The Cargo Letter
THE CARGO LETTER 
Air & Ocean Freight Forwarder - Customs Broker News
25 May 2000
Good Thursday 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
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Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel,
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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
- WTO Two Steps Closer - U.S. Vote Passes .......... as China &
the European Union have reached a groundbreaking bilateral trade agreement
that paves the way for China's membership of the World Trade Organization
(WTO). The agreement follows a similar pact last year between China &
the U.S. Under the China/EU agreement, China will reduce import tariffs by
8% to 10% on over 150 leading European exports such as machinery, textile,
cosmetic, footwear, leather goods, wine & spirits. China also agreed to
liberalize its markets for telecommunications, distribution, automobile
& other industries. China will also cease to apply a number of measures
which distort trade, such as export performance & local content
requirements, and industrial export subsidies, the European Commission said.
Meanwhile in the U.S., legislation that would grant China permanent normal
trade relations status was passed today by the House of Representatives. The
bill, was backed by the American Assn. of Port Authorities, APL, Maersk
Sealand, & many large industry groups. The legislation is required as a
1st step for China to join the WTO. The bill is now expected to move more
easily through the Senate, where it has bipartisan report. The bill gives
China the same low-tariffs that the U.S. offers to nations with
"favored nation status." China had been getting these benefits for
the past 20 years, but it has been subject to annual renewal. While passage
of the U.S. bill has no direct bearing on China's entry to the WTO, bill
supporters argue that rejecting the bill would have give trade benefits to
other nations that U.S. businesses would not enjoy. Opposition to the bill
came from unions, environmental & human rights interests, who said the
trade bill rewards a brutal regime & will move U.S. manufacturing jobs
- Euro Woe .......... as EU Commission President Romano Prodi said on
May 12 he was not worried about the weakness of Europe's single currency,
adding that he was confident that the euro "very soon" would be
stronger than the U.S. dollar. The euro has fallen steadily against the
dollar since the currency was launched by 11 EU countries on Jan. 4, 1999,
for corporate & investment transactions. It was recently trading at
90.74 cents in London. Prodi was in Copenhagen to attend a conference about
the 15-nation bloc's upcoming intergovernmental conference on enlargement
& the need for reform when candidate countries eventually join. Denmark,
Sweden & Britain declined to adopt the euro in its initial phase.
Greece, which was not allowed into the monetary union because of its high
inflation and budget deficit, is expected to gain membership next year.
- A Customs First ......... as A.N. Deringer Co. made industry
history on May 18 by becoming the 1st customs broker to receive a
"National Permit" from U.S. Customs. The National Permit, which
allow brokers to conduct specific types of customs business nationwide, is
one of the biggest changes in Customs' new broker regulations. The rules
became effective April 14. Customs Commissioner Raymond W. Kelly presented
the permit to the 80-year-old St. Albans, Vt.-based broker. "It's part
of the changing environment at Customs," Kelly said. "We want to
do business the way business does business." Another 22 national
permits were mailed to brokers on May 19. Brokers of all sizes are eligible
to join the program. To qualify for a national permit, a broker must hold at
least one district permit. The broker must also file an application with
Customs Headquarters. The application must list the office which will
oversee the national permit operations & the name of the person who will
supervise. The agency requires payment of US$100 for th e permit
application. National Permits allow brokers to conduct the following customs
Although national permits are part of the 1993 Customs Modernization Act,
the agency began to seriously develop the program with the brokers 2 years
ago. Benefits of National Permits won't be fully realized until Customs
implements its new computer system, the Automated Commercial Environment.
- Place employees at client facilities in districts where the broker may
not hold a district permit.
- File electronic drawback claims at a designated drawback office in a
location where the broker does not hold a district permit.
- Participate in any operational aspect of the National Customs
- Perform post-entry summary work for clients in broker districts in
which they do not hold a district permit.
- Kelly Bullish On HKG ............. as visiting U.S. Customs Service
Commissioner Raymond Kelly said on May 12 he found Hong Kong was committed
to preventing the diversion of strategic goods. Kelly made the remarks a
year after a Congressional report by Republican Christopher Cox chided Hong
Kong's border controls as lax and accused mainland China of using the
territory as an illegal conduit for strategic American goods. "Both the
U.S. & Hong Kong are committed to the implementation of effective and
comprehensive strategic controls that uphold the relevant Int'l regimes
& prevent the diversion of strategic commodities," he was quoted
saying in a statement released by the Hong Kong government. Last June, the
U.S. Senate approved a bill sponsored by Republican Senator John Ashcroft
threatening to impose controls on the export of high-tech goods to Hong
Kong. The bill followed the "Cox Report" released in the previous
month. Hong Kong, a former British colony which reverted to Chinese rule in
July 1997, has said it keeps a stringent customs regime that is impartial
& separate from mainland China.
