The Cargo Letter

THE CARGO LETTER [349]
Air & Ocean Freight Forwarder - Customs Broker News
29 February 2000

Good Leap Day 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''. Don't miss the big Feb.10 news regarding the disaster on M/V OOCL AMERICA in " Cargo Damage Dispatches."

"Because of our confidential sources, we have obtained the first photos of this massive loss, an incident which now involves at least 200 more lost-crushed ocean containers that the previous 400 container record aboard M/ L APL China. Our confidential news & photos are not available at any other source.
https://cargolaw.com/2000nightmare_1_oocl_ameri.html

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

INDEX to The Cargo Letter:

OUR "A" Section: Trade, Financial & Inland News
   1.  Freight Forwarder Trade Briefs
   2. The Cargo Letter Financial Page
OUR "B" Section: FF World Air News
   3. Freight Forwarder World Air Briefs
OUR "C" Section:  FF World Ocean News
   4. FF World Ocean Briefs
   5. The Cargo Letter Cargo Damage Dispatches
      * Back By Popular Demand
OUR "D" Section: FF in Cyberspace
   6. The Cargo Letter "Cyber Ports Of Call"
OUR "E" Section: The Forwarder/Broker World
   7. New U.S. Transport Related Legal Cases
      * Forwarder "Terms & Conditions" Upheld
   8. The Boeing Chicken Launcher
      * A Tale From The Past

