The Cargo Letter
THE CARGO LETTER 
Air & Ocean Freight Forwarder - Customs Broker News
17 November 1999
Good Wednesday 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's got more Pirate, Vessel Disaster & Air Loss news this month
than you can handle. Where are the world navies? Where is CNN? The news is quite
grim, but you'll never read about it in the daily newspapers. Don't miss Part 2
of today's edition. Also today, BREAKING NEWS as China wins the WTO bid and
Danzas becomes the world's largest air cargo company. What a month!
Contribute your knowledge, stories & company information ........ by
e-mail to The Cargo Letter. We strive to
bring you useful information which is timely & topical.
Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel,
forwarder/broker attorneys at LAX.
INDEX to The Cargo Letter:
OUR Top Story
1. The Search For M/V Kobe Queen 1
* US$100,000 Reward
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
6. The Cargo Letter Cargo Damage Dispatches
* No. 1 Vessel Disaster Center
OUR "D" Section: FF in Cyberspace
7. The Cargo Letter "Cyber Ports Of Call"
OUR "E" Section: The Forwarder/Broker World
8. The Other Sea - Space Disasters
9. Combating Cargo Crime with Electronic Seals
- US$100,000 Reward For Criminal Ship
More to the story reported to you last month in The
Cargo Letter , there is now a US$100,000 reward for information leading
to the arrest of the Panamanian bulk carrier Kobe Queen I & the recovery of
its cargo. The vessel has now been declared a criminal and is sought by world
governments, including Her Majesty's Customs & Excise. The 1976-built 18,500
dwt vessel left Turkey in June for the Caribbean with a steel cargo worth US$5M.
The ship left Dakar after a short stop on Aug. 3 and was then contacted &
diverted by Odessa-based Babush Marine. Since then both Babush & the ship's
master Yuri Levkovsky have refused to give details of the location or
destination of the Kobe Queen I.
The well known U.S.-based insurance investigator & friend of The Cargo
Letter, Capt. John Alder of New York has joined the Int'l hunt on behalf of
certain cargo interests.
The vessel bunkered at St Vincent, Cape Verde, at the end of Aug. & again
at Lagos over Oct. 18-19. The ship, which dodged an attempted arrest while in
Lagos, left port with supplies & fuel for 6 weeks. Since leaving Lagos, the
vessel has gone incommunicado. Communications from Babush Marine in Odessa have
been sporadic &very unclear, & have now ceased again. Every effort has
been made to spread the word on this matter, through Lloyd's agents, port
authorities, law enforcement, steel brokers & breakerage agents. This type
of criminal activity threatens every charterer, cargo broker, underwriter,
forwarder & shipper.
The investigators are also looking for the ship's owner, a man by the name of
Elias Kellis, who has gone to ground. The ship has a crew of more than 20
Ukrainians & was due for its annual survey by Germanischer Lloyd last month.
Its P &I cover was withdrawn by the American Club during the summer. For
full vessel identification details, see our top story in The
Cargo Letter . Earn a reward of US$100,000 ...... keep looking.
- BREAKING NEWS: "Danzas-AEI"........... as Reuters
confirms that Deutsche Post AG said on Monday that it would offer US$33 per
share for all of U.S. freight firm Air Express Int'l in a deal valued at
US$1.14B. Deutsche Post & AEI said in a joint statement that they had
signed a takeover agreement on Monday. The AEI board of directors &
Deutsche Post's supervisory board have already approved the deal. Deutsche
Post plans to integrate all AEI activities into the Danzas group, its
Switzerland-based freight & logistics division, under the name
The deal gives Deutsche Post a strong position in the U.S. & makes
Danzas the world's leading provider of air cargo services.
Deutsche Post Chairman Klaus Zumwinkel said the group would have total
turnover of about US$29.3B next year following the acquisition.
"Deutsche Post will have the number one position in Europe with its
mail parcels/express and logistics activities as well as a good position in
financial services in the year of its IPO," Zumwinkel said. Deutsche
Post is due to be floated next autumn in what will be one of Europe's
- But Inspector EU Eyes Deutsche Post ........... as the European
Commission is expected to rule early next year on whether Deutsche Post,
Europe's largest post office, and now owner of "Danzas-AEI," has
been using letter monopoly profits to undercut rivals & finance it's
huge acquisition spree. The controversial issue comes at a time when the
German government plans a partial flotation of the state-controlled firm,
and adds to the already long list of disputes between Germany & the EU's
competition watchdog. Other high-profile probes focus on unlimited
guarantees granted to state banks & on fixed book prices, both a long
tradition in Germany. UPS, which has been complaining to the Commission
about Deutsche Post since 1994, believes the EU competition watchdog will
make a ruling early next year. With the new AEI buy, the Deutsche Post group
expects to achieve total sales of about US$29.3B in the year 2000 with some
- Danzas Continues To Absorb ASG .......... as effective Nov. 15,
1999, Danzas Freight (HK) Ltd. has taken over as handling agent for the ASG
group for all Scandinavian, UK & USA traffic to/from Hong Kong. This
development is said "the next logical step" in the acquisition of
the Scandinavian ASG group by Danzas. While ASG Hong Kong will continue to
handle other cargo, all of the above routes will now be controlled by Danzas
Freight (HK) Ltd. Effective Oct. 29, 1999 Danzas & its parent company
Deutsche Post own 78% of the issued equity, and 60.4% of the voting rights
in the Sweden-based forwarding group. Integration is taking place throughout
both organizations. In the USA, only 4 ASG offices retain their independent
identity, the rest having been absorbed into the Danzas USA structure.
- BREAKING NEWS: China Gets WTO ......... as Reuters confirms that
after 6 days of grueling talks, China & the U.S. signed an agreement on
Monday that paves the way for Beijing's entry to the WTO. The accord on
Beijing's entry to the World Trade Organization (WTO) will boost trade &
benefit transport companies in both countries. "We believe that China's
entry to the WTO will stimulate growth in the volume of trade flowing in and
out of China,'' said Eddy Chan, FedEx VP for the mid-Pacific region. Total
U.S. trade with China grew to more than US$85B in 1998, making China the 4th
largest trading partner of the U.S. U.S. & other foreign firms were
confident China would loosen its tight grip on shipping services after its
entry to the WTO, industry officials said. "For shipping services, the
difference will be black and white," said an official at a foreign
shipping agency. Foreign shipping agencies, which help arrange cargo
transport & contract out ships, are not allowed to conduct business
directly now and must use Chinese subcontractors, he said. Industry
officials said the agreement was expected to allow foreign shipping agencies
& Internet providers to set up joint ventures. China still needs
separate agreements with the European Union & other key trading partners
to join the WTO and significant differences remain to be bridged in those
- New Trade Bill Faces Controversy ........... as the U.S. Senate
passed a controversial trade bill this month which included the African
Growth & Opportunity Act, the Caribbean Basin Initiative, and a renewal
of the General System of Preferences (GSP). The bill proposes to lower
tariffs & quotas on products from sub-Saharan African countries, such as
textiles, apparel & footwear. "The textile trade provisions are one
of the key elements of the bill's approach toward generating investment in
the African region," said Robert J. Verdisco, president of the Int'l
Mass Retail Assn. The bill gives renewed trade privileges to countries in
the Caribbean Central America, which will put them in the same status as
Mexico in the North American Free Trade Agreement. The bill also proposes to
renew the General System of Preferences program for 5 years, retroactive to
its last expiration on June 30. GSP gives importers duty-free status on
certain goods from developing countries. The bill offers no modifications to
the program. While the Senate version is more restrictive than the version
passed by the House in July, the differences will be worked out in
conference. Some industry groups that failed to get provisions into the
Senate version will try again during the conference period. "We will be
working behind the scenes to make sure that our amendments get looked at and
considered," said Edwin W. Van Ek, head of the American Association of
Exporters & Importers drawback committee, which is seeking revisions to
Customs' duty drawback rules.
- China News Eases Devaluation Fears .......... as China said on 12
Nov. its trade surplus in the 1st 10 months of this year dropped 38% to
US$23.8B, but exports continued to pick up and economists said a devaluation
of the yuan was now less likely. "The trade figures are better than
expected,'' said Sheng Hong, an economist at the Beijing Unirule Institute
of Economics. "This is a good news for the renminbi,'' he said. The
yuan is also known as the renminbi. "There is no reason to devalue the
renminbi with such a big trade surplus. The renminbi should not be
devalued,'' he said. Exports in the Jan. to Oct. period rose a year-on-year
4.3% to $155.2B, while imports surged 19.2% to $131.4B, the official Xinhua
news agency quoted customs data as saying. China posted a trade surplus of
US$4.4B in Oct. alone, a surge of 41.9% from a year earlier. The Oct.
surplus compares with a surplus of US$3.3B in September & US$4.88B in
Aug. Strikingly, exports in Oct. grew faster than imports. Exports soared
23.8% year-on-year to US$18.2B while imports rose 18.2 percent to $13.8B.
Sheng said the rise of the Japanese yen against the dollar helped Chinese
exports, along with recovery in Asian markets. The yuan is kept in a very
narrow range against the U.S. dollar, making Chinese goods cheaper in Japan.
- Americas Trade Gets More Freedom ............. as North & South
American countries are beginning to show signs that they may be willing to
reduce trade barriers. At a ministerial meeting of the Free Trade Area of
the Americas in Toronto this month, 34 countries accepted 8 business
facilitation proposals aimed at moving goods faster across their borders.
These proposals include ways to establish compatible
electronic-data-interchange systems, harmonized commodity descriptions and
codes, transparency of customs procedures and rulings through broad
dissemination of information, & a better focus on high-risk cargo for
customs inspections. The FTAA countries also approved the Cancun Accord. It
is the result of 4 years of hard-fought lobbying by express carriers FedEx,
UPS, TNT & DHL to reduce customs barriers to their shipments.
- Air Cargo Americas At MIA .......... as Michael S. McDaniel, Esq.,
of the Countryman & McDaniel firm addressed the Air Cargo Americas V *
International Congress & Exhibition on 27 Oct. 1999, at the Radisson
Centre. A featured presentation, McDaniel presented "Major Changes To
The Warsaw Convention As Amended By Montreal Protocols 4 & 5" the
first change to Int'l air cargo law involving the U.S. in 70 years. The
event was sponsored by The Journal of Commerce, World Trade Center Miami,
FedEx, DHL, AA Cargo, Martinair Cargo, MIA CFS, Miami-Dade Airport Dept.
& Arrow Air, this year's theme was "Advanced Logistics for the 21st
Century: Challenges & Opportunities in the Western Hemisphere." The
event was attended by over 5,000 industry executives from 43 countries. For
the full text of Mr. McDaniel's presentation & study guides to the
Montreal Protocol 4, go to: http://www.cargolaw.com/presentations_mp4.html
- China Makes Internet Grab ......... as the Wall Street Journal
reports China has drafted rules that would formally ban foreign investment
in the Internet. The article states that the rules are still preliminary,
but in their current form would introduce a new type of business license for
commercial Internet-content providers.
- Safe Harbor Seen ......... as the U.S. State Dept. reports that the
U.S. & the European Union have made progress in resolving outstanding
issues in the proposed "safe harbor" arrangement which would
enable U.S. organizations to comply with the EU's Directive on Data
Protection. The groups are working to develop a package of safe harbor
documentation this month. For more on this important topic, visit our
Internet & Electronic Commerce Center: http://www.cargolaw.com/d.electronic_commerce.html
- Fritz To Open Mega National Customs Center ......... as Fritz
Companies, Inc. will open it's new U.S. Customs Brokerage Processing Center
in Dallas, TX on Jan. 1, 2000. The state-of-the-art "Center of
Excellence" will be responsible for providing transactional Customs
Brokerage services to existing Fritz locations in the U.S. The transition to
the new Center from existing local operations should be seamless to Fritz
customers, since all existing customer service processes will remain
fundamentally unchanged. "The new facility will allow Fritz to provide
substantially upgraded service, including superior peak-volume coverage;
enhanced employee training, education, & retention; greater compliance
specialization; improved overall customer service through better use of new
technology; and, consistency of service," said Lynn C. Fritz, chair
& CEO. The company expects no fiscal 2nd quarter impact on results from
this action. However, in the 2nd half, this initiative is anticipated to
have an earnings-per-share cost of between 14 cents & 16 cents. For
fiscal year 2001, the company is expected to experience a favorable impact
of between 5 cents & 11 cents, with annual savings thereafter of
approximately 16 cents per share. The planned cost savings will result from
the elimination of redundant backroom processes in 47 U.S. locations.
