filing agency like the FMC but which would/will also have the
a uthority to accept or reject rates on ocean cargo outright. The move by
China is seen by some as a possible method of reversing rate decline in
China lanes, perhaps not a bad result for FFs & NVOCCs. Can rates be
reversed in days of over capacity, vessel expansion and carrier competition?
Can the public be made to realize that there are basic costs to the services
- APL Reaches Accord....... with its unlicensed seagoing unions for a
new contract that will extend until June 1999, and has agreed to enroll 9
(up from 8) of its box ships into the new U.S.-flag Maritime Security
Program, subject to resolution of certain legal issues with MarAd (U.S.
- Two Flags Will Come Down At Hong Kong............as after the Union
Jack is lowered on 1 July 1997, it will become illegal for any vessel to fly
the Taiwanese flag (Republic of China), according to new PRC orders last
week. Further to the dispute, a Chinese freighter was denied permission to
dock for emergency repairs at Keelung, Taiwan, this week when it refused the
s tandard international courtesy of flying Taiwan's flag while in port.
Indeed, 1997 will be a most interesting year for our industry in the Orient.
- Baltic Shipping Lines Bankrupt.......as a Russian Court reacted
last week to US$518M in debt owed by the company. Some 19 of Baltic's 53
ships are under arrest world wide, but sources estimate that the bankruptcy
will allow Baltic to delay payments and eventually emerge with perhaps 40
vessels and about half of its current 11,000 employees.
- Canal Commission Discrimination Charged........as naturalized U.S.
citizen employees of the Panama Canal have filed suit in a Washington U.S.
District Court against the Commission claiming the rule allowing for higher
pay to only native born U.S. citizen employees is discriminatory. See our
current series on troubles at the Panama Canal in The Cargo Letter 
and  on the world wide web.
- Future COSCO Services?..........are hinted by the China flag
carrier's announcement of a 5 year plan to spend almost US$1B to develop new
properties in the Changjian River basin, Shanghai and areas around the Bohai
Gulf. Meanwhile, construction has begun for the new Port of Dafeng, Jiangsu
Province, with cargo operations set to commence in 1999.
- Interior China's Longest CTNR Leg...........has begun with twice
monthly river service from Yichang, Hubei Province, to Shanghai. The 5 day
service should allow cargo insurance and greater stability for interior
- Expect More Phnom Penh Traffic.........as Japan last month
announced completion of its 4 year project to upgrade the Cambodian port
with modern container handling abilities.
- Cool New Company To Form.......... as Cool Carriers A.B., Leif
Hoegh and Co., Safmarine of South Africa, Tufton Oceanic and Universal
Reefers will now merge, forming the world's largest refrigerated cargo
company.......under the name UniCool Ltd. Operations from Stockholm will
continue as Cool Carriers while management of South African services will
remain marketed as Un iversal Reefers.
- CMA To Down Size..........as French carrier Compagnie Maritime
d'Affretement has just announced it will eliminate about 15% of existing
positions and consolidate the agency network into a single entity. Problems
continue for the French shipping industry.
- A New "Old" Port For Sri Lanka?.......as U.K./Chinese
proposals are underway to re-establish Galle as the country's former major
port, a distinction it lost with the building of Columbo in the 1800's.
Easing the congestion at Columbo, a revitalized Galle is projected to handle
1M TEUs. Colombo, is likely to be about 1.35M TEU for 1996 and could reach
1.5M TEU, close to theoretical full capacity, in 1997. Last year Colombo
handled 1M TEU. It's time to think about your future station at Galle.
- England To Carry Arresting Cargo.........as it is believed the U.K.
will reintroduce prison ships in order to reduce overcrowding, starting next
- In Memory of Our Cargo Family...........as we remember December
1996 difficulties for the crews of M/V Dystos (lost from a rogue wave with
20 dead); M/V Sydney Express (5 dead from the same family in the N.Z.
trawler with which she collided); M/V Jahan (lost off South Africa with all
32 crew missing); M/V Jutha Jessica (lost off Korea with 2 dead & 3
missing); M/V Nakhodka (lost off Japan with all 32 crew rescued); M/V Mr.
Bill (lost off Japan with all 8 crew saved from raft by U.S. Navy); M/V
Samaina former M/V Mary Poppins (4 missing from Greek warship with which she
collided and sank); M/T Kinyo Maru No. 2 (1 dead after lightning strike).
>>>>>>>Ocean freighting remains a most dangerous
business. Encourage your customers to buy quality marine cargo insurance.
OUR "D" Section: FF in Cyberspace
OUR "E" Section: The Forwarder/Broker World
-- By Charles Veigel, Esq. with Michael S. McDaniel for The Cargo Letter
Seattle - 3 Jan. -- Our last article, "Written Notice of Loss and Damage
Claims in Ocean Transport," (please visit The Cargo Letter on the World
Wide Web at Edition ) pointed out that only
written notice of loss (not actual claim) is required by law under ocean rules
of the Carriage of Goods by Sea Act (Title 46 U.S. Code). In domestic air cargo
transport, however, there is no legal requirement for written notice of claims
for loss & damage. Nevertheless, domestic air cargo carriers generally
follow rules which dictate the WRITTEN notice of claim requirements.