OUR "A" Section: Trade, Financial & Inland News

1. Freight Forwarder Trade Briefs

• FedEx Gets Tower .......... as the air express giant moves to rival one of its main competitors, UPS, by taking over U.S. Customs broker Tower Group Int'l. Last year UPS acquired Trans-Border Customs Services in order to enhance operations, and now FedEx is going in-house as well. Tower, a US$116.3M Buffalo, N.Y. based firm & subsidiary of McGraw-Hill Co. is a major player in the No. American market with 63 offices & 1,600 employees in the region. The company has been providing customs clearance for FedEx since 1996 in Miami, Newark (New Jersey) & Indianapolis. Tower will provide FedEx with a digital imaging system which electronically transfers documents to clients & Customs. The new operation will provide a variety of transport & trade services, such as customs brokerage, trade consulting & information technology, E-Commerce programs, and transport & logistics services. Tower will become a subsidiary of "FedEx Trade Networks."
• Ocean & NFC Make New Giant ........ as merger will create one of the largest logistics groups in the world. The merged group will be called Exel, named after the NFC subsidiary, & have combined annual revenues of US$5.6B. NFC is the parent company of Int'l logistics operator Excel, and Ocean, the parent company of global forwarding & logistics group MSAS Global Logistics. The 2 British groups said that the merger will combine the MSAS worldwide freight forwarding business & Exel's ground-based supply chain services. The new group will serve about two-thirds of the world's largest 250 companies, excluding financial institutions. The Ocean Group has made an offer for NFC shares. Shareholders from each company will have 50% of shares in the merged group. The new CEO of the merged company will be the current CEO of Ocean Group, John Allan. The initial cost of the merger will be some US$50M due to job losses. Currently the combined group employs 53,000 people.
• Tomorrow The World ............ as the German postal service Deutsche Post AG, which plans an initial public offering this year, said on 25 Feb. that its 1999 sales rose to more than 44 billion marks (US$22.24B) from 28.7 billion marks in 1998. The company, which said it aims to become world leader in the air cargo business, said 1999 profit on ordinary activities was significantly higher than 1998's 1.3 billion marks & that it expected 2000 sales to climb to around 60 billion marks. Deutsche Post says it is changing its name to "Deutsche Post World Net." Also announced at the CeBIT technology fair in Hanover, it intends to become Europe's leader in road and rail freight transport. Its current brand names Deutsche Post, Postbank & Danzas will remain. Deutsche Post CFO Edgar Ernst said a decision had not yet been reached on the size of the stake to be floated in its planned IPO. "All the figures currently being named are rubbish," Ernst said, adding that his company planned no U.S. listing. The Financial Times has reported that the German government would sell up to 35% of Deutsche Post in the IPO. The report quoted sources at the Finance Ministry & at the company. In related news, Lufthansa & Deutsche Post AG declined to comment on another report in the Financial Times that the 2 were in talks to combine their logistics subsidiaries with negotiations due to be completed by April. Citing company sources, the FT said that Lufthansa & Deutsche Post plan to merge freight airline Lufthansa Cargo, express market leader DHL & freight forwarder Air Express Int'l (AEI), forming a global logistics group with US$8.68B in turnover. AEI is owned by Deutsche Post and both Deutsche Post & Lufthansa each own a 25% stake in DHL.
• U.S. Transport Sector Healthy .......... as it reported revenues of US$318B & employed more than 2.9 million workers in 1997, according to reports from the U.S. Commerce Dept.'s Census Bureau. Nationwide, truck transportation generated $141B in revenues, dominated by general freight trucking with revenues of $88B. Water transport revenues of $24B were attributable mostly to deep-sea freight transportation. California, with revenues of $37B, & Texas, with revenues of $29B, led all states.
• Bolero Launches ......... as new Internet-based Int'l trade transactions system, bolero.net, was launched in the U.S. market 10 Feb. The system's developers claim that the system substantially reduces, and in some cases eliminates, paperwork in the trade transactions. According to the United Nations, 7% of the cost of Int'l trade is a result of inefficient trade administration, adding up to $420 billion a year. Bolero.net is owned jointly by the T.T. Club & the Society for Worldwide Interbank Financial Telecommunications (SWIFT). The firms began developing the program in 1997. Last year, they started testing bolero.net in the Int'l market. The system links the entire Int'l trade supply chain, from exporter and importer to carriers & banks. The company, based in London, will open an office next week in New York. For more details on Bolero, look under "Letters of Credit" at: https://cargolaw.com/navigator.html
• A Chinese Ax Will Fall .......... as Chinese Premier Zhu Rongji has vowed to intensify a crackdown on smuggling & punish corrupt customs officials severely, the People's Daily said on 21 Feb. We "must continue to intensify the crackdown on smuggling ... and should not allow contraband activities to stage a comeback," Zhu told a national meeting of customs officials. The government would also "thoroughly investigate and check corruption cases & severely punish corrupt elements according to the law," he said on 20 Feb. Zhu said China's recent clampdown on smuggling had uncovered some "evil members of the herd" in customs and that showed the Communist Party was determined & able to eradicate corruption. The newspaper did not identify any of the corrupt customs officials but quoted Zhu as saying customs should improve their computer networks & cooperate with other government agencies more closely to smash "smuggling rings." China's biggest smuggling scandal in 5 decades has recently unfolded in the southeastern coastal city of Xiamen with close to 200 people implicated. These include the wife of Jia Qinglin, one of the 22 members of the Communist Party's powerful Politburo & a close ally of President Jiang Zemin.
• President Clinton's Last Agenda ........... as he has set out a limited trade agenda for his final year in office, according to The Journal of Commerce, urging Congress in his State of the Union address to back Normal Trade Relations (NTR) status for China, which would clear the way for the U.S. to receive the benefits of China's expected accession to the World Trade Organization (WTO). Clinton also urged Congress to extend new trade privileges to Africa, the Caribbean & Central America.
• Tiawan Over Channel ....... as it had a US$15.58B trade surplus with the Chinese mainland last year, jumping 21% over 1998 Taiwanese Customs statistics revealed. Bilateral trade heavily slanted in Taiwan's favor grew by 14.5% over the previous year to $23.48B. The bulk of the trade was imports from Taiwan which increased by 17% to $19.5B. Chinese exports to Taiwan accounted for only US$3.9B & grew by just 2.1%. The processing trade remained the core of the trade relationship. China imported US$14.7B worth of such goods, an increase of 8%, and exported about $2.5B worth to Taiwan - down by 4.4%.
• Taiwan Rise .......... as its export orders received in 1999 rose 7.26% compared with the previous year, reaching a first ever high of US$127.47 B. The strong overseas demand for electronics and information technology products was the main reason for the surge in trade orders, according to Taiwan's Statistics Dept. In 1999, orders for electronics products rose 19.11% to US$22.21B - a rise accounted for by Taiwan makers' global logistics operations. Meanwhile, demand for information and communications products increased by 9.3% to US$23.46B due to Y2K-related orders & robust demand for notebook computers. Such a growth rate is expected to continue. Export orders in 2000 are expected to grow 5% from a year earlier as growth in Asian markets continues and the demand for information & electronics products remains strong. In Dec. last year, export orders were worth US$11.14B, up 11.47% year-on-year.
• Guangdong Is Tops ........... as the General Administration of Customs in China reports that 40% of China's total exports came from the southern coastal province of Guangdong, with a value of US$77.68B. About 90% of the country's overall exports were from just 10 provinces & municipalities in the east of China: Guangdong, Shanghai, Jiangsu, Zhejiang, Shandong, Fujian, Liaoning Hebei, Beijing & Tianjin.
• Philippines Mending .......... as it saw a drastic recovery in its economy in 1999. After 1998's trade deficit of US$163M, the country reported a surplus of US$4.3B in 1999. Exports grew from US$29.5B in 1998 to US$35B in 1999, an increase of 18.8%. While imports grew by 3.6%, from US$29.7B in 1998 to US$30.7B last year. Imports in Dec. 1999 showed the highest growth since July 1996 rising 28.7% from US$2.1B to US$2.7B.
• CLECAT Chief ........... as the European Liaison Committee of Freight Forwarders, a federation of 14 national forwarders' organizations in Europe, has appointed Henrik Baasch as its CEO & senior policy adviser. Baasch, a consultant in intermodal transport, was the secretary-general of the European Shippers' Council from 1994 to 1996. Baasch will keep his consultancy practice during his work for the European Liaison Committee of Freight Forwarders, known under the French acronym CLECAT. CLECAT represents the European national organizations of freight forwarders & customs agents vis-à-vis the European Commission & other European institutions. The European Liaison Committee of Freight Forwarders said that its member organizations employ about 650,000 people altogether.
• Singapore Freight Forwarders Assn. Gone ............. as it has reviewed its objectives and changed name. Under the new identity as "Singapore Logistics Association, the group revised its Constitution to admit logistics related & ancillary support businesses as Associate Members.
• Freight Forward Europe Wants You?.......... as the Brussels-based group says it's looking to expand its membership with companies from outside the EU, although the organization would continue to concentrate on EU policies & industry queries regarding air, sea and land transport & logistics services. In order to join, a company must have their core business in freight forwarding, annual revenues of more than US$1B & more than 5,000 employees. Current members are ABX Logistics of Belgium; Dachser & Schenker of Germany; Geodis of France; Kuehne & Nagel, Panalpina and Danzas of Switzerland; and Geologistics, previously British but now U.S. based. The poor need not apply.
• Circle Int'l Takes Them To School ............. as it will sponsor the Logistics Institute Asia Pacific, an initiative by the Economic Development Board (EDB). The institute forms part of EDB's vision to develop Singapore into a leading logistics hub in Asia. "The institute is a vital force in providing professional development for the future of logistics executives, managers and engineers. The logistics industry in this region will benefit tremendously from such an institute," said Circle's COO, Paul Graham. The sponsorship money will be used for the development of professional education & research to provide new knowledge and tools for students. In the future, Circle plans to work jointly with the institute to provide guest lecturers for its courses.
• Class Also In Session At Fritz Companies ......... as it has announced the promotion of Heather Moseley to the new position of "V. P. of Continuous Improvement." In this position, Ms. Moseley will be responsible for achieving companywide continuous improvement goals using the Malcolm Baldrige process, Fritz University employee training & customer-focused research. She has been with the logistics giant since 1984 & will report directly to the CFO.
• No More "Transportation" For CNF .......... as the California-based parent company of Emery Worldwide, Con-Way Transportation Services & Menlo Logistics, is changing its name from "CNF Transportation, Inc." to "CNF Inc."
• TNT Post Group Buys French .......... as it now has possession of 60% of French logistics company Mendy Developpement. Mendy was established in 1950 and specializes in transporting automotive components to Spain, northern France & the Seine Valley. The Benesse-Maremne based company has the additional bonus of having a contract with Renault. TNT Post Group, which is the parent company to Dutch Post & express carrier TNT, is looking to buy the remaining shares over the next few years.
• Tibbett & Britten Also Buys French ........... as the UK firm has acquired the TCA group of companies, a French logistics operator. The purchase includes the group's French holding company, Cipar Developpement SA. TCA operates internationally in the fresh produce transport & distribution sector in France & Spain. The company undertakes distribution to wholesalers & retailers throughout France & Spain using a fleet of 180 refrigerated commercial vehicles & trailers. TCA employs about 250 people with revenues of more than US$29M in 1998. In Poland, T&B has acquired Integrated Systems of Logistic Sp. zoo.
• U-T Goes Canadian .......... as Union-Transport has acquired Commerce Customs Brokers & Freight Forwarders Ltd., a 42-year old customs clearance & freight forwarding business based in Canada. With a staff of more than 100, the Commerce Group is located primarily in Ontario, with an agent network throughout Canada and border services at more than 20 border-crossing points between the U.S. & Canada. The group's primary offices are located in Toronto, Niagara Falls, Fort Erie, Sarnia & Windsor, Ontario; & also Bondy Customs Brokers, based in Leamington, Ontario. The group also has an interest in Ambassador Customs Brokerage Ltd., based in Windsor, Ontario, one of the largest border brokerage operations in Canada. U-T is based in Rancho Dominguez, Calif. with 175 company-owned offices in 41 countries.
• TransForce Gets DCA .......... as the Canadian transport concern has reached an agreement in principle through which it will acquire all the shares of DCA Express 24 inc. & Distribution de Colis les Appalaches inc., two companies specializing in express delivery of parcels & envelopes. The closing date for the transaction is expected in March 2000.
• Mail Hormones ........ as the European Court of Justice has decided TNT Post may no longer distribute domestic mail - from senders based in Germany - to German addressees. The ruling came in a case against Citibank which makes use of cheaper 'remail' in order to circumvent the high domestic rate charged in Germany. It hands the mail to TNT Post in The Netherlands which offers it - as Int'l mail - to Deutsche Post. TNT Post was 'extremely disappointed' and also saw its stock exchange price drop immediately. "This is contrary to the European range of ideas. The Court has rewarded protectionism," according to the spokeswoman of TNT in Amsterdam. Citibank must now pay the revenue of its cheap route to Deutsche Post. The Court opines that the Int'l postal accord must be observed.
• Flater Rate...... as Airborne Express has introduced a service for generic bulk shipments of "flat mail," which it says is 15 to 20% lower than U.S. Postal Service 1st class mail. Airborne said it can send flat mail, non-personalized printed or video materials weighing up to a pound & meeting specified dimension requirements, in 1 to 2 days. USPS bulk-rate delivery rate has a delivery time of 10 to 14 days, with USPS first class in 2 to 3 days. Airborne's service, called QuikMail, is provided through a partnership with QuickPak Inc., which provides sorting services. Customers of QuikMail stuff, seal & address individual flat mail pieces & place them in a carton for Airborne pickup. Airborne verifies addresses, barcodes the pieces & delivers them to the QuikMail Processing Center in Indianapolis. There the pieces are sorted by zip code & delivered directly into the USPS stream for residential delivery.
• German Road Rage .......... as road transport operators in Germany & from other countries may have to pay DM 0.25 for every kilometer covered. That is the recommendation of a German commission which has been conducting a study into the funding of infrastructure for the Government. The recommendation has created an uproar in Germany because the levy would be 10 times as high as the annual payment which applies to the Eurovignet now. The plan would increase government road revenue by tenfold.
• UPS Now Drives A Ford .......... has Ford Motor Co. has formed a strategic alliance with UPS Logistics Group in order to better implement its transportation operations in the US, Mexico & Canada. Not only does Ford want to speed up the delivery time of its vehicles by 40%, it wants both consumers & dealers to have on-line access to individual vehicle tracking from production to final delivery. This is expected to be fully possible before the end of 2001. UPS will be responsible for the transportation of Ford, Lincoln & Mercury automobiles and the Ford transportation network will be upgraded in order to fully optimize the facilities. No word on trade-in values for thse brown trucks.
• But Circle Gets A Buick .......... as General Motors & Delphi Automotive Systems Corp. have awarded Circle Int'l a multiyear contract to manage customs clearance of their U.S. imports. Circle will manage shipments from its service centers in Atlanta, Chicago, Detroit, Los Angeles & New York. Both GM & Delphi import about 32,000 shipments a year into the US. The companies choose Circle after reviewing bids from 17 brokers.
• Brennan Int'l Greets New CEO ........ as it has promoted John Franson to president of Brennan USA. Charles Brennan, founder of the California-based non vessel operating common carrier (NVOCC), has moved to chairman of the board for Brennan Int'l Transport. Mr. Franson will continue to work out of the company's office in Itasca, Illinois.
• Happy Rails To You ........... as the Canadian National Railway Co. & Burlington Northern Santa Fe Corp. have guaranteed that they will provide shippers better or the same rail service after merging. Paul M. Tellier, CN president, along with Robert D. Krebs, BNSF chairman, said that "our customers ... do not want service problems or the loss of route options such as those that followed the Union Pacific-Southern Pacific merger & the breakup of Conrail." "The CN/BNSF combination will meet or exceed our current service levels. That's why we'll guarantee service levels & route options for our customers," the executives said. CN & BNSF are expected to file, as soon as they can after March 20, a joint application to the Surface Transportation Board asking that their merger be approved. They have petitioned the STB suggesting a one-year review of their proposed union. See next story.
• But Not So Fast ......... as Roquette America Inc. (RAI), one of the largest corn processors in the U.S., filed a petition with the Surface Transportation Board (STB) to reopen the 1995 merger between the Burlington Northern Railroad (BN) and the Atchinson, Topeka, & Santa Fe Railway Company (ATSF). RAI is citing as grounds for reopening 'a loss of pre-merger competition resulting in a revenue windfall to the rail carrier & substantial harm' to RAI. RAI's request for a reopening of the ICC-approved merger coincides with the STB's consideration of the largest rail merger proposal to date between the BNSF & the Canadian National Railway ('CN'). In 1995, the merger of the BN & the ATSF was the largest at that time.
• Belarus To Loose GSP? ........ as the Office of the U.S. Trade Representative may drop Belarus from the Generalized System of Preferences. GSP grants duty-free treatment to certain goods that are imported from approved developing countries. The program is authorized under the Trade Act of 1974. The USTR's Trade Policy Staff Committee cited Belarus for violating internationally recognized worker's rights.
• Latin America Investment Surge .......... as for the 1st time since 1986, Latin America & the Caribbean surpassed Asia last year as the largest regional recipient of foreign direct investment among developing countries. According to preliminary estimates released by the UN Conference on Trade & Development (UNCTAD), the region enjoyed a 32% increase in investment from US$73B in 1998 to US$97B in 1999.
• Vietnam Fraud Surge ......... as Vietnam uncovered 14,281 breaches of import & other trade rules last year, an increase of 8.5% from 1998, official media reported. The Saigon Giai Phong (Liberation Saigon) daily said violations included use of illegal shipping documents, bribing of state firms & false declarations of the origin of goods to avoid import duties. Smuggling & graft have become widespread in communist Vietnam in recent years, and foreign investors complain they are a major impediment to doing business in the country as smuggled goods are often cheaper than those imported legally. The daily quoted figures from police in Ho Chi Minh City, the country's business hub, as showing that 2,608 cases of such fraud were discovered in the city last year, 18.2% of the total. Other major smuggling routes include the Cambodian & Chinese borders.
• China Customs Wants To Know ............ as it is tightening its supervision of customs declarations on imports starting March 1. The State Administration of Foreign Exchange & the General Administration of Customs have issued a circular of guidelines requiring all companies to specify what items they import. This new rule will be brought in apparently because some imports do not need to be paid for in foreign currencies, such as bartered goods.
• Mexico Wants To Know When ......... as Women's Wear Daily reports that U.S. retailers & shippers are angry over the Clinton administration's December 1999 decision to again delay allowing Mexican trucks to deliver goods anywhere in the U.S., claiming that the move was made to placate the Teamsters Union. The article notes that according to one industry source, Mexico will file a complaint on the issue with a NAFTA arbitration panel.
• U.S. Customs Shuts Down NAFTA ......... as it will close its NAFTA Center on March 15. The Dallas-based facility was opened in 1995 to help shippers with their questions regarding the North American Free Trade Agreement. During the past 5 years, the center's staff, which comprises representatives from Canada, Mexico & U.S. Customs, fielded about 20,000 questions a year. "Now that the trade community and local Customs officials are familiar with NAFTA, questions about importing under the Agreement will be addressed in the same way as any questions about other trade laws or regulations," Customs said. Companies importing goods from either Mexico or Canada should direct their NAFTA questions to the port of entry. NAFTA information pertaining to U.S. Customs can also be found on the Internet. http://www.nafta.customs.org http://www.customs.gov
• Customs Gets 5 New SACs ......... as U.S. Customs Commissioner Raymond W. Kelly has appointed & relocated 5 Special Agents in Charge (SAC) to the agency's Office of Investigations & Office of Internal Affairs. The 4 special agents for the Office of Investigation will operate in specific regions of the country. They are John Kelley in El Paso, Texas; Loraine Brown in Los Angeles; Joseph Webber of New York; and Elissa Brown in Chicago. Michael Turner has been assigned to acting regional Special Agent in Charge for the Office of Internal Affairs in Long Beach, Calif. Congratulations!
• U.S. Customs Needs Help With It's COBRA .......... as it is preparing to develop a COBRA Fees Advisory Committee. Customs is authorized to create the committee under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, which was amended by the 1999 Miscellaneous Trade and Technical Corrections Act. The purpose of the committee is to analyze how the COBRA fees are applied to the industry. Customs levies the COBRA fees to help cover its inspection costs. The agency collected about US$274M in COBRA fees in fiscal 1999, three-quarters of which were generated from ocean and airline passengers. The rest was generated from inspections of railcars, trucks, cargo ships, dutiable mail, and small boats & aircraft. Last year's COBRA also included about $367,000 in customs broker permit fees. Customs says its COBRA fees, which had been increasing by about 10% a year, fell 18% last year. The improved economic outlook in Europe & Asia in 2000 is expected to increase COBRA collections. The committee will consist of 8 industry members from air & ocean transport sectors. It will be headed by the deputy commissioner of Customs. The committee will meet twice annually in Washington. Customs is accepting applications from the industry to join the COBRA Fees Advisory Committee until March 9. For more information, contact Richard Coleman of Customs' Trade Compliance Team at 202-927-0563.
• Export Workshop At NOL ......... as the U.S. Commerce Dept.'s Office of Export Enforcement, along with the Small Business Development Center & World Trade Center of New Orleans, is sponsoring a workshop with industry executives about export controls. The workshop, the Business Executive's Enforcement Team, will feature presentations by the director of Export Enforcement and representatives from Customs, U.S. Attorney's Office, Census' Foreign Trade Division & Office of Chief Counsel for the Export Administration. Commerce wants companies to develop export compliance programs. The workshop will be held March 31. To attend, contact Paul Straughn at (214) 767-9294 or by e-mail at wmusgrav@bxa.doc.gov
• New UK Consultant Powerhouse ........ as an alliance has been announced between 3 strategic consultancy companies serving the Int'l freight and logistics industry. The companies in question - Andrew Lester & Associates (ALA), Peter Farmer Associates (PFA) and Reinecke & Associates (RAL) - are all experts in their specialist fields. Andrew Lester & Associates has been providing Int'l marketing research services to logistics companies & industry watchers since 1986. Reinecke & Associates is an Int'l search & selection network, with offices in key European markets as well as the U.S. & the Far East. Peter Farmer has specialized in advising companies on mergers & acquisitions since 1990 and launched PFA in Jan. this year. helen@andrew-lester.com
• Heady Smugglers ............ as U.S. Customs agents detained 2 women on 11 Feb. at a Mexican border crossing after allegedly finding pounds of cocaine hidden under their wigs. "It was the hair. Something about it didn't look right," said Rick Pauza, a government spokesman who obviously dislikes beehive styles of the '50s. Peggie Ann McEachern, 42, of Fayetteville, N.C., & Angela Cole, 29, of Spring Lake, N.C., appeared before a federal magistrate after being arrested on federal charges of possession with intent to import & distribute cocaine. Pauza said the pair acted increasingly nervous when officers, suspicious of their hair, pulled them aside to be searched at the Hidalgo-Reynosa Int'l Bridge pedestrian walkway. Customs inspectors said they found 3 packages of cocaine beneath their wigs. Behold! They must have been enormous! "The inspector noticed that the height of the wigs seemed a little strange, & their behavior also gave them away," Pauza said. "Obviously, they sat high enough that they didn't look normal." After clearly having had a "bad hair day", the women are being held at the Hidalgo County Jail, pending a bail request from their beautician. Send photos, please!
• That Old "Warm Sausages" Clue ........... as German customs officials arrested a drug courier who tried to smuggle US$257,000 worth of cocaine into the country in a cooler box stuffed with sausages on 22 Feb. Customs officials at Duesseldorf's Int'l airport became suspicious when they noticed that 2 bottles & the pile of sausages in the container were warm. The courier, a British woman who arrived from Barbados last week, had removed the coolant from 3 ice packs in the box & filled them with 5.6 kg of blue-dyed cocaine paste which would resemble the coolant packs. It said the woman worked for a British drug dealer, who had promised to forgive her own drug debts of about US$1,450 in exchange for making the cocaine run. The clear lesson here is never allow customs to squeeze your sausages without a fight. It obviously having been a bad day for smugglers, also on Feb. 22 Greek police arrested a man for trying to smuggle drugs to his father in prison -- by soaking shoelaces in liquefied heroin. The man is being held on charges of attempted shoe sucking.

