The Cargo Letter
THE CARGO LETTER 
Air & Ocean Freight Forwarder - Customs Broker News
17 May 1999
Good Monday Morning from our Observation Deck...... overlooking the
officially designated "Cargo City" area and....... Runway 25-Right, at
Los Angeles International Airport, voted ``Best Cargo Airport in North
We have Pirate news today!
The thousands of Forwarders & Brokers who read this publication around
the world need to learn of YOUR experiences and what YOU learned today.
Contribute your knowledge & information ........ by e-mail to The
Cargo Letter. We strive to bring you useful information which is timely
& topical. Be sure to visit our web site .......... http://cargolaw.com
To post comments or discuss articles, go to our message
board or try our new News Server.
The Freight Detective ........ http://www.cargolaw.com/detective.html
Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel,
forwarder/broker attorneys at LAX.
INDEX to The Cargo Letter:
OUR TOP STORY
1. The Death of John Myers
* After 153 Years
OUR "A" Section: Trade, Financial & Inland News
2. Freight Forwarder Trade Briefs
3. The Cargo Letter Financial Page
OUR "B" Section: FF World Air News
4. Freight Forwarder World Air Briefs
OUR "C" Section: FF World Ocean News
5. FF World Ocean Briefs
OUR "D" Section: FF in Cyberspace
6. The Cargo Letter "Cyber Ports Of Call"
OUR "E" Section: The Forwarder/Broker World
7. China-US Relations Suffer After Accidental Embassy Bombing
* Singapore Warns: "Chinese playing with fire."
* Beijing Hints WTO Membership as Reparations
8. Which Article Controls Your Air Cargo?
* Understanding The Warsaw Convention
9. New U.S. Transport Related Legal Cases
10. Billions in State Funds Requested for Ground-Access
Improvements at Los Angeles Area Airports
11. A Night At FedEx
* Looking To The Future
12. Surface Transport Board To Allow Electronic Filing
* Full Details
We must all mourn the passing of a force in our industry. The first Freight
Forwarder - Customs Broker client ever represented by Countryman & McDaniel
was F. W. Myers & Co. back in 1978 (also known as The Myers Group). For this
reason, we are saddened to report the unexpected news that this proud company
F.W. Myers, based in Rouses Point, New York, which had an estimated 500
clients doing business across the 49th parallel, closed its doors without
warning May 11. The company is instructing its importer & carrier customers
to contact Trans-Border Customs Service in Champlain, N.Y. "The process in
getting shipments cleared should be as seamless as possible," said a F.W.
Myers spokesman. Many former F.W. Myers staffers have joined Trans-Border
Founded in 1846 by John Myers, a veteran of the War of 1812, F.W. Myers &
Co. has operated from a facility at Rouses Point, N.Y., that was built to its
own specifications in 1861. A world leader by the 1970's, larger then than such
current giants as Fritz Companies or Expeditors Int'l, Myers showed gross
revenues near a billion dollars in the days before inflation. With numerous
stations in the Far East, F.W. Myers led to way to open the China markets with
which we are now all so familiar. Its past glory faded, Myers has been seen to
concentrate in recent years on its historic roots as a leading customs broker
along the U.S. - Canadian Border.
New hope for a restored F. W. Myers & Co. came last year when a major
investment group presented plans for funding a merger with another leading
customs broker. However, financial details could not be agreed upon by Myers
largest private shareholders. The rescue plan fell through, leaving Myers facing
monthly loses approaching US$300,000 and increasingly more desperate for cash.
Sources report the recent decision to sell off Myers' seaport & airport
business to Derringer in an attempt to keep the doors open. Moments prior to
contract signing last Thursday afternoon, Derringer pulled out. There would be
no saving F. W. Myers & Co.
There are many memories here of dear friends, valuable relationships,
exciting legal challenges, past adventures and proud accomplishments in then
remote trading areas of the world ............ which tonight appear to have all
become historical footnotes. Still, after an incredible 153 year American run,
we must all pause for a moment to reflect upon a former giant which appears to
no longer be among us. Whatever the current situation or expected news accounts
in coming days, we will remember F. W. Myers & Company as a pioneer which
led the way with vision and skill.
- FedEx To Capture Geologistics? ............. as the giant
has been in talks to acquire GeoLogistics, the US$1.7B global logistics
company that includes the LEP Int'l worldwide forwarding empire, according
to cargo industry sources. FDX & GeoLogistics, which is owned by a group
of private investors, refused to comment or to acknowledge that discussions
were underway. But sources close to the companies said they expected a deal
to be completed as early as this month and that FDX would shut down the
forwarder’s troubled American business and not take on Bekins Van Lines,
which is part of GeoLogistics. The purchase, the largest for FDX since the
company bought trucking and logistics operator Caliber Systems two years
ago, would give the express operator an enormous new presence in the Int'l
heavy freight market, including GeoLogistics’ extensive network in Europe
- China Forwarding Reviewed ........... as recent talks
between China & Japan produced a stalemate over the question of
deregulation of freight forwarding. Progress was limited with Japanese
officials insisting on the issuance of bills of lading being included in the
business areas covered by rules on the screening and approval of forwarding
business in China. At present, issuance of B/Ls is not covered by screening
& approval rules. The Chinese officials responded by saying they were
currently reviewing possible adjustments of related regulations but could
not give a date for completion of the review. Japan has repeatedly urged
China to remove the regulations impairing the progress of Japanese
businesses entering the Chinese forwarding market for several years, with no
- The Marine Insurance Leader Moves Forward .............
as leading transportation & trade underwriter Intercargo Corp. has
announced that its merger with a subsidiary of XL Capital, Ltd. (NYSE:XL)
was consummated last week. The merger had been approved by the stockholders
of Intercargo on April 29, 1999. A shareholder lawsuit related to the merger
was dismissed on May 3, 1999. As a result of the merger, Intercargo became a
wholly owned indirect subsidiary of XL Capital & each share of common
stock of Intercargo previously outstanding was converted into the right to
receive US$12.00 in cash. Shareholders of Intercargo will receive
instructions in the near future explaining how to exchange their stock
certificates for the cash payment. Stan Galanski, Pres. & CEO of
Intercargo, commented, "We are pleased to complete this merger and to
deliver meaningful value to the shareholders of Intercargo. Going forward,
we are quite pleased to be a part of one of the emerging global insurance
leaders. The financial strength & global reach of XL Capital, Ltd. will
enable us to expand the products and services to our insureds and agents,
backed by the exceptional quality of XL Capital's balance sheet." XL
Capital Ltd., through its wholly owned subsidiaries, including XL Ins. Ltd.,
XL Mid Ocean Reinsurance Ltd., XL Capital Products Ltd. & The Brockbank
Group plc, provides insurance & reinsurance coverages and financial
products worldwide. As of February 28, 1999 XL Capital Ltd. had consolidated
assets of US$10.5B consolidated shareholders' equity of US$4.8B
- White House Orders Port Crime Study ............ as U.S.
has launched a commission to fight auto & cargo theft at U.S. ports. The
commission will be co-chaired by Attorney General Janet Reno, Transportation
Secty. Rodney Slater & Treasury Secty. Robert Rubin. Over US$3B are lost
annually through illegal export of stolen cars, while more than US$1B are
lost due to cargo theft.
- Don't Miss The Big Apple Customs Show .......... as the
American Assn. of Exporters & Importers will hold its 1999 Int'l
Convention & Exhibition at the New York Marriott Marquis Hotel in New
York to explore critical partnership issues such as Customs automation
development & funding, target architecture plan, prototype programs, CAT
audits, reasonable care & compliance. Global issues such as the Int'l
Trade Data System, valuation, harmonized system, globalization & rules
of origin will also be addressed. In the spirit of partnership, government
officials & top industry executives will discuss how they are tackling
these issues together. The 2-day event is the most cost & time effective
way to stake your claim in the partnership ......... on 23 & 24 May
1999. The keynote speaker will be Raymond Kelly, U.S. Customs Commissioner.
For info call 1-800-843-4898, or go to http://www.aaei.org/convention.htm
- Schenker Brings Home The Gold .............. as Schenker
Int'l (Australia) Pty. Ltd. is now the "Official Supplier of Freight
Forwarding" to the Sydney Organizing Committee for the Year 2000
Olympic Games at Sydney. The company was official freight forwarder for the
1972 Olympic Games in Munich, Germany.
- Journal of Commerce Keeps UP ............ as the daily
business newspaper of Int'l trade & transportation founded by Samuel
Morse in 1827, has announced several major changes in publishing
&circulation, including the decision to drop its traditional broadsheet
format in favor of a new tabloid design, which will debut June 1.
"We're evolving based on the needs of readers and advertisers,"
said Willy Morgan, group publisher for the Journal of Commerce Group, which
publishes the newspaper as well as other periodicals & business
information in the field of trade & transportation. "The tabloid
format is easier to read and easier to navigate. It is a more suitable,
contemporary vehicle for what our customers want from us: actionable
business information and analysis," he said. The Journal will now also
shift coverage of breaking news & commodity prices to its Internet
edition leaving the print edition more room for analysis of news and trends
affecting shippers] http://www.joc.com
- Schenker Goes Public ........... as the parent company of
Schenker Group, Stinnes AG, is going public on the Frankfurt stock market at
the end of 2nd quarter 1999. Stinnes Group, with around 48,000 employees and
an annual turnover of 12 billion euros, decided to return to the stock
exchange trading after a seven-year absence. Stinnes will also introduce a
new corporate logo this month, in preparation for the IPO & to bring
under one roof the various logistics parts of the company.
- Fritz Runs The Store ............... as the multi-modal
logistics giant has been named as Sears Roebuck & Co. "Partner in
Progress for 1998." This prestigious award is presented to a select
group of vendor companies who supply Sears with quality products &
services. More than 10,000 sources competed for this award. Fritz Companies,
represented by its President, Dennis Pelino, was honored on April 13 during
Sears Source Day at Sears' HQ in Hoffman Estates, IL. Last year Sear had
revenues of US$1B. For Sears, Fritz distributes to 845 department stores
& more than 2,000 specialized retail locations. In related news, Fritz
Cos. has appointed Ronald F. Dutt as Exec. V.P. & CFO. Dutt was senior
V.P., financial planning & analysis, for Visa Int'l's worldwide
operations. Dutt assumes responsibility for the financial management of the
company worldwide, as well as overseeing the administration of the company's
business plan, human resources practices and investor relations. http://www.fritz.com
- Panalpina Seeks Big Changes .............. as it and the
SAirGroup have concluded an agreement to co-found
"SwissGlobalCargo", the 1st air cargo company to provide a fully
integrated, door-to-door airfreight service with time-definite guarantees,
and no weight restrictions, specifically designed for particular customer
groups. The new company will be 55% owned by Panalpina and 45% owned by
SAirLogistics, the holding company for the SAirGroup's cargo & logistics
subsidiaries. Panalpina will also be incorporating the air division of its
air/sea broker subsidiary into the new company. As a further component of
the new logistics venture, the Swiss, Italian & Austrian operations of
SAirGroup's Jacky Maeder Group will be acquired by Panalpina and integrated
as an independent company into the Panalpina network. The new deal means
that the Jacky Maeder Group's far east operations will be taken over by its
German partner, Hans Geis GmbH.