Centralized customs, the next wave.
- Circle Looks Inward ......... as after months of testing, Circle
Int'l is to enter the dedicated U.S. domestic forwarding market with the
launch of a new service, CircleConnect. Through Circle's 52 US offices,
CircleConnect will offer 3 levels of door-to-door, time-definite service for
the domestic air freight shipping sector. Level 1 promises delivery by 1700
Hrs. on the next business day, with level 2 guaranteeing delivery by 1700
Hrs. on the 2nd business day. Level 3 is an 'economy deferred' service,
offering 3rd or 4th business day delivery. San Francisco-based Circle
believes that offering a dedicated domestic forwarding network will help it
promote its Int'l freight forwarding services.
- For Hellman, The World Is Not Enough ........... as the company
announced today the appointment of Nelke/Hellmann Spedition as one of the
official forwarders for Expo 2000, the world’s fair that will open in
Hannover on June 1, 2000. A 10,000 sq. meter distribution facility will
receive incoming goods for unloading & delivery via shuttle system to
the various halls, pavilions & theme parks. About 1,400 tons of goods
(approximately 800 truckloads) will be transported each day to the site, so
deliveries will be scheduled during overnight hours to avoid placing an
unnecessary burden on the city traffic. The fair is expected to involve a
23,000 member EXPO staff & an estimated 260,000 exhibit personnel
representing almost 200 Int'l exhibitors. Hellmann Worldwide Logistics is an
Int'l company with a global network that includes company-owned offices
& exclusive partners in every important customs port in the world.
- iShip Turns Yellow ............ as Yellow Freight System, a
national LTL carrier, has signed an agreement to join iShip.com in its
web-based, multi-carrier shipping service. Under the agreement, Yellow's new
Yellow HomeNet service will be offered by iShip.com to its customers for
transportation of items weighing more than 150 lbs. iShip.com's partners
include eBay and Mail Boxes Etc. Yellow said that the e-commerce
transportation services market is about US$500M today and will be in excess
of US$1B in about 4 years. Yellow's Chairman, President and CEO, A. Maurice
Myers has just resigned. Yellow employs approximately 32,000 people. More,
Stamps.com, the Internet postage company has announced it has agreed it has
agreed to acquire privately held iShip.com
- Coversion To 21st Century Customs .......... as Customs brokers
& importers are starting to convert to a new communication link with
U.S. Customs' Automated Commercial System. The agency installed the new link
developed by IBM, called MQ (message queuing), earlier this year to ease the
data capacity burden on ACS. Last year, Customs' 16-year-old system
experienced routine slowdowns because of data overload in its communications
network. ACS processes about 65,000 to 75,000 jobs a day. Data activity is
expected to grow by 20% a year for the next 5 years. MQ should help to
handle this growth in trade data, but it's only a temporary fix until the
new umbrella system, the Automated Commercial Environment, is built, said
John B. Hill, Customs' director of applications for ACS. So far, 2 import
entry filers have switched to MQ, & another 17 are testing. "Every
time a filer gets onto MQ, it lightens the load on the system," Hill
said. Customs plans to enhance the efficiency of MQ in April by making the
industry responsible for prioritizing its data in ACS. Currently, brokers
file all their data at once and the system schedules the processing.
"We've done a lot of analysis on our side and it doesn't appear that it
will have an impact on the industry," Hill said. Only a small
percentage of ACS jobs will be affected, such as importer and manufacturer
- Diplomatic Meltdown? .......... as Reuters reports that U.S.
embassies abroad are "perilously close to the point of system
failure" because of antiquated buildings and grossly inefficient
computer networks, the independent commission Overseas Presence Advisory
Panel said this month. Few U.S. diplomats can send e-mail messages to each
other, even within the same embassy, but continue to depend on the slow
& hierarchical "cable culture" of traditional diplomacy.
- U.S. Customs Won't Crash ......... as U.S. Customs wants its
port-level staff & industry to know what to do if there's a system
meltdown because of year 2000 or other technical glitches. The agency
requested that its staff meet with industry at the ports by Nov. 1 to review
contingency plans if the Automated Commercial System fails. "We don't
expect a lot of problems," said Vera Adams, director for commercial
processing at Customs in Washington. "What could happen will likely be
localized." Last October, the agency reprogrammed more than 6 million
lines of code in ACS to prepare for Y2K. Customs has established an
Emergency Response Center in Newington, Va., to operate during New Year's
Eve weekend. The biggest concern, however, is that local power companies
& communication providers may experience Y2K problems. Customs recently
simulated ACS crashes in Savannah, Ga., & Charleston, S.C. This gave the
agency and industry a better idea of what they need to do if such an event
- UPS Get Trans-Border ......... as it is to acquire Trans-Border
Customs Services, a broker specializing in Canada-US trade, expanding UPS's
services along the border. UPS has been operating brokerage services since
1985, and in 1984 began providing its services to northbound shipments into
Canada. Trans-Border, based in New York, will become part of UPS Customhouse
Brokerage, operating in 15 US cities & 31 countries.
- Y2K Far East Warning ......... as a leading information technology
consultant has claimed that the Far East & the countries of the former
Soviet Union are the most likely to encounter severe supply chain disruption
from Y2K-related failures or reductions in telecommunications services.
Echoing expert testimony given before the US Senate, Michael Erbschloe, V.P.
of Research at Computer Economics, said: "If the geographic scope of
your supply chain extends beyond the U.S., Canada or Central Europe, it is
very likely that your business process will be interrupted. The regions most
likely to be affected include the former Soviet Union & the Far
East." Computer Economics, a Carlsbad, California-based information
technology consultancy firm, has suggested that companies at risk draw up a
contingency plan to minimize supply chain disruption. It advises first
setting up a project group to investigate the company's vulnerability to
telecommunications failure. The group should include a telecommunications
specialist or at least somebody with a strong telecommunications background,
as well as staff fully familiar with the organization's supply chain and
distribution channels. Once established, the team should identify potential
supply chain weak spots vulnerable to telecommunications outages, and
develop contingency data & telecommunications plans. OK, you've been
- ITDS Is A Go ........... as the developers of the U.S. Int'l Trade
Data System say they're ready to go ahead with a pilot of the system by
April 2000. The ITDS is designed to operate as a switchboard to distribute
shipment info to any of more than 100 government agencies. ITDS has been in
development for the past 2 years. The multi-agency link promises to change
the way import & export data is processed with the government. The pilot
program will be conducted at the land-border ports of Detroit, Buffalo, N.Y.
& Laredo, TX. It will involve the use of new transponder technology, and
participants will be able to file their shipment info in common data
formats, such as Customs' Automated Broker Interface & EDIFACT. ITDS
developers say there should be no additional burden to industry. In recent
months, ITDS has been bogged down in political controversy. The U.S.
Treasury Dept., which heads the ITDS initiative, has proposed to give
Customs the responsibility to develop the system. However, the ITDS board is
expected to still have an oversight role in the system's development. Deputy
Asst. Secty. Treasury John P. Simpson also resigned as chairman of the ITDS
board. His successor is Eugene Rosengarden, director of the Int'l Trade
Commission's Office of Tariff Affairs and Trade Agreements. "The
controversy over ITDS is immaterial as far as we're concerned," said
William L. Nolle, Int'l trade specialist with ITDS. "It's going to be
- Pacer Trucks ......... as Pacer Int'l, the North American logistics
services provider, has consolidated its local trucking capabilities,
acquired through various mergers, into a single operating group known as
Pacer Cartage. Pacer's local trucking capability currently consists of
approx. 350 trucks that are predominantly owner-operator units.
- UPS Also Trunks ............ as UPS Logistics Group has announced
an agreement in principle to acquire the assets of Rollins Logistics, a
subsidiary of Rollins Truck Leasing Corp. The acquisition, when finalized,
will add more than 100 customers to UPS Logistics Group's existing Worldwide
Dedicated Services unit. In a separate transaction, the UPS Logistics Group
agreed to sell its UPS Truck Leasing unit and the 9,000-vehicle managed
fleet to Rollins. The 2 companies also signed a strategic alliance that
includes co-marketing programs, as well as mutual "preferred
provider" status: UPS Logistics for integrated logistics solutions and
Rollins for truck leasing and maintenance services. Terms of the
transactions were not disclosed by either party.
- China Does Not Want Your Beetle Either .......... as authorities
have issued stringent control measures against the U.S. & Japan
following a scare involving a tree-killing pest. Starting Jan. 1, 2000, no
ships from the U.S. or Japan using any wood packing will be allowed into
Chinese ports before they have been fully treated. All ships must bear a
certificate guaranteeing that if the vessel contains any wood packing it
will have been appropriately treated in a method recognized by the Chinese
authorities. The pest, the pinewood nematode Bursaphelenchus xylophilus,
spreads rapidly & can devastate entire forests. The fear is that it is
being brought over to China from the U.S. & Japan in wood packing used
in containers. Last year, the U.S. Dept. of Agriculture declared that as of
Dec. 17, 1998, no shipments from China bearing wood packing would be allowed
into the country unless they had been previously treated & accompanied
by documents saying so. The U.S. move was made because of the Asian long
horned beetle which had been introduced to the US, probably via cargo ships.
As a result, the European Union, Canada & Australia all followed suit by
introducing the ban.
- Phoenix Explodes ....... as Phoenix Int'l Freight Services, Ltd. is
amidst an unprecedented expansion of its global network with the opening of
new offices last month in Seoul & Kuala Lumpur, Malaysia. The company's
total number of worldwide offices is 34. Drew Felling was promoted to
director of marketing, a new position. http://www.phoenixintl.com
- Schenker Driving A Chrysler ............ as Schenker Int'l, the
forwarding arm of German logistics company Schenker AG, has won a logistics
management contract from automaker Daimler Chrysler in Brazil. Schenker's
automotive logistics division will oversee parts supply operations at a
DaimlerChrysler A-Class car production plant near Rio de Janeiro. Meanwhile,
Seino Transport Co. Ltd. is to employ Schenker as its sole agent for
logistics & forwarding in Europe.
- Welcome To Australia - Now Go Home! ........... as Australia will
be more vigilant in nabbing illegal immigrants amid a spate of tourists
expected to attend the Sydney Olympics next year. With the Olympics just
round the corner, Australia has warned tourist agencies around the world
should ensure their clients are bona fide tourists, or the travelers would
face harsh penalties if caught. Australia has introduced legislation
imposing tough new penalties for people-smugglers, including 20-year jail
terms and fines of up to US$143,000. Those caught also risk losing the
thousands of dollars they paid to the smugglers.
- Going For The Gold ........ as 2 Spaniards posing as an Olympics
cameramen for U.S. television were charged here on 4 Nov. with smuggling
drugs hidden in bogus camera batteries. The AAP news agency said the two
were detained at Sydney airport after arriving in the country with 45 lb. of
cocaine worth up to US$3M. It said a Colombian man, arrested separately, had
been charged with receiving the drugs. Police told a Sydney court the
Spaniards had said they had been sent to Australia by a Spanish firm
subcontracted by a U.S. television company to film preparations for Sydney's
2000 Olympic Games. The pair were said to have carried fake media passes
could not provide police with any business contact names in Sydney, nor the
name of the hotel where they intended to stay.
- Medical Miracle ..........as an ambulance that pulled up to a
police checkpoint near Juarez, Mex. (El Paso) on 12 Nov. with lights
flashing & a patient in the back turned out to be carrying almost 100
pounds of marijuana. The ambulance driver & the alleged patient, who
turned out to be in good health, were arrested after drug-sniffing dogs
became excited when the ambulance halted at a roadblock outside this
northern border city. "The driver said he was rushing a patient with a
ruptured appendix to the hospital," a federal police spokesman said.