Kelly, who just concluded a 3 day visit to Hong Kong, lauded Hong Kong
Customs for its efforts to detect the smuggling of human cargo aboard
container ships. Since late last year, there have been a number of cases of
Chinese illegals using container vessels going via Hong Kong seeking to
reach North America, sparking fears that the territory had become a base for
trafficking mainland Chinese overseas. Kelly also said Hong Kong customs had
succeeded in curbing intellectual property rights piracy & the
manufacturing of counterfeit goods. Kelly said joint efforts by Hong Kong
and U. S. Customs to stop illegal textile transshipment to the U.S. had
resulted in a number of successful cooperative investigations.
- Entry At Origin ......... as U.S. Customs has opened its office in
Aruba joining the existing immigration facility to allow U.S.-bound air
passengers to clear customs before they leave the Dutch Caribbean island.
The new service allows visitors to save time & enjoy the convenience of
a domestic flight back into the U.S. U.S. Customs has similar operations in
airports in Canada, Bermuda, the U.S. Virgin Islands & the Bahamas.
Customs will still have the right to re-inspect passengers when they arrive
in the U.S.
- Trade Priorities Reported .......... as the Office of the U.S.
Trade Representative has submitted its trade
priorities report to the Senate Finance Committee and House Ways and
Means Committee. The Report on Trade Expansion Priorities Pursuant to
Executive Order 13116 ("Super 301") was built on several other
trade reports, such as the 2000 National Trade Estimate Report on Foreign
Trade Barriers, released March 31. USTR worked closely with other government
agencies & U.S. embassies abroad to draft the report. The
Administration's top trade priority this year is to complete China's
accession to the World Trade Organization & to secure approval of
permanent Normal Trade Regulations status to China. Other priorities include
the enactment of legislation that promotes trade with poor countries;
continue negotiations for the Free Trade Area of the Americas; pursue
multilateral negotiations to open overseas markets to U.S. exports; and
enforce trade commitments & resolve disputes with other countries.
- GSP Refund Deadline Approaches ........... as importers have just
until June 14 to request refunds for import duties paid during the
expiration period of the Generalized System of Preferences program. GSP,
which expired June 30, 1999 and was renewed in Dec., gives importers
duty-free status on certain goods from developing countries. The program
helps developing countries sell their products more competitively in the
U.S. market. Since the reauthorization of GSP was retroactive, duties paid
on GSP-eligible goods are recoverable by importers. Customs has
automatically issued refund checks on those GSP shipments marked in the
agency's computer system by an "A" indicator on importers' entry
summaries. Importers that did not use the "A" indicator in their
entry summaries should review their import records for potential GSP
- Nigeria wants GSP......... as it's government has requested the
U.S. for admission to the Generalized System of Preferences Program (GSP).
GSP gives importers preference on certain goods from developing countries,
thus allowing them to compete more effectively on the U.S. market. Trade
representative discussions have been scheduled for July 10.
- Laos WTO Help From Down Under ........... as Australia on 26 April
committed US$210,000 to a UN-sponsored program aimed at preparing Laos for
WTO membership. The funds will be used to train governmental officials in
Int'l economics & trade law toward building Laos' ability to negotiate
WTO accession agreements.
- Putting The Squeeze On O.J. .......... as the arrival of the 1st
container of U.S. citrus fruit on Chinese soil for almost 20 years, 5 reefer
containers of Sunkist oranges & pomelos have been impounded at the
Chinese port of Dalian. The 5 containers destined for Beijing have been
detained as the result of a dispute over information on shipping
documentation & customs declarations. But the project all seems so
promising when we last reported it to you! Although the citrus fruit will
stay fresh for 2 or 3 months in the refrigerated containers, the bounty is
missing the week-long Chinese holiday during which it was scheduled to go on
sale. Fruit shipments are now possible (or are they?) because of the
U.S.-China Agricultural Cooperation Agreement reached in Washington last
year. China agreed to allow the import of oranges from Texas, Arizona,
Florida & California as of March this year, but has insisted that the
fruit must come from orchards approved by State Administration for
Exit-Entry and the U.S. Dept. of Agriculture. Ten more containers of U.S.
citrus fruits weighing a total of 460 tons are due at Chinese ports this
- Africa - Caribbean Apparel Boost .......... as the U.S. House of
Representative has passed legislation which would open American markets to
sub-Saharan African apparel manufacturers & increase U.S. textile
exports to Caribbean markets. About 48 sub-Saharan African countries &
25 Caribbean countries would benefit from the legislation. Apparel made in
these countries from U.S. fabric and yarn could enter the country free of
duties & quotas. Apparel made in Africa from African fabric would be
allowed to increase from 1.5% of U.S. imports to 3.5% over the next 8 years,
reportedly increasing African apparel exports from about US$250M to US$4.2B.