- Hans Geis GmbH Gets Maeder Asia .......... as the German
forwarder will acquire all Jacky Maeder companies in Asia. Effective from
July 1, all 21 Asia offices of Jacky Maeder in Japan, Korea, China, Hong
Kong, Taiwan, Vietnam, Thailand & Malaysia will become part of the Geis
Cargo Logistics Group. Jacky Maeder Asia presently employs some 370 staff,
handled 125,000 air & ocean shipments in 1998 and achieved a
consolidated net turnover of US$80M. Geis Cargo has already operated its own
organization in Singapore since 1975.
- Skynet Gets New Pony & On Board ............ as the
delivery services company has acquired two new units. First, it has acquired
51% of privately held Freight On Board Int'l Ltd. (FOB), a UK express
delivery service with annual revenue of approximately US$10M. Terms of the
sale were not disclosed. The deal follows Skynet's acquisition in March 1999
of Fleet Delivery Service, a Las Vegas, Nev.-based delivery company with
annual revenue of approximately US$13M. Second, Skynet has entered into a
preliminary agreement to acquire privately held Pony Express Delivery
Services in Atlanta. Founded in 1860, Pony Express was America's 1st express
company and now is one of the largest regional ground delivery service
providers in the U.S. with a revenue base in excess of US$100M. Pony Express
handles more than 32 million packages each year through 100 offices in 22
- Deutsche Post Buys American ........... as the German
post office has bought its 2nd US firm this year. The company, which last
September bought the Virginia-based Global Mail Ltd, now buys Yellowstone
Int'l Corp, an Illinois-based publications distributor. The company says the
acquisitions are part of its strategy to provide greater scope to its
distribution services for US companies.
- U.K. Post Buys German ............. as UK Post Office has
bought Der Kurier, continuing trend towards consolidation in the German
parcel delivery industry. UK Post Office bought the express courier company,
one of the largest in Germany, through German Parcel, a company it acquired
in January. The acquisition is strategic, in that it will give German
Parcel- Germany's 4th largest parcel delivery firm - the ability to offer
overnight and same-day delivery. By law, the U.S. Post Office can't buy
- Danzas Buys Swedish ........... as it is buying a
majority voting bloc of the Swedish freight forwarder and logistics company
ASG AB for US$400M. The acquisition is the latest of a US$2B buying spree in
Europe by Danzas' parent, Deutsche Post. ASG operates in road transport, air
and ocean freight, logistics and special services. It posted $1.4B revenue
last year and ranked 11th among Europe's top transport companies.
- Geodis Marches On Rome ......... as the French transport
concern Geodis is to buy Italian distribution company Borghi Trasposti with
a turnover of US$24M. Borghi has 11 depots across the whole of Italy and 150
- BAX Will Also Do Laundry & Light Cleaning
............ as BAX Global now offers the next generation of delivery
services -- delivery inside the customer's facility. "When door-to-door
delivery doesn't go far enough, use BAX Connex Inside Delivery," says
Bill Hampton, BAX Connex Product Manager, "This product offers delivery
expertise beyond the norm. Our delivery personnel are specially trained to
handle sensitive hi-tech equipment." BAX will deliver the equipment,
unpack, assemble, if necessary, and make the equipment ready to be installed
by the customer's service technicians. "We do everything but plug it
in," says Hampton. "We remove all the packing materials and can
even return old equipment for repair or disposal."
- UPS And The "Big Gulp" Strategy ............ as
it now has an alliance with convenience chain store 7-ELEVEN to provide UPS
services to more than 350 locations across Hong Kong. UPS is the 1st express
company in Hong Kong to launch round-the-clock collection for international
express envelope shipments to convenience stores. At 7-ELEVEN, UPS express
envelope shipments will be charged a single flat rate by destination,
regardless of weight.
- Hellmann Changes Name .......... as company formerly
known as Hellmann Int'l Forwarders Ltd has changed its name to Hellmann
Worldwide Logistics Ltd. The company says the new name reflects the
company's shift from being a 3rd-party freight-forwarder to a 3rd-party
- USFreightways Unites ............. as the 4 operating
units in its freight forwarding business have united under one new name,
"USF Worldwide." This change brings together, under a single
identity, all domestic and international freight forwarding operations,
including air, surface, ocean & other value added services. Combined to
form USF Worldwide are: USF Seko Worldwide (freight forwarding); Golden
Eagle Group, (Int'l air & ocean services, customs brokerage &
packing); USF Caribbean Services (ocean forwarding in the Puerto Rican
market); USF Coast Consolidators, (ocean forwarding in the Hawaiian &
- Rutges Seeks Protection ............ as Europe's biggest
air cargo trucking company Rutges again faces financial problems. The
company was forced to apply for a moratorium.
- The Mounties Get Their Smoke ............. as a 2 year
investigation has resulted in 30 charges against 8 individuals & 2
businesses in the U.S. The Royal Canadian Mounted Police investigation
focused on offenses committed with respect to the Customs & Excise Acts
for distribution of major quantities of contraband tobacco products
illegally entering Canada from the U.S. The products were purchased from the
``J. STANLEY COMPANY'' of Elizabeth, New Jersey by Lewis & Robert Tavano
and delivered to a warehouse in the Toronto area where the Tavanos would
remanifest the tobacco for return to the U.S.. Once the tobacco products
were back in the U.S., the product was then sold to several businesses
operating on the American portion of the Akwesasne Territory. In turn, the
tobacco was then smuggled back into Canada for sale on the black market.
From September 1997 to August 1998, investigators determined that over
US$7,500,000.00 worth of tobacco products was purchased from the ``J.
STANLEY COMPANY" in this fashion. In one instance, a load of cigarettes
worth US$632,000 was seized upon entry into Canada at the Fort Erie point of
entry, with federal taxes payable in excess of US$450,000 & provincial
taxes in excess of US$164,000. On April 8, 1999, Loran Thompson, age 51 of
Racquet Point, New York was arrested by officers of the Regional Task Force
as he entered into Canada on eight charges contrary to the Customs Act,
Excise Act and Criminal Code of Canada.
- Uncle Sam's Trucker Finds The Cargo ........... as
Consolidated Freightways (CF) has been named "Carrier of the Year"
by the U.S. Department of Defense for the company's active support in
helping reduce government cost associated with identifying & delivering
lost freight. The award recognizes CF's freight claims customer service
staff in Portland, Oregon & Nashville for their collaboration with the
Military Traffic Management Command (MTMC) to more efficiently identify,
recover & deliver military or government freight which may have been
misidentified or lost in transit. MTMC is a joint command for all branches
of the military.
- U.S. Customs Re-Launches Web Site ........... as its
newly designed service is on line. The site has been viewed by some 11
million visitors since its grand opening in August, 1996. The site's new
look features more visual impact, a more intuitive navigational scheme, and
more information for the import-export community and international travelers
alike. The Customs Web site welcomes about 40,000 visitors a day. For the
benefit of the public, the site is organized in 6 sections meaningful to
visitors. The site, which also features improved access to all Headquarters
Rulings; New York Rulings; 19 U.S. Code; 19 C.F.R (Customs Regulations); and
Harmonized Tariff Schedule of the United States (HTSUSA), as well as search
U.S. Customs Resource Center - The Cargo Letter http://www.cargolaw.com/d2.customs.html
- FedEx In Your Hand ............ as Federal Express Corp.
(FedEx) today signed an agreement with AvantGo, Inc. to provide FedEx
package-status tracking information to users of handheld devices such as
PalmPilots and Microsoft Windows CE-based Handheld PCs. Later, FedEx
shipping rates & drop-off location information will be added. FedEx
customers will be able to download free AvantGo software directly from the
fedex.com tracking page onto their handheld device. To access package-status
information, customers would then simply select the FedEx channel within the
AvantGo icon on their device and submit their request. http://www.avantgo.com
- Virtual Courier .............. as SmartShip.com Web site
users can compare shipping prices & services, select a courier, and
print an air waybill using their PC. Membership and use of the website is
free. The user only pays for the cost of the package shipment. Between any 2
zip codes, SmartShip.com compares overnight package delivery companies by
displaying rate & service information for Airborne Express, FedEx, UPS,
the U.S. Postal Service, as well as other regional and national couriers.
Package tracking for these couriers is also simplified via a consistent
display of tracking results. Other SmartShip features include an
"intelligent" address book, sender-recipient e-mail notification
services for pickup and delivery status, and a history of all shipping
transactions. Package tracking is done through a simple & consistent
- APL Tends Toward Quick ............ as American President
Lines has adopted "QuickReport", an exception-management tool that
will sort and filter the contents of the customer's shipment data. The
reports can be configured to meet any requirement, and the parameters can be
easily modified or saved in the system to generate future reports. Delivery
of the reports can be prescheduled, so they automatically arrive by E-mail
at the same time each day or each week. The reports can be downloaded and
printed. QuickReport is the latest information product that APL offers on
its HomePort web page, a customer customizable "portal" to the APL
Web site. It allows customers to tailor the Web page so it offers only those
informational and transactional "channels" they require. http://www.apl.com
- TNT Also Quick .......... as it has unveiled
QuickShipper, a service that allows U.S. businesses to order, send and
monitor Int'l express deliveries, without special software. The service
offers the ability to prepare shipping documents, calculate prices, arrange
package pickup & track up to 100 shipments step by step through TNT's
integrated services, known as Price Checker, Web Collection & Web
- EU E-Commerce Concerns Continue ......... as in a letter
to Under Secty. of Commerce David Aaron, the Information Technology Assn. of
America (ITAA) has offered support for the ongoing negotiations between the
U.S. & the European Commission on Safe Harbor Privacy Principles.
"While it's difficult to predict how the principles might shape up in
the next few weeks, overall, we believe the Department of Commerce is
pushing the principles in the right direction," said ITAA Pres. Harris
Miller. He added that the next round of negotiations is critical for
establishing successful principles. "The principles go a long way in
bridging the different approaches to data protection in the U.S. and
Europe," Miller continued. Last October the E.U. directive on the
protection of personal data took effect in 15 European countries. The
directive would prevent the transborder flow of data to countries outside
the E.U. that do not provide "adequate" privacy protection. The
U.S. and E.U. are now negotiating a set of privacy principles to which U.S.
companies could voluntarily adhere in order to be granted safe harbor. ITAA
called on the Department of Commerce to be mindful of the precedent the Safe
Harbor Principles may set for any potential domestic regulation on privacy.
ITAA registered concern about the language of several of the principles,
including one that covers an individual's right to access information
collected on them. The ITAA comments state that the principles should
provide for reasonable access rather than absolute access. Read more about
the debate & the EU rules at our Electronic
Commerce Center - The Cargo Letter
- Transportation E-Commerce Seminar Set ............. as
the event will be held at the Hilton Riverside in New Orleans on June 2-3
1999. Speakers include representatives from Union Pacific, Maersk, APL,
Sea-Land, Yellow Services, Consolidated Freightways, United Air, Canadian
National, New York Port Authority, BAX Global, Port of Houston, U.S.