"After the officers found the marijuana, the patient made a miraculous
recovery." The roadblock was one of many police checkpoints on both
sides of the Mexican-U.S. border aimed at combating drug smuggling &
- Juan Valdez Vows Revenge ........... as it is highly suggested that
diplomats should avoid confusing coffee with cocaine when talking about one
of the symbols of Colombia's national pride. U.S. Ambassador Curtis Kamman
made just such a mistake, according to Bogota's leading newspaper El Tiempo,
while giving a lecture on U.S.-Colombia relations on 11 Nov. at a local
university. In a slip of the tongue, while talking about some of the
positive aspects of bilateral ties, Kamman referred to "Juan Valdez
with his mule carrying cocaine." Valdez, the happy-go-lucky albeit
fictitious peasant, is the beloved symbol of Colombia's National Coffee
Growers' Federation & one of the world's best known trademarks. The
red-faced U.S. envoy sought to make amends for his lapses, saying
"Coffee, I meant to say coffee." Colombia takes great pride in its
coffee industry, and ranks as the world's 2nd largest producer behind
Brazil. It is also estimated to produce 80% of the world's cocaine & is
a leading supplier of heroin to the U.S., which ranks as one of the world's
leading consumers of illicit drugs. In an embarrassing drug-scandal that
sent Kamman's embassy reeling 3 months ago, the wife of the man who headed
U.S. military anti-drug operation in Colombia was accused of smuggling 15.8
pounds of cocaine into the U.S.
- AEI .....the Danzas takeover candidate. DOWN. As 3rd quarter results show
a 1.7% drop in net income, to US$12.8M, compared with the corresponding 1998
figures. However, AEI's net income for the first 9 months of the year rose
7.5% year-on-year, to US$39.1M.
- Atlas Air. UP as net income in the 3rd quarter rose 11% to US$14.1M.
- British Airways. DOWN as for the 6 months to Sept. 30, operating profit
was down 51% to US$342M from US$696M. Net profit was down 37% from US$562M
to US$353M & revenue was down 2% from US$7.64B to $7.52B.
- China Airlines. DOWN with its 1st pre-tax loss in over a decade last year,
losing almost US$31M. This year, though, the trend has reversed and the
airline has predicted a pre-tax profit of almost US$54M. Nonetheless, the
largest shareholder of the airline, Taiwan's China Aviation Development
Foundation, has seen fit to put up 35% of its stock for sale in order to
further help the recovering carrier. 25% of its shares will probably be sold
to either OneWorld or Star Alliance. Oneworld comprises Cathay Pacific,
American , Canadian Airlines Int'l among others and Star Alliance includes
Thai Int'l, Scandinavian Airlines, Lufthansa, United & Varig. Earlier
this year, Singapore Airlines showed an interest in acquiring a 25% stake in
China Airlines with a view to forming a strategic alliance, but talks were
halted after the 2 companies were unable to settle differences.
- Covenant Transport (U.S. motor truck carrier). UP with record revenue,
earnings & earnings per share for the 3rd quarter ended September 30,
1999. For the 3rd quarter, revenue increased 26% to $120.1 million from
$95.6 million in 1998. Net income increased 23% to US$6.7M from US$5.4M in
1998. Basic & diluted earnings per share increased 22% to US$.45
compared with US$.37 for the 3rd quarter of 1998.
- Eagle USA Airfreight, Inc. UP as diluted earnings per share for the 4th
quarter increased 42% to US$7.9M. ** Emery Worldwide. UP with 3rd-quarter
operating income of US$4.6M, up 4% on revenues of US$617.3M, up 11% from the
- Expeditors Int'l of Washington Inc. UP with reported record 3rd-quarter
earnings of US$17.84M, an increase 25% from the year-earlier quarter, on
revenue of US$406.14M, up 40%.
- Far Eastern Shipping Co. (FESCO) CRASH with reported soaring losses of
US$128M for the year ending Dec. 31, nearly 3 times the deficit recorded in
the previous year. The net deficit represents more than 40% of the company's
hire &freight revenues of US$292M for 1998. In 1997, FESCO made a net
loss of US$45M on freight revenues of US$338M.
- J.B. Hunt Transportation. DOWN with total revenue increased 11% to
US$523.9M in the 3rd quarter of 1999 from US$473.4M in the comparable period
of 1998. Revenue in the Van segment grew 1%, with truck revenue up 2% and
intermodal up 1%. Logistics segment (JBHL) revenue increased 23% during the
third quarter of 1999, while Dedicated Contract Services (DCS) business grew
49%. But, net earnings for the 9 months ended Sept. 30, 1999 were US$26.3M,
or 73 cents per diluted share, compared with US$36.0M, or 98 cents per
diluted share in 1998.
- Kitty Hawk Inc. UP as 3rd-quarter income jumped 219% to US$8.08M on
revenue of US$183.35M, up 7%.
- Mercury Air Group, Inc. UP with record quarterly revenues for its 1st
quarter of fiscal 2000 of US$74.6M, an increase of 42% from revenues of
US$52.6M for the 1st quarter of fiscal 1999.
- NIPPON Yusen Kaisha (NYK). UP as net income soared 39% to US$93M from last
year's US$20M, while operating income rose 60% to US$226M from US$142M.
Revenue was up from US$3.2B to $3.3B.
- Railtrack. UP as the owner of all rail infrastructure and stations in the
UK, reported net profits of US$398M for the 6-month period ending Sept. 30,
a 12% increase over the year-earlier period.
- United Parcel Service. UP as its net income rose 29% during the 3rd
quarter, the final quarter before the package delivery giant expects to go
public. UPS said its net income for the quarter ending Sept. 30 was US$577M
or US$1.03 per diluted share, compared with US$441M or 81 cents per share
for the same period last year. The privately held company credited the
growing U.S. economy, combined with volume growth & higher rates, for
the quarterly increase. Revenues for the quarter totaled US$6.72B, up 9%
from US$6.16B in the same period last year. For the first 9 months of the
year, UPS earnings took a US$1.44B hit from a tax assessment that resulted
from a court fight with the Internal Revenue Service. A federal judge ruled
in August that UPS set up a Bermuda company to avoid paying income taxes.
UPS may appeal, but it set the US$1.44B aside from 2nd-quarter earnings to
keep the tax assessment from ballooning further with interest.
We Mourn The Loss .......... as EgyptAir Flight 990, which crashed on 31 Oct.
in the icy North Atlantic off Nantucket, Massachusetts with 212 people on board,
is the 4th air tragedy to occur in the area in nearly as many years. In July, a
small plane piloted by John F. Kennedy, Jr., son of assassinated President John
F. Kennedy, and carrying his wife Carolyn Bessette Kennedy & her sister,
crashed in the sea near Martha's Vineyard, Mass., killing all on board. In
Sept., 1998, Swissair Flight 111 crashed off Nova Scotia, killing 229 people.
Two years earlier, TWA Flight 800 exploded after taking off from Kennedy
Airport, New York. All 230 on board died.
But as we should not forget, The Cargo Letter presents a chronology of major
air crashes since 1995. Our air cargo industry advances are not without cost:
Dec. 11, 1998 - Thai Airways Flight TG261 carrying 146 people crashed
as it approached the airport in Surat Thani in southern Thailand at the end of a
flight from Bangkok. A total of 101 people died.
Sept. 2, 1998 - A Swissair wide-bodied MD-11, en route from New York
to Geneva, crashed off Nova Scotia as it prepared to make an emergency landing
in Halifax. All 215 passengers and 14 crew were killed.
Feb. 16, 1998 - A China Airlines Airbus crashed and disintegrated at
Taipei's international airport killing 196 people on the aircraft & 7 on the
ground. It was en route from Bali, Indonesia, and was carrying Taiwan's central
bank governor Sheu Yuan-dong.
Feb. 2, 1998 - Cebu Pacific Air DC-9 crashed into a mountainside 40
miles (65 km) northeast of Cagayan de Oro airport, Philippines, killing all 104
on board. The crash was the worst in Philippines history.
Dec. 19, 1997 - All 104 people on board died when a Singapore SilkAir
Boeing 737-300 airliner crashed near the Indonesian city of Palembangare.
Sept. 26, 1997 - An Indonesian Airbus A-300-B4 crashed in northern
Sumatra, in a mountainous area about 30 miles (45 km) south of the city. All 222
passengers, 10 cabin crew and the pilot and co-pilot were killed in the crash,
which was Indonesia's worst ever.
Aug. 6, 1997 - Korean Air Lines flight 801 carrying 254 people from
Seoul crashed into a hilly area near Guam's airport. 26 people survived.
Nov. 23, 1996 - A total of 125 of the 175 passengers & crew died
when a hijacked Ethiopian Airlines Boeing 767 crashed into the sea off the
Comoros Islands. Fifty people survived.
Nov. 12, 1996 - 349 people died when a Saudi Arabian jumbo jet and a
Kazakhstan cargo plane collided in mid-air over India in the worst mid-air
Nov. 7, 1996 - A Nigerian Boeing 727 flying from Port Harcourt to
Lagos, with 142 passengers and nine crew members, crashed with no survivors.
Aug. 29, 1996 - A Tupolev 154, chartered by the Russian mining company
Trust Arktik Ugol and carrying 129 passengers & a crew of 12 to the remote
Arctic island of Spitzbergen, crashed killing all aboard.
Jul. 17, 1996 - TWA Flight 800 exploded in a fireball over the
Atlantic Ocean after taking off from Kennedy Airport, N.Y., en route for Paris.
All 230 on board died.
May 10, 1996 - A ValuJet Airlines DC-9 jet with 110 people on board
crashed in the swampy Everglades near Miami Int'l Airport. There were no
Feb. 29, 1996 - In the worst accident in Peru's history, a B-737
crashed in the Andes killing all 117 passengers & 6 crew members. The plane
belonging to local Faucett airline, on a flight from Lima, slammed into a
mountain as it prepared to land at the city of Arequipa, 600 miles south of
Feb. 6, 1996 - A Dominican Alas Nacionales B-757 carrying 189 people
plunged into waters off the Dominican Republic, killing all on board.
Jan. 8, 1996 - At least 350 people died when a Russian-built
Antonov-32 cargo plane crashed into a crowded market in the center of the Zaire
We mourn them all.
- FedEx Splash ........... as it's freighter overshot the runway
while landing at Subic Freeport at midnight on 17 Oct. The MD-11F originated
in Shanghai. Subic, a former U.S. Navy base that has been converted into a
special economic zone, has a small airport that FedEx uses as its Southeast
Asian flight center. FedEx said crew members, Capt. Michael Rooney & 1st
Officer Cynthia Hubbard, evacuated the aircraft safely and were treated for
minor injuries at a local hospital. The nose broke off from the plane, and
cargo slipped out of the hold. All of the plane was submerged in the sea
except for the cockpit. FedEx said most of the cargo had been damaged &
may not be salvageable. It reportedly consisted mainly of electronic goods
& garments. There was no immediate explanation of the cause of the
accident. You are requested to e-mail photos to The
- African Air History .......... as the U.S. & Tanzania signed an
"open skies" aviation agreement, the 1st such U.S. agreement with
an African country. The agreement which permits unrestricted air service by
the airlines of each country to, from, and beyond each other's territory.
- U.S. - Chile "Open Skies" ......... as an "open
skies" agreement, the U.S. & Chile will allow each others airlines
access to/from the respective countries. Including Argentina & Peru, the
U.S. currently has similar arrangements with 35 other countries. Chilean
carrier Lan Chile, American, Continental & United all provide flights
to/from Chile & now Delta has put in a request for this right. Hopes are
that as a result air prices may become lower & services become more
- TIACA To Soar At MIA ......... as the Int'l Air Cargo Association
(TIACA), is to hold its AGM & conference on December 5 & 6 at the
Baltimore Hotel, Miami. Members from around the world are expected to
attend. TIACA's General Secretariat - its focus for worldwide operations -
is located in Miami. Air logistics professional Daniel Fernandez, who has
worked with the World Trade Center & co-ordinated the Air Cargo Americas
conference and exhibition, was recently named the new secretary general,
replacing founding secretary general Garth Davies, who died in April. TIACA
president Geoffrey Bridges, chair of Bridges Worldwide, will preside over
the AGM and conference to seek opinions and lead discussion among the
members about current and emerging Int'l air cargo issues. TIACA's executive
council meets quarterly and the entire membership is invited to participate
annually in the AGM & conference. Said Mr Bridges: "We have strong
representation of our membership at the AGM each year, and we hope that the
Miami venue will encourage even more to attend this year. "There are
many important issues on the agenda, including setting the priorities of
TIACA for the next year, especially within the framework of our TIACA
Manifesto, the blueprint for the association and the industry."