2. The Cargo Letter Financial Page

• Atlas Air Inc. UP with reported record 4th-quarter net income of US$23.7M, up 31% from the year-earlier period. Revenues for the quarter rose 37% to $198.8M & operating income rose to $61.5M, from $47.1M. Both were also records. For the year, net income was $61.3M, including a one-time extraordinary 1st-quarter charge, compared to $46.2M in 1998. Revenues rose 51% to $637.1M & operating income increased 38% to $187.5M.
• BAX Global UP with an operating loss of US$600,000 in 1998 but a profit of US$61.5M a year later. For the last quarter of 1999, operating profit was up by over 100% over the same period in 1998, from US$13.9M to US$30.1M. For 1999, total operating revenue was up 17% to US$2.1B. And for the last quarter of the year operating revenue jumped 25% to US$600.9M. Although the company handled slightly less shipments; down from 1.26 million in 1998 to 1.255 million in 1999, in the last quarter of last year, freight weight was up to 504 million pounds.
• British Airways. DOWN as the airline carried 248,000 tons of cargo in the last quarter of last year, an increase of 10%. But cargo yield per ton kilometer was down to US$0.19; a drop of 4%. For the 9 month period ended on Dec. 31, operating profit stood at US$343M, a drop of 60% over the same period the year before. Revenue, however, remained the same at $11.2B. For the same period, the airline earned $241M after tax. This is compared with the last 9 months of 1998 when the figure stood at $460M.
• Canadian National UP as net income for the 4th quarter of 1999 rose 17% to US$213M. CN also said that its board of directors has authorized a repurchase program for outstanding common shares. The buy-back program, which starts Jan. 31, will acquire up to 13 million shares, or about 6.4% of the 201.9 million outstanding common shares. Operating income for the fourth quarter rose 14% to a record $407M. Revenue rose 4 percent to $1.39B, while operating expenses were essentially flat, at $980M. For the year, net income was $746M, compared with 1998 net income of $598M.
• C.H. Robinson. UP for the latest quarter as income from operations increased 29%, to US$22.7M, from US$17.5M in the 4th quarter of 1998. Net income rose 31%, to $14.6M, from $11.1M. Gross annual revenues were $2.26B in 1999, an increase of 11%. Net revenues increased 19%, to $293.3M.
• Circle Int'l. UP with net income, before a one-time gain, grew 22% to US$7.1M in the 4th quarter, capping a solid 1999 that saw the forwarding & logistics provider gain momentum under new management. Net revenue, or sales minus purchased transportation costs, increased 10% to US$90.8M in the last quarter, pushing full year net revenue up 10% to US$332.0M. Annual profit, not including a one-time US$2.7M gain, increased 11% to US$20.5M, on a 10% increase in total revenue of US$814.1M. Each of Circle's principal product lines improved year-over-year. Net revenues for air freight & ocean freight were up 10% & 16%, respectively. Net revenue from logistics, including customs brokerage, increased 8%.
• CSX Corp. DOWN a loss after one-time items of US$25M in the 4th quarter last year, mainly due to weakness in container shipping & workforce reduction charges in its rail & intermodal businesses. The group's loss compared with net earnings of $108M in the 4th quarter 1998. Before one-time charges, CSX reported earnings of $44M, compared to $108M in the year-earlier period. A one-time after-tax charge for a workforce reduction program at the rail & intermodal units cost CSX $34M, in addition to a $35M charge related to the sale of Sea-Land's Int'l liner business.
• Expeditors Int'l of Washington Inc. UP with record net income of US$15.89M for the 4th quarter of 1999, up 33% from the $13.94M for same quarter in 1998. Net revenues increased 21% to $124.1M. Total revenue was $422.7M, up 37%. Operating income rose 34% to $29.51M. For the full year, net earnings rose 25% to $59.18M. Net revenues increased 25% to $442.49M. Total revenue was $1.445B, up 36%, while operating income rose 27% to $93.32M.
• Forward Air. UP with record operating revenue and earnings relating to its 4th quarter and year end 1999 results of operations. Operating revenue for the quarter ended Dec. 31, 1999 increased to a record US$49.7M, an increase of 32.5%. Operating income from continuing operations for the period was US$8.5 million, an increase of 60.4% Income from continuing operations for the 4th quarter of 1999 was US$5.4M, an increase of 80.0%.
• Hapag-Lloyd. UP as operating profit from liner shipping reached DM100 million (US$53M), on revenue of DM3.1 billion. Between Jan. & Sept. 1998, shipping operating profits were DM50 million on revenue of DM2.2 billion. On a comparable basis, operating profit was up by about 33%. The German carrier moved 1.5 million TEUs in 1998/1999, 15% more than a year earlier.
• Hub Group, Inc. UP with increases in net income for the 4th quarter & year ended Dec. 31. For the latest quarter, net income increased 18%, to $3.1M. Revenue for the quarter was $336.3M, up 8% over the comparable period in 1998. Intermodal revenue rose 4%, to $249.9M. Truckload brokerage revenue increased 15%, to $52.5M, while logistics revenue increased 33%, to $33.9M. For the year, net income increased 22%, to $10.8M Revenue in 1999 was $1.3B, an increase of 13%.
• Hyundai Merchant Marine. UP with 190 billion won (US$170M) in net profits last year, compared with a net profit of 51.3 billion won in 1998.
• Target Logistics. UP as the fast-growing U.S.-based international forwarder & logistics provider, reported a 136% increase in operating revenues for its fiscal 2nd quarter, ended Dec. 31. The company reported operating revenues of US$24.9M, compared to operating revenues of $10.5M in Sept.-Dec. 1998. This was its 4th successive quarter of double-or triple-digit percentage of revenue increases. For the latest quarter, net income was $137,687, compared with a net loss of $632,297 for the same period in 1998.
• Wilhelmsen ASA. DOWN as the Norwegian group that owns 50% of Wallenius Wilhelmsen Lines, reported a net income of US$37M for 1999, down 27% on the 1998 net profit of $51M.
• UPS. UP (BUT) as net income in the last 3 months of 1999 increased 37.1% to US$661M, while revenue increased 11.7% to $7.45B. Net income for the year fell 49.3% to US$883M due to a one-time tax charge related to a federal ruling against the company. Without the $1.44B assessment, profit would have increased 33.5% to $2.33B. Total annual sales grew 9.1% to $27.05B.