Customs, Ingram Barge Company & Mark VII Worldwide Logistics. Electronic
Commerce for Freight Transportation' is sponsored by IBM. Information is
available at 1-800 814 3459 or visit the event web site
- Emery Flies The Highway ........... as a massive
15,000-pound, two-car-lane-wide section of a B-747 aircraft was recently
moved overland under the coordination of Emery Worldwide's Global Project
Management group from Roswell, N.M. to the Hiller Aviation Museum in San
Carlos, Calif., for a future static display there. Consisting of the flight
deck and first-class passenger section, the B-747 will be adjacent to the
two-story museum building for visitors to tour the cockpit & passenger
interior of the aircraft display. The interactive exhibit is scheduled to
open in late 1999. The aircraft section, measuring 21-feet wide, 41-feet
long and 10-feet tall, was disassembled into two parts, with the top portion
fitted into the lower portion and then lifted by crane onto a specialized
flatbed trailer for the five-day, 900-mile journey. In addition to selecting
the surface carrier, Emery was responsible for routing and scheduling as
well as coordination of civilian & police escorts through New Mexico,
Arizona and California to its final destination. Photo: http://www.newscom.com/cgi-bin/prnh/19990506/HSTH159
- Baskin Robins Names "Hint of Carp" The Monthly Flavor
............ as a Vietnamese logistics firm has started trucking 16 tons of
ice cream from Ho Chi Minh City to Hanoi to satisfy the rising demand for
the frozen goods, thus giving rise to reports of U.S. POWs still on hand.
The 3,600 km round-trip takes Javitrans, partly owned by Japan's Konoike
Transportation, one week. Javitrans is the 1st company in Vietnam to
transport ice cream over such a distance after also being the 1st company to
open a refrigeration warehouse in Ho Chi Minh City last May. The trucks, and
the company's other vehicles, transport fishery products from Danang and
fruit & vegetables from northern Vietnam on the return journeys from
- Smuggler Union Hikes Insurance Dues .......... as 3
convicted drug traffickers were beheaded in Saudi Arabia on 3 May, the
official Saudi Press Agency reported. Thani Aayed al-Ruwaily, a Saudi &
Khalil Hilal al-Ruwaily, a Syrian, were found guilty of trying to smuggle
hashish into the kingdom and were executed by sword in Dammam in the eastern
province, the agency said. Sanab Gul Raidy Gul, a Pakistani who was
convicted of trying to smuggle heroin, was executed in the Red Sea city of
Jiddah. Saudi Arabia's Islamic courts impose death sentences for murder,
rape, drug trafficking & armed robbery. Executions usually are carried
out with a sword in public. So far this year, 21 people have been executed.
Last year, 29 were put to death.
- Aer Lingus Group. UP with net profit of US$77.6 for 1998, an increase of
13.7% over 1997. This was achieved on a 12.4% increase in turnover over the
same period to US$1335M. Last year Aer Lingus carried a record 5.8 million
passengers, an increase of 10% over 1997.
- Alaska Air. UP with record 1st quarter net income of US$20.2M, or US$0.76
per share (diluted), compared with US$13.1M. Operating revenues for the
quarter were US$461M, a 10.8% increase, while operating expenses were
US$433M, up 9.8%. Operating income for the quarter was US$28.6M, compared
with US$22.5M a year earlier, while pretax income was US$33.4M compared to
US$22.0M last year.
- Atlantic Container Line. Down with earnings of US$5M for 1st quarter 1999,
a 66% drop over 1998.
- Burlington Northern Santa Fe. UP with 1st quarter operating income of
US$480M - US$33M or 7% higher than 1998 - Revenues of US$2.2B, an increase
of US$42M or 2% over 1st quarter 1998 revenues of US$2.1B - Operating ratio
for the first quarter improved to 78.1 percent compared with 79.2% in 1998
- Cannon Express. DOWN as revenues 3rd fiscal quarter 1999 were
US$22,700,681 compared to US$26,023,161 in the 3rd fiscal quarter of 1998.
Net loss 3rd fiscal quarter 1999 was US$(623,933) compared to net income of
US$396,367 in the 3rd fiscal quarter of 1998. Per share 3rd fiscal quarter
1999 was 19 cents loss compared to 12 cents in the 3rd fiscal quarter of
- Consolidated Freightways. Neutral with 1st quarter earnings of $0.30 per
basic share, equal to last year's record first quarter. Net income for the
quarter was US$6.8M compared to last year's US$7.0M. Revenue improved 2.3%
to US$558.2M this quarter from US$545.6M last year. **Cargolux. UP as income
jumped to US$92M on the back of the sale of three B747-200s. The 1998 income
figure compares to US$30.7M the previous year. Revenue went up 5.2% to
US$578M as volumes leapt to 321,982 tons, a 17.6% hike.
- Circle Int'l. DOWN as year-on-year income has dropped from US$5.4M to
US$1.9M. High costs of Y2K programming, around US$3.2M, and other charges
for computer upgrades have been mainly blamed for the net drop. On a
brighter note, revenues for the 1st quarter rose 11%to US$182.9M. Starting
it's 2nd hundred years. Circle charges back.
- Continental Airlines. UP with 1st quarter net income of US$84M (US$1.23
basic and US$1.11 diluted earnings per share), compared with 1st quarter
1998 net income of US$81M. This is the 16th quarter in a row for company
growth & increased profit.
- Cronos Group (container leasing). DOWN with a net loss of US$93,000, or
$0.01 per share, for the 1st quarter of 1999, compared to a net loss of
$675,000, or $0.08 per share, for the corresponding period in 1998.
- Danzas. UP as operating income climbed 74% to US$40M and group net income
increase 56% to US$37M last year. Gross & net sales were above last
year's figures at US$4.7B (1997: US$4.5B) and US$3.2B (1997: US$3B),
respectively. Danzas Group registered a climb of net income from US$24M to
US$40M (up 56%) while operating income rose from US$23M to US$40M (up 74%).
- Eagle USA Airfreight Inc. UP with a net income of US$5.5M for its 2nd
fiscal quarter ending March 31, up 39%. Revenue jumped 48% to US$133.7M.
- Emery Worldwide. DOWN with a 53-percent drop in 1st quarter income, citing
declines in domestic and international air freight revenue & tonnage.
Income for the recent quarter was US$3.6M, down from US$7.5M for the year
earlier quarter, despite a 1% increase in revenue, to US$29.4M.
- Expeditors Int'l of Washington, Inc. UP with net earnings of US$9,521,000
for 1st quarter of 1999, compared with US$8,034,000 for the same quarter of
1998, an increase of 19%. Net revenues for 1st quarter increased 25% to
US$94,413,000. A 2-for-1 stock split in the form of a stock dividend is to
be issued to shareholders of record as of May 17, 1999.
- Forward Air. UP with a 1st quarter record of US$37.7M compared with
US$28.9M for same period 1998. Operating income from continuing operations
for the period was US$5.5M, an increase of 96.4%. Income from continuing
operations for 1st quarter 1999 was US$3.1M, an increase of 93.8%, compared
with US$1.6M in the prior-year quarter. Diluted earnings per share from
continuing operations for the 1st quarter of 1999 were US$0.24, an increase
- Interpool, Inc. UP with 1999 1st quarter net income of US$9,256,000, or
US$0.32 per diluted share, as compared with net income of US$8,110,000, or
US$0.28 per diluted share, for same period 1998. Revenues during the 1st
quarter of 1999 were US$56,571,000, up 32% from US$42,832,000 in the 1st
quarter 1998. At the end of the 1st quarter, the company's container fleet
was approximately 500,000 TEUs (twenty-foot-equivalent units), with
container utilization at 98%, while the chassis fleet has grown to
approximately 78,000 units, with chassis utilization at 92%. Interpool is
the corporate sponsor of The Cargo Letter library and search engine web
- Int'l Container Terminal Services. UP as the largest operator in the
Philippines, saw profits increase by 23% to US$9.23M in 1998.
- Kitty Hawk. DOWN as it has expanded net loss to US$2M in the 1st quarter
compared to a US$1.73M net loss last year, but the Dallas-based cargo
carrier says an ongoing restructuring helped improve the company's operating
profit 10% to US$7.7M despite declining revenue. Revenue fell from US$145M
last year to US$138.5M in the 3 months ending March 31, 1999. Kitty Hawk
pinned that partly on discontinued passenger charter business that brought
in US$13.8M in last year's 1st quarter. That business was part of the
American International Airways operation that Kitty Hawk purchased &
Kitty Hawk continues to realign the remaining parts of AIA's cargo
- Kuene & Nagel. UP by 7.1% for the year to US$59M in 1998, the highest
in the company's history. The Swiss-German company says a strong performance
in overseas operations & key contributions from the US, Canada & the
Asia-Pacific region offset economic problems in Asia-Pacific and in Russia.
Klaus-Michael Kuehne will be succeeded as chairman of the board by Klaus
- Malaysia Int'l Shipping Corp. UP with a net profit of US$230M, up 27% on
the previous year.
- Mercury Air Group, Inc. UP with revenues for the 3rd quarter of fiscal
1999, which ended March 31, 1999, to US$53,643,000 from $52,720,000 for 3rd
quarter 1998. Net income for the period was US$1,076,000 as compared to
US$1,416,000 for 3rd quarter of fiscal 1998.
- Northwest Airlines. DOWN with a net loss of US$29M or US$0.36 per diluted
common share for the three months ended March 31, 1999. **Sea Containers
Ltd. UP with net earnings of US$3.6M compared with US$0.5M in the year
earlier period. Revenue increased 6% to US$277M.
- Singapore Airlines. DOWN with net income of US$601.7M for its fiscal year
ending March 31, down slightly from a year earlier. SIA cited weak demand
caused by Asia's financial crisis and remains cautious about this year's
- Target Logistics. DOWN with revenues for the fiscal 3rd quarter ended
March 31, 1999 totaled US$13,850,340, compared with revenues of
US$23,825,874 reported for the fiscal 3rd quarter ended March 31, 1998. The
1998 results include revenues of $13,623,349 attributed to the Company's
Caribbean Air Services, Inc. subsidiary, sold in July 1998. Excluding
revenues from Caribbean, Target Logistic Services, Inc., Target's operating
subsidiary, recorded a 36% increase in revenues. The Company reported a net
loss of $565,438, or $0.07 per share for the 3rd quarter, compared with net
income of $104,811 for the 3rd quarter ended March 31, 1998.
- Transportacion Maritima Mexicana. DOWN with a net loss of US$18M for 1st
quarter, compared to a deficit of US$5M in the year-earlier period. Revenue
for the latest quarter, including the company's share of the revenue of
Americana Ships, the new TMM/CP Ships joint venture, was US$193M, down 15%.
TMM said that the decrease was due mainly to lower liner revenues.
- The Freight Connection. UP with revenues for the 1999 1st quarter of
US$7.34M, compared to US$6.57M for the 1998 1st quarter, an increase of 12%.
- Union-Transport. UP with gross revenues of US$571.1M earnings of US$16.0M
for the fiscal year ended Jan. 31, 1999. This compares with US$528.5M of
revenue and US$11.8M of earnings in the prior year, representing increases
of 8% in revenue & 36% in earnings from year to year.
- United Parcel Service. UP as 1st quarter net income rose 42% to US$499M,
while revenue rose 8% to $6.33B.