- UPS Up's ........... as UPS sold stock to the public in the 10 Nov.
IPO at US$50 per share. The shares soared to US$68.25 & continue to
climb. UPS' rank-and-file saw nowhere near the paper profits realized by
management in the US$5.47B IPO. The value of Chairman & CEO James
Kelly's 414,000 shares tripled to US$31M, for example. About 125,000 of UPS'
330,000 workers worldwide own shares, but UPS has allowed hourly workers to
buy stock in the heretofore private company for just 4 years. The Teamsters
union estimates that the average hourly worker owns less than 100 shares.
- UPS Playing With Dynamite? .......... as the price of the TNT Post
share has increased substantially in recent days, a consequence of the
rumors about a takeover by UPS.
- Court Order.com ........ as KLM will get its domain name
"klm-alitalia.com" back. The return of the name was ordered by a
judge this month. The court in Arnhem, The Netherlands, has ordered the
Dutch Trading House Morellino BV to give up the domain name immediately
because it breaches the airlines' brand ownership rights.
- Russian Cargo Carriers Fuelish ........ as Russian cargo carriers
say the industry had seen solid growth over the 1st 9 months of 1999 but
they were concerned that jet fuel price hikes were cutting into profits.
Most of the country's top carriers posted year-on-year cargo increases in
the 1st 3 quarters despite the country's devastating financial meltdown last
year. National airline Aeroflot reported turnover up more than 3.0% to
63,500 tons, while up-and-coming regional carrier Sibir said volumes jumped
66% to 6,288 tons. But they & other lines said soaring jet fuel costs
had undermined the significance of those gains. High fuel costs have already
forced Domodevo Airlines to delay the start of a scheduled weekly
Moscow-Macau service. Russian air officials expressed concern about prices,
since fuel accounts 60-70% of expenses at some airlines. But Russian prices
do not correspond with those in the West. Russian kerosene costs the same as
petrol, while in Europe it is 75% cheaper.
- Court Halts Air Canada Buy ......... as Onex Corp.'s plans to take
over Air Canada have been thwarted by a Quebec Superior Court Justice who
cited their bid illegal. When Air Canada was privatized in 1988, Canadian
parliament stipulated that a 10% ceiling be put on any one shareholder
stake. This was to ensure that the airline remained primarily publicly
owned. Onex was hoping that approval from shareholders may lead to a waiver
of the 10% limit, thereby enabling them to continue with the takeover. Onex,
backed by the parent company of American Airlines had intended to merge Air
Canada with rival Canadian Air Int'l if the bid was successful. American is
currently considering selling its stake in Canadian. Industry sources say
that Air Canada is interested in buying American's share. If this goes
ahead, Canadian Air will become a part of Star Alliance along with
Lufthansa. ........ Then yesterday, Air Canada announced that a newly formed
corp. owned in part by Air Canada ('The Offerer') mailed its offer to
purchase all the issued outstan ding Common Shares & Non Voting Shares
of Canadian Airlines for a price of US$2 per share, with a 'net employment
reduction' of approximately 2,500 employees.
- From Shipping To Shopping .......... as FedEx joins the shopping on
line craze. http://www.fedex.com/us/about/marketplace/
- Emery Guarantees It ........... as Emery Worldwide, the air cargo
subsidiary of CNF Transportation Inc., has expanded its guaranteed `Gold
Priority Express' service for shipments from Hong Kong to the 48-contiguous
U.S. states plus Puerto Rico, Canada & major points in Mexico. The
service, previously available in Asia from Singapore & Japan only,
offers a 100% money-back guarantee for on-time delivery, with no size or
weight limitations on shipments. Emery is the 1st Int'l freight forwarder to
offer a guaranteed service to shippers as part of its basic pricing &
product offering. Emery established its 1st office in Hong Kong in 1962.
- American In The Docket .......... as a federal grand jury
reportedly is considering criminal charges against American Airlines
following a two-year investigation into its acceptance of hazardous cargo.
The case stems from an incident in October 1997 when passengers had to
evacuate from an American Airlines plane at Miami International Airport
because an illegal shipment of 500 pounds of a toxic pesticide broke open
while being loaded as cargo, The Miami Herald and The New Yorker reported.
American Air referred questions to its attorney, Rebekah Poston, who did not
return a telephone call on 6 Nov. The legal limit for such shipments is 2.2
pounds, The New Yorker reports in its Nov. 15 issue. An indictment could
come within days, the Herald said in 6 Nov. editions. The incident came
during a federal crackdown on dangerous cargo that followed the 1996 ValuJet
crash, which was blamed on a fire produced by an illegal shipment of oxygen
generators. The airline has repeatedly said it was cooperating with federal
authorities, even before 60 federal agents raided its Miami cargo terminal
& offices for documents on hazardous materials 3 weeks after the
pesticide spill. The seized documents revealed almost a complete lack of
control and security for excess baggage and unmarked cargo, the Herald said.
"It's permissible to fly toxic materials. The problem with American is
that it was not complying with the federal regulations,'' an investigator
familiar with the probe told the Herald. "They were transporting toxic
materials that were not labeled." Subsequent FAA inspections in Miami
found 13 airlines were willing to carry improperly marked packages and 10 of
17 cargo companies failed to follow security procedures in identifying the
contents of shipments. American attorneys has been quietly pushing for a
settlement with the U.S. attorney's office for weeks, the Herald reported.
Rosa Rodriguez Mera, spokeswoman for the U.S. attorney's office, said 6 Nov.
that she had no comment on the investigation.
- China Seen Big Time In It's Air ........... as a recent prediction
is based on estimates by the China Aviation Industry Corp. (AVIC) of an
annual 8.6% increase in passenger traffic volume up to 2018, belly cargo
included. The current civil aviation fleet of 511 aircraft (1998 figure)
will need expanding to 1,618 planes to meet the extra demand. At that time
revenue passenger kilometers are expected to have reached 415.9 billion, or
4 times more than the current figure. The State Economic & Trade
Commission, although wary of forecasting over a 20-year period, believes
that the expansion targets cannot be achieved through imports alone,
implying an increased market presence for domestic manufacturers. According
to AVIC figures, released recently in Beijing, a fleet of 772 aircraft will
be needed by 2008, and 1,618 by 2018, comprising 1,219 large/medium sized
planes and 399 smaller craft. The prediction also takes into account the
retirement & replacement of 367 aircraft. The forecast is based on the
continuing, rapid urbanization of China & demand growing at a pace
outstripping GDP. The analysis follows a sluggish period for the Chinese
aviation industry. AVIC aims to focus the Chinese industry on rebounding
into profit, in a market probably growing by less than 5% per annum over the
next 3 years. Diminished capacity has been one strategy adopted by the Civil
Aviation Administration of China (CAAC) to increase revenue. Last year the
sector saw losses of US$294M, in a period that saw it import 76 aircraft. As
previously discussed in The Cargo Letter, massive traffic growth must, as a
matter of simple calculation, lead to increased air accidents & cargo
loss, all in slightly higher proportion to the growth. Do not be surprised.
- Thai's Many Suitors .......... as 3 worldwide alliances & one
airline have announced they were interested in acquiring a stake in Thai
Airways when the Thai government is to sell 23% of the carrier in 2000. The
newly formed alliance between Air France & Delta is favored to win the
competition for the stake, but the Star Alliance, of which Thai Airways is a
member, is a close 2nd. But Thai Airways has denied allegations that the
airline has considered offers from Air France & Delta. Still, officials
from Singapore Airlines, Lufthansa & United have already held talks with
officials from Thai Airways in order to discuss the future of the carrier if
the 3 Star Alliance members jointly acquire a stake in Thai. American,
British Airways & Qantas have also made representations of interests
with the Thai government on behalf of the Oneworld alliance. Swissair is
also interested in acquiring the 23% stake in Thai Air, but the Swiss
carrier may be the worst bet for Thai in the short run. Swissair is the
leading airline in an alliance of several European carriers which also
include Sabena of Belgium, France’s AOM and TAP Air Portugal, but the
alliance has no partner in the U.S. since Delta terminated its Quality
Excellence Alliance with Sabena &Swissair to ally itself with Air
- Could This Be True About Our PAL? ............ as Philippines
Airlines (PAL) is said meeting its rehabilitation plan targets, announcing
revenues for July & Aug. of US$108.8M. A net profit of US$2.7M was
announced this month, after accounting for operating expenses (US$82.8M),
foreign exchange losses (US$1.36M), and financial charges (US$17.85M). After
eliminating all other airlines from rights to the Philippines & facing
the rigors of bank lawsuits for failure to meet obligations the industry
will be slow to adopt these reports. In a reconsideration move, the
Philippines will once again allow Taiwanese airlines to fly to/from Manila,
restoring aviation links cut in Sept. 1999. The Philippine government
scrapped its 1996 aviation pact with Taipei after accusing Taiwanese
airlines of carrying more than their allotted quota of passengers.
- Atlas CEO Knighted ......... as Michael Chowdry has been named the
1999 National Ernst & Young Entrepreneur Of The Year in the Service
category. His story is an American dream classic. An immigrant who navigated
through scholarships, mentors & earning his Certified Flight Instructor
License, he started out crop dusting and relentlessly worked his way through
the industry, taking a visionary approach to the air cargo business. In
spite of his father's death when Chowdry was only two, he managed to make
his way in the world, from Pakistan to London at age 14 and then to the U.S.
to pursue college in the mid-1970s. He tapped into scholarships and
friendships to help him find his way, befriending a classmate whose parents
"adopted" him and guaranteed his first step into aviation -- a
loan for his Certified Flight Instructor License. His strong interest in
flying led him through an entrepreneurial maze, from crop dusting &
aerobatics to sales for Piper, where his aircraft trading abilities began to
emerge. He then managed a South Dakota commuter airline and, saving it from
foreclosure by raising US$14,000 to satisfy its debt, bought his first
business. Moving into consulting, he bought 7 Boeing 727s from Frontier Air
& sold them to cargo carrier Flying Tiger -- for a US$4.2M profit. The
rest is history, the history of Atlas Air. Currently, Atlas Air controls 80%
of the world's ACMI cargo market and, with net annual sales of more than
US$422M, is the 3rd largest cargo carrier in the world for revenue tons
- Air Holland Nears Extinction ........... as one of the few
remaining independent Dutch airlines, charter carrier Air Holland, has
suspended all payments, in order to try to save the airline. The airline
came into trouble at the end of Sept. and may not survive. The carrier also
faced bankruptcy in 1991 but pulled through.
- Same Bird, New Name ......... as Eagle USA Airfreight, Inc. is
changing the name under which it does business worldwide to "EGL Eagle
- Same Caliber .......... as Caliber Logistics, has changed its name
to FDX Supply Chain Services. The name change follows months of
restructuring at Caliber. Caliber's parent company is FDX Logistics, a
subsidiary of FDX Corp.
- New FedEx Chief .......... as Ted Weise, FedEx's CEO announced his
planned retirement after 28 years with the company & 2 years at its
helm. When Weise steps down on Jan. 31, David J. Bronczek, now chief
operating officer, will assume the top spot. Robert Arovas replaced Roger
Payton, as CEO of GeoLogistics. Arovas, hired to engineer a turnaround at
the struggling company, joined GeoLogistics in June as its chief operating
officer. He had been CFO at Fritz Companies, Inc.
- Delta Sighted On New Alliance Structure? ............ as Delta Air
Lines will end its longtime Atlantic Excellence Alliance with Swissair,
Austrian Airlines & Belgian carrier Sabena at the end of the year. The
move, widely expected since Delta teamed with Swissair rival Air France this
summer, frees Delta, Air France & AeroMexico to build a global alliance
to rival the Star Alliance, Oneworld and the KLM/Alitalia/Northwest Airlines
team. Delta said it negotiated with Swissair, Austrian & Sabena to join
its alliance with Air France, but no agreement could be reached. Austrian
Airlines' parent company recently announced plans to join the Star Alliance,
which is anchored by United Airlines and Lufthansa German Airlines. Atlantic
Excellence members have agreed to honor existing travel agency &
corporate sales agreements through Dec. 31. Codeshare flights will end Aug.