OUR "B" Section: FF World Air News

3. Freight Forwarder World Air Briefs

• We Mourn .......... as an Emery Worldwide DC-8F freighter on Flight 17 crashed near Sacramento just after takeoff from Mather Field (15 miles east of Sacramento) for Dayton late 17 Feb. killing all 3 crew & sparking a huge fireball. FAA Western Region spokesman Jim Whitehead said the cargo jet crashed shortly after the pilot reported a "severe center of gravity problem," which refers to the way cargo is stowed in the aircraft's hold. Cargo shift suspected. The plane was carrying 62,000 pounds of cargo including clothing, automatic transmission fluid and a small number of fuses used to detonate automobile air bags - 9 grams worth, or about a third of an ounce, Emery officials said. Its capacity was 90,000 pounds. An FAA official once charged with checking some Emery planes said the agency was concerned about how the company strapped down cargo in some planes. Sacramento television station KXTV has reported that the Air Line Pilots Association, the union representing Emery pilots, wrote the company a 2 page letter last July alleging safety problems, including the loading of cargo. This was the 1st fatal accident in the company's 50-year history.
• Deregulation Said "Incomplete" ............ as substantial benefits for the consumer have flowed from European airline deregulation -- but nowhere close to what was anticipated," said IATA Director General Pierre J. Jeanniot. "Why? Simply because the airline industry's deregulation is incomplete." Jeanniot was speaking on 25 Feb. to the ATC 2000 Conference in Maastricht. Jeanniot continued, "For a variety of reasons, and in some cases a lack of political courage, those vital elements of the air transport product - Air Traffic Control Services - are not able to be fully responsive to market demand. The result is higher cost of operation, lack of capacity and increasing inconvenience to travelers & shippers." After pointing out that air traffic delays in Europe this summer are likely to be as bad as during the last two summers, because national ATC authorities are not planning sufficient capacity, Jeanniot identified what needs to be done. "The long-term solution to the world's localized ATC capacity crises will be provided by universal adoption of CNS/ATM. But in the meantime effective change will only happen with sustained and effective political commitment at the highest level: Redesign airspace to increase capacity -- giving capacity increases of at least 30% without the need for many additional controllers or expensive new systems. Plan together -- and governments must commit to meet agreed capacity targets. Service providers should be freed from government control and allowed to operate on a commercial basis. Ownership can range from state-owned to privatized, depending on what is appropriate for the country concerned. This would force the entity to think in terms of customer needs, productivity targets and seeking financing on the open market -just as airlines do! Such action would be a significant stride towards the completion of a true, integrated, European air transport system -- for the benefit of air travelers & shippers alike." (From the IATA press release.)
• IATA's Premier IT Event 2000 ......... as it's "Airlines@Internet" conference is set for 10-11 April 2000, & the Information Management conference will be held on 12-13 April, at the Doubletree Hotel in San Jose, Calif. http://www.iata.org/events/ai2000 or http://www.iata.org/events/im2000
• Open Up Or Be Closed Down ........... as leaders from both political parties in the U.S. Congress & the Clinton Administration say British air carriers may face stiff sanctions unless the U.K. government moves to liberalize aviation trade between the 2 countries. Warnings were voiced repeatedly at a special hearing called by House Transportation & Infrastructure Committee chairman Bud Shuster, R (PA), to address the breakdown in U. S.-U. K. negotiations. Measures, that would include barring flights by British carriers to the U.S., are not beyond the pale, and are under consideration, Transportation Secretary Rodney Slater said in response to a question from Shuster, who outlined possible remedies in a letter sent to the DOT Secretary a few days before the hearing. "We will have to explore all of our options," Slater said. And the DOT "will be working closely with the White House" to try to resolve the problems. The DOT will focus on the situation in March, when Slater returns from talks in Asia. Shuster & others indicated time is running out on the British to come around and work towards an open-skies agreement between the 2 nations. But the parties may actually be closing the gap, as the British government told a U.S. congressional committee that it is ready to make an aviation market liberalization deal with the U.S.,"but only on a balanced basis that will provide equal opportunities for U.K. airlines as well as U.S. ones." British officials said that U.S. "open skies" proposals would allow U.S. airlines to serve Europe from Britain, but deny U.K. airlines the right to fly between U.S. cities. British officials argue that Europe is essentially one market, like the U.S. The U.K. also criticized the U.S. stance against cargo wet-leasing. The UK said that it is prepared to restore direct services to London from Pittsburgh, provided the deal is balanced & that the U.S. government approves, for example, the British Airways-American Airlines & British Midland-United Airlines Codeshare applications. At present, just 2 airlines from each country -- British Airways & Virgin Atlantic Airways for the UK, and American Airlines & United Airlines for the U.S. -- can fly U.S./U.K. routes via Heathrow.
• Open Sky To Chicago ......... as China Southern Airlines, the mainland's largest airline, will launch its 1st Int'l cargo service on March 29, offering a dedicated Boeing 747-200 freighter service between Shenzhen & Chicago. The carrier's new service, listed as CZ Flight 392, will depart Shenzhen for the U.S. every Mon., Wed. & Fri. evening. The aircraft will make technical stops in Anchorage, Alaska & Sapporo, Japan but will neither take nor drop off cargo at these ports. The airline's new Shenzhen-Chicago service is a result of the recent bilateral agreement between the U.S. & the mainland signed last year. But it will still be a U.S. show, as Colorado-based Atlas Air will operate China Southern Airlines' new service under a long-term agreement that covers aircraft, crews, insurance & maintenance. A wet lease.
• Northwest & Malaysia Seek Immunity .............. as the airlines have filed a joint application with the U.S. Dept. of Transportation (DOT) for antitrust immunity for their recently concluded commercial cooperation agreement. If the application is granted, the Northwest-Malaysia partnership will be the 1st immunized alliance between a U.S. & an Asian carrier. Under the alliance agreement, Northwest will place its codes on Malaysia-US flights operated by Malaysia, & Malaysia Airlines will place its codes on U.S.-Malaysia flights operated by Northwest.
• Panalpina Cancels 2000 .......... as the forwarding & logistics group has decided to quit the Cargo 2000 interest group, consisting of several airlines & forwarding companies. Established within the Int'l Air Transport Association (IATA), Cargo 2000 was founded in 1997 with the aim of increasing the efficiency of the airfreight industry and, with this objective in mind, of jointly developing & implementing processes and standards plus a uniform data platform. Over the past year, Cargo 2000 has been concentrating on developing a comprehensive technical solution. In Panalpina's opinion, however, no further progress has been made with optimizing handling procedures, with the barcoding project or with electronic data exchange. In March 2000, moreover, the group is opening itself up to additional members. "There's a risk that further delays will occur and that we will have to accept the lowest common denominator when defining & attaining objectives" said Robert Frei, COO & director of Panalpina's Air Division.
• Fallen Star? .......... as Thai Airways Int'l said on 8 Feb. it is considering leaving the Star Alliance of linked airlines to join a rival group. The move apparently was prompted by the imminent membership in the Star Alliance of stronger regional rival Singapore Airlines. Thailand's national carrier could jump to the rival Oneworld alliance, which doesn't yet have a Southeast Asian member, analysts told Dow Jones Newswires.
• Northwest & KLM Seek Thai ........ as Northwest Airlines chief John Dasburg said recently that KLM & Northwest are talking with Thai Airways about joining the Wings Alliance, which also includes Alitalia. ***Delta & Swisscargo Change Cargo Dance Partners .......... as it is to end its alliance with Swissair subsidiary Swisscargo. Delta will partner Air France instead. Swisscargo said it will replace Delta with American Airlines from March 1.
• Private Portugal? .......... as the government has defied unions by planning to sell 34% of the national flag carrier TAP Air Portugal to the SAirGroup. In recent years, union members have strongly resisted privatization due to fears of redundancy or other negative changes, but it appears that the government alone cannot save the failing airline. Between 1994 & 1997, the Portuguese government invested US$871M in the company but recorded losses of $96.8M after only 2 years of profit. It is hoped that SAirGroup, the parent company of Swissair, will be able to rescue the struggling airline paying $154M for the 34% stake. It also holds the option of buying a further 5% at a later date.
• Goodbye Ansett? .......... as the Australian carrier may soon to be totally handed over to Air New Zealand by Rupert Murdoch's News Corp. According to The New Zealand Herald, Air New Zealand's chairman, Sir Selwyn Cushing, has implied that he is fully confident that the sale will take place within days. Sir Selwyn also indicated that the price of the sale had been settled. Air New Zealand & News Corp. each own 50% of Ansett Australia.
• Hello Virgin Down Under? ........... as Virgin Group announce it is spending US$125M on the development of its new national Australian airline, to be based in Brisbane, Queensland. Virgin is still having discussions with partner Singapore Airlines about intercontinental connections.
• Taiwan Won't Say......... as China Airlines has said that if the airline is to sell any shares, the identity of the buyer will probably be revealed in early March. The statement comes amid denials by Northwest that it is buying a 23% stake in the Taiwanese airline. The Taiwanese newspaper, Economic Daily News, recently reported that China Airlines will be selling off a 23% stake to the U.S. airline & a further 10% to an unidentified U.S. cargo carrier.
• Night Fighting .......... as the battle by the European airports against regional claims for night flights prohibitions now has German airports united on the issue. Via their joint organization in Stuttgart the German airports have made it known that they no longer consider it 'economically responsible' to agree to night flights prohibitions. They reacted to a decision by the regional politicos to prepare a night flights prohibition for Cologne/Bonn Airport. A broad front of political parties banded together for this.
• Mexpost Says Yes For Privatization .............. as the public sector parcels & messenger service is up for privatization and looks set to go on-line. The 10-year old company is receiving interest from various startup on-line retailers who are frustrated with the inadequacies of Mexico's public mail system. Currently, Mexpost holds about 15% of the national market for package & message delivery systems & retailers view this as an opportunity to efficiently make home deliveries via the Internet. Initially, UPS, Grupo Bailleres & Grupo Desc showed interest in the acquisition but they have since pulled out leaving room for other companies such as Hermes, Chronopost, Grupo Elektra, Femsa & Omnitrax de Mexico. All these companies have on-line product sales or are to implement them soon.
• What's An "EGL?".............. As Eagle USA Airfreight said it will change its name to EGL Inc. Snappy.
• Varig Cargo Expands .......... as the Brazilian freight subsidiary of Varig is to take over both Nordeste & Rio Sul. Varig Cargo will then amalgamate the 3 airlines, increasing overall cargo capacity. The move will give the carrier more flexibility in routing options.
• Said "Ridiculous" - But UPS Not Laughing ........... as an arbitrator has ruled that United Parcel Service must create 2,000 full-time jobs under the terms of its 5 year contract with the Teamsters. In a decision released 16 Feb., independent arbitrator George Nicolau gave Atlanta-based UPS 90 days to add the full-time positions. UPS also must pay back wages & benefits to those workers, who previously were part-time. Teamsters officials estimated Thursday their members would realize at least US$80M from the arbitration decision, which they said was among the largest in union history. UPS called the US$80M figure "ridiculous" and said the company had not yet determined any costs. As part of its 1997 contract with the Teamsters, UPS agreed to hire 2,000 new full-time workers per year for 5 years _ replacing part-timers _ if UPS regained and surpassed shipping volume lost to a 15-day strike. When package volume dropped because of the strike, UPS officials contended that the job-creation language was void for the contract's first 2 years. The Teamsters then filed grievances for 1997 & 1998. The decision covered the 1997 grievance; the 1998 dispute is pending. With shipping volumes restored, UPS agreed to create 2,000 full-time jobs for 1999. In happier news, UPS is now the official express company of NASCAR. Maybe it can race away from the Teamsters.
• Virtual Freight .......... as the idea of a virtual market set up to provide transport & shipping interests with return loads is easily stated but somehow has eluded practical implementation so far. Perhaps Global Freight Exchange, an U.K.-based Internet startup will do better because of the weight & seriousness of the parties concerned, e.g. many airlines & companies like Circle Int'l Group, Emery Worldwide, Fritz Co.'s, Kuehne & Nagel, MSAS Global Logistics, Panalpina and Yusen Air & Sea Service. GFX says it will begin pilot testing in May an online market for buying & selling airline cargo capacity. GFX, launched last year by two former McKinsey & Co. consultants, has signed up 9 airlines & 7 forwarders to use the system during the pilot, after which GFX hopes to begin charging clients to use the system. The system is slated to go live in July. GFX says it is leaning toward charging forwarders & airlines subscription fees, instead of transaction fees. More than just an auction, the company says, GFX plans to eliminate inefficiencies inherent in air freight capacity contracts & purchase agreements by giving forwarders & airlines real-time access to information on flight schedules, capacity & booking commitments., a U.K.-based Internet startup, says it will begin pilot testing in May an online market for buying & selling airline cargo capacity. http://www.gf-x.com/
• BAX Global Gets Fuelish ..........has implemented a US$0.10 per kilogram fuel surcharge on Int'l shipments. The surcharge comes as jet fuel prices continue to rise & adds to a separate surcharge BAX imposed on domestic shipments in the fall last year. The Int'l surcharge rate will vary by origin country & be shown as a separate line item on BAX house air waybills. Follwing the industry trend.
• Danzas Preferred ......... as the Swiss logistics subsidiary of Deutsche Post, has signed a key account agreement with Swisscargo, the airfreight marketing arm of the Swiss airline group SAirGroup. Under the agreement, Danzas will receive preferential treatment in handling, capacity, pricing, & IT integration. Swisscargo sells & manages the air freight capacity of Swissair, Sabena & other airlines.
• Concern At Dublin ........... as it's airport has seen a decrease in cargo over the past few years with figures dropping from 14.6% growth in 1997 to 9.9% in 1998. As a result, fears have been raised that the airport is not functioning at its full potential. Infrastructure in the area presents a problem as congestion between the manufacturing facilities and the airport is steadily growing worse & this is inevitably causing delays. Suggestions have been made that the airport be redeveloped to make it more freight friendly as currently there are concerns over the lack of freight capacity. About 65% of the 250 cargo movements leaving the airport each week are taken on passenger aircraft & this reflects the lack of dedication to freight.
• Let's Get The Rest In Line ......... as Lufhansa Cargo has stepped up measures to ensure security at its warehouses & during transit. In the warehouses, the cargo is now monitored by CCTV while under tight security. And during transit, the cargo travels with the new Safe/td 1 system in safe containers on the carrier's td. Flash express service. In April, the airline will introduce shock-sensitive & temperature sensitive freight services. With theft on the rise, other lines take notice!
• Door Prize? ........... as Delta Air Lines is to provide its staff with an inexpensive PC with Internet connection. In all, some 72,000 employees will be involved.
• Packaging The Gold ............ as World-class UPS employee-athletes will be running, swimming, kicking & jumping into customers' hands this month as UPS, the official express delivery company of the 2000 Olympic Games, unveils its Olympic-themed packaging in support of the Olympic Games in Sydney, Australia this Sept. For the 1st time ever, nearly 65 million packages will feature the images of four UPS employee-athletes who have been training to compete among the world's elite athletes. The images represent 3 sports of the Olympic Games - track & field, taekwondo & swimming.
• Haz Mat Rumble .......... as the FAA has issued a notice of proposed civil penalty in the amount of US$220,000 from McKesson HBOC, Inc., doing business as McKesson Drug Company, for its alleged violations of the Dept. of Transportation Hazardous Material Regulations. The FAA alleged that on Nov. 6, 1998, McKesson offered a shipment of hazardous materials to Airborne Express for transportation by air from Chicago O'Hare International Airport. The shipment consisted of a single Styrofoam cooler which did not bear any orientation or identification markings or labels. The shipment was not accompanied by a Shipper's Certification or Declaration of Dangerous Goods. On or about Nov. 6-7, the shipment was flown on a regularly scheduled Airborne cargo flight from O'Hare to a sort facility in Wilmington, Ohio, where employees noticed the packaging had failed & exhibited stains or spills. Upon opening the container, the employees found six (6) 500-ml clear glass bottles of Acetic Acid Glacial, a hazardous material under the Department of Transportation Hazardous Materials Regulations. Further investigation showed that one of the bottles had broken & leaked its contents through the container.
• Mr. Sand Man On Board ........ as American Airlines recently adopted a policy allowing pilots who are too tired to fly to beg off a flight without penalty, a top executive said at a hearing into a crash that killed 11 people last year.
• KAL Fliers Also To Get More Rest............ as Korean Air, which has been troubled by a string of accidents, plans to hire 240 pilots this year to help strengthen its safety standards. KAL usually hires 170 pilots a year, and the sharp increase this year was aimed at reducing the average flight time for its pilots from the current 180 hours to 120 hours a month. Cockpit fatigue has been cited as a cause in some recent accidents involving Korean Air planes. Of the 240 new pilots to be hired this year, 130 will be hired overseas. The rest will be filled by retired Korean Air Force pilots and graduates of Korean Air's own pilot training program. KAL runs 107 planes with 1,589 pilots. It has only 147 foreign pilots, nearly half of them hired last year. Experts have said Korean Air could increase its safety standards by hiring more foreign pilots who can communicate more easily with overseas air traffic controllers. Aviation records indicate more than 750 people have died in a series of disasters involving Korean Air planes in the past 16 years .
• SAS Will Take The Bus .......... as the Airbus A321-100 will be SAS's new, large aircraft for use in Scandinavia & Europe. SAS is purchasing 12 new A321-100s and has an option to purchase 10 additional aircraft. Freight handling is made more efficient through an ingenious container system. The solution reduces the amount of time spent loading & provides a better working environment. Improved freight capacity will also provide increased freight income for SAS. The plane carries a max of 10 LD3 containers.
• But Will It Have Machine Guns? .......... as Russia's MIG Aircraft Corp., known for the Soviet Union's fighter jets is finishing construction of the prototype of its 1st civil airliner, the MIG-110. Designer Valery Rodikov told Reuters the aircraft would start test flights aimed at getting certification in 3 years. The MIG-110 will carry 48 passenger or 5 tons of cargo up to 3,700 km.
• Fish Revolt - Return To Lake ........as 5 crew of a Boeing 707 freighter survived when the aircraft crashed into Lake Victoria, Tanzania on 5 Feb. The B-707F aircraft, operated by Sudanese carrier Trans Arabian Air Transport, crashed into the water while approaching Mwanza airport in northwest Tanzania with a Europe-bound cargo of fish. It landed in the water 2 to 3 km from the shore, but it didn't sink. The crew members were picked up by rescue boats while the damaged aircraft was later towed to the shore. The cause of the accident is unknown. Mwanza is used by several airfreight operators flying chilled fish from Lake Victoria to Europe. Tanzania resumed fish exports from Lake Victoria to Europe last week after a 9 month ban imposed by the EU because of a poisoning scare was lifted.