- U.S. Xpress. UP with net income for the 1st quarter ended March 31, 1999
of US$3.7M, or US$.25 per common share, an increase of 13.3% from US$3.3M,
or US$.22 per common share, for 1998. Operating revenue for the quarter was
US$161.3M, an increase of 30.1% . Operating income for the 1999, 1st quarter
was US$9.3M, up 28.9%. U.S. Xpress is a national & regional truckload
- We Mourn The Loss ............ as Korean Air freighter
crashed & exploded in a migrant worker community minutes after leaving
Shanghai's busy airport on 15 April, killing at five people. The Seoul-bound
plane, a 7-year-old MD-11F, crashed into an industrial development 6 miles
S.W. of Hongqiao airport, officials said. The plane, carrying 68 tons of
cargo (mushrooms, machine parts & FAK), then plowed into housing for
migrant workers. Korean Air said there was ``a high possibility'' explosives
destroyed the plane. All 3 members of the flight crew and 4 others on the
ground were killed, 37 people were critically injured. Two minutes after
leaving Shanghai's busy Hongqiao airport, the plane climbed to 3,300 feet
and in its last communication with the control tower was told to bank left
and rise to 5,000 feet, the South Korean Ministry of Construction &
Transportation said. In its final seconds, the MD-11F just missed a 7-story
housing block, then slammed into a construction site and its makeshift
housing for migrant workers, 6 miles south of the airport. The impact left a
crater 65 feet long & nearly 26 feet deep. Witnesses saw the plane
making a slow, loud descent, but said there were no visible signs of
trouble. The crash scattered pieces of the plane along the ground and blew
out car windows for several blocks, said a local resident and a Minhang
district rescue worker. Among the injured was a road crew working in the
industrial development zone. Fragments of tape from the plane's flight-data
recorder have been found, indicating the device was ``completely
destroyed".. The device tracks the operation of the plane's systems in
flight. A microchip from a 2nd device that records cockpit conversation was
found & sent to the U.S. for analysis, but the rest of the device wasn't
found. As a result of the crash Delta Air Lines has suspended its codeshare
with Korean Air Lines pending a thorough review of KAL operations.
After several Korean Air planes slipped off runways & were involved
in other minor accidents, the South Korean government late last year ordered
the carrier to cut back domestic flights by 15% for 6 months. The
restriction, scheduled to ended April 25, was said to have cost Korean Air
about US$30M in lost revenues. In 1987, a man and a woman planted a bomb on
board a Korean Air Boeing 707 that exploded over the Andaman Sea, killing
all 115 people on board. The woman, captured alive, confessed to being a
North Korean spy. On 28 April, President Kim Dae-jung demanded fundamental
changes in the management of accident-prone Korean Air, saying the airline
was giving South Korea a bad name.
- The Cargo Letter Time Line: We review a troublesome track
record for KAL, the world's 13th-largest passenger airline. More than 700
people have been killed in 20 years, among them 228 who died when a Korean
Air B-747 flew into a hill on Guam in August 1997 & 269 killed when the
Soviet Union shot down KAL Flight 007 after the B-747 strayed into Soviet
airspace in September 1983. By contrast, United Airlines, the world's
biggest carrier, has had 140 passenger deaths in the same 2 decades. Last
month, a KAL jet skidded off a runway while landing in Pohang, South Korea
& split in two, with 19 passengers injured. In September, another plane
overshot a runway, and a month before that, a Korean Air Boeing 747 skidded
off a runway in Seoul and tore off its landing gear. After the runway
accidents & several other minor incidents last year, South Korean
officials ordered the carrier to cut back domestic flights by 15% for 6
months. KAL has now begun a US$114M safety overhaul. Good Luck to this proud
- Everglades National Park Memorial Dedicated .......... as
last week a monument was dedicated to those killed when a ValuJet plane
crashed into a swamp three years ago. The monument with 110 concrete columns
topped by pyramids rests on a grassy knoll a few yards from a levee. The
columns, set apart in rows, represent each victim of the crash. The columns
are arranged on a triangular platform that points toward the crash site. A
center aisle divides the rows, widening as the structure rises. Chemical
oxygen generators ignited in the cargo hold of ValuJet Flight 592, sending
flames tearing through the floor of the passenger cabin. The DC-9 nose-dived
into the swamp at 460 mph moments after it took off from Miami for Atlanta.
- World Cargo Volume Positive, But Growth Rate Down
........... as world air cargo traffic rose by 1.1% in 1998, as Asia-Pacific
cargo volumes contracted, according to statistics compiled by Airports
Council Int'l, based in Geneva. Total cargo moving through the world's
airports totaled 58.3M metric tons in 1998. The 1.1% rate of growth is down
from 8% in 1997. Asia-Pacific volumes fell by 3.8%, to 13.6 million tons in
1998. North American traffic was up by 3%, to 28.9 million tons. European
airports reported a 2.2% increase, to 11.3 million tons.
- Asia Rates Fueled By Fuel ........... as Asian airlines
are likely to see profits squeezed by a surge in jet fuel prices as
competition for passengers prevents them from passing on rising costs in the
form of higher ticket prices. Jet fuel prices rose as much as 60% after
crude oil producers cut supply in March, pushing up the cost of benchmark
Brent oil by 53%. Singapore jet fuel prices hit a peak of US$20.25 (EUR
18.74) a barrel on April 7, just 7 weeks after touching a 5-year low of
US$12.60 (EUR 11.66) a barrel. For example, Air India sets aside 16% of its
yearly budget for fuel purchases, but the recent increase in jet fuel barrel
price increased fuel costs on some routes by up to 50%.
- U.S. Supreme Court Reverses Air Tax Risk ............. as
The U.S. Supreme Court has denied a request for appeal of a tax ruling by
the Hawaii Supreme Court that sets a dangerous precedent for air freight
companies. The Hawaii tax ruling overturned a widely held legal definition
of "air transportation" that had prohibited states from taxing the
gross receipts derived from the sale of interstate air freight services.
Industry officials are concerned that other states may institute similar tax
plans. Lynden Air Freight, which appealed the case, has paid Hawaii more
than US$500,000 in back taxes awarded from the ruling, in addition to
several hundred thousand dollars in legal fees. UPS has paid Hawaii about
US$344,000 in similar taxes. The Hawaii tax case is unique and will not be
followed by other states that seek to encourage business.
- Consolidation Seen For South America Fleet ............
as Latin America's airlines cannot pay for the fleets of aircraft needed for
their growing markets and will rapidly consolidate into a handful of
companies, according to regional airline leaders. "All Latin American
carriers need more capital in order to play the game,'' said Avianca chief
executive Gustavo Lenis, adding "the process of consolidation will be
faster henceforth." Throughout the 1990s, Latin America has been the
world's fastest growing commercial airlines market, with traffic in South
America doubling between 1990 & 1997. Passengers moving through Latin
American airports rose 10% in 1998 to 120.1 millions, according to the
Airport Council Int'l (ACI) trade group. In comparison, passenger traffic
rose only 2.2% in North America. Traffic between South America and the rest
of the world has also increased, with a number of foreign carriers signing
alliance with domestic & regional operators to carry passengers &
cargo beyond the big Int'l gateways and further into Latin America. Compare
the current situations in Latin America to the state of the airline industry
in the US after the deregulation of the 1980s that spurred mergers, new
competitors and higher passenger traffic. US airlines are expected to drive
the consolidation wave in South America by trying to pick dominant airlines
in a regional or domestic market first, possibly forcing smaller carriers
- Emirates #1 ......... as it has been named Cargo Airline
of the Year 1998- 1999 at the prestigious Cargo Airline of the Year Awards
presentations in London, held annually by Air Cargo News. The airline also
won for Best Cargo Carrier to the Middles East, for the 11th year running,
& Best Cargo Carrier to the Indian subcontinent, for the 2nd time.
United Airlines Cargo was voted the "Best Airline to North
America". United is the largest US combi carrier, flying nearly three
billion cargo ton miles last year.
- Emery Drafted ............. as The U.S. Military Traffic
Management Command (MTMC) has awarded Emery Worldwide its 1998 Quality
Award, the second time the company has been so recognized. Selected from a
group of more than 600 transportation carriers, Emery was cited for being at
the "forefront of transportation innovation and providing the highest
level of quality customer service to the U.S. Department of Defense."
Emery's MTMC award for 1998 was based on the company's work with Defense
Distribution Depot, Susquehanna (DDSP) in New Cumberland, Pa. Emery, which
serves as the prime carrier for the depot's Europe-bound cargo, was able to
substantially reduce transit times for cargo while maintaining costs to the
- Alitalia Joins Northwest & KLM .............. as
Northwest Air, Alitalia & KLM Royal Dutch Air have announced that
Alitalia will join the Northwest/KLM trans-Atlantic joint venture. The 3
lines made the announcement at the signing of a Commercial Cooperation &
Integration Agreement and an Alliance Coordination Agreement held at the
Rainbow Room in New York. As part of their agreement, Northwest, KLM &
Alitalia are making a joint application to the U.S. Dept. of Transportation
for immunity from the U.S. antitrust laws. The request is similar to the
Northwest/KLM application approved by the DOT in 1993 and will allow
Alitalia, KLM & Northwest to coordinate their trans-Atlantic route
networks, enhance the efficiency of their respective operations &
facilitate their ability to provide seamless service to the public.
- Customers Remember The Service ........... as despite a
nonexistent advertising campaign, Airborne Express came out on top in a
recent study tracking brand loyalty in the express industry. In a study
conducted by Brand Keys Inc., Airborne Express customers are less likely to
be wooed away to competitors than customers of other companies. FedEx
finished second in the rankings, followed by the U.S. Postal Service, UPS
- Pushing The Skies Further Open .......... as the British
Cargo Airline Alliance (BCAA) has fueled the open skies debate with an
application for fifth freedom rights to fly within the US. The BCAA has made
the application on behalf of member airline Air Foyle in the wake of FedEx's
request for fifth freedom rights to operate flights out of Prestwick and
Stansted into Europe.
- UAL Upgrades LAX ........... as United has officially
designated Los Angeles Int'l Airport as a hub. The new status has been
marked by the frequency of flights and the number of destinations served by
United from LAX and highlighted by the completion of extensive terminal
renovations and other passenger amenity improvements. United's US$260M
upgrade at LAX is scheduled for completion on May 15. Ground breaking for a
new cargo facility is scheduled for later this month or early June. The
US$430M facility will include 160,000 square feet of storage space, double
that of United's existing cargo facility & an additional 22,000 square
feet of office space. Construction will take place directly under windows of
The Cargo Letter.
- BA Handles It With Care ........... as a `Special
Handling' facility has been opened at Heathrow Airport by British Airways
World Cargo, which at 4,900 square meters is 3 times larger than the
`Premium Products' facility it replaces, at a cost US$4.6M. The new facility
will handle courier, express & livestock shipments.
- LanChile Joins OneWorld ............ as Chile's largest
carrier has been invited to join the "OneWorld" alliance,
worldwide network. The invitation was made last week during a meeting of
CEO's of member airlines. LanChile has become the 8th member of this
worldwide alliance, joining American Airlines, British Airways, Canadian
Airlines, Cathay Pacific & Qantas Airways. It is the 3rd member to join
since the alliance' creation was announced last September. Finnair &
Iberia also joined recently and plan to offer OneWorld services and benefits
toward the end of this year.
- TNT Gets Down Under ............. as on 19 April it was
announced that TNT Australia will purchase Ansett's door-to-door air freight
business. Ansett is owned 50-50 by News Corp. Ltd. & Air New Zealand.
News Corp. is selling its stake in Ansett to Singapore Air under a deal
announced last month. TNT will continue to run the door-to-door business as
a separate unit keeping its management and all 800 employees, and would be
able to use the Ansett Air Freight brand name for two years.
- TNT Goes Up & Out .......... as TNT Post Group has
announced plans to form its own cargo airline under the name TNT Airways.