Many industry groups support the trade legislation. The Senate is expected
to pass the legislation this month & President Clinton will then sign it
- Lebanon & The United Arab Emirates Free ........ as in April
they signed a free trade agreement under which the 2 countries will begin to
phase out customs duties from 1 June 2001.
- Import Permits On The Net ........ as the U.S.
Dept. of Agriculture has launch a new Internet Web site that will allow
shippers to electronically submit their applications to import vegetables,
fruits & animal products into the country. "The USDA's Animal and
Plant Health Inspection Service's new Web site is designed to make the
permit application process easier for our customers," said Craig A.
Reed, an administrator at APHIS. "If the site is as popular as we
expect, it will be expanded to include additional permit applications."
Once the application is submitted, the Web site gives shippers a tracking
number that can be used to check the status of their permit request. Since
importers can't sign their online applications before they submit them,
however, shippers must sign them after they're issued. Shippers may also use
the Web site to renew or amend existing import applications. In addition,
the online import application Web site lists guidelines and user fees needed
to apply for APHIS permits and includes an index of vegetables, fruits &
animal products that can be imported.
- Free Airports! ............. as U.S. Customs has issued its revised
list of user-fee airports -- those which do not have on-site Customs
officers, but occasionally receive Int'l flights. Customs' rules require
that passengers & cargo aboard Int'l flights be processed &
inspected at the 1st port of landing in the U.S. Since these airports are
designated to be "Int'l airports" by Customs, they must pay an
annual flat fee for Customs to inspect flights from overseas. The 36
airports Customs has designated with user-fee status are listed in the
Federal Register at http://frwebgate3.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=638253535+0+0+
- What's Your Interest In Duty? .......... as U.S. Customs has
amended its rules for interest due on duties, taxes & fees pertaining to
imported goods. The changes were made in response to provisions in the NAFTA
Implementation Act and 1996 Miscellaneous Trade & Technical Corrections
Act. Interest accrues from the date the duties, taxes or fees are deposited
with Customs in the case of overpayments, or in the case of underpayments,
at the time they must be deposited with the agency. Customs rules say that
payments are due in 15 to 30 days after issuance.
- AES To Be Mandatory? ............ as a report reviewing the
feasibility of requiring all U.S. export data to be filed electronically to
the government is expected to be ready for congressional review by May 29.
The report, which was initiated by the Consolidated Appropriations Act of
2000, required the secretaries of Commerce, State, Defense, Energy &
Treasury, and the director of the CIA, to determine whether it's advisable
& feasible to process all export declarations through the Automated
Export System. In related news, the U.S. Commerce Department's Census Bureau
wants to incorporate data elements on paper filings of shipper's export
declaration which are already reported through the Automated Export System.
Census must review the SED format every 3 years. Some information, such as
hazardous material data & vehicle identification numbers, is not
collected on paper SEDs but is on AES. These additional items are
conditional data elements & are neither reported for all transactions
nor a burden to the trade, Census said. The agency still collects about
450,000 paper SEDs a month at its Jeffersonville, Ind. data center. Census
will take comments from the industry about its proposed SED changes through
June 27. For more information, contact Mr. Jerome Greenwell at (301)
- First Air Is Consolidated ......... as Consolidated Freightways one
of the largest U.S. LTL carriers, has signed a letter of intent to purchase
FirstAir, Inc., an airfreight forwarder based in St. Paul, MN. FirstAir,
through its FlightMasters & SeaMasters subsidiaries, provides domestic
and Int'l airfreight forwarding & NVOCC transportation. The privately
owned company was founded in St. Paul in 1988 and has offices in
Minneapolis, L.A., Chicago, Dallas/Ft.Worth & London.