OUR "C" Section: FF World Ocean News

4. FF World Ocean Briefs

• Antitrust Tale To Be Told ......... as Harold J. Creel, chairman of the U.S. Federal Maritime Commission, said the FMC is ready to offer its view to the U.S. House Judiciary Committee in future hearings about a bill to remove the antitrust immunity of ocean common carriers. Creel told a conference of the American Federation of Labor & Congress of Industrial Organizations in New Orleans that Henry Hyde, R-Ill., chairman of the House Judiciary Committee, will hold a hearing on his antitrust immunity removal bill sometime late in March. "The bill has the support of some NVOCCs upset with their inability to offer service contracts to their customers," Creel said. "We expect that all segments of the ocean transport industry will be invited to testify & we will stand ready to offer our views, if requested," he added.
• Japan Also Ponders .......... as talks have begun between Japan's Ministry of Transport (MOT) & concerned parties over the Organization for Economic Cooperation & Development's (OECD) plan to abolish the antitrust immunity held by shipping cartels -- a plan MOT has publicly stated it does not want to see happen. MOT believes that the antitrust immunity should be retained to keep world trade stable. In a letter to OECD last year, the Japanese government stated that the OECD proposal was unrealistic because it failed to recognize the current state of Int'l shipping & the role of the shipping conference. Last year, OECD published a report on the comprehensive antitrust immunity, advocating its abolition so as to replace it with more competitive policies in worldwide shipping.
• Dead Pirates Tell No Tales .......... as Chinese authorities executed 13 people on 28 Jan. for murder & a string of attacks on ships, a sign the country is cracking down on rampant piracy. The executions were carried out in Shanwei, a port city in Guangdong province, according to police and a statement by the Shanwei court titled "Doomsday arrives for the 'evil monsters' of the sea." Those put to death included an Indonesian & 12 Chinese. They were among 37 gang members convicted by the court last year of crimes including robbery and murder in the Nov. 1998 hijacking of the freighter M/V Chang Sheng. The gang killed 23 sailors in the attack. The 13 pirates were described as staggered drunkenly, some of them singing Ricky Martin's anthem for the 1998 World Cup, into trucks which took them to be executed. One pirate was sentenced to life in prison, and sentences for 17 others ranged from one year to 12 years in prison. Six were convicted of robbery but did not receive jail time, for which we ask "WHY?". The case has been described as a signal that China is finally cracking down on widespread piracy & corrupt officials who have tolerated it. In previous cases, piracy suspects were released by local authorities & sometimes went on to commit other crimes. The ringleader in the M/V Chang Sheng case was Sony Wei.
• Pirate Gets Death ........ as the leader of the pirate gang responsible for the hijacking of the M/V Marine Master last year was given the death sentence by a Chinese court this month. The Intermediate People's Court in Fangchenggang gave life sentences to 2 other members of the gang & a mixture of other penalties to the other 11 gang members. The death sentence followed hot on the heels of the execution of 13 men for the hijacking of the M/V Cheung Son (above). The Marine Master was hijacked in March last year, when 14 armed Myanmar pirates boarded the general cargo ship & forced the crew into swimming pool inflatables in which they drifted for 10 days before being rescued.
• Pirates More Dangerous .......... as the number of pirate attacks reported during 1999 rose around 40% from figures in 1998 & are now nearly 3 times as frequent as in 1991, according to an end of year report from the Int'l Maritime Bureau. There were 285 incidents during the past year, 113 of which took place in Indonesia. "Although more attacks are reported to the IMB Piracy Reporting Center in Kuala Lumpur now than previously, there can be no doubt that attacks have increased substantially," says the IMB in the report. Crew deaths & ship hijackings are both down, despite the rise in incidents. Only 3 seafarers were reported killed by pirates last year & 2 missing, down from 78 in 1998, while hijackings fell from 17 to 8 last year. However, the numbers of pirates armed with guns or knives has risen. "The 1999 Annual Report once again highlights that modern piracy is violent, bloody and ruthless," said IMB deputy director Capt. Jayant Abhyankar. Read the full report. http://www.imo.org
• Growth Slows ......... as global oceanborne trade is expected to grow 3 to 4% annually through 2002, according to a study released by the U.S. Dept. of Transportation. Trade growth is projected to exceed that of the world's ocean fleets, which is estimated at 1 to 2% annually. Trade growth will "improve earnings for water carriers," the report said. The latest projections fall short of the trade growth -- 4.6% per year -- between 1993-1997, the report said.
• It's OK Because "Maintenance" Is Now "Service" ............ as the U.S. port industry, ocean carriers, rail carriers & shippers vocally oppose the Clinton Administration's inclusion of a tax on vessels calling at U.S. ports which would be used to pay for port dredging projects & harbor maintenance projects. Sound familiar? The Administration's proposal again surfaced in the fiscal year 2001 budget request to fund programs of the U.S. Army Crops of Engineers. The Harbor Services Fund would serve as a replacement of the Harbor Maintenance Tax on exports, which was declared unconstitutional by the U.S. Supreme Court in March 1998. If implemented, the fees would cost vessel operators almost US$1B per year, opponents of the Administration's plan said. Organizations opposed to the proposed fees include the American Assn. of Port Authorities, the Chamber of Shipping of America, the Agriculture Ocean Transportation Coalition, the Transportation Institute, the National Mining Assn., a large group of ocean carriers, the American Waterways Operators, the Assn. of American Railroads, the National Waterways Conference & Intertanko. The European Union is also opposed to the proposed fees, on grounds that they would constitute an unfair trade practice. So don't provide "Maintenance" for harbors, if simple "Service" will suffice!
• FMC Will Proceed ........ as the U.S. Federal Maritime Commission has advised that it will not be discontinuing its probe into the abuse of transpacific routes. This is despite the fact that the investigation was officially terminated at the end of last year. It appears that disgruntled shippers complained of carriers not honoring their contracts during the peak holiday season in 1998 as they were taking advantage of higher rates. As a result, the FMC pledged to undertake an extensive investigation which was forecast to be completed by the end of last year. However, due to the reluctance of shippers to come forward with evidence of abuse, the FMC claims it has not been sufficiently able to press charges. Nonetheless, the FMC has reported that it is still strongly considering this matter & although the investigation is officially closed, it will continue to study the facts and in due course will act accordingly. Even though there has been no firm action yet taken, it has been noted that the FMC has seriously considered the situati on & this in turn is expected to act as a warning to all carriers who may abuse the system.
• Connecticut Maritime Association's Shipping 2000 ........... with be held at Westin Stamford Hotel at Stamford CT on 20, 21 & 22 March 2000. You may also attend this great event by "virtual conference" online. Don't miss this unique event. http://www.cmaconnect.com/vc
• Raising The Pac Rates ............ as the 12 member lines of the Westbound Transpacific Stabilization Agreement have set rate adjustment guidelines for the U.S. export market to Asia. The increases are staggered through July & vary according to commodity. Rates for such items as hay & wastepaper will be increased twice by US$100 per 40-foot Ctnr. Most commodities are scheduled for a one-time bump. The maximum single increase recommended, on temperature-controlled products, is US$400 per 40-foot ctnr. Although U.S. container exports to Asia are rebounding following a period of heavy trade imbalances, the carriers said westbound rates remain 40% below 1997 levels & lower even than 1990 prices. The WTSA is a discussion agreement & only issues guidelines. Each line will negotiate actual tariff & contract rates individually with customers. The WTSA lines are APL, COSCO, Evergreen, Hanjin, Hyundai, "K" Line, Maersk Sealand, Mitsui O.S.K., P&O Nedlloyd, NYK, OOCL & Yangming Marine.
• Following The Trend ........ as the Far Eastern Freight Conference (FEFC) member lines will also increase freight rates to US$200 per container from April 1, saying rate restorations applied last year did not slow the strong recovery seen in the trade. Freight rates applied by the lines fell by as much as 60-70% during the Asian economic crisis as Asian markets collapsed & volumes dropped. However, when European exporters began to regain their Asian markets, FEFC lines brought in an early rate improvement program and applied rate restorations in April, July & Oct. of last year. The latest figures published by Eastbound Management Agreement (EMA) Lines have shown that by the end of 1999 volumes should have increased by over 20%. The lines said these restorations did not slow recovery. Cargo volumes are expected to grow by 7% this year, the lines said. Further rate increases will not occur until at least Oct., they said, adding the market developments will be closely watched. Companies in the EMA include APL, CMA-CGM, Hapag-Lloyd, Maersk Sealand, Mitsui OSK Lines, OOCL & P&O Nedlloyd.
• Raising The Euro- Mideast Rate ........... as lines are planning to raise freight rates in April in the trades from northern Europe to the Red Sea & the Mideast. The Europe Middle East Rate Agreement carriers will raise rates by US$200 per container on April 1 for shipments from the UK and northern continental Europe to the Mideast. Members of the agreement are Andrew Weir Shipping (Ellerman), CMA CGM, DSR-Senator, Hapag-Lloyd, Maersk Sealand, P&O Nedlloyd, Safmarine Container Line (CMB Transport) & United Arab Shipping Co. The Jeddah Service Group will also raise rates from northern Europe to the Red Sea port of Jeddah by US$200 per container increase, effective April 1. Jeddah Service Group carriers are CMA CGM, Hapag-Lloyd, Maersk Sealand, National Shipping Co. of Saudi Arabia, NYK, P&O Nedlloyd & UASC.
• Setting The Rate ...........as a senior executive from both the Westbound Transpacific Stabilization Agreement & the Transpacific Stabilization Agreement has backed a new method of negotiating between shippers & carriers. Brian Conrad, deputy executive director of both agreements, has slated the typical method of threshing out contracts between shippers & carriers. He pointed out that it is common for shippers to wait for a competitor to set rates with a carrier and then use the publicly filed terms to negotiate a better deal. Larger shippers demand lower rates because of higher volumes. Mr. Conrad said that confidentiality is good for the trade as it means that the 2 parties in question have no choice but to discuss the characteristics of each individual case. No benchmarks can be made & each case will be judged on its own merit. Mr. Conrad added that a small shipper could negotiate better terms than a large competitor on the basis of quality over quantity. And the carrier in turn can exploit the confidentiality by offering better terms if it finds dealing with the shipper to be beneficial.
• Just Say No ......... as China has been urged by the U.S. government to drop plans for regulations that would give the Chinese government restrictive authority to approve Int'l ocean shipping rates & insist that service contracts be made public. Other governments also share U.S. concerns that the proposed shipping regulations would clash with the free market system adopted by China's major trading nations. In a letter to China's Vice Minister of Communications Hong Shanxiang, U.S. maritime official Clyde Hart said that opposition to China's regulations includes the governments of the European Union & Japan. The concern is that, according to Mr. Hart, the proposed regulations "represent an unprecedented attempt" by the Chinese government "to control the practices & activities of commercial parties that collectively make up the Int'l shipping market." The regulations would require rate approvals, tariff filing & public service contracts. These would restrict market access & competition, said Hart. Instead, new regulations "should state unambiguously that the government of China will not interfere in the market for shipping services between carriers & shippers, including in particular the negotiation of freight rates and all commercial terms &conditions," said Mr. Hart. "The regulations should also authorize the practice of private service contracting that is widely used in Europe, the Americas & in Asia as well."
• Global Ocean Carriers, Now Less So ............. as it filed voluntary petitions for Chapter 11 protection from their creditors late 14 Feb.in Wilmington, Del. Besides Global Ocean itself, 14 subsidiaries filed petitions as well. The filing is the apparent follow-up to an agreement in principle the struggling Athens-based shipping company reached last month with the holders of more than two-thirds of its US$126M of 10.25% junk bonds due 2007. Under terms of that agreement, Global Ocean agreed to file a pre-negotiated reorganization plan some time this month, with the noteholders slated to receive 50 cents on the dollar for their bonds. Semi-Global Ocean Carriers?
• Joining The Post-Panamax Giants Club ......... as Hapag-Lloyd is finalizing an order for 4 giant containerships of about 7,000 TEU capacity, the 1st vessels in its fleet that would be too wide to transit the Panama Canal. The German carrier said that it will confirm the order soon. Hapag-Lloyd is one of the few major containership operators that have not switched to post-Panamax tonnage. At present, the largest Hapag-Lloyd vessels have a capacity of 4,800 TEU. The announcement of forthcoming orders by Hapag-Lloyd follows a recent order by Mediterranean Shipping Co. for 10 vessels of 6,700 TEU capacity for the Asia/Europe trade.
• The Giant Port .......... as Hong Kong is claiming to have handled 16.1 million TEU last year making it the world's busiest container port ahead of Singapore's 15.9 million TEU. The SAR's Secretary for Trade and Industry Chow Tak-hay gave the figure in the Legislative Council recently in reply to a question, adding that it represented a 10% increase in throughput over 1998. The figure was said to be "the best estimate we have for today and the collection of the final figures, including river trade & mid-stream, will not be available until mid-March" according to the Hong Kong Port & Maritime Board. A surge in river & mid-stream traffic in Dec. is credited with the boost which gave the edge over Singapore, whose traffic in the same period slowed down.
• Setting The L.A. Record ........... as despite traditional early year slowdowns, the Port of Los Angeles (#2 after Long Beach in the Americas) has posted its highest Jan. total on record: 358,235 TEUs. Total container volume through the port increased 33% over the 269,235 containers moved in Jan. last year. The Port reported a 28.4% increase in outbound loaded container volume. The January figures approached the port's highest-ever watermark for a single month for both imports & exports: 387,165 TEUs in Oct. last year. Inbound loaded containers last month set a Jan. record at 185,914 TEUs. Inbound empties tallied 8,265, or 4.26% of the port's total of 194,179 imports. Outbound loaded containers numbered 73,881. There were 90,174 outbound empty containers, accounting for 54.97% of the port's total of 164,055 exported containers. In contrast, The Port of Oakland's loaded container throughput for 1999 reached 1.21 million TEUs, an increase of 4.5% over 1998. Import cargo volume rose 2.5% to 448,800 TEUs while export cargo volume rose 5.6% to 756,400 TEUs. Total container throughput was 1.56 million TEUs, making Oakland the 4th-busiest containerport in the US.