TNT Airways will operate the group's 33 aircraft from TNT's base hub in
Liege, Belgium. The company says that consolidating the airway carrier
activities under one umbrella will make the group more efficient. The
company adds that it expects to see substantial cost reductions over the
next 3 years. TNT Airways, to start in the third quarter of 1999, now moves
1,400 tons of express cargo weekly and serves 50 airports every night
throughout Europe. The company is now on line. http://www.tnt.com/
- The Germans Are Coming ........... as Deutsche Post has
expanded in the U.S. by acquiring Yellowstone Int'l Corp., a privately held
Int'l publications distributor based in Illinois. The German postal company
said it wants to use Yellowstone, which had US$21M in annual revenue last
year, to offer U.S. companies global distribution of materials with
value-added mail services. Yellowstone is Deutsche Post's 2nd acquisition in
the U.S. In September, it bought Global Mail Ltd., a specialized Int'l mail
distributor based in Virginia.
- Indian Air Will Go Private To Survive ............ as the
Indian government has signaled its acceptance to selloff the airline by
looking to raise US$74M in fresh equity. The airlines current capital stands
at US$24.7M, not enough for an aviation firm of Indian Airlines size. The
domestic carrier has had a monopoly in the country for almost 4 decades,
until 1991, but has failed to see profits. The restructuring is part of a
series of recommendations from a panel of experts brought in by the
government to advise on the plight of the airline. Their overall proposals
would require a capital injection of US$217M.
- DHL Opens The Big One ...........as its largest U.S.
service center in Sunnyvale, California is now on line. The new 53,000
square-foot facility is more than twice the size of the service center it
replaces and covers the core of the Silicon Valley from Menlo Park to
Fremont to South San Jose.
- Son of Chek Lap Kok ............ as a troubled start
marked the opening of British Airways' new cargo facility which saw delays,
misplaced goods & widespread confusion this month. The HK$37 million
facility is an arm of BA's World Cargo Center. Officials within the facility
admitted that it was opened without proper pre-testing. Others within the
industry complained that staff at the facility were poorly trained and did
not cope well with opening-related glitches. The courier operation, Asia
Pacific, was one outfit inconvenienced by the opening, seeing its cargo left
behind and missing several flights. BA has expressed regret for the
problems, which it blames on a personnel shortage. It says it has assigned
more staff to the facility to get it running smoothly.
- UPS Logistics Group Restructured ............. as its
transportation management companies are now a single entity called the
Transportation Services Group, comprised of UPS Truck Leasing, Worldwide
Dedicated Services, Martrac and the Transportation Resource Center.
Individually, these three units will continue to offer transportation
services in their areas of expertise, but will also operate from the newly
created Transportation Resource Center (TRC), in Norcross, GA. The TRC
leverages the capabilities of UPS Truck Leasing, Worldwide Dedicated
Services and Martrac, as well as a worldwide network of multi-modal
carriers, freight forwarders & customs brokerage. The TRC provides
design and engineering expertise, including information technology support,
network optimization, logistics coordination & carrier relations. The
UPS Logistics Group was formed in 1995. http://www.cargoweb.nl/bin/news.exe?Action=Show&ID=6230
- The MD-10F Takes Wing ............ as Boeing has now
flight-tested its first MD-10 freighter with a 4-hour, 25-minute trip from
Long Beach Municipal Airport to Williams Gateway Airport in Mesa, Arizona.
The MD-10F is the designation given to modified DC-10s that incorporate the
Boeing Advanced Common Flight deck (ACF) which accommodates a 2-person crew.
The MD-10 flight deck is similar to the Boeing MD-11, allowing the crews to
fly the 2 aircraft interchangeably. Two other MD-10Fs are scheduled to join
the flight-test program, which is expected to last 10 months.
- Lufthansa Returns To "Big D" ........... as
Lufthansa Cargo will again fly freighters to Dallas-Fort Worth Int'l
beginning on May 31, after suspending all-cargo service to Dallas in March.
- Giants May Roam The Skies Again .............. as plans
for the construction of classic airships in the Netherlands have been
announced by Rigid Airship Design NV consortium. Work on the huge assembly
hanger at Lelystad, Netherlands, will begin in September. The consortium
believes there will be a market over the next 20 years for at least 1,000
airships to carry both passengers & freight. The first two 550 ft.
airships to be constructed for American interests by 2001 will be rigid,
incorporating a stiff cage within which the "envelope" divided
into a number of separate gas compartments, known as cells. The new ships
will be 90 ft. in diameter with a payload of approximately 30 tons, a
maximum speed of 148 kilometers per hour, an operating radius of 20,000
kilometers and a cruising period of 20 days. The cost is US$30M.
- Goodwill Mission For UPS ........... as the express
carrier is helping Zoo Atlanta realize its 10-year quest to bring giant
pandas to the people of Georgia by airlifting a pair of the rare animals
from Beijing this autumn. The company also will provide logistical support
and ground transportation to take the pandas to their new home once they
arrive in the United States. In addition, The UPS Foundation, the charitable
arm of the company, will donate US$625,000 to the zoo over the next 5 years
to maintain its new state-of-the-art panda facility. The giant pandas -
currently at the Chengdu Research Base of Giant Panda Breeding in Chengdu,
China - will remain at Zoo Atlanta on a 10-year loan. Only 2 other zoos in
the U.S., the National Zoo in Washington D.C. & the San Diego Zoo,
currently house giant pandas.
- Volume ............ as Dragonair had a record total cargo
uplift in March of 5,045 tons, surpassing the previous monthly high of 4,662
tons in December 1998. For KLM, its cargo traffic was up by 10% in the 12
months from April 1998 to April 1999, as capacity increased 7% and its cargo
load factor rose from 64% to 66.2%. KLM increased cargo traffic growth for
its Asia Pacific routes (up 23%), Middle East and South Asia (up 13%) &
North America (up 4%), on revenue cargo ton-Kms of 326 million, up 10%.
- Bulwinke Vows To Revenge KLM Flying Squirrel Killings
.............. as public outrage caused KLM Royal Dutch Airlines to
apologize last month for using a shredding machine to kill 440 Chinese
squirrels which flew illegally to the Netherlands. KLM called the slaughter
an unethical mistake, but said it had little choice after failing to find a
new home for the furry rodents, which arrived from China without proper
documentation en route to a collector in Athens, Greece. In a statement, the
airline said it ``made a grave mistake on ethical grounds'' when it killed
the squirrels, and said it deserved criticism from the public & animal
rights groups. The employee responsible for the slaughter has been ordered
to stay home pending an investigation. KLM said it would no longer accept
shipments of animals from China and was considering stopping all transports
of exotic animals. The squirrels were killed instantly by being dropped --
while apparently still alive -- into a shredder used in the commercial
poultry industry and recommended by the government for animal disposal. ``We
absolutely don't find this normal,'' said the De Meern Foundation for
Squirrel Refuge. ``It's simply absurd,'' she said. ``Just the fact that they
killed them makes me nauseous, let alone how they did it.'' Despite repeated
requests from KLM, the Beijing exporter who shipped the squirrels refused to
take them back. The squirrels' brief stay at an animal detention center at
Amsterdam's Schiphol Airport was disrupted when a large number of the
animals escaped, scurrying onto the runway and causing some panic among
baggage handlers. Nearly all the escapees were believed to have been
recaptured in time for shredding.
- KLM's Next Problem Is For The Birds ............ as the
shredded Chinese squirrel debacle led to suspension of rodent, reptile &
amphibian shipments, a new problem arose this month. Now the company has
announced that it has added bird shipments to the ban. The measure was taken
immediately after an incident at Amsterdam's Schiphol airport where 226
birds in a consignment of 1,648 canaries, finches & weavers from
Johannesburg were found to have died on the flight. The consignor in Africa
had not packaged the birds in accordance with the IATA Live Animals
Regulations. KLM has suspended further transports of all species of birds
since it is impossible to exercise proper inspection of packaging and
content on acceptance. KLM is awaiting the outcome of talks with government
authorities & animal welfare organizations before making a definite
decision whether to resume bird & squirrel shipments. All human
passengers are advised to be properly packaged before taking a KLM flight.
- New FMC Rules & Service Contract Information
......... get the details on line. http://www.cargolaw.com/ocean%26nvocc.html.htm
- Participate In The Survey ............ as the Maine
Maritime Academy is conducting a survey regarding the likely impacts &
effects of the Ocean Shipping Reform Act, passed in 1998, and taking effect
this month. To participate in the survey, you need to be involved with liner
Shipping, either or both import or export, but touching the USA. Responses
are being solicited from Shippers, Carriers & Intermediaries. http://www.conconnect.com/surveycover.htm
- Loss of Carrier Immunity? ................ as House
Judiciary Committee chairman Henry Hyde will retain the threat of repealing
ocean carriers' antitrust immunity, the legislator said in a letter to U.S.
Federal Maritime Commission chairman Hal Creel last week. The letter was
sent shortly after Hyde completed hearings which focused on alleged ocean
carrier abuses in the inbound transpacific trade. Hyde says he is still
skeptical as to whether antitrust immunity contributes to the well-being of
the shipping industry. "Ultimately, my judgment of any potential
legislation (to repeal antitrust immunity) will rest on the (carriers')
record as it develops under OSRA," he said. The U.S. Congress Judiciary
Committee has begun hearings on the antitrust immunity aspects of the Ocean
Shipping Reform Act, and is certain to focus on alleged malpractices by
transpacific ocean carriers during last year's busy shipping season. The
Committee is reviewing the record compiled by the U.S. Federal Maritime
Commission regarding the behavior of the carriers in the Asia/U.S. trade
between July & November 1998.
- Next Incarnation Of Harbor Tax Previewed ............ as
the U.S. government has sent advanced copies of the new harbor maintenance
fee proposal to the port industry & congressional committees. The
proposal would raise almost US$1B a year for port projects, by imposing a
new tax on vessel operators. The proposal was drawn up to replace the Harbor
Maintenance Tax which was declared unconstitutional by the U.S. Supreme
Court in 1997.
- Merck Tapped For FMC .......... as Senate Majority Leader
Trent Lott & Sen. John McCain, R-Ariz., have asked President Clinton to
nominate Charleston maritime attorney Antony M. Merck, 55, to replace Ming
Hsu on the Federal Maritime Commission. Merck has represented ship owners
and P & I insurance clients in litigation and matters involving personal
injury, cargo damage, charter disputes, bills of lading, contracts of
carriage and affreightment, immigration, collision and international
- P & O Nedlloyd Takes Top Honors ................ as
it has won the prestigious "Shipping Line of the Year" for 1998 at
an industry awards ceremony jointly sponsored by Lloyd's Loading List &
Freightliner. The announcement was made at the Cafe Royal Liner Awards
ceremony in London. The award is based upon the nomination of the lines by
customers within the UK. They take into consideration the product, the
quality of sales & customer service provided, as well as the
contribution made by the shipping line to the industry in general. P&O
Nedlloyd also won a Customer Service Award for its efforts in the African
trade, and a number of individual awards for best schedule reliability or
transit times awards on various trade lanes.