- Pacing At The Hub? ........... as the top brass of both Pacer Int'l
Inc. & the Hub Group have denied a rumor that Pacer was negotiating to
buy the Hub Group. David Yeager, CEO of the Hub Group, told the Shippers
News Wire that "any report alluding to such a thing is wrong, really
off-base." "The Hub Group is not for sale, period. My family owns
more than 60% of the stock, and I think I would know if something were in
the works. "There are no ongoing discussions taking place between Pacer
& the Hub Group," said Donald C. Orris, chair & CEO of Pacer
- CN - BNSF Merger Still Boils .......... as while the proposed
merger of Canadian National & Burlington Northern Santa Fe has been
stalled by a 15-month merger moratorium by the U.S. Surface Transportation
Board, Canadian officials are moving forward. Canadian Transport Minister
David Collenette has asked the House of Commons transport committee to
review the proposed merger. Meanwhile, U.S. Transportation Secretary Rodney
Slater says that the U.S. Surface Transportation Board needs to move swiftly
to complete new rules for railroad mergers.
- New Duo Compliance Clicks .......... as NextLinx Corp. has an
agreement with Clicklogistics.com
which will allow Clicklogistics to expand its web-based services in the
areas of global logistics and import & export compliance. Clicklogistics
will enable its B2B customers to expand their web marketplaces to global
buyers and sellers and offer door to door logistics service with the
assurance of the full costs of logistics, duties & taxes when a
transaction is placed. Under this agreement NextLinx will provide an
Internet service to Clicklogistics to use its transaction engines to access
its extensive NextLinx Global Commerce Knowledge Base of duties, taxes,
trade regulations, & logistics costs.
- "E" Committee .......... as the National Council on Int'l
Trade Development has created an electronic commerce committee to address
the emerging impact of the Internet on Int'l trade. "We intend to bring
together multiple industry logistics & compliance representatives with
government regulators to provide a nucleus for identifying improvements in
traditional logistics practices," said the chairman of the
Washington-based council. "At the same time, we will address ways
industry can protect itself from adverse regulatory consequences that need
to be considered as part of any B2B model," he said. The council's
members include Oracle, General Electric, Citicorp, Alcoa, Eastman Kodak,
Bechtel, Union Carbide, BDP Int'l, Fritz Companies., Perkin-Elmer Corp.
- Wireless Discount Truckers ......... as Tomas Nilsson and a fellow
trucker, Patrick Nordin, are using wireless technology & the Web to make
the trucking world run more smoothly. Last year, they founded Delego.com,
a logistical business-to-business site and wireless Web portal that offers
shippers up to a 40% discount on deliveries by electronically rerouting
trucks with unused space to do extra work. Delego moved to Sweden this month
and plans to roll out across Europe later this year. An initial public
offering is expected within 12 months.
- GeoLogistics Goes West ........ as it has relocated its corporate
& Americas HQ & service centers to Santa Ana, California. The move
unites GeoLogistics' corporate senior executive team with management from
its GeoLogistics Americas division. Previously, the corporate offices were
located in Golden, Colorado & Hillside, Illinois, while the Americas
regional office was in Atlanta, Georgia.
- Danzas Gets 5 More In China ......... as it has been granted
operating licenses, which they don't give away, for 5 new branch offices in
the mainland from the Ministry of Foreign Trade & Economic Cooperation
(Moftec). The newly licensed branches are located in Beijing, Tianjin,
Qingdao, Xiamen & Shenzhen. Danzas now has 6 licenses in China to
operate integrated logistics services.
- Circle Shakeup .......... as Circle Int'l Group announced May 14
that David I. Beatson, Circle's chair & CEO, has resigned to become
chairman & CEO of a new Silicon Valley E-Commerce venture. Peter Gibert,
a Circle board member who served as Circle's chairman & CEO from 1992 to
1998, has been named interim chairman & CEO.
- New EI China Chief ........ as Expeditors Int'l of Washington, Inc.
has announced that James L.K. Wang has been promoted to the newly created
position of President-Asia. Wang, a China native & Taiwanese citizen,
previously held the office of Executive V.P.-Far East. Mr. Wang was a
founder of Expeditors & has served as a member of the Board of Directors
- New Leaks In Eurotunnel........... as it's joint Board of
Eurotunnel is under pressure since a small group of French shareholders made
2 claims, related to alleged insider trading & to publishing false
accounts, to rendering misleading information and to misuse of company
assets. The experts' report on these allegations contained certain criticism
of individual directors. The joint Board firmly rejected the allegations.