• But Hamburg Cries ......... as due to insufficient container handling, Hamburg terminal organization HHLA will close its subsidiary Unikai Container Terminal (UCT), possibly by the end of the year. UCT needed to handle more than the 170,000 containers it handled in 1999 in order to be economical and so upgrade the terminal facilities. UCT employees will be transferred to other jobs within HHLA companies.
• SingaPort 2000 .......... as this major event will be held from March 29-31, 2000 at the Singapore Expo. Some 400 exhibiting companies from 32 countries & 9 national groups are expected at SingaPort 2000. Information about the exhibition conference is available through the website. http://www.singaport.com.sg
• Safmarine Name Changes ............. as the line owned by AP Moller, is to change most of the names of its subsidiaries to help promote its brand. Safmarine's South African SafLink office organization & its European Aseco agency are both to be renamed Safmarine as are liner shipping services CMB Transport & SCL. However, the No. & So. America shipping line SafBank, which is jointly owned by British shipping group Andrew Weir Shipping, will remain unaffected.
• NOL Dollar Change .......... as the Singapore liner company decided to switch definitely from the Singapore dollar to the U.S. dollar for all its administrations. First our APL Line, now our dollar.
• Nedlloyd Gets Decafinated ......... as it has agreed, in principle, with Italian Decafin S.p.A, terms for the purchase of Decafin's 33% minority interest in the Mammoet Decalift joint venture. The Italian heavy-lift & transport operations of Mammoet Transport have since July 1995 been combined in the joint venture in which Nedlloyd holds a 67% interest. Nedlloyd expects that the purchase of Decafin's interest in the Mammoet Decalift joint venture will be completed after the necessary procedures by mid March, but with an effective transfer date of Jan. 1, 2000.
• Phoenix Int'l Hits #12 .......... as it has opened branch office in Charleston, South Carolina. Phoenix has opened twelve new offices within the last year. Phoenix Int'l is the largest, privately owned Int'l freight forwarder in the USA.
• All In The Family ......... as German project cargo firm Rickmers Line has been sold by parent company Hapag-Lloyd to Reederei Bertram Rickmers, bringing the line back to the Rickmers family fold. The sale was made retrospective from Jan. 1 this year.
• Sea-Land in China ........ MAERSK Sealand has introduced through bills of lading to/from Wuhan in Hubei, China. Four inland connections between Shanghai & Wuhan, the industrial hub, are to be established and will be provided once a week in both directions. Upstream of the Yangtze, the journey takes 4 days, while the downstream journey takes only 3. Acting as subagents for Maersk Sealand will be Changjiang Forwarding, Sinotrans Hubei & Hubei CTD, while Associated Marine Transportation Inc. & Sinotrans Hubei will oversee & implement the inland operations.
• Big P&O Nedlloyd Box Buy ........... as it has placed new orders for general purpose & reefer containers, worth US$84M in total. The new containers will replace older equipment & expiring leases. A total of 53,000 TEU of general purpose containers, consisting of a mixture of 20-foot, 40-foot & 40-foot high-cube containers have been ordered from China International Marine Containers Group (CIMC), Hong Kong & CIVET/KSCF, Hong Kong. All of these containers will be built in China delivered from March 2000 onwards. Also on order are 1,000 40 foot high-cube reefers which will be built by Hyundai in Korea. P&O Nedlloyd currently has more than 600,000 owned & leased containers.
• "E" Buy .......... as Descartes Systems Group, Inc., a Canadian provider of business-to-business hosted transportation software, will acquire E-Transport, based in Pittsburgh. E-Transport provides rate & tariff management software used by major ocean carriers. Descartes Systems, based in Waterloo, Ontario, is a source of logistics networks used to manage transportation services. E-Transport will continue to operate in its present form & retain its name. Descartes will issue stock worth US$80M to E-Transport's shareholders, "based on Descartes' closing stock price in the period leading up to the execution of the definitive agreement," according to a company statement.
• "E-Freight" .......... as the Singapore National Shippers' Council will launch an Internet site in March to enable shippers to request ocean freight rate quotations & book shipments online. The shipper group said that its soon-to-be-launched "E-Freight Center" will help the shipping community cut down paperwork & time when conducting shipping activities via the Internet. The Singaporean shipper council said that the system is the 1st of its kind to be introduced in Singapore. Shippers will use the Internet system to obtain freight & service rates, book cargo space with shipping lines and generate shipping documents such as bills of lading directly with service providers. The system will also allow cargo tracking.
• APL Chief Steps Down ........... as after being replaced as CEO of American President Line in Oct. 1999, Tim Rhein is giving up his position as CEO of APL Logistics. His replacement for this position has not yet been announced. A long-term senior executive of APL, Mr. Rhein will no longer have any responsibilities in the day-to-day senior management at APL. He will remain chairman of APL - the group subsidiary responsible for U.S.-flagships - and will continue to be a director of NOL.
• Ships.com? ........ as Microsoft Corp. chairman Bill Gates has bought an 8% share of Newport News Shipbuilding. The purchase, disclosed 18 Feb. in forms filed with the Securities & Exchange Commission, is worth US$68.9M at current stock prices & makes Gates one of the shipyard's 2 top stockholders. First Manhattan Co., a Madison Avenue investment firm also owns 2.6 million shares. Gates, with a personal fortune estimated at more than US$100B, hasn't publicly said why he bought a piece of the shipyard. The shipyard employs about 17,300 people. It is the nation's only builder of nuclear-powered aircraft carriers, which year the shipyard earned $97M.
• E-Mail Woes ........... as the Int'l Transport Intermediaries Club (ITIC) has warns that while e-mail systems can help to reduce communication costs they can still lead to substantial losses at the touch of a button. The latest issue of ITIC's "Claims Review" reports the case of a charterer who had invited tenders for a long-term charter. A ship broker sent his principal's bid via an e-mail message system to the charterer's mailbox in the U.S. using an address code for the charterer. Unfortunately, the U.S. system interpreted the code as a mailing list & the bid was circulated to a number of other owners. The principal did not secure the bid, claiming it was undercut as a result of its inadvertent publication. In another case, a ship broker in Scandinavia was instructed by his principal to confirm redelivery of a ship to its owners. He sent the notice of re-delivery to the owner's broker in the Far East by e-mail & requested confirmation of receipt. The owner's broker received the message but when he viewed it, it was blank. The system confirmed receipt to the Scandinavian broker who assumed the redelivery notice had been received & accepted. But the owners refused to accept redelivery of the ship & a substantial claim was made against the Scandinavian broker. As part of its loss prevention services, ITIC has launched a survey in its latest "Claims Review."
• NIT Picking? ........ as the National Industrial Transportation League has launched the "Global Shippers Network" a free Internet site. The Web site houses information from U.S. government agencies, foreign government agencies, the NIT League & shippers councils based in Canada, Europe, Korea, Singapore, Thailand, Japan, Hong Kong, & the Federation of ASEAN Shippers' Council. http://www.globalshippersnetwork.org
• Hooray For HHG! .......... as founding of the Int'l Shippers' Association (ISA) was declared recently by members of the Household Goods Forwarders Assn. of America (HGFAA). Members of the ISA will eventually be able to benefit from the consolidation of commercial & military household goods shipments, as well as other commodities. The 1st area targeted by the association will be the North Atlantic's trade for household goods. After membership figures grow, service contracts in other trades will be developed. North Atlantic Services & Pasha Int'l will be the exclusive agents in the running of service contracts developed with members of the Transatlantic American Flag Liner Operators Conference. Participation in the ISA will not be exclusive to HGFAA members.
• Another Fledgling Shipper's Group Growing ......... as National Unaffiliated Shippers' Assn. in the U.S. has signed a deal with shipping line Cho Yang. The carrier has agreed to ship between 250 to 400 containers across the Pacific this year. Originally, Cho Yang was asking for a minimum of 400 containers but the association claimed that as it was still young it did not want to be too adventurous. The association was formed in Sept. 1999. With 33 members, including Converse, Hirum Walker, Global equipment & SuperValu, the association is looking to establish one line to Latin America & possibly 2 to Europe.
• Too Much Dock? .......... as the FMC has issued a notice stating that it has received & assigned to the office of administrative law judges a complaint by Crowley Liner Services & Trailer Bridge, that the Puerto Rico Ports Authority (PRPA) violated sections 10(d)(1) & (4) of the 1984 Shipping Act & the terms of a previous settlement agreement by assessing excess dockage charges on the basis of a new vessel measurement system contrary to the terms of its tariffs, giving no notice of such changes, & not following procedures as set forth in the settlement agreement.
• Demurrage Online? .............. as a new service offered by Demurrage Specialists Int'l is in the works. DemurrageOnLine.com wich claims to open the way to settle demurrage disputes & related Charter Party disputes in real-time & in complete confidentiality at a fraction of the cost of arbitration, or litigation. Parties will be able to "make an offer" or mediate their disputes on-line. Look for details in future announcements. http://www.DemurrageOnLine.com
• "Cargo Track" ........... as Lykes Lines launches it's new web service for customers. Said unique to this system, importers can also obtain customs details & status. http://www2.lykeslines.com/
• Up Periscope! ......... as Russian metals giant Norilsk Nickel (NKEL.RTS) has ordered its research institute, Gipronikel, to look at the possibility of using submarines to transport ore shipments. "Gipronikel is finishing work on a feasibility study, so the board has not yet examined the issue as there is nothing to look at yet," Yuri Kotlyar told Reuters. Norilsk, based near Russia's Arctic coast, has to resort to expensive nuclear powered icebreakers to guarantee shipments of ores & concentrates between its units in winter. But rising freight costs & repeated problems with icebreakers, most of which are past their prime, have led Norilsk to consider commissioning converted naval submarines instead. U.S. mineworkers are planning countermeasures.
• Nigerian Pirates Nabbed ............ as the Nigerian Navy arrested 8 suspected pirates who specialize in hijacking boats used by oil companies in the Niger Delta area, state television reported on 20 Feb. The suspects were arrested near the southeastern Brass River while attempting to hijack a boat belonging to Royal Dutch/Shell's Nigerian oil producing unit. "Piracy, hijacking & kidnapping of oil workers on high seas have become a serious threat to the economy which will no longer be tolerated," the report quoted a naval officer as saying. Scores of workers for multinational companies producing Nigeria's oil have been kidnapped by youths from communities in the Niger Delta who are demanding a greater share of the region's oil wealth.
• The Friendship 11 Face Trial ........... as 11 men could face trial for the deaths of 283 immigrants after a collision between 2 ships south of Sicily in the Mediterranean in Dec. 1996. A magistrate in Piraeus, Greece, ordered the case against the 11 to be heard in court but the order has still to be endorsed. The incident occurred on Christmas Day 1996 when the Panama-flagged M/V Friendship with over 300 illegal immigrants bound for Europe from Egypt was allegedly rammed by the M/V Yioham, a Honduran-registered general cargo ship. The captain of the Yioham is one of the 11 men facing trial.
• Thousands of Chinese Immigrants Put To The Ax ............ as 4,300 trees in New York City & 1,200 trees in Chicago have so far been chopped down & removed by agricultural officials after the trees became infested by the Asian longhorn beetle. A spokesman for the U.S. Dept. of Agriculture said tree removal is so far the only way to eradicate the beetles which, it is believed, travel over in wood packing materials from China & Hong Kong. Last year the USDA imposed controls against the import of such materials, much to China's dismay, in order to ensure such wood is fumigated or heat-treated before arrival. However, there is hope that an insecticide can be found to eradicate the scourge of wood-eating insects. A copy of USDA's Asian longhorned beetle eradication study may be found on the Internet. http://www.aphis.usda.gov/ppq/ead/alb/html
• Seized Tanker Puts Back To Sea ............ as the tanker M/T Volga-Neft-147 was seized Feb. 2 in the Gulf of Oman off the United Arab Emirates on suspicion it was carrying Iraqi oil. Military personnel on the cruiser USS Monterey stopped & boarded the ship after it failed to respond to routine queries. The tanker was sent to Oman, where technical problems stalled the unloading of 4,000 tons of oil cargo aboard the ship. On 18 Feb. the Russian tanker unloaded it's cargo & was released, more than 2 weeks after the vessel was detained. Russia has backed off its initial denials that the vessel could have been carrying illicit Iraqi oil. But it said more tests were needed, and commissioned a Swiss firm to conduct the tests. The U.S. said tests confirmed that the tanker was carrying Iraqi crude in violation of U.N. sanctions that bar Baghdad from selling oil unilaterally. The cargo is to be auctioned off, and some of the proceeds are to be used to pay for the U.N. sanctions monitoring operation. An additional 2 not so lucky ships seized by the U.S. Navy in the Gulf last month for smuggling Iraqi oil were auctioned on 20 Feb. in the UAE. The sale of a 3rd ship had not gone through because bids were far below the vessel's value. One vessel sold for US$517,000 while the 2nd fetched US$54,000. The Honduran-registered M/V Jazya 1, which sank off the coast of Abu Dhabi last month, was carrying heavy fuel auctioned from 1 of the 3 vessels & had been heading with its cargo to Somalia. Gulf News said the UAE Finance Ministry was in charge of the sale of the vessels, which was carried out at an Abu Dhabi port.
• History At Risk ......... as the S/V Cutty Sark, built in 1869 at Dumbarton on the Clyde, the only surviving tea clipper in the world, and perhaps the ultimate icon of Britain's great maritime heritage is under threat. There is an urgent need for a £5 million plus restoration program to undertake the critical restoration uncovered by a structural survey of the ship. Rainwater penetration has caused rot in Cutty Sark's decks & hull planking, and rust in her wrought iron structure, which is seriously threatening the survival of the ship.
• This Month In U.S. Naval History ........ as on Feb. 28, 1944, USS Trout (SS 202) was lost at sea on her 11th war patrol with all hands on board, after being spotted by a Japanese convoy. The sub had a distinguished history in World War II but was known in particular for one mission. In 1942, Trout delivered ammunition & weapons to the South Pacific island of Corregidor, which was preparing for a Japanese attack. This delivery, however, reduced Trout's weight to the point of not being able to submerge. To counter this problem, Trout departed Corregidor with 20 tons of gold, silver & securities, protecting the U.S. booty & allowing the vessel to submerge & safely return to Pearl Harbor. Trout is credited with sinking 23 enemy ships (87,000 tons). The sub was awarded 11 battle stars & the Presidential Unit Citation for it's 2nd, 3rd & 5th war patrols.