- But The EU Says Monopoly is Fair ......... as the
European Commission has adopted a decision formally exempting from European
Competition laws the agreements concluded within the Int'l Group of
Protection & Indemnity Clubs. The Int'l Group is a worldwide association
of P&I marine insurers. The P&I Clubs' exemption is granted for 10
years. The EC said that the P&I Clubs have substantially amended the
agreements "to increase competition in the maritime insurance
- EU Bans The Dead ........... as the Europe Asia Trade
Agreement (EATA), a pact designed to boost shipping prices by reducing
capacity, has been banned by the European Commission (EC). However, the EATA
pact was dissolved by its members in September 1997. The EC said that it
does not allow deals in which shipping associations act to inflate prices by
reducing capacity. The purpose of the EATA was to increase prices by
establishing a capacity management program concerning scheduled maritime
transport services for the carriage containers from North Europe to the Far
- Not Following The Tariff - The Results .......... as The
Federal Maritime Commission has reached settlements with 10 ocean carriers,
non-vessel-operating common carriers and freight forwarders on fines
totaling US$2.9M for alleged violations of the 1984 Shipping Act. Chile's
Compania Sud Americana de Vapores (CSAV) was hit the hardest, US$1.85M, for
allegedly giving illegal refunds or rebates to shippers, overcompensating
freight forwarders & engaging in service contract malpractices.
Mediterranean Shipping Co. agreed to pay US$360,000 for allegedly giving
shippers illegal rebates in the U.S./South America trade. Miami-based NVOs
Mercator Shipping Ltd. & Eagle Transfer Inc. were fined US$200,000 and
US$150,000, respectively, for allegedly receiving rebates and other rate
concessions. Other companies fined and the amounts are: Orient Express
Container Co., a Taipei, Taiwan NVO, US$90,000; China Interocean Transport
& affiliate, Sino-Am Marine Co., US$70,000; Gardena, Calif.-based NVO
American Commercial Transport, $65,000; Miami-based NVOs A&M Independent
Line and Freight Line of the Americas Inc., US$50,000 apiece; and Metro
Freight Services Inc., an Inwood, N.Y.-based forwarder, US$15,000. Total:
- DCL & Maersk Next? ............. as the FMC has
opened investigations into alleged shipping-act violations committed by
Maersk Line and Direct Container Line, an NVOCC at Carson, CA. The FMC said
it has evidence that Maersk paid illegal rebates and made other freight
concessions to several customers, including NVOs, covering "hundreds of
shipments" between the Pacific and South America from 1996 to 1998. The
commission alleges that Maersk collaborated with its customers over
commodity and measurement misdeclarations so the shippers could benefit from
"very substantial freight savings to which they were not
entitled," the FMC said. The FMC is also investigating charges that
Direct Container Line received rebates, freight-rate concessions and
less-than-applicable tariff & service contract rates from one or more
ocean carriers for cargo moving from the U.S. to Chile, Peru &
destinations on the East Coast of South America after October 1994. The FMC
said it will issue final decisions in both cases by August 18, 2000.
- Shipco Jumps NAAA Ship ........... as the neutral NVOCC
has resigned from the North Atlantic Alliance Assn., effective from May 1.
Introduction of the Ocean Shipping Reform Act (OSRA), which also came into
effect on May 1, means that the individual negotiation of global contracts
between a carrier and an NVOCC becomes a reality, a spokesman said. "We
feel that, in the post-May 1 environment, a fast decision making process is
a necessity and this can be best realized as one single entity, rather than
being one of several members in an association," the spokesman
concluded. Meanwhile, Joseph Saggese has been appointed executive director
of the NAAA, the 34 member NVOCC group.
- Grand Alliance Discussions Stalled ............ as talks
on cooperation by the Grand Alliance, Sea-Land & Maersk on their
northern Europe/U.S. & northern Europe/Canada routes are on hold. The
carriers have been discussing ways to integrate their transatlantic services
for the past 6 months, but no more meetings are currently planned. Involved
were Hapag-Lloyd, P&O Nedlloyd, OOCL, NYK, Maersk, Sea-Land and,
indirectly, their transatlantic partners TMM, Lykes, Canada Maritime &
Cast. During earlier talks, the lines could not agree on whether the AEX
& PAX transatlantic services of the Grand Alliance would call at the
Howland Hook terminal operated by OOCL in New York or at what price P&O
Nedlloyd, OOCL, Sea-Land & Maersk would sell each other slots.
- Sea-Land Backs From Europe - South America Trade
............ as the U.S. carrier is withdrawing, saying its investment on
that route can be better used on the carrier's core services. Sea-Land has
operated weekly services to both the East & West coasts of South America
from Europe through its alliance with Maersk.
- Maersk At The Horn ........... as the European Commission
has approved the acquisition of sole control by Maersk of Safmarine
Container Lines (SCL). SCL is the liner business of Safmarine, which is part
of the South African group Safren Ltd. SCL is a carrier mainly active on
- Maersk & Sea-Land Lurking Off The East Coast
............. as the carriers have been looking for a new east coast
container hub. They have decided to stay where they are now. The two
carriers issued a joint statement this month, accepting a facilities
proposal from of the Port of Authority of New York & New Jersey, along
with a New Jersey plan to provide US$120M in state funds, as a final offer.
However, New York Governor George Pataki rejected the deal and refused to
approve any offer until New Jersey, as a separate issue, would agree to a
restructuring of the Port Authority, that would give New York control of a
greater share of the agency's revenue. The feud had put most other business
at the agency on hold, including US$1.7B in expansion projects at Newark
& New York airports.
- FastPort At The Other End ......... as FastShip, Inc. has
announced an agreement with MAINCO to operate the state-of-the art FastShip
terminal in Cherbourg, France. The terminal will serve as the exclusive
European port of entry for FastShip's new high-speed trans-Atlantic
transportation network. FastShip's North American port of entry will be the
Port of Philadelphia and Camden. FastShip recently announced an agreement
with the Delaware River Port Authority to finance the construction of a new
marine shipping terminal at a cost of up to US$74.8M. The Delaware River
Port Authority is also an equity investor in the project. FastShip will
create a premium, time-definite, 7-day, door-to-door North Atlantic
transportation network. The service will target high-value, time-sensitive
goods, the fastest growing sector of the global freight business.
- Crowley Shuts Lake Charles ......... as Crowley American
Transport says poor businesses has forced it to shut its terminal in Lake
Charles, Louisiana. The terminal was used to ship goods to & from Puerto
Rico, but Crowley says it will continue to service Puerto Rico from its
terminal at Jacksonville, Florida. Gulf shippers will be linked intermodally
to Jacksonville. The company ran its Lake Charles terminal since 1980,
employing 100 staff. Crowley says that it was forced to close the 28-acre
terminal because of falling rates for ocean freight. Crowley Marine
Transport's break-bulk service between the Gulf, Latin America & the
Caribbean is not affected.
- Dr. C C Chen Casts His Lot .......... as he has become
the main investor in San Francisco-based Trans Pacific Lines. Dr Chen is the
founder and major shareholder in intra-Asia liner company, Wan Hai Lines. Dr
Chen earlier bought out the 49% holding of Wan Hai Lines in the multipurpose
transpacific liner operator, Madrigal-Wan Hai Lines Corp. To reflect this
change, MWHL will be renamed Madrigal Pacific Carriers.
- L.A. & Seattle Are Cool ........... as Port of
Seattle topped the nation as the largest center for refrigerated exports
last year. According to the U.S. Bureau of the Census, the port handled
813,059 metric tons of reefer exports in 1998, followed by the Port of
Oakland with 794,857 metric tons and the Port of Long Beach with 565,181
metric tons. The Port of Los Angeles ranked 1st in total refrigerated cargo
trade, handling 872,582 metric tons of cold commodities. The Port of Seattle
was 2nd, with 871,680 metric tons of refrigerated two-way trade. The Port of
Long Beach came in 3rd with 845,338 metric tons.
- Dropping Thai Boom ........... as United Thai Shipping
Corp. and the state-owned Express Transportation have had their operating
licenses revoked by Thailand's Finance Ministry. Both companies were found
to be operating without any ships, mainly chartering cargo space on other
- Y2K No Problem On Singapore Waters ............. as the
Associated Press reports that Singapore's seaport is prepared for a number
of nightmare scenarios that could arise from the Year 2000 computer bug on
Jan. 1, 2000. One fear was that the failure of computerized steering systems
in the 1,000 ships plying Singapore waters at any given time could lead to
collisions, The Straits Times newspaper said. Another was that the port's
high-tech cranes -- which handle more than 10 million containers a year --
could grind to a halt. But Singapore has been ready to fend off such
catastrophes since the beginning of this year, according to the Maritime and
Port Authority. Motor launches with expert captains will be ready to race
out to ships with Y2K system problems, and tugboats will stand by to guide
the vessels. Computer systems for running the port itself have been
rigorously tested, and programs that might have caused Y2K problems have
been changed. ``Anything that wasn't up to scratch was either upgraded or
replaced,'' Goh Kwong Heng, assistant director of MPA's information
technology division, told the newspaper. The government in highly modernized
Singapore has been meticulously preparing the island republic's utilities,
airport, financial systems and other vital areas to avoid potential Y2K
- New Customs Regulations For Used Vehicle Exports
........... as effective on May 6, US Customs will no longer accept
notarized copies of the titles for export customs clearance of used motor
vehicles. U.S. Customs will now require the actual original title of the
vehicle or a certified copy of the title. The certified copy of the title
has to be certified by a Government authority that it is an authentic copy
of the original title. In the past customs has accepted 3 (or 5) notarized
copies but due to their belief that some of these notarized copies may be
easily forged they want to have the original's. Additional information about
this can be obtained from the Dept. of the Treasury of the Federal Register
of April 6, 1999, or from the Center for Int'l Trade. http://www.centretrade.com
- Taking A Bite Out Of Pirates ............ as the newly
formed Satellites Maritime Security (SMS) in Rotterdam is to offer
protection against pirates to ships. SMS says that it will have 225 Dutch
marines and antiterrorism experts at its disposal who are willing to leave
the Dutch army. The rate is about US$2,500 per person per day. SMS intends
to establish branches in Curacao, in Gambia &the Philippines. SMS
closely cooperates with the International Maritime Organization (IMO) and
the Int'l Maritime Bureau (IMB), which forms part of the Int'l Chamber of
- PIRATES: The Escapees Are Very Lucky ......... as 21 crew
are lucky to be alive after surviving for 6 days on tiny swimming pool-style
inflatable rafts in the shark-infested waters off the Thai & Burmese
coasts last month. The entire 21-strong crew of the 8,100 dwt general cargo
ship M/V Marine Master were ordered off their vessel by armed pirates on
March 21 and picked up by passing Thai fishermen on March 27. News of the
incident was only released last week by the specialist anti-maritime crime
body ICC-International Maritime Bureau (IMB). The pirates had brought along
9 tiny, flimsy plastic rafts into which they cast the crew who were given
only a small amount of food. Most of rafts sank quite quickly while the food
ran out in two days. By the time of the rescue the men were in a desperate
state, clustered around the one raft still afloat. The pirates are thought
to have been either Thai or Burmese speakers. They wore masks and some were
dressed in military uniforms & were armed with automatic weapons and
pistols. The Panamanian-flag vessel had been on a voyage from Nantong in
China to Calcutta with a cargo of bagged soda ash. It is owned by Taiwanese
interests and was on charter to a South Korean company. The 1978-built ship
had a black hull, dark red bottom & white superstructure. However, the
IMB warns that the vessel's name, particulars and flag could have been
changed. IMB sources believe the ship will be used for scams against
charterers in which so-called "phantom ships" with false
identities load cargo and disappear. By any measure, matters are getting
- Port Heineken? ............ as the Dutch brewery
considers the construction of an inland port close to its Dutch plant at
Zoeterwoude. The brewer does not think here in the first place of the
conveyance of beer, but rather of the supply of raw materials &
packaging by barge.