5 next year.
- Delta Sighted On China .......... as It has applied to the U.S.
Dept. of Transportation seeking authority to operate flights connecting the
U.S. & China. The carrier is seeking approval to operate daily nonstop
flights connecting N.Y. to Beijing, China, with continuing service to
Shanghai, China; and 3-days-per-week service between Portland & Beijing,
also with continuing service to Shanghai. The application is part of a
U.S./China agreement to allow additional airlines to operate in the market.
- So Long Jakarta ........... as Swissair, British Airways & KLM
plan to stop flights to Jakarta from Europe because of a sharp decline in
the number of passengers, Air Communications Director General Soenaryo
Yosopratomo said here. He said the number of air passengers from Europe to
S.E. Asia had fallen because of "global impact." A significant
decline had also been recorded in the number of domestic passengers in the
country. Seonaryo predicted the number of domestic passengers would total
only 6.5 million this year, falling short of an official projection of 10.5
million and down 13% from last year & 54% from 1997.
- Chek Lap Kok On Track ........... as the Hong Kong Airport
Authority has said that 201,000 tons of air cargo throughput in Oct., a 30%
rise compared with the same period last year, just after the historic
"meltdown" when the new airport opened. After Memphis & LAX,
Hong Kong ranked the 3rd busiest cargo airport in the world handling 875,632
tons in the 1st 6 months of the year.
- Greeks Unite ........... as Aegean Airlines of Greece & Air
Greece are to merge after Air Greece majority shareholder Minoan Lines
bought the remaining shares in the carrier to become its sole owner on 7
- LanChile Gets The Code .......... as Chile's largest domestic and
Int'l passenger & air cargo carrier has announced that it successfully
initiated the 1st phase of its code share operations with American Airlines
on Oct. 13, 1999. This 1st phase includes a LanChile Santiago-Miami-Santiago
flight and an American Santiago-Miami-Santiago flight.
- Asia Y2K ......... as Morgan Stanley has expressed concern
regarding the Y2K compliance of many Asian airlines, in view of the
comparatively low budgets the companies have assigned to the problem. These
include China Eastern, China Southern and - despite the story below - Thai
Airways. An analyst with Merrill Lynch has admitted that it would not be
feasible to expect 100% reliability from all Asia-Pacific airlines. It seems
that most Asian airlines are even now trying to cope with the problem.
Merrill Lynch has shown total confidence in Cathay Pacific, Singapore &
Qantas Airways while both Morgan Stanley Dean Witter & Goldman Sachs
have given high ratings to Air New Zealand. Despite the confidence expressed
in it's operations, Hong Kong based Cathay Pacific has decided to cancel 25
passenger aircraft & 3 freighter flights between Dec. 30.1999 & Jan.
1, 2000. Nearly all destinations served in Australia, Europe & North
America will see at least one round-trip flight canceled. Freighter flights
between Hong Kong & N.Y., Chicago & London have also been canceled.
- Thai 2K .......... as to reassure passengers that Thai Airways
flights are free from the Y2K bug, the airline's president will be on a
plane during the actual millennium "rolling hour." The carrier
says it spent US$7.65M to correct the problem, a small amount compared to
other airlines. Thai Airways reports higher than usual bookings for flights
taking place during the changeover to the year 2000 & is planning to
distribute gifts to passengers on those flights, perhaps life preservers.
Thai’s declaration is in light of announcements by other carriers such as
Australia's Ansett & KLM which have canceled or curbed flights during
the so called roll over. This may suggest that there is more than just lower
passenger numbers to some airlines’ decision to reduce or cancel services
on Dec. 31, 1999 & Jan. 1, 2000.
- Air Botswana Also Will Not Fly On 31. Dec. (WOW!) .......... as a
disgruntled senior pilot grounded the carrier this month by destroying its 3
remaining airworthy aircraft. Capt. Chris Phatswhe took off in an ATR-42
owned by the carrier on an unauthorized flight & threatened to crash the
plane into the Air Botswana administration building. The good Captain
changed his mind upon learning that innocent people were inside the
office........ and then decided on a new plan for lodging his grievance.
Next, Capt. Phatswhe turned off his radio & crashed his plane directly
onto Air Botswana’s 2 other ATRs, killing himself and destroying all three
planes in a ball of fire. The nature of the dispute between the pilot and
the carrier is unknown, but assumed not to involve the current U.S.
controversy of whether to serve peanuts in flight. Wow!
Written from wire stories, the Associated Press,
Reuters, Hong Kong Shipping News Lloyds & other world sources.
Pirates Out of Control ......... as the Int'l Maritime Bureau (IMB) in
London defines piracy as "the act of boarding any vessel with the intent to
commit theft or other crime and with the capability to use force in the
furtherance of the act.''
Piracy flourishes where it always has: in the Caribbean where Henry Morgan
& Blackbeard once ruled the waves, off North Africa where corsairs once
plundered the Barbary Coast, in the Far East where the pirate junks of the famed
Chieftain Ching Yih were the scourge of the South China Sea, in the Malacca
Straits where some 2,000 ships a day pass from the South China Sea to the Indian
In the first 9 months of this year, the IMB recorded 180 cases of piracy,
ranging from petty theft of cash & parts to hijacked oil tankers. In 1998,
it reported 202 cases. But, officials say, most high seas crimes never get
reported. According to the IMB, a ship can be hijacked to order for US$300,000
in the Philippines and delivered in 3 days.
The latest in this high-stakes game of high-seas crimes is a phenomenon known
as phantom ships. Hijacked by pirates, a ship is repainted, the crew dumped or
killed, the cargo transferred or sold. The ship sails into a new port with a
false name & false papers. To the legitimate seafaring world, it is a
phantom. The case of M/V Anna Sierra is a good example. The Cyprus-registered
general cargo ship left Bangkok for Manila on Sept. 12, 1995, carrying US$5M
worth of sugar. Steaming through the Gulf of Thailand, it was hijacked by 30
masked men, who sped alongside in powerboats, clambered aboard and set the
ship's 23 crewmen adrift on rafts. Rescued by fishermen, the crew alerted the
piracy center, which immediately sent word to ports & offered a reward. Days
later, the ship was located in the Chinese port of Beihai. It had been renamed
"M/V Artic Sea" (misspelled by the pirates). But its original name was
still faintly visible, revealing its true identity. Pressed by the IMB, Chinese
officials boarded the ship and placed the crew under guard. Then began a 9 month
war of words & paper to ascertain ownership. After endless wrangling, the
authorities gave up. The pirates were sent home to Indonesia. The ship was
abandoned by its owner and, to this day, sits rusting in a Chinese port. The
losers: the companies that insured the ship & its cargo.
Maritime organizations like the IMB & the Int'l Maritime Organization (a
branch of the UN) are trying to change this, pressing governments & ship
owners to work together to combat high seas crime. They've had some success, but
Int'l cooperation has not been uniform. For example, the case of the Singapore
freighter M/V Hye Mieko. In June 1995 it was hijacked off Cambodia by a ship
resembling a Chinese customs launch and forced to sail more than 1,600 km
through international waters to Shanwei, in south China. Although the ship's
plight was broadcast worldwide, not a single vessel came to its rescue. On
arrival in China, the ship was impounded. The owner, who had followed the ship's
path from a small plane, was charged with intending to smuggle cigarettes. He
was detained to cover the crime.
A very partial list of recent cases include:
Jan. 9, 1998: An oil tanker owned by Shell Int'l Trading was boarded
by 4 armed pirates in Santos, Brazil. They shot 2 British crew members &
threatened to blow up the ship.
Jan. 24, 1998: Pirates boarded a freighter docked in the Miami River
at night. They pistol-whipped the crew & then jumped overboard to avoid
capture by police.
March 3, 1998: An Australian yacht was sailing toward the island of
Manus, in Papua New Guinea, when it was hailed by local women selling vegetables
from a dugout canoe. As the yacht pulled alongside, 9 men armed with long knives
& axes leaped from the canoe, overpowered the yacht's crew, stabbed the
captain & stole goods worth thousands of dollars.
April 16, 1998: Twelve armed pirates hijacked a Malaysian tanker
carrying a cargo of gas oil & kerosene from Singapore to Vietnam. They
forced the crew to sail to Hainan Island in China, where they attempted to sell
the cargo, before being intercepted by police.
March 17, 1999: Twenty pirates with face-masks & machine guns
boarded a Panamanian cargo ship in Thailand. The crew was set adrift in
inflatable rafts. They were picked up by fishermen. The ship turned up in
southern China under another name.
March 28, 1999: Pirates armed with knives, machetes & machine guns
boarded a Panamanian bulk carrier anchored in Sapele, Nigeria. They ordered the
crew to the bridge, where they began firing their guns and smashing up
equipment. Several crew members were injured.
April 9, 1999: Pirates sped alongside a Lithuanian refrigerator ship
in Zaire, firing at it with machine guns. The pirates boarded and stole cash
April, 1999: Pirates with long knives boarded an Irish chemical tanker
off Lepar Island in Indonesia, taking 2 crew members hostage and stealing cash
from the master's safe.
May 4, 1999: Gunmen boarded a Finnish yacht off the northeast coast of
Somalia, took the crew hostage and demanded ransom.
May, 1999: Gunmen boarded a ferry packed with tourists off Mexico's
Caribbean coast. They robbed passengers, threw 2 security guards overboard &
destroyed the ferry's communication system before escaping in a speedboat.
June 8, 1999: Armed pirates in speedboats hijacked a Thai oil tanker
off the east coast of Malaysia & set 16 crew members adrift.
June 24, 1999: Somali gunmen attacked & hijacked a German yacht en
route from New Zealand to a tourist island in the Indian Ocean. They held crew
members hostage and demand US$50,000 in ransom.
July 20, 1999: Twenty armed pirates boarded a Bahamas chemical tanker
with a crew of 17 Russians off Lagos near the Pennington Oil Field. They beat
the crew, took hostages & removed equipment from the ship.
Sept. 11, 1999: Armed pirates boarded a British yacht as it was
sailing around the world. One of 5 crew members was shot & buried at sea the
- Thai Pirates Strike ......... as 17 crew members of the missing
cargo ship M/V Alondra Rainbow have been found by fisherman in Thai waters.
The ship was hijacked by 10 pirates armed with pistols and swords on Oct. 22
and the crew transferred to a smaller vessel. The hijackers set them adrift
in a 20-man raft a week later with supplies, albeit limited, of food &
water. The crew spent 10 days drifting in Thai waters, during which 6 ships
passed them by despite their use of flares and other emergency signals,
before they were found & rescued by Thai fishermen. The 17 men are all
reported to be in good health. There has still been no reported sighting of
the hijacked vessel itself.
- Yemen Pirates Strike .............. as pirates sprayed bullets into
an Australian family yacht near the coast of Yemen & the vacationers
were eventually rescued by a Saudi Arabian oil tanker. Moya Tucker, resting
with her husband & 2 children at a Yemeni army resort in Aden, said her
family were shaken but none was hurt in the incident which occurred on 12
Nov. Tucker, who is from New South Wales, said the family were sailing near
the Aden coast when 5 pirates in a fishing boat stopped them, claiming they
were policemen. The pirates began firing at the yacht when Tucker tried to
speed away. "The men fired many shots into the cockpit, breaking the
windows, and we were lying on the floor. I had to crawl along to the
children who were terrified," she said. But the pirates caught up with
the yacht & 3 of them came onboard. "We came out of the cockpit.
They said they were policemen & ordered us to sit down. They kicked me
& my boy on the head. Then he asked for money," Tucker said. She
told the gunman that she only had 50 British poun ds, but he went inside
searching for valuables -- taking a video cassette recorder, a computer
screen & some fruit. The pirate asked for whisky and she gave him some
as well as a bottle of wine. But the alcohol sparked an argument with his
colleagues, who forced him to leave the bottles behind. Help came about
one-and-a-half hours later, when a Saudi oil tanker located them & towed
the yacht into the port of Aden. The military commander of Yemen's southern
region, Brigadier-General Mohammed Maqoulah said the Yemeni government would
pay for repairing the yacht which is expected to take about 3 months. The
pirates were captured on 14 Nov. and will stand trial.