5. The Cargo Letter Cargo Damage Dispatches

• Back By Popular Demand

Visit our new Vessel Casualties & Pirate Activity Database https://cargolaw.com/presentations_casualties.html

This is only a partial list of casualties for the month in that most dangerous place ....... out there. Well over 400 containers lost at sea this month. Don't miss the big Feb.10 news on M/V OOCL AMERICA, below.

At least 32 people were killed when a a number of bombs exploded on a bus being carried on Philippines inter-island ferry M/V LADY MEDIATRIX, 201 tons, as the vessel was berthing at Ozamis. The blasts subsequently sparked a fire on the vessel. Poluice said the bombs were planted in the luggage of the bus passengers. (Mon. Feb. 28 2000)

Six crew members of a civilian vessel were forced to abandon ship after the U.S. Navy refueling tanker USNS Yukon collided with it 27 Feb. outside Dubai's Jebel Ali port. The USNS Yukon, which provides fuel for ships & aircraft at sea with the U.S. Navy's Fifth Fleet, hit the M/V Inchcape-14 while trying to enter port, said a statement by the Fifth Fleet, which is based in the Gulf state of Bahrain. The 677-foot Yukon sustained minor damage & helped rescue the 6 crew members who were forced to jump off the partially submergerd 135-foot Inchcape-14. Inchcape's Dubai office would not comment on the condition of its vessel. The U.K.-based company is mainly involved in cargo shipping. The U.S. Navy statement said that harbor tugs helped keep the ship afloat & removed it from the busy traffic channel. The Navy statement said that the incident was under investigation. (Sun. Feb. 27 2000)

British police on 25 Feb. arrested 5 activists from the environmental group Greenpeace who had boarded a U.S. vessel M/V LOLCOS GRACE with genetically modified soya aboard off Wales. "They're still there -- 2 on the anchor chain & 3 on board -- and they'll stay there for as long as it takes," a spokesman for the group told Reuters. A spokesman for North Wales police said the campaigners, who stormed the ship early on 25 Feb., would be detained overnight & questioned. The ship, carrying 60,000 tons of soya belonging to U.S. grain giant Cargill Inc., was bound for a processing plant in Liverpool. The soya was destined to be processed into animal feed, Greenpeace said. Cargill confirmed that the vessel had a cargo of U.S. soybeans, some of which were genetically modified. Greenpeace GM campaigner Charlie Kronick said police had used bolt cutters to remove 3 activists who were chained into the ship's anchor chamber & arrested them along with 2 others positioned on the anchor chain on the hull. The campaigners had blocked the anchor to stop the ship pulling it up & moving on to Anglesey to unload. Police said there had been no struggle. Earlier Greenpeace had said it would cling onto the ship until Cargill agreed to take the soya back to the U.S. Cargill argued that imports of genetically modified soybeans were fully regulated & had been approved as safe for use in food & feed in Britain & the rest of the EU since 1996." Many supermarkets in Britain have pledged to label foods which contain GM elements but there is no way of knowing if products such as milk & meat have come from animals that have eaten GM feed. Sorry, killer soya? (Fri. Feb. 25 2000)

The Cyprus bulk carrier M/V VITASTAR (37,700 gross), Genoa for Dunkirk in ballast, had water ingress into a cylinder liner in lat 48 12N, long 05 32W, Feb 24. LOF signed. Towed to anchorage in Brest area by tug Abielle Flandre. (Sat. Feb. 26 2000)

The Estonian cargo vessel M/V Fiina Timber called for help from the British coastguard in the early hours of 25 Feb. after about 15 packages of timber fell overboard, tilting the ship about six degrees to its port side. The coastguard said a helicopter would fly out to survey the Fiina Timber -- languishing just south west of the small Scottish island of Tiree -- and that a tug would reach the ship in the early afternoon. "The situation at the moment is stable,'' said the head of the area's coastguard. "With strong weather, however...we are concerned that this incident could possibly escalate." The 77-meter cargo ship, with its 10-man Swedish crew, was on its way from Sweden to Warren Point in Northern Ireland when it lost part of its cargo. (Fri. Feb. 25 2000)

The Greek bulk carrier M/V SAMJOHN LIGHT (38,077 gross), Australia for San Nicolas with charcoal, grounded at Km 44, Martin Garcia Channel, Feb 21. Still aground Feb 23. Attempts to refloat by own means failed. LOF signed. (Thurs. Feb. 24 2000)

The 8 crew members of a Syrian-flagged freighter M/V Lina Star (672-dwt) escaped safely on 21 Feb. when their vessel sank while anchored off Greece in Vatika Bay in the Laconia region of the southern Peloponnese. The crew -- one Egyptian and seven Syrian crewmen -- were rescued by a coast guard launch. Lina Star was bound for Algeria from Ukraine laden with soda. The vessel was thought to have temporarily anchored in the bay to shelter from southwesterly winds but began taking on water in its engine room. (Mon. Feb 21 2000)

Tanker M/T FRONT COMMANDER (157,863 gt, built 1999) & container vessel M/V HANG FENG (1,589 gt) were in collision in lat 22 16.7N, long 114 37.2E on Feb 19. Hang Feng sustained damage amidships, began taking water & listed to starboard. Twenty-seven containers fell overboard. Salvage tugs on scene. Front Commander sustained no damage. (Mon. Feb. 21 2000)

The Danish M/V THOR EMILIE (1,655 gross), Dunkirk for Porto Vesme with zinc concentrate, had an explosion & fire in engine-room & sank immediately in lat 37 32N, long 02 11E, Feb 17. 6 crew missing. The Thor Emilie went down 60 miles north of Algiers following an explosion near the engine room, according to Spain's Marine Rescue Service. The cause of the explosion was not known. One of the missing crewmen is Danish. The other 5 are from the Philippines. The vessel's Danish captain was picked up in good physical condition by the Italian commercial ship M/V Verdi that took part in the rescue operation. Rescue services said the captain was on watch at the bow of the ship at the time of the explosion. The captain told his rescuers he was the only crew member to make it into one of the ship's two lifeboats. (Sat. Feb. 19 2000)

The Carnival Cruise Lines ship M/V Carnival Destiny canceled its Caribbean port stops & sailed toward Miami after more than a day adrift in the ocean. It was near the Turks & Caicos Islands southeast of the Bahama Islands early Tuesday when 1 of 2 cycloconverters malfunctioned. Cycloconverters transmit electricity from a ship's diesel engines to a propulsion motor. The ship was carrying 2,956 passengers on a 7 day cruise. Passengers were promised full refunds for their cruise & air transportation, a 50% discount on a future 3- to 7-day cruise, and a free cycloconverter. (Turs. Feb. 17 2000)

Some 750 passengers were forced to abandon passenger vessel M/V Carousel, Feb 13, after she ran over rocks off Mexico's Yucatan, seriously damaging a propeller & causing a 50 ton oil spill. Contamination has been detected long surrounding beaches. (Thurs. Feb. 17 2000)

