The Cargo Letter

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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 America''.

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 ..........

To post comments or discuss articles, go to our message board or try our new News Server.

The Freight Detective ........

Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel, forwarder/broker attorneys at LAX.

INDEX to The Cargo Letter:

   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


1. The Death of John Myers

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 has passed.

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 Customs Service.

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.

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. Freight Forwarder World Ocean Briefs

OUR "D" Section: FF in Cyberspace

6. The Cargo Letter "Cyber Ports Of Call"

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 your customers.

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.

OUR "E" Section: The Forwarder/Broker World

7. China-US Relations Suffer After Accidental Embassy Bombing

-- 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 machine.

Friday, President Clinton finally got through to Chinese President Jiang Zemin, who had previously refused to take his calls. The two spoke for thirty minutes.

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 Consulates.

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 embassy.

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 were located.

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.

8. Which Article Controls Your Air Cargo?

-- 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 2/99.

9. New U.S. Transport Related Legal Cases

U.S. v. Camargo
U.S. 9th Circuit Court of Appeals
Decided 13 May 1999
Border Enforcement

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.
No. 97-36050
Decided 04/14/99
Maritime Law

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.
No. 97-2044
U.S. Supreme Court

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:

Newman v. American Airlines, Inc.
No. 97-55115 (05/04/99)
9th Circuit Court of Appeal

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.

10. Billions in State Funds Requested for Ground-Access Improvements at Los Angeles Area Airports

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 Regional Airport.

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:

Among the proposed on-airport access improvements at LAX are:

11. A Night At FedEx

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 distribution center.

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 final destination.

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 warehouses.

"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. `` has already proven that.''

12. Surface Transport Board To Allow Electronic Filing

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 electronically.

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

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