- APL History Exhibit On Tour ............ as a historical
exhibit commemorating the 150th anniversary of APL, the oldest continuously
operating shipping firm in America, will be displayed at various Los
Angeles-area locations. May 17 through June 1 (including 5/22 Maritime Day
Ceremony) -- Los Angeles Maritime Museum, Berth 84 (Foot of 6th Street), San
Pedro, CA 90731, tel. 310-548-7618 June 3 -- Trade Tech '99, Hilton Los
Angeles Airport Hotel, California Ball Room, 5711 West Century Boulevard,
Los Angeles, CA 90045, tel. 310-410-4000, ext. 6199
- Don't Miss Oakland Port Fest '99 ............. as how
often does one have the chance to see a dredging demonstration, a
world-renowned sculptor transform scrap logs into magnificent art pieces,
taste food from around the world, witness awe-inspiring aerial acts and hear
the kind of music that stirs the soul and lifts the spirit? The action takes
place at the Port of Oakland's PortFest '99, Saturday, May 22, from 11:00
a.m. to 5:00 p.m. in Jack London Square at the foot of Broadway. The
festival is free & open to the public. http://www.portofoakland.com
- This Month In U.S. Navy History ........... as on May 10,
1960, the submarine USS Triton (SSRN 586) completed an 84 day-36,014 mile
circumnavigation of the world, submerged.
Here are our suggested world wide web sites of the week for your business,
your information and your amusement ...............
New FMC Rules & Service Contract Information
Multicarrier Ocean Sailing Schedules ............. retrieve
sailing schedules from ISA carriers in an Excel format, and save this
information for your personal analysis and reference.
UPS & The "Bubbles" Strategy ............ On
March 9, 1999 the Senate Judiciary Committee held a hearing regarding S-577
about juveniles illegally ordering alcoholic beverages over the Internet and
having them delivered by United Parcel Service to their homes. 1 (800) 4
Champagne believes the committee's investigation should also focus on the
pivotal role which UPS plays regarding an additional illegal activity involving
deliveries of parcels containing alcoholic beverages. Read the whole story:
Freight Finder ........... load matching in North America
OOCL's Tariff Rates ......... the web is buzzing over this
new service. Get the contract terms.
Port of Corpus Christi ........... the new site.
Consolidated Freightways .............. a web-based
interactive service that allows real time, 2-way dialogue with customers. CF
staff began using the technology this month to converse with online customers
who visit the company's website.
Cargo Carrier Ltd .......... their new web site
Viking Freight ............ with newly added Advanced
Tracing and electronic Management Reports.
Hutchison Port Holdings ........... a new site with
information on its operations in 17 ports.
TRISM ........ in addition to customer service, this
trucking company site has a Drivers Domain which gives drivers & their
families an easy way to send and receive e-mail while on the road. It also
features an Events Calendar, road condition updates, etc.
U.S. Jet - new site from the logistics company, on which it
will concentrate the company operations.
Haushahn's "VIAWARE" Suite of Supply Chain Xecution
Software ..............includes warehouse management software,
transportation management software, yard management software, order management
software, automation management software &decision support software. These
software products create a total supply chain execution suite.
Center for Int'l Trade.
The U.S. Code of Federal Regulations .......all 50 Titles on
CD-ROM. Features include no "time locks," 5,000 + in-line graphics.
Travel Agent University - On Line
Asia Research ......... keeping track of the threats.
Current feature on North Korean infiltration.
Search For Gold On The Sailing Vessel "Republic"
......... ship wreck of the California Gold Rush!
Bureau of Land Management Wild Horse Adoption ........ an
older form of transportation, but it's free!
ICCAS '99 ............ the premier conference on
shipbuilding information technology, at the Massachusetts Institute of
Technology, June 7-11, 1999.
WorldMerge E-Mail Software ......... for communicating with
Forte Software ......... Kintetsu World Express has deployed
its suite of integrated e-business customer service applications which support
4,200 internal and thousands of external users, will eventually replace 43
separate legacy systems operating at the company's 10 IT departments worldwide.
- Singapore Warns: "Chinese playing with fire."
- Beijing Hints WTO Membership as Reparations
-- by Warren S. Levine, for The Cargo Letter
SEATTLE, May 15 - Amidst trying to sort out the reason for the accidental
bombing of the Chinese Embassy in Belgrade last week, the United States and its
NATO allies are being bombarded by the Beijing government's giant propaganda
Friday, President Clinton finally got through to Chinese President Jiang
Zemin, who had previously refused to take his calls. The two spoke for thirty
Earlier, Secretary of State Madeleine Albright had written a formal letter to
Tang Jiaxuan, the Chinese Foreign Minister, in which she expressed regret for
the loss of life.
In the face of protests, many violent, in some twenty Chinese cities, she
also asked the Chinese government to provide security at US Embassies and
Demonstrators laid siege on the US Embassy in Beijing, trapping Ambassador
James Sasser and others for four days.
PLA and local police stood by as the crowd threw stones, paint bombs and
other debris at a number of US diplomatic buildings. CNN broadcast a picture of
a riot policeman handing a stone to a demonstrator, who then threw it at the
Sources inside China reported that local police called private bus operators
to help shuttle demonstrators from various points to demonstration sites. There
were signs on many streets indicating where shuttle stops and demonstrations
A number of Chinese protesters were seen carrying signs with a Nike
"swoosh" with a red slash through it, in apparent ignorance of where
those Nikes are made. Other signs carried slogans like "Patriots, Don't
Drink Coca Cola."
American reaction included outrage at the organized and violent
demonstrations and China's crackdown on demonstrations in the past decade.
Less than three weeks away, June 4th is the tenth anniversary of the
Tiananmen Square massacre, and Beijing has taken great steps to ensure that
similar demonstrations aren't staged. Tiananmen Square itself is closed for
replacement of the stone tiles in preparation for the fiftieth anniversary of
the People's Republic of China, and what promises to be the world's largest
military parade, on October 1st.
Beijing floated a suggestion that WTO membership would be suitable payback
for the embassy bombing. The action was not appreciated in Hong Kong, where
Financial Secretary Donald Tsang told reporters, "Quite clearly it will
increase uncertainty … on the WTO accession."
Japan & Singapore stood by the United States, the latter almost a
surprise, as Singapore's government has close ties to Beijing. But most of the
rest of Asia condemned the US & NATO.
The Straits Times, a Singapore daily, ran an editorial which stated "The
Chinese authorities are playing with fire, slowing anti-Americanism to run riot
in this fashion." The editorial also faulted China for refusing to report
American apologies and for encouraging violence.
But they also warned, "Nationalism is the single most powerful force in
China…. (The US) should take care not to drive China into a corner…."
Singapore's socialist government is known to be close to Beijing in theory,
albeit not in practice. Their government has been described as
"Market-Leninist". The population of the technical capital of Asia is
predominantly of Chinese origin.
The US State Department issued a Travel Warning for China earlier in the
week, but later replaced it with a Public Announcement as the demonstrations
subsided. The announcement urged US citizens in China to review their security
practices and to stay away from demonstrations.
- Understanding The Warsaw Convention
-- by Cameron W. Roberts, Esq. for The Cargo Letter
LAX - 16 June, 1999 -- As previously reported in The Cargo Letter the U.S.
ratified Montreal Protocol 4 (MP4), effective March 4, 1999. By ratifying MP4,
the U.S. has also adopted an earlier "amendment" to the original
Warsaw Convention (Warsaw), commonly referred to as the Hague Protocol (Hague).
In simpler terms, our law controlling Int'l air waybills and air transportation
has undergone a two-step change. First, the original Warsaw language (1929) is
amended by the Hague, second by MP4.
With this framework in mind, not all countries are signatories to the same
version of the Warsaw treaty. Some countries are signatories only to unamended
Warsaw, for example Japan,* and some are signatories to Warsaw as amended by
Hague, Federal Republic of Germany* and some are signatories to Warsaw amended
by Hague and by MP4, such as the United States*. If different versions control,
depending on the version of the treaty is used, then the results will likely
differ from country to country. For example, Warsaw does not deal with servants
or agents of the carrier. However, Hague provides that if an action is brought
against a servant or agent of the carrier arising out of damages to which the
Convention relates, and if such servant or agent proves that he acted within the
scope of his employment he is entitled to the limits of liability of the
carrier. In this example, a ground handling agent could limit his liability
under Hague, but not under Warsaw.
In the case of air cargo damage, one of the most important questions is the
application of unamended Warsaw Articles 8 & 9, which requires air carriers
to list certain air waybill particulars or loses the ability to limit liability.
If both the origin and destination country have signed the same version of the
treaty, no problem, the result is clear. But in the case of different treaty
versions what happens?
According to a recent U.S. District Court case involving damage to cargo, if
one country is a signatory to Hague and the other unamended Warsaw, then the
treaty only controls when the two versions are in concordance. Chubb v. Asiana,
1998 WL 647185 (SDNY). In that case, the shipper wanted full value for the cargo
and claimed that the air carrier could not limit its liability to US$9.07 per
lb., due to a defect in the air waybill, a violation of Article 8 & 9.
However, the court ruled that because the treaties signed by the origin country
and destination country had different versions of Article 8 & 9, there was
no loss of liability protection. Simply put the court threw out the portions of
the treaty where there was no "agreement" between the versions. Given
this ruling, it would appear that air carriers will be hard pressed to lose
their limits on liability. However, courts in other countries with unamended
Warsaw may be less forgiving, finding that deviation from Warsaw's strict
guidelines may result in a full value damage award, with no limitation
protection for you.
* According to Sorkin, Goods in Transit & FIATA letter to Consultants
U.S. v. Camargo
U.S. 9th Circuit Court of Appeals
Decided 13 May 1999
Holding: Border Patrol agents can consider ethnicity when they make traffic
stops, the court ruled in a case involving two Hispanic men who turned their
cars around to avoid a checkpoint. The ruling comes at a time when the use
ethnic background as the basis for traffic stops is receiving increasing
attention across the country. In a 2-1 ruling, the court upheld the detention of
two Hispanic men stopped 50 miles inside the U.S. after they tried to avoid a
highway checkpoint. The court said it was appropriate that among the things the
officers considered in making the stop was the fact the men turned around, and
that they were Hispanic. Writing for the majority, visiting U.S. District Judge
Frank C. Damrell of Fresno pointed to a Supreme Court decision in a 1975 case,
in which the court listed a number of things the police could consider in such
an instance. Among them were the character of the area; nearness to the border;
traffic patterns; previous smuggling problems in the area, the officer's
experience; and the behavior of the passengers. After a motorist told
authorities that two cars with Mexican plates turned around a mile from the
checkpoint, they were stopped. Agents searched the cars of German Espinoza
Montero-Camargo and Lorenzo Sanchez-Guillen and found two large bags of
marijuana and a .32-caliber pistol. The men were charged.
Bank of America v. Fishing Vessel Owners & Marine Ways Inc.