- Brazil Takes Steps Against Pirates ........ as the Brazilian
government has stepped up its war against pirate activity in its seaports
with a new maritime police force, known as Nepom. It will operate in the
ports of Santos & Rio de Janeiro to prevent crimes against ships in port
or anchored in territorial waters. These crimes may range from armed
robbery, drugs & weapons trafficking, & waterway terrorism.
"It's encouraging to see that Brazil is looking beyond just armed
robbery," said Thomas Timlen of the Baltic and Int'l Maritime Council,
which represents hundreds of carriers & ship agents in Brazil.
"They are taking steps to enhance their port security." Brazil
recently deployed 2 high-speed motorboats in Santos for anti-piracy efforts.
The government plans to add 7 more motorboats & split them between
Santos & Rio de Janeiro.
- New COGSA Delayed ......... as it is now doubtful that the proposed
Carriage of Goods by Sea Act, intended to replace the 1936 Act, will be
introduced to the U.S. Senate until next term in Jan. 2000. If so, passage
through both houses of Congress will take about a year. Thus, start thinking
of the Act as "COGSA 2001." Revision having been made to result in
a Sept. 1999 6th draft, opposition in the U.S. has evaporated. For example,
the venue clause of the proposed Act now mirrors Article 20 & 21 of the
Hamburg Rules to the delight of many in the EU. Even a FIATA advisor has
recently published an article titled, "Why FIATA Must Support New
COGSA." Still, a Journal of Commerce article this month reports that
the European Commission (EC) wants the U.S. to wait until a global
cargo-liability regime is developed rather than acting unilaterally. For
full details and to read the articles, please visit our "Transport Law
Navigator" feature: http://www.cargolaw.com/navigator.html
- FIATA Investigates .......... as Int'l Federation of Freight
Forwarders Assns. (FIATA) has launched a survey to reveal members'
experiences under the US Ocean Shipping Reform Act, which it claims
discriminates NVOCCs. NVOCCs have complained that, under the Act, they are
denied the right of signing service contracts with shippers that have
confidential rates. In contrast, shipping lines, which are permitted such
confidentiality, have access to the rates of every freight forwarder &
so are better informed on costs. FIATA said the survey should reveal
"concrete facts & figures which demonstrate the discrimination
against the freight forwarding industry in the US maritime trade."
- Bad Year For Cans ........ as Container shipping companies last
year recorded losses totaling US$2.4B on the East-West routes between
Europe, the U.S. & Asia, amounting to 8% of their combined turnover. The
crisis in Asia was the major contributing factor, apart from structural
problems. Despite the increase in the volume of TEUs carried to 7.2 million,
earnings dropped by 1.2%. This is outlined in the 1999 edition of the annual
"Container Market Outlook" compiled by Drewry Shipping
Consultants. Results for 1999 are better: because of the end of the economic
crisis in Asia, Trans-Pacific services will earn US$2.2B more. For the Far
East-Europe trade, Drewry expects an improvement of US$600M, and for the
- Panama Promises ......... as the Panamanian leader who will
continue to head operations of the Panama Canal when the U.S. gives it up at
the end of the year promised last month that it will not fall under the
control of any other country - specifically not China - "There will be
no influence of any country on the operations of the Panama Canal,''
declared Alberto Aleman Zubieta, administrator of the Panama Canal
Authority, which will take over the 50-mile canal at noon Dec. 31. Aleman
also is acting as canal administrator during the transition from U.S.
control. U.S. Senate Majority Leader Trent Lott has called for congressional
hearings on fears that China may be seeking control of the vital canal
through a Hong Kong company's port operations. The canal is a crossing point
between the Atlantic & Pacific for 144 shipping routes. Traffic last
year reached 14,000 ships carrying 228 million tons of cargo - about 4% of
seaborne trade. Aleman said a Hong Kong-based company's operation of ports
at both ends of the canal gives it no control over the canal. The company,
Hutchison Whampoa, operates at ports worldwide & says it has no member
of the Chinese government on its board. It competes with several other
companies at the Panama ports. Members of Congress also have raised concerns
that US$160M that is to go to the new canal authority upon the turnover may
end up in government coffers rather than canal projects. Aleman said that
money, collected from an increased toll tax, could only be used by the canal
for modernization projects. He said it already has been budgeted. Panama
plans major improvements in the canal aimed at increasing its capacity &
turning it into a profit-making enterprise. Canal financial officers say it
already turned a US$29.4M profit last year. But engineers said it would be a
challenge to find enough water to increase canal traffic. John R. Gribar,
director of canal capacity projects, said even current water systems cannot
support full capacity of 39 ships a day. With shipping increasing and
Panama, a country of 1.4 million, growing in population, several projects
are planned to increase water supplies, he said. U.S. Army Secty. Louis
Caldera, agreed with Aleman that China could not gain control of the canal,
as did former Secty. of State Henry Kissinger. Both spoke at a conference on
the canal sponsored by U.S. & Panamanian businesses. "In the
domestic debate, we should not invent imaginary dangers of foreign influence
threatening the security of the canal," Kissinger said. Kissinger noted
that both the Nixon admin., which he served & the Carter admin. helped
renegotiate the canal treaties that turn it over to Panama at the end of the
millennium. The U.S. completed the canal in 1914 in one of the greatest
engineering feats of all time. Through a series of locks, it carries ships
across the narrowest point between the Atlantic & Pacific oceans.
- Forwarders Line Up For FASTSHIP ......... as the high speed
transatlantic service, due to start in 2003 & has started selling cargo
space to forwarders. Geologistics, MSAS Global Logistics, AEI & Circle
Int'l have all signed agreements to purchase cargo space. The service is
expected to revolutionize the transatlantic trades by drastically reducing
- Singapore Beams ......... as it has been named the No. 1 worldwide
container port in 1998, handling some 15 million TEU of cargo for the year,
marking a 7% increase on throughput handled in 1997. In the worldwide top 20
container ports listed by the China Shipping Gazette, Hong Kong took 2nd
place with a throughput of 14.5 million TEU (up 1.4% on last year), and
Kaohsiung ranked 3rd at 6 million TEUs (a 10% increase on 1997). In
descending order, the other top 20 ports in terms of cargo throughput for
1998 are Rotterdam, Pusan, Long Beach, Hamburg, Los Angeles, Antwerp,
Shanghai, Dubai, Tokyo, New York, Felixstowe, Gioia Taure, Kobe, Yokohama,
San Juan, Manila, & Algeciras ranking number 20. This said, Long Beach
& Los Angeles are really one huge port & together would be at least
the world's 3rd largest.
- L.A. Smiles ........ as our Port of Los Angeles handled 336,936 TEU
last month, giving the port an unprecedented 5 consecutive months with
300,000 TEU or more. Container volume in Sept. 1999 includes a
record-setting inbound loaded total of 180,796 TEU. The outbound loaded
total of 66,207 TEU last month marks the 5th consecutive month that exports
exceeded the year-earlier monthly figure. Total container volume last month
represents a 16.2% increase of 46,957 TEU compared to Sept. 1998. In the 1st
9 months of this year, the port has moved 2,759,720 TEU, a 10.8% increase of
268,824 TEU compared to Jan.-Sept.1998. More, Maersk has unveiled plans to
build a new terminal at the Port of L.A.'s Pier 400 to serve as a southern
California hub for the joint Maersk/Sea-Land operations. The 484-acre
terminal, to be located at the southern terminus of the planned Alameda
Corridor transportation project, will be constructed in two phases at an
estimated cost of US$794M. Phase one should see the initial 288-acre
facility ready for operation by the end of 2001. Maersk & Sea-Land
operations will be relocated from Long Beach to L.A. When complete, it is
said that L.A. will reclaim it's No. 1 U.S. position over Long Beach.
- Maersk's Million ......... as the U.S. FMC has approved a
settlement agreement between its Bureau of Enforcement & A.P.
Moller-Maersk Line, regarding allegations that Maersk violated sections
10(b)(1), (2), & (4) of the 1984 Shipping Act by (1) paying rebates
& making other freight concessions to several persons, including NVOCCs,
in the South American trades on hundreds of shipments over a significant
period of time & (2) collaborating with persons, including NVOCCs, in
the Pacific trades in arrangements involving commodity & measurement
misdeclarations, thereby allowing those entities to obtain very substantial
freight savings to which they were not entitled. This settlement agreement
requires Maersk to make a monetary payment of US$925,000 to the FMC &
prohibits FMC from instituting against Maersk any investigation, assessment
proceeding, other claim for recovery of civil penalty, or related claim
arising from these alleged violations. The FMC states that this settlement
agreement is not & is not to be construed as, an admission by Maersk of
any of the alleged violations of the Act.
- Japan Port Deregulation Questioned .......... as the country's 3
major containership operators have filed a report with the U.S. Federal
Maritime Commission (FMC), saying Japan's Diet will consider port
deregulatory legislation in 2000. Carriers Mitsui OSK Lines, K Line &
NYK Line said in the report that the reform bill proposes to abolish
stevedore licensing along with the current rate approval system applied to
the stevedoring industry. According to the report, the reforms are expected
to attract new entrants & enhance competition in Japan's port transport
services industry. However, the U.S. Maritime Administrator Clyde Hart has
made a public attack on the proposal for port deregulation, saying it would
preserve Japan's monopoly over stevedoring operations in Japan's ports.
Speaking at the Int'l Propeller Club in Tokyo, Mr. Hart said the proposed
legislation would set up insurmountable obstacles to new companies who would
otherwise open up competition in the Japanese port services sector. Mr. Hart
urged Tokyo to secure the port reforms promised 2 years ago by the Japanese
government and criticized the slow pace of reforms to date. The choice is
clear. Japan can maintain its current system, attempt to preserve its
existing port jobs, and watch the world sail by to less costly destinations,
said Mr. Hart. Or it can embrace port reform and develop the kind of
1st-class port services that such a great nation & its trading partners
- Antitrust Changes Years Away? .......... as P&O Nedlloyd
predicts the proposed removal of ocean carriers' antitrust immunity in the
U.S. by House Judiciary Committee Chairman Henry Hyde will not be voted and
enacted for "at least a couple of years." Exec. V.P. Paul
Windfield said that he believes that the intention of deregulation-bent
congressmen is to affect the antitrust regime of price-setting agreements,
such as conferences and discussion agreements, not the operational-type
carrier agreements such as consortia & vessel-sharing agreements.
Windfield said that the U.S. Ocean Shipping Reform Act took about 4 years to
discuss, vote & enact.
- U.S. & Brazil Make Up ......... as after 2 years of often
strained negotiations, the nations have signed a new maritime trade
agreement. The 3-year bilateral agreement will boost maritime trade between
the countries by forbidding discrimination by either party against the
other's national flag carriers, particularly with respect to tax issues.
Brazil has agreed to end tax breaks for shippers using Brazilian-flag ships,
& to revoke the industrial production tax on some Brazilian cargo
shipped by US-flag vessels. The U.S. has abandoned a tonnage tax on
Brazilian ships using its ports. The agreement guarantees equal access by
either side's national flag lines to the other's commercial and
government-controlled cargo, with the exception of defense and agricultural
- Evergreen To Speak Italian? .......... as it might switch 30 or
more Panama-registered vessels to the Italian flag of Lloyd Triestino,
according to Lloyd's List.
- E-rrival Notices ........ as "K" Line America, the U.S.
arm of the "K" Line shipping group, says that it has introduced a
system of e-mail & fax arrival notices for import customers in North
- Shanghai Is Cool ......... as since COSCO line introduced its Green
Express reefer container service in May 1999, demand has grown steadily.