U.S. DOMESTIC AIRLINE DEREGULATION: Prior to airline deregulation, the C ivil
Aeronautics Board (CAB) reviewed filed tariffs of air cargo carriers. Sh ippers
were deemed to have constructive notice of the contents of the tariff, as well
as the notice of claim rules for loss & damage. CAB had indicated that most
airlines required claims for loss and damage to be filed within 9 months and 9
days from the date of shipment.
The Airline Deregulation Act of 1978 (Pub.L. No. 95-504, 92 Stat. 1705)
brought a phased end to the CAB in 1985 as well as the notice of claim rules.
Consequently, direct air carriers & indirect air carriers (air forwarders)
have been free to mandate rules for loss & damage claims, which often differ
from carrier to carrier. Because each carrier may have different rules for air
cargo claims, the claimant/transportation practitioner must be familiar with
contratural rights of the performing air carrier.
U.S. DOMESTIC AIR CARGO DAMAGE LIMIT: This is usually US$.50 per pound unless
the shipper declares the cargo's value and pays a higher shipping rate.
SOURCES OF DOMESTIC AIR CLAIM RULES: To locate the cargo carrier's rule for
loss and damage claims, the claimant should look to 3 basic sources: 1.) air
waybill of lading; 2.) air service guides; 3.) air cargo tariff (Procedural
The air waybill of lading (AWB) is issued to the shipper; however, the
service guides and tariffs (procedural manual) can be requested directly from
the direct/indirect carrier. They often contain valuable information not set
forth on the air waybill. (Several domestic air carriers have now posted their
claim rules on the world wide web.)
These same rules apply for the house air waybill (HAWB) of the indirect air
carrier, i.e. the airfreight forwarder/air forwarder. Remember, to the actual
air carrier, the indirect air carrier (airfreight forwarder) is the shipper and
receives its AWB when cargo is tendered. The actual shipper receives the HAWB of
the indirect air carrier/air forwarder. When an HAWB has been issued by the air
forwarder, the direct carrier's bill becomes known as an MAWB ......or master
FILING DOMESTIC AIR CARGO CLAIMS: This article cannot begin to outline the
various rules each domestic air carrier follows for cargo loss & damage
claims, but you can certainly benefit by exercising the following guidelines:
1. Written Notice. All notices of claims and supporting documentation mu st
be WRITTEN. Any WRITTEN notice of claim should be sent by either certified or
registered mail, return receipt requested or via courier to the carrier. Notice
given to an air carrier by telefax was upheld in a recent case, see Royal Ins.
Co. v. Emery Air Freight Corp., 834 F.Supp. 633,635 (S.D.N.Y. 1993). If by
telefax.......keep the confirmation sheet from your machine.
2. Content Of The Written Notice. There are no statutory requirements for
written notices of claim. Nevertheless, a claimant's notice should include: (1)
name of shipper; (2) name of consignee; (3) AWB or HAWB number; (4) flight
number & carrier name; (5) date shipment was delivered to the air carrier;
(6) place where the shipment was delivered; (7) port of departure; (8 )
destination port; (9) the description of goods shipped; and (10) a brief
decription of the goods lost or damaged as well as value, if known.
3. Content Of Claim. Following written notice of claim to the carrier, a
formal written claim with supporting documentation must be provided. Certai nly
the notice and the claim can be combined. The domestic air carrier (or indirect
air carrier/FF) will require verifiable documentation supporting the claim, such
as a survey/inspection, commercial invoices, etc.. [Please visit The Cargo
Letter on the World Wide Web at Edition  and 
where we outline documentation necessary to support a cargo claim.]
4. Time Limits. Domestic air carriers require the claimant to provide WRITTEN
notice of claim & formal WRITTEN claim within a time period mandated by the
AWB/HAWB, etc.. For example, on domestic moves FedEx requires claimants to
submit WRITTEN notice of claim within 15 days from delivery in the case of cargo
damage, delay or shortage. FedEx also requires claimants submit verifiable
documentation supporting a written claim of loss & damage within 90 days
after written notice of the claim was received, differing significantly from the
old notification period once indicated by CAB before deregulation. Today, if a
claimant misses the deadline for filing loss & damage claims in domestic air
moves the carrier may move under contractual provisions of its AWB (or HAWB of
the indirect air carrier/air forwarder) to deny the claim.
5. Written Notice To The Cargo Underwriter: If the shipment was covered by
air cargo insurance, you must notify the cargo insurance underwriter of the
claim IMMEDIATELY. If you are to recover under the subject policy of insurance,
the underwriter requires that YOU take ALL required steps to preserve claim
against the carrier/indirect carrier .......i n order to protect its rights of
Following deregulation many shippers became disgruntled, arguing that shorter
time limits were overly burdensome and one-sided. Since Deregulation, shippers
have had to argue in court that rules for cargo loss & damage were either
unconscionable or contrary to public policy under federal common law. These
efforts are largely in vain. Still, do not forget that the domestic air
carrier's rules are not statutorily prescribed and therefore subject to
negotiation. Large volume shippers often negotiate with domestic air carrier's
to obtain more favorable claim notice periods and other cons cessions. THE
SAFEST COURSE: Purchase quality air cargo insurance from your air forwarder
professional and avoid uncertainty
Next time .........we go "Back To The Basics" with international
air cargo claims under The Warsaw Convention. [Charles Veigel practices
transportation law at the Law Offices of Charles H. Veigel, P.S. in Seattle,
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