Holding: The U.S. 9th Circuit Court of Appeal held that the district court
did not err in concluding that the Bank of America had priority to sell at
auction the vessel and its fishing rights. The district court confirmed the sale
and determined that the Bank, which had recorded two preferred ship mortgages
before Fishing Vessel Owners ("FVO") had completed work on the vessel
that gave rise to a necessaries lien, as well as a series of mortgages
thereafter, had priority. This priority was allowed to the extent of the
outstanding balance on the indebtedness secured by both of the earlier mortgages
as of the time FVO's lien arose. FVO appealed on two issues: (1) whether the two
earlier mortgages should have been consolidated and treated as replaced and
renewed and (2) whether partial priority should have been accorded the
outstanding balance on those mortgages in the face of subsequent mortgages that
substantially exceeded the amount of the prior debt. The 9th Circuit concluded
that the mortgages recorded before the necessaries lien arose were not
extinguished and therefore take priority at least to the extent that they
remained unpaid when FVO's lien was perfected. AFFIRMED. Read the full decision:
United States v. Haggar Apparel Co.
U.S. Supreme Court
TRADE DUTY EXEMPTION
Holding: The United States Supreme Court reversed the Federal Circuit (7-2;
opinion by Kennedy; partial dissent by Stevens and Ginsburg) and remanded by
holding that that statute governing partial duty exemption for garments shipped
to this country from an assembly plant in another country was ambiguous with
respect to whether Haggar's permapressing process was "incidental to the
assembly process" (19 USC s 1202), and therefore, under the analysis of
Chevron v. National Defense Council (467 US 837), the Court needed to examine
and possibly defer to regulations adopted by the Treasury Department pursuant to
the statute. Those regulations specifically exclude permapressing from a partial
duty exemption (19 CFR s 10.16(c) (4)). The Court, however, remanded to the
Federal Circuit to determine if this regulation was a reasonable interpretation
of the statutory phrase under the Chevron analysis. The dissenters would not
have remanded. Full text: http://supct.law.cornell.edu/supct/supct.April.1999.html
Newman v. American Airlines, Inc.
No. 97-55115 (05/04/99)
9th Circuit Court of Appeal
CIVIL PROCEDURE/SUMMARY JUDGMENT
Holding: The 9th Circuit found Newman presented enough evidence to draw into
question whether American acted reasonably in refusing her passage. Accordingly,
the district court erred in granting summary judgment in favor of American on
Newman's claim under the Air Carrier Access Act of 1986, 49 U.S.C. sec. 41705.
Facts: Newman appealed the district court's decision to grant summary
judgment in favor of American Airlines, Inc. on her complaint that American
discriminated against her due to her disabilities. Newman's complaint stemmed
from her attempt to fly round-trip from San Diego to Long Island on an American
flight. She flew from San Diego to Long Island without incident. However, on her
attempted return flight, American denied Newman passage until she could provide
a certificate from her doctor stating that she was stable for flight. REVERSED
and REMANDED. http://laws.findlaw.com/9th/9755115.html
Los Angeles World Airports (LAWA) has requested more than US$2.52B in new
state funds over the next eight years for 28 different ground-access-improvement
projects near three LAWA-operated airports in the Los Angeles region.
The proposed projects, submitted in a list to the California Transportation
Commission, are concentrated near Los Angeles International Airport (LAX).
Additional funding is also requested for two major projects near Ontario
International Airport and for a major airport-access project at Palmdale
The improvements are for both on- and off-airport. Construction would begin
between the years 2000 & 2008.
The costs of the projects range from US$3M each for road improvements to the
Sepulveda Boulevard tunnel and La Tijera Boulevard, to US$575M for a
Metropolitan Transit Authority (MTA) Green Line extension into LAX.
"As all our airports continue to grow, we are committed to reducing
traffic congestion in their vicinity and improving ground access through
multiperson vehicles," said John J. Agoglia, president of the Los Angeles
Board of Airport Commissioners.
"We are pleased that the state legislature is considering a long-term
transportation-infrastructure program," said Agoglia. "The proposed
projects seek to create a balance between near- and long-term on-airport
improvements and enhancements to the regional transportation system."
The list of projects submitted by LAWA will be incorporated in the 10-year
needs assessment of the state's transportation system in accordance with Senate
Resolution 8 (SR 8), authored by Senate President Pro Tem John Burton.
Ultimately, the projects may be included in a US$16B general-obligation-bond
measure proposed by Burton that is expected to go before the voters in 2000.
In last year's annual report to the legislature, the California
Transportation Commission recognized "the importance of California's
international airports and LAX in particular to the state's economy and our
future economic growth."
The report stated that supplemental funding that is "dedicated to
airport-access and airport-system capacity improvements is needed during this
period of high demand for airport-access improvements."
In a letter to the Commission sent last month, LAWA strongly supported
accelerating the construction of High Occupancy Vehicle (HOV) lanes around LAX
on the I-405, the I-105 and Route 90. An abandoned railroad track northeast of
the airport may also provide additional HOV access, as well as a potential cargo
connection to both the existing and proposed new cargo areas.
Among the transportation improvement projects requested around LAX are:
- Construction of a new "expressway" to provide direct access
between I-405 and the airport-terminal areas; -- Upgrading Arbor Vitae
Street to conform to major highway standards; -- Improvement of Aviation
Boulevard to facilitate access to cargo areas;
- Connection between the proposed I-405 HOV lane with the existing I-105 HOV
lane; -- Expansion of the Van Nuys FlyAway bus terminal and the addition of
3 to 5 new remote terminals; and
- Adding a clean-fuel-burning "people mover" for a new passenger
terminal to be connected to MTA's Green Line.
Among the proposed on-airport access improvements at LAX are:
- A new access road from Century Boulevard to service a renovated cargo
area; -- An additional travel lane in front of the international terminal on
the upper and lower levels; and
- Construction of an on-airport traffic-management center to coordinate
signals and control electronic message signs. Funding for projects around
Ontario Airport include:
- Widening the westerly portion of Airport Drive to three lanes in each
- Improving the southwest access to the airport by constructing a grade
separation at Grove Avenue and the Union Pacific railroad tracks. Funding
for a ground-access project at Palmdale Airport entails:
- Extending State Route 14 through the city of Palmdale directly into the
The Associated Press recently visited our industry leader as the skies over
Memphis glowed with the lights of Federal Express jets, and a string of
mechanical fireflies headed to and from the delivery company's national
The planes touch down one after another on 3 runways. Crews wearing knee pads
& back braces rush to unload them, and within 20 minutes roughly 1.3 million
documents and boxes are sent into a maze of human & computerized sorters.
Three hours later, the jets roar back into the air, their cargo rerouted to its
The rush of activity is a far cry from the company's first night in 1973,
when a fleet of 25 planes handled 186 packages. Still, Fred Smith, founder of
Federal Express, the world's No. 1 air delivery business, says the industry is
``just now reaching its growth stride.''
The ripples from such growth will be felt not only through the rest of the
economy, but also the aviation industry. Skies that are already crowded in the
daytime are becoming more so at night, when cargo jets make their mad dash to
hubs like Memphis or Louisville, Ky., where the air operation for United Parcel
Service is based.
Pilots are pushing the government to require the installation of collision
avoidance equipment in cargo planes, just as it did for commercial airliners.
The traffic is also creating a heavy demand for flight crews. Young pilots once
destined to spend years skipping from community to community in puddle jumpers
are now being plucked to fly jets full of packages around the globe.
That's creating a supply problem for the passenger airlines, whose heavy
recruiting has already taken a toll on the military's supply of pilots.
The U.S. express delivery business -- as the time-guaranteed delivery of
packages and documents is known -- is roughly a $23 billion industry. FedEx --
the official name today for Federal Express -- expects the business to more than
quadruple to $100 billion within 20 years.
FedEx and other players such as United Parcel Service, Airborne Express &
DHL expect even larger growth overseas, with the total marketplace perhaps
reaching $250 billion by 2020.
What's fueling the growth is a change in how companies conduct their
business. Because it is increasingly easy to ship goods rapidly, and since
companies now guarantee delivery times, businesses are less likely to keep
expensive inventories on site. They are more interested in ordering products
just in time for delivery to their customers. The parts for the average Dell
computer, for example, spend little more than 8 hours at the company's Texas
manufacturing plant before they are assembled and shipped off to the buyer. This
business transformation has turned airplanes & trucks into mobile
"What's happened is that in the '70s and '80s, everyone considered air
to be the premium spread of the world, sort of the butter. That is true, but
what wasn't taken into account -- and what is being considered now -- is the
savings that can create," said Steve Alterman, spokesman for the Cargo
Airline Association, a trade group.
With the growth has come challenges. Crowded skies, for example, have
prompted UPS to develop a new collision avoidance system called ADS-B. It allows
pilots to see traffic up to 100 miles away, as well as vehicles on the ground.
UPS is now seeking government approval to install the devices in its fleet.
FedEx, UPS & their competitors also expect they will have to recruit more
heavily as the competition for pilots heightens.
But Tom Weidemeyer, president of UPS Airlines, said the move toward
globalization and the increasing use of electronic commerce such as Internet
shopping spells a bright future for the air delivery industry. The quick, easy
movement of products ``will mean a limitless ability for anybody anywhere to be
a global company,'' Weidemeyer said. ``Amazon.com has already proven that.''
Surface Transportation Board Chairman Linda J. Morgan has announced that the
Board has issued a decision permitting tariffs showing water & joint
motor-water carrier rates in the noncontiguous domestic trade to be filed
Although most carriers are no longer required to do so, water carriers
operating in the noncontiguous domestic trade (involving domestic movements from
or to Alaska, Hawaii, or U.S. territories or possessions such as Puerto Rico and
Guam) still must file public tariffs showing their rates and the joint rates
they establish with motor carriers. Since passage of the ICC Termination Act of
1995, the Board has permitted these carriers to file electronic tariffs through
the Automated Tariff Filing and Information System (ATFI) maintained by the
Federal Maritime Commission (FMC). As a result of the recently enacted Ocean
Shipping Reform Act of 1998, however, the FMC will not be accepting new
electronic tariffs after April 30, 1999. Therefore, in a decision issued on
February 3, 1999, the Board indicated that parties seeking to continue to file
tariffs electronically would need to obtain "special tariff authority"
from the Board (see "Surface Transportation Board News" release No.
99-3, issued February 5, 1999.
A request for such authority was filed by D.X.I. Incorporated (DXI), a tariff
publisher whose software is currently used in the FMC's ATFI system. Under DXI's
proposed system, which several major carriers have apparently agreed to use, DXI
will continue the online tariff data base that it currently maintains for
domestic ocean and joint ocean-motor rates, including rates currently published
in ATFI. DXI will make online (dial-up) access available at no cost from the
Board's offices to all of its tariffs that are filed electronically with the
Board, and DXI will notify the Board on the day of filing (through one or more
electronically submitted transmittal letters) of all tariff changes being filed
with the Board that day. The Board and the public will be able to immediately
access those filings and determine the exact rates and other tariff provisions
that are being proposed by the carriers that participate in the DXI program.
DXI will also provide the Board with a machine readable copy of all changes
to its tariffs, which the Board will retain in its offices. For persons who
desire to have DXI's tariffs available in their own offices, DXI advises the
Board that it offers the public both printed and electronic subscriptions to its
tariffs for a fee.
In granting the special tariff authority sought, the Board noted that the
system that DXI proposes will permit a largely seamless transition from ATFI
tariffs. The Board will continue to permit carriers that do not wish to file
electronically to file printed tariffs, and it will also consider electronic
tariff filing proposals from other filers.
The Board's decision, which becomes effective immediately, was issued on
April 29, 1999 in Electronic Filing of Noncontiguous Domestic Trade Tariffs, STB
Special Tariff Authority No. 6. It is available on the Board's web site at http://www.stb.dot.gov
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