Reefer container cargo from Shanghai to Japan jumped an impressive 300% from
October last year. The total amount of cargo COSCO transported to Japan in
October this year was 2,772 TEU, an increase of 137% from the same period
- Cool Threat Approaches ......... as a sheet of ice 40 miles long,
11 miles wide &180ft high has drifted into the southern edges of the
shipping lanes around Cape Horn. The berg, designated B10A, is surrounded by
hundred of smaller fragments which have broken from its main body. It
originally broke from the Antarctic ice shelf in 1992, split in 2 in 1995
and is now drifting north at 9 miles per day towards Tierra del Fuego
- Uniglory Scraps - Preserves History ......... as Uniglory Marine
Corp. augments its fleet with 10 new P-type 1,618-TEU ships, it has decided
to scrap 4 older vessels. The older vessels are 866-TEU S-types, used on the
company's Taiwan-Hong Kong routes & loops within S.E. Asia. Constructed
in 1975, all 4 are to be scrapped by Nov. next year. The 1st vessel, M/V Uni
Spring, was sent to a Kaohsiung scrap yard, C. Chih Sheng Steel &
Shipping Co., on Sept. 15. Equipment from the ships will be donated to the
Evergreen Museum & the Nat'l Taiwan Ocean University, for educational
purposes. Uniglory will take delivery of all its new vessels by 2001.
- "Carrierland" Delayed ........... as the former
42,000-ton Soviet navy aircraft carrier, the Minsk, suffered heavy internal
damage this month as the result of a sustained fire at the southern Chinese
port where it was being converted into a theme park.
- This Month In U.S. Naval history .......... as on Nov. 10, 1775,
during a meeting in Philadelphia of the 2nd Continental Congress, a secret
resolution was drafted authorizing 2 battalions of Continental Marines. This
date marked the birthday of the United States Marine Corps. Semper Fi!
- No. 1 Vessel Disaster Center
We're back! "Cargo Damage Dispatches" was one of your most popular
features. Indeed, the West Coast's ILWU has put up a special web site, just for
our previous reports. We've now brought the feature back for you with what seems
to be the No. 1 Internet center for vessel casualty information Please send us
your information & photos of casualties in that most dangerous place .......
COMING SOON: Our The Cargo Letter database of vessel disasters on the
Internet. A listing of all disasters since at least 1994.
While the casualties below are only a portion of ocean disasters for
Oct./Nov. 1999, our ability to gather the info has significantly increased. McD
M/V Carissa Update ............ as attempts on the USA's Oregon coast
to remove the beached stern section of the woodchip carrier have been abandoned
until spring next year due to increasingly poor weather. Salvors have spent the
last few weeks making strenuous efforts to haul the 120-ft hulk out of the sand
but have had to concede defeat as winter weather sets in. The ship originally
ran aground in Feb. and removing the wreck has already been a long-running &
complicated operation. The bow section of the ship, towed into deep water, could
only be sunk with the aid of a torpedo from U.S.S. Bremerton while the stern
section has steadfastly resisted efforts to shift it out of the sand. Salvors
had hoped to remove it before the weather deteriorated but will now have to sit
it out until the spring. For the full & quite amazing account & photos
of "The Ship That Would Not Die", visit our special "Gallery of
Cargo Loss": http://www.cargolaw.com/gallery.html
The Turkish M/V KARAER III (1,595 gross) contacted the quay at La Nouvelle
during stormy weather Nov 15. Sustained severe damage. (Wed. Nov. 17 1999)
The Bahamas LNG carrier M/T MATTHEW (88,971 gross) Arzew for Boston, had
tailshaft problems & overheated bearing and sailed Boston, in tow, Nov 12,
bound Newport News. (Mon. Nov. 15 1999)
The North Korean fish factory CHIL BO SAN (9,162 gross) grounded while
fishing during a heavy storm in the Bering Sea, in lat 60 27N, long 169 30E, Nov
9. Sustained serious damages and flooding. Some crew taken off. Tug on scene,
however, salvage hampered by bad weather. (Sat. Nov. 13 1999)
Brazilian rescue workers on 12 Nov. held out little hope of finding more
survivors among dozens still feared missing from a wreck of the ferry M/V
Captain Pinheiro on the Amazon River that killed at least 3 people. A woman
& 2 children drowned and 55 others were rescued after the low-riding Captain
Pinheiro ferry sank on the night of 10 Nov. after crashing into rocks in an
archipelago near the riverside town of Coari. "The search is now more for
bodies (than survivors)," said a journalist in the Amazon town of Coari,
quoting river traffic officials. "They have found 55 survivors since the
ferry capsized." While the vessel's official register lists only five
people as missing, witnesses said up to 100 people may have been aboard the boat
when it sank. Firefighters said as many as 50 people may have disappeared into
the swirling waters of Latin America's longest river or been trapped in the
boat. The Captain Pinheiro left Manaus, capital of Amazonas state heading for
the town of Tefe with 51 people officially on board. It had traveled some 150
miles (240 km) upstream, picking up to as many as 30 passengers at farms and
villages on the way, before sinking 9 miles (15 km) west of Coari. The boat
plunged to a depth of 130 feet (40 meters). Witnesses said the ferry was so
weighed down with grain and other merchandise that the turbine engines were
submerged as it moved through the murky waters. When the boat hit the rocks it
sank within 2 minutes. Transportation officials have often criticized the
ferries on the rivers of the dense Amazon rain forest for taking on too much
cargo to navigate safely through their strong currents. One of 3 lifeless bodies
area fishermen pulled from the turbulent Amazon waters belonged to the
1-year-old granddaughter of the ship's owner & another to a 5-year-old boy
from Brasilia who had been visiting his sick grandmother. (Fri. 12 Nov. 1999)
The St. Vincent & Grenadines oil/ore carrier M/V LASSIA (74,139 gross),
Point Central for Taranto with iron ore, sustained structural breakage between
Holds Nos. 3 & 4 during discharge at Taranto Nov 8. Vessel bent without
breaking. Fore & aft now touching bottom. Crew ordered off. (Thurs. Nov. 11
The Turkish M/V ALICAN DEVAL (982 gross), Hopa for Samsun with ore, sank off
Rize/Pazar, due to very strong winds, Nov 9. Seven crew dead. Five crew rescued.
(Thurs. Nov. 11 1999)
The Cyprus M/V MIKA (1,895 gross), Riga for Bremerhaven with timber,
contacted the German ro-ro M/V SCAN BOTHNIA (8,811 gross), Jakobstad for Emden
with forest products, in the Kiel-Holtenau locks Nov 7. Mika sustained heavy
damage forward. Scan Bothnia sustained damage to stern ramp & small hole
above waterline. (Wed. Nov. 10 1999)
The Belize-registered freighter M/V Semele (5,945 gross), Nikolaev for
Algeria with steel sank at the mouth of the Bosporus Strait after colliding with
M/V Sipka on 6 Nov. Passing ships rescued the 18 crew of the Semele, which went
down shortly after colliding with another freighter, the Bulgarian-flagged M/V
Sipka. The strait remained open after the accident, which left a large oil
slick. The 6,000-ton Semele was enroute to Algeria with a load of steel from
Nikolaev in Ukraine. The 16,000-ton Sipka was heading to Varna, Bulgaria. It was
damaged but not in danger of sinking. The accident came as an Istanbul-based
environmental group, the Nature Warriors, was staging a demonstration against
tanker traffic in the Bosporus Strait. Some 440 million barrels of oil transit
the Bosporus each year & nearly 3,500 ships pass through each month. Some
200 accidents over the last decade in the strait, which bisects the ancient
metropolis, have caused oil spills & fires that sometimes shut down the
strait. Shipka sustained damage & is anchored at Ahirkapi.(Sat. 6 Nov. 1999)
Liberian refrigerated M/V DOLE AMERICA (10,584 gt, built 1994), bound for
Antwerp loaded with bananas, contacted Nab Tower Navigational Aid in Southampton
Water and sustained water ingress. Vessel has damage to three starboard tanks
forward, as well as flooding in engine-room. Salvage team on board. (Mon. Nov. 8
Devastating floods have killed 223 people across 6 coastal Provinces in
Vietnam. The Air Force & Navy are helping to rescue stranded people and
search for missing fishing vessels. One thousand people have been trapped in 3
trains for several days in Quang Binh Province. (Sat. Nov. 6 1999)
The Liberian M/V HOEGH DUKE (30,061 gross), Mumbai for Hampton Roads with
rubber & plywood, had fire in Nos. 6 and 7 Holds off the coast of Hampton
Roads Oct 31. Fire under control Nov 3 and vessel berthed Norfolk. Extent of
damage not yet known. (Fri. Nov. 5 1999)
The Panama M/V SAN MARINO, ex NAN HUI, (4,852 gross), Solomon Islands for
Shanghai with timber, reported stranded off Pu-Tai, Chia-Yi, Hsien, Taiwan, in
about lat 23 23N, long 120 09E, Nov 2. Crew still on board, all safe. (Thurs.
Nov. 4 1999)
The Netherlands Antilles semi-submersible heavy load carrier M/V MIGHTY
SERVANT 2 (21,162 gross), Singapore for Cabinda, capsized in lat 00 48S, long
104 20E, Nov 2. The 1983-built ship, owned by Belgium-based offshore
heavylifting group Dockwise, had a crew of 20 and was carrying an 8,790 ton
offshore production module at the time of the accident, which reportedly
occurred in calm seas. The ship is currently on its side in 35m of water, with
5m of its hull still above the surface. Divers searching the vessel discovered
the bodies of 2 Dutch & 2 Filipino crewmen inside the vessel, and the search
for a remaining man has entered its final stages inside the wreck. This was a
very impressive, huge & famous vessel. (Wed. Nov. 3 1999)
Four hundred people had to evacuate the Greek ferry M/V Superfast III after a
fire broke out in its garage deck which left 14 Kurdish stowaways dead. The ship
had 307 passengers & 106 crew on board when the blaze started 15 miles into
its voyage from the Greek port of Patras to Ancona in Italy. (Wed. Nov.3)
The Isle of Man M/V DONNINGTON (7,788 gross), Norway for Hunterston in
ballast, had main engine shutdown due to smoke in engine-room in lat 58 41.7N,
long 05 03.1W, Oct 31. One engine restarted. Taken in tow by tug/supply vessel
Portosalvo bound Ullapool, where ETA Nov 1. (Tues. Nov. 2 1999)
The Cyprus container vessel M/V SIMA STAR (5,148 gross) had internal leakage
from a ballast tank into cargo hold & listed in lat 26 52N, long 51 47E, Oct
31. Pumps delivered on board and situation under control. (Mon. Nov. 1 1999)
The St. Vincent & Grenadines M/V DUBAI OASIS (6,212 gross) reported a
severe list in the Bay of Bengal, in lat 16 36N, long 87 36E, Oct 29. All crew
abandoned ship and safely rescued. (Sat. Oct. 30 1999)
The Panama M/V ALONDRA RAINBOW (7,762 gross), Kuala Tanjung for Miike, Japan,
with aluminum ingots, was taken by pirates on Oct 22. See our story above. The
crew of 17 has been rescued, the vessel remains missing (Fri. Oct. 29 1999)
US$100,000 REWARD - contact The Cargo Letter
M/V PIONER SEVERODVINSKA (5,370 gt, built 1975), Archangel for Honfleur with
timber, grounded at the entrance to Honfleur fairway at 1100, Oct 22, due to
steering problems. Vessel was refloated later same day with tug assistance and
towed into Honfleur. (Monday Oct. 25 1999)
The Croatian M/V BORAK (328 gt), Koromacna for Solin with 360 tons cement,
sank between the Vela Sestrica & Mala Sestrica islets, SW of Zlarin Island
near Sibenik, at 0530, Oct 21. Three crew rescued & 2 missing. (Sat. Oct. 23
The Cyprus M/V HENRY NAVIGATOR (11,033 gt), Bourgas for Cape Town was towed
out of Cape Town Harbor on Oct 20 after experiencing ingress of water. Crew
evacuated. Towline broke and vessel lying on side in lat 33 37.68S, long 17
53.78E. Vessel sank in deep water. (Fri. Oct. 22 1999)
Collision between m bulk carrier M/V Graceous (85,695 gt) & bulk/oil
carrier M /V Lula I (62,031 gt) in the Traffic Separation Scheme, outside
Singapore port limits, which caused damage to both vessels. (Wed. Oct. 20 1999)
Russian icebreaker M/V ADMIRAL MAKAROV (14,058 gt, built 1975), towing a dry
dock to the Bahamas, had towline break on Oct 14 and the dry dock was adrift off
eastern Canada in the Cabot Strait between Nova Scotia and Newfoundland. The dry
dock, with 15 people on board, was adrift in heavy seas for 2 days before being
taken back under tow by the Admiral Makarov on Oct 16. All 15 crew members were
reported in good health. (Mon. Oct. 18 1999)
In a suspected act of sabotage, an oil tanker belonging to Myanmar exploded
while at anchor near the country's tense border with Thailand on 16 Oct. Two
crewmen on the oil tanker died & a cargo ship also was destroyed Thai police
at the nearby port of Ranong, 290 miles southwest of Bangkok, arrested 3 Myanmar
nationals 5 hours after the explosion. Police said the 3 were carrying dynamite
and traveling in a boat in Thai waters. They were charged with illegally
crossing the Thai border & possessing explosives. The incident comes at a
time of bilateral tension: Myanmar's military regime has blamed Bangkok for
allowing anti-Myanmar "terrorists" to operate from Thai territory.