The Italian M/V Espresso Catania & the Madeira Islands-registered M/V Zafir rammed into each other early on 14 Feb. about 4 miles south of the port town of Santa Caterina, outside Punta Stilo, in the Calabria region at the toe of the Italian peninsula. The Zafir split apart & sank within minutes, while the Espresso Catania stayed afloat. Twenty crew members and & passengers on the Espresso Catania were escorted safely ashore. Fourteen Spanish sailors were believed to be on the Zafir. Three died, 2 were saved & 9 are missing. The Zafir's captain was among the victims. Helicopters & rescue boats are searching for survivors, but coast guard officials said the chances of finding anyone alive 8 hours later were extremely slim. The cause of the accident was not immediately clear. Weather conditions appeared to be good, with no fog. The Zafir, carrying material to make cement, had just left a nearby Italian port. The Italian vessel was on its way from northern Italy to Catania, Sicily, with a load of trucks. Officials at the Madeira Islands' shipping registry said the Zafir was owned by the Panama-based company Buckland Consulting Inc. Espresso Catania is beached at Guardavalle, south of Crotone. (Mon. Feb 14 2000)

The Liberian vehicle carrier M/V OLIVE ACE (38,772 gross), Antwerp for Japan, had engine problems & anchored in Flushing Roads Feb 12 to effect repairs. Proceeded Feb 13. (Mon. Feb. 14 2000)

The Norwegian vessel M/V FAKTOR, 793 gt (built 1971, had fire break out today between Staarheim & Isane in Nordfjorden following an explosion in some gas containers on board. After one hour the fire was extinguished & vessel was towed to Davik. (Sat. Feb. 12 2000)

The Hapag-Lloyd containership M/V Bonn Express has been delayed after a mechanical failure in the ship's steering mechanism caused it to run aground 11 Feb. in New York harbor. A U.S. Coast Guard spokesman said the 2,800-TEU ship had not sailed & was undergoing repairs. The Bonn Express is one of 13 vessels in the Grand Alliance "PAX" weekly service connecting Europe via North America with Asia. The ship was leaving Port Newark for Halifax & Europe. (Fri. Feb. 11 2000)

The Hong Kong container vessel M/V OOCL AMERICA (66.047 gt, built 1995) sustained heavy weather damage on voyage Long Beach for Kaohsiung. There is major cargo damage. Severe weather Jan 31 in the Pacific Ocean & lost a large number of containers overboard. OOCL put the figure at around 300, but could not confirm exactly, as the vessel is still underway & is not expected to dock in Kaohsiung until Feb 8. The company said it will survey the damage then. A maritime attorney for cargo interests who had been contacted about the incident put the figure at 350 containers lost overboard & 217 still on board but crushed or bent out of usable. Others that lost cargo were K Line's M/V Astoria Bridge & two CSX Lines' ships slot chartered to M/V Maersk Sealand ..... M/V Sea-Land Hawaii .... washed 21 x 40 ft boxes in to the sea .... M/V Sea-Land Pacific ...... lost 20 containers overboard ..." (Thus Feb. 10 2000)

Bahamas bulk carrier M/V MIRA NOR, 2,343 gross tons, built 1981, grounded in the Karmsundet, south of Haugesund on Feb 3 after experiencing steering system failure. (Mon. Feb. 7 2000)

The Panamanian vehicle carrier M/V ASIAN PARADE (55,680 gross), Dublin for Rotterdam with cars, grounded on the Codling Bank, off Dublin, in lat 53 08.02N, long 05 54.1W, Feb 3. Still aground Feb 4. Several tugs on scene. De-bunkering operations under way. (Sat. Feb. 5 2000)

The Singapore bulk carrier M/V NOL SCHEDAR (38,520 gross), Newcastle (Aus) for Sual with coal, grounded off Sual, Luzon Island, Jan 24. Refloated with tug assistance Jan 27. Emergency repairs to holes in her hull underway at Sual. (Fri. Feb. 4 2000)

The Singapore m bulk carrier NOL SCHEDAR (38,520 gross), Newcastle (Aus) for Sual with coal, grounded off Sual, Luzon Island, Jan 24. Refloated with tug assistance Jan 27. Emergency repairs to holes in her hull underway at Sual. (Fri. Feb. 4 2000)

The Liberian tanker M/T SLETREAL (5,451 gross) had an explosion on board while maneuvering to load crude oil at Cardenas, Cuba, & partially sank Jan 31. 3 crew missing. 2 crew injured. Some spillage of oil occurred. (Wed. Feb. 2 2000)

Passing Japanese ships rescued 23 crewmen from the disabled Panama-registered cargo vessel M/V Yan Yang in the South China Sea & gave them into Philippine custody, the Navy said on 31 Jan. The M/V Yan Yang, laden with logs, was on its way to China from Kota Kinabalu in Malaysia on Friday when it ran into bad weather & its engine failed, Philippine navy chief Vice-Admiral Luisito Fernandez said. Two Japanese commercial vessels, one identified as the M/V Tsushima Maru, rescued the crew -- 22 Filipinos & a Myanmarese -- and turned them over to a Philippine Navy boat which was rushing to the scene. The Yan Yang was about 50 nautical miles from Scarborough Shoal, a rocky outcrop west of the Philippines' Luzon Island, when its engine gave out, Fernandez said. There was no immediate word on what happened to the Yan Yang after its crew abandoned ship. (Tues. Feb. 1 2000)

The South Korean refrigerated M/V KYUNG CHUN (1,525 gt), Davao for Vladivostok, with bananas & pineapple, caught fire in engine-room 26 Jan in lat 12 13N, long 126 27E, 0808, Jan 26. Passing vessel responded & helped put fire out. No reported casualties. Vessel to be towed back to Cebu as fire destroyed her engine. (Tues. Feb. 1 2000)

Maltese tanker M/T MICHAEL (66,942 gt, built 1977), loaded with 90,000 barrels of oil, grounded at entrance to Delaware Bay on Jan 29. Lightering barge is alongside vessel and lightering operations are in hand before next refloating attempt. (Mon. Jan. 31 2000)

The Malaysian M/V YIAW YANG (5,577 gross), Sandakan for China, developed a severe list to starboard, flooding in Holds Nos. 1 & 2 and sank in lat 15 31N, long 117 03E, Jan 27. All crew rescued safely. (Sat. Jan. 29 2000)

The St.Vincent & Grenadines M/V RUI DA (4,942 gross), Malaysia for China with logs, took water & sank in about lat 11 47.3N, long 109 54.5E, Jan 27. All crew rescued. (Fri. Jan. 28 2000)

The Panamanian bulk carrier M/V MIN NOBLE (35,561 gross), for Port Muhammad Bin Qasim with coal, grounded between bouys 7&9 in the approach channel to the port Jan 24. Refloated same day & berthed Jan 26. To be inspected after discharge completed. (Thurs. Jan. 27 2000)

Twenty-three crew members of a the M/T Yiew Ying were rescued in South China Sea in a rescue operation mounted by the Hong Kong Maritime Rescue Coordination Center. The center immediately mounted a search & rescue operation by alerting ships in the vicinity to locate the Cambodia-registered log carrier after it was informed of the ship's emergency situation at around 4:00 am 26 Feb., said the spokesman. At 7:50 PM, the center established communications with the motor tanker "Kwan Siu," which had responded to the appeal & arrived at the scene, about 429 nautical miles southeast from Hong Kong. The 117-meter cargo vessel M/V Yiew Ying was listing 35 degrees to starboard amid northeasterly wind of force 7 to 8 and very rough sea, according to a report of "Kwan Siu." Of the 23 crew members, 22 Filipinos & one Burmese, 14 boarded "Kwan Siu" and the others boarded M/V Tsushima, a Japanese vessel, which later joined the operation. At around 9:00 am today, as "Yiew Ying" continued to take in water, the captain decided to abandon the ship. (Wed. Jan. 26 2000)

NOTE: The historic dangers of carriage by sea continue to be quite real. Shi ppers must be encouraged to purchase high quality marine cargo insurance from their freight forwarder or customs broker. It's dangerous out there.

OUR "D" Section: FF in Cyberspace

6. The Cargo Letter "Cyber Ports Of Call"

New Books:

1. "The Business of Shipbuilding" .......... the latest addition to LLP Limited's Business of Shipping Series, which seeks to explain the nature of the business through practical examples used in the commercial environment.
2. Customs Publications ........ as McMullin Publishers Ltd. has issued its list of Millennium 2000 Customs Publications, including titles on the U.S. and Canadian 2000 Customs Tariffs, Explanatory Notes to the Harmonized System, and handbooks & manuals on other world Customs systems.

The Boating Post ...... enjoy this online e-zine.

American Shipper's ........... "compairdata.com" liner database & related newswire sites which now cover every liner deepsea schedule in the world.

ComPair Schedules .......

Repositioning of Surplus Ocean Container Equipment

• http://www.dmd.co.at/
• http://www.linershipping.net/
• http://www.containershipping.com/

Ocean Containers Lost In Action

Felixstowe Newsletter .......... by our friend Pat Gardiner.

ShipChem ......... Eastman Chemical Co. & Global Logistics Technologies, a developer of Web-based logistics software, have formed an online logistics company called ShipChem.com to offer an Internet portal-based logistics gateway for chemical manufacturers, distributors, carriers & 3rd party logistics providers to share information & conduct shipping transactions online. The company also plans to offer management services for customers that want to outsource logistics operations.

Export Regs On CD .......... as the newest U.S. EPA / environmental regulations are now on CD-ROM. All 24 Volumes of Title 40 of the U.S. Code of Federal Regulations have been updated to the latest 1999 revision levels. The CD-ROM contains all 50 CFR Titles.

Cartagena Protocol on Biosafety .........the published paper.

Portugal Hauls ......... as LSXS.com, a logistics marketplace just launched its service in Spain & Portugal with agent Tecni Publicaciones. Approximately 178,000 companies in Spain alone are involved in haulage, which makes a good potential for LSXS.com in this region.

China Southern Airlines ....... China's 1st air site.

China' Busiest Website

Standard & Poor's Insurance Company Rankings

Hoover IPO

OUR "E" Section: The Forwarder/Broker World

7. New U.S. Transport Related Legal Cases

• "Terms & Conditions" Work

Insurance Company of North America v. NRR Aircargo Service (USA), Inc.
U.S. Ninth Circuit Court of Appeal
No. 98-55280 (02/04/00)
Before Circuit Judges Fletcher, Nelson & Brunetti

Holding: Freight forwarder invoice "Terms & Conditions of Service" of the NCBFAA may supplement shipping agreements if there has been a sufficient course of dealing between the parties. A container with nearly US$260,000 worth of golf balls was stolen from NRR, the freight handler. The invoice used for this transaction & 47 previous transactions stated that liability was limited to $50.00 per shipment. Plaintiff made 5 separate arguments as to why its recovery should exceed $50.00. The court rejected all 5 arguments. AFFIRMED IN FAVOR OF THE FORWARDER. This ruling follows a long line of court decisions which uphold the trading terms of U.S. freight forwarders & customs brokers.

For the full opinion

For details on the use of U.S. "Terms & Conditions of Service" to protect your forwader-broker business, go to
https://cargolaw.com/navigator.html

8. The Boeing Chicken Launcher

• A Tale Trom The Past

In the 1950s the aircraft industry was faced with a problem: Birds. As aircraft speeds increased it became possible for a bird hitting the windshield to break through it, injuring or killing the pilot. The chemical companys got to work to come up with stronger glass & then plastic coatings for the glass as a way to mitigate the problem.

OK, so how do you test such a thing? After all, planes don't hit a large bird head-ob very often. Well, the good folks at Boeing designed a bird canon, air powered & capable at launching a chicken into a test windshield at near supersonic speeds. Work progressed on both the glass improvements & the canon. They succeeded in making chickens fly really well for short distances and created unbreakable glass as well.

So where's the funny story?

Well, British aviation had the same problem and decided to ask Boeing if they could use their 'Chicken Canon' for their own tests. Of course they could, so off it went to the UK. The engineers carefully set up the tests, put their best glass compounds on a mock plane cabin & hit the "fire" button. To their dismay the bird crashed through the glass! Not just through the glass, but literally into the seat behind the glass, and through the bulkhead behind the seat, destroying a metal encased piece of electronic equipment behind the bulkhead.

Slightly shaken the UK aviation experts called the engineers back at Seattle, asking "Has this ever happened to you?" "Nope" was the reply. However the designers of the wonderful 'Chicken Launcher' offered to analyze details of the test & give any advice they could.

The engineers at Boeing reviewed the data. Then one week later, the following telegram was issued from Seattle to their British counterparts.

"Next time, thaw the chicken!"

Note: This is a true story from years ago, now found by one of our readers, reprinted in Air & Business Travel News.

Written from wire stories, the Associated Press, Reuters, Hong Kong Shipping News Lloyds & other world sources. [an error occurred while processing this directive]