Officials from Myanmar, also known as Burma, were not available for comment on
the explosion. (Sat. Oct. 16 1999)
The Panamanian motor ore carrier M/V Fu Kuo Hsin (4,556 gt) had an engine
failure on October 9 when leaving Kaohsiung as Typhoon "Dan"
approached Taiwan. The vessel dragged her anchor and began to drift. A tug
secured a line on the vessel, however, she dragged her anchor & ran aground
at Chichin, Kaohsiung. Port operating normally. (Fri. Oct. 15 1999)
The Italian ro-ro m ferry ARBOREA (11,324 gross), Civitavecchia for Olbia
with passengers and vehicles, ran aground off Olbia port entrance in thick fog
on Oct 26. Tug Impetuoso on scene. Vessel expected to refloat at high tide.
Passengers remain on board. (Wed. Oct. 27 1999)
The Madeiran M/V TRANSMAR (2,820 gross), Raaha for Vejle with steel &
timber, grounded at Nyckeln lightbuoy, north of Kalmar, Oct 25. Three ballast
tanks leaking. Currently awaiting diver & tug. (Tues. October 26 1999)
The St. Vincent & Grenadines container vessel M/V DUBAI TRADER (9,764
gross), Mersin for Gioia Tauro, Italy, with containers, grounded off Crete, in
lat 35 30.8N, long 26 16.6E, on Oct 27. Sustained cracks to hull & some fuel
oil leakage. Tug Megas Alexandros proceeding. (Thurs. Oct. 28 1999)
M/V Courage, Lagos for Aveiro, due to bad weather and possible engine
failure, ran aground on the S. Jacinto beach at Aveiro. Vessel did not enter the
port before running aground. Her 18 crew were safely taken-off. Salvage of the
vessel will be very difficult. (Fri., Oct. 22)
M/V Dorothy Jean, 72 gt (built 1977) (not Dorthy) was refloated later on Oct
13 & towed into Ketchikan. Vessel has completed temporary repairs & is
currently en route to Seattle where she will undergo permanent repairs. (Fri.,
Oct. 22, 1999)
Passenger vessel M/V Galapagos Discovery continued to burn during the night
& until 0900, today when she finally sank near Balboa. 90% of the ship's
hull is now under water. At the present location the wreck does not represent a
hazard to navigation but there is some concern that the pressures caused by
tidal changes could cause her to shift towards the navigation channel. Tugs
remain at the scene to ensure safe navigation in the area. No pollution has been
reported so far and the wreck has been boomed to contain any possible leaks. The
Discovey Class vessels have led the way to passenger comfort in cruises of
discovery to isolated world areas. This is a great loss. (Fri., Oct. 22, 1999)
The Panamanian motor bulk carrier M/V SANAGA (14,929 gt), with 26 crew on
board, reported in lat 27 34.3S, long 44 13.6E, about 700 miles ENE of Durban,
at 1000, UTC, taking water in No.1 hold. Down by head 2.5 meters & at
waterline level to Nos. 1 & 2 holds. Ingress to No.2 hold. Nos 1 & 2
decks awash. Heading 258 degs true. The crew were rescued by the container
vessel M/ V Sagittarius Challenger. Sanga is adrift. (Tuesday Oct. 12 1999)
The Norwegian ro-ro ferry M/V TYSNES (534 gt) ran aground outside Valevaag,
north of Haugesund about 0920, local time, Oct 13. Vessel's hull & propeller
damaged. Vessel now at shipyard at Rubbestadneset, on Bomlo. (Thurs Oct. 14
The Egyptian tug/supply vessel M/V MARIDIVE XII (844 gt) sank in bad weather
while en route from Port Said to Baltim on Oct 10. The master and 2 of his crew
were killed. (Wed. Oct. 13 1999)
NOTE: The historic dangers of carriage by sea continue to be quite real. Sh
ippers must be encouraged to purchase high quality marine cargo insurance from
their freight forwarder or customs broker. It's dangerous out there.
U.S. Customs Automated Export Web Site
....... newAESDirect, was developed by the Census Bureau to remove any barriers
to filing shippers export declarations electronically with the agency. The
service is offered free to all filers.
The Journal of Commerce Group
........ the leading publisher in the international transportation and trade
industries, has launched Tech Center, an online resource center for logistics
& supply chain software.
........the world's only flat packed temperature control unit with many
features, including stable chilled & frozen temperatures for 96 hours.
Analysis of The
Business Procedures of Chartering Broker
Resource Management Projects
of The NSRP/MARITECH ASE Panels
World of Fruit ........
Internet perishable commodities trading & auction on line by one of Europe's
largest wholesale supplier.
The Newest U.S.
EPA Toxic Substance Control Act (TSCA) ........Chemical Inventory of
more than 62,000 chemicals cross-referenced with SARA III RCRA reporting
requirements is on CD-ROM.
Aerospace Engine Technology Applied To Marine Use ......... making it
possible for vessels to travel much faster. To request case studies, make an
e-mail request. firstname.lastname@example.org
Airliners.com ....... a
fabulous new site.
Save The S.S. United States
Foundation .......... a great site to help the great lady.
the Trail of the Global Criminal ........ as catching today's
sophisticated white collar criminal is like peeling an onion, going through
layers & layers of business entities, paper trails & false identities,
ring by ring, coming ever closer to the core of the crime.
The Fitzgerald Remembrance
The following is a chronology of some key space incidents in an area that
will become the most important sea to our children:
Jan. 1967 - Three U.S. astronauts, Virgil Grissom, Roger Chaffee and
Edward White, die in a "flash fire'' aboard Apollo 1 during a simulated
launch at Cape Canaveral.
April 1967 - Soviet cosmonaut Vladimir Mikhailovich Komarov is 1st man
to die in a space mission when a parachute on his spaceship failed on re-entry
and the ship crashed to Earth.
July 1971 - Three Soviet cosmonauts die during re-entry after 24 days
in an orbiting space laboratory, a record endurance flight at that time.
Mar. 18, 1980 - Fifty technicians die at Russia's Plesetsk Cosmodrome
when a Vostok booster explodes while being fueled. The incident is reported only
Jan. 28, 1986 - Seven U.S. astronauts including a school teacher die
aboard the Challenger space shuttle 72 seconds after lift-off from Cape
Apr. 18, 1986 - A Titan missile believed to be carrying a military
satellite explodes shortly after launch from the Vandenberg Air Force Base
launch site in California.
May 3, 1986 - A Delta rocket carrying a $57 million weather satellite
explodes shortly after lift-off from Cape Canaveral.
Feb. 22, 1990 - Western Europe's 36th Ariane rocket, carrying two
Japanese satellites, explodes less than two minutes after lift-off from Kourou,
Sept. 7, 1990 - Part of a U.S. Titan rocket falls from a crane and
explodes at Edwards Air Force Base, sending flames 150 feet into the air and
killing at least one person.
June 18, 1991 - A 46-foot Prospector rocket carrying 10 science
experiments for the U.S. space agency and several universities is destroyed
after veering off course after launch from Cape Canaveral.
Aug. 2, 1993 - A Titan 4 rocket believed to be carrying an expensive
military spy satellite explodes after lift-off from Vandenberg Air Force Base.
Dec. 1, 1994 - Western Europe's 70th Ariane rocket crashes into the
Atlantic with the $150 million PanAmsat-3 telecoms satellite after launch from
Kourou, French Guiana.
Jan. 26, 1995 - The Chinese-designed Long March 2E rocket carrying a
telecommunications satellite explodes after blast-off from Xichang in southwest
Oct. 23, 1995 - An unmanned Conestoga rocket whose satellite contained
14 scientific experiments explodes 45 seconds after blast-off from a NASA
facility in Virginia.
Feb. 15, 1996 - A rocket carrying an Intelsat 708 communications
satellite explodes soon after take-off from China's launch site in Xichang.
May 20, 1996 - A Soyuz-U booster rocket carrying reconnaissance
satellites explodes 49 seconds after lift-off from Russia's Baikonur cosmodrome.
June 4, 1996 - Europe's Ariane-5 rocket explodes 40 seconds into its
maiden flight after blasting off from the European Space Agency launch center in
June 20, 1996 - A Soyuz-U rocket carrying reconnaissance satellites
explodes after lift-off at Plesetsk cosmodrome.
May 20, 1997 - A Russian Zenit-2 booster rocket carrying a Cosmos
military satellite explodes 48 seconds after launch.
Aug. 12, 1998 - The U.S. Titan rocket program is put on hold when a
Titan 4A explodes soon after lift off in one of history's most expensive space
disasters. The cost of the rocket and its spy satellite cargo was put at more
than $1 billion.
Aug. 27, 1998 - A Delta 3 rocket carrying a U.S. communications
satellite bursts into a $225 million fireball, soon after blast-off from Cape
Canaveral on its maiden flight.
Sept. 10, 1998 - A computer malfunction brings down a Ukrainian rocket
carrying 12 commercial satellites, minutes after blast off from Baikonur.
Jul. 5, 1999 - A Russian Proton-K heavy booster rocket launched from
Baikonur suffers a malfunction which detached the engine and parts of the
booster, causing them to crash onto the steppe. A 200-kg (440 lb) chunk falls
into the courtyard of a private house. Kazakhstan briefly closes Baikanur in a
row with Russia over clean-up costs & rent for the base.
Oct. 28, 1999 - A Russian Proton rocket carrying a communications
satellite crashes shortly after take-off from Baikonur.
This article was excerpted & edited from NCSC’s Guidelines for Cargo
Security & Loss Control. The article was contributed by Mark Hayward,
president & founder of Encrypta Electronics UK.
Electronic seals were invented and developed in the UK in 1985 and have
become the European industry standard for closed loop transportation. Generally
electronic seals are permanent installations, bolted to the cargo doors of a
truck or trailer. Battery operated, they do not rely on external power and can
seal any cargo whether connected to a tractor unit or not. Battery power lasts
for six to ten years depending on the usage and battery technology. Because
these units are fixed to cargo doors they are reusable and as a result offer
both increased security & more cost effective sealing than disposable
sealing systems in closed loop distribution.
An electronic seal comprises a heavy duty housing which contains electronics,
a battery, a seal number display, display button and a physical security cable
which is passed through the cargo door handle, then trapped in the seal housing.
All the electronics are potted in a resin which ensures they will withstand
world weather conditions and abuse from drivers. When the cargo has been loaded
and the cable trapped in the housing the electronics generate a random seal
number. This number is displayed on the seal unit’s light emitting diode (LED)
display by pressing a button, & encoded on the cargo manifest. To check on
cargo integrity a press on the button should display the same seal number as
that recorded on the manifest. If a totally different number is displayed, that
means the original seal has been broken or violated. One of the major benefits
of electronics over mechanical systems is that seal number generation and
opening can be timed & stamped. In addition the electronics can have a built
in audit trail memory of the last 50 events. This can be invaluable in
identifying precisely when cargo theft took place, a great aid to the task of
As with any sealing system, electronic seals are designed as tamper detection
devices they are not entry prevention devices. Electronic seals are primarily
used to deter and detect internal theft. However there are physical locks which
also combine electronic seal technology so users can have both prevention and
the built in audit trail facility that electronic seals offer. The benefits of
these products is that all locks may be keyed alike, it is the seal number which
detects opening by employees with keys. The lock will deter opportunist cargo
theft while on the road.
Written from wire stories, the Associated Press,
Reuters, Hong Kong Shipping News Lloyds & other world sources.
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