- Rare "White Teak" Discovered .......... as Taiwanese
Customs officials seized 332 uncarved elephant tusks & various ivory
pieces worth US$3.2M on May 5 in the largest such seizure in the island's
history. Officials in the northern Keelung port found the contraband in 2
large wooden crates at the back of a shipping container. The 4,752-pound
shipment was listed on the manifest as teak wood beams imported from West
Africa. Arrests have been made. If found guilty of violating Taiwan's
endangered species protection law, importers of contraband ivory face up to
7 years in prison & fines of nearly US$80,000. This seizure is the
largest since officials discovered 185 uncarved tusks and carved ivory
pieces in a freight container at the same port in 1998. To further
demonstrate this world problem, Thai Customs seized a record 1,078 pounds of
raw ivory at Bangkok airport on May 1. The 112 pieces of elephant tusks
worth more than US$131,000 were found in 3 iron boxes freighted from Zambia.
The ivory was concealed under a thick layer of uncut gemstones.
- Grzabbing China Butts .......... as German custom officers made the
country's biggest ever cigarette smuggling bust when they seized 120 million
untaxed cigarettes coming from China, officials said on May 11. The
smugglers, who would have been liable for taxes amounting to US$12.4M, had
stashed fake "Benson & Hedges" & "Regal" brand
cigarettes on containers aboard a Chinese ship. Three suspects, including
the head of a transport company based in Hungary, were detained in Hamburg.
Customs authorities said they believed smugglers were continuing to try to
bring large amounts of cigarettes into Germany & the EU from China.
- Formula For Success............. as a woman has admitted to
smuggling heroin and cocaine in infant formula cans and said she twice used
babies as props to ease the suspicions of customs inspectors. Donna
Washington, 50, of Chicago pleaded guilty on May 18 in U.S. District Court
to one count of smuggling heroin from Panama & a 2nd count of smuggling
liquid cocaine. In a written plea agreement, she said she had gotten 1 of
the babies from her daughter, Kim, & another had been "rented"
from the child's aunt by unnamed individuals who paid her. The ploy failed
when customs officials in Atlanta became suspicious in May 1999 & opened
the cans of infant formula. The woman had arrived in Atlanta from Panama
& had planned to fly on to Chicago. Eleven people have been charged so
far in what federal prosecutors describe as a ring that includes other women
who used babies as props at customs stops. Seven have pleaded guilty and
others may be charged, prosecutors said. Washington faces up to 9 years in
prison, but prosecutors are offering a reduced sentence if she cooperates in
the investigation. Another hearing is set for Aug. 15.
- Buddy, Can You Spare A Franc? ........... as strike by armored van
security guards is turning France into a cashless society. Sales are down in
small shops, waiters are losing out on their usual tips and beggars are
deprived of the few coins they live off. With the normal flow of cash
between banks & shops cut off, the small change and bank notes normally
used for everyday purchases are becoming ever harder to find. Credit cards
and checks are often the only way to pay for purchases. French state
railways and the Paris metro system announced on May 19 they would accept
checks as low as 5 francs (68 U.S. cents) -- even less than the 8 franc
metro ticket. The guards who transport cash between banks & shops to
feed automated teller machines (ATMs) and collect shop earnings went on
strike on May 9 for more risk money following a series of brutal holdups,
some with bazookas and automatic weapons. The French government appointed a
mediator for the dispute earlier this week after negotiations between unions
& bosses broke down. Customers feel embarrassed about buying a fish for
15 francs (US$2.00) with their credit cards.
- Taking A Bite Out of Crime ......... as in one of the largest
executions in 2 decades, Saudi Arabia beheaded 7 Nigerians on May 13 for
taking part in a bank heist. The penal authorities amputated the right hands
& left feet of 3 other Nigerians involved in the same armed robbery, the
Interior Ministry. Executions & amputations in Saudi Arabia are carried
out with a sword in a public square. The executions took place in the Red
Sea port city of Jeddah. The Nigerians had stolen a car to rob the bank,
where they threatened the employees with cleavers, the statement said. They
flagged down another car for their getaway, attacking its driver with
cleavers & wounding him in the hand. The robbers found to be the
masterminds of the crime were the ones condemned to death. On May 12 an
Indian heroin smuggler & a Saudi man convicted of raping a shepherd girl
were also beheaded.
- Circle Int'l Group. UP with net income for the 1st quarter ended
March 31, 2000 of US$3.2M, or $0.18 per diluted share, compared to 1999
first quarter earnings of US$1.9M, or $0.11 per diluted share. Income from
operations for the 1st quarter of 2000 increased 102% to $4.6 million from
US$2.3M last year. Revenues for the 1st quarter of 2000 increased 18% to
US$216.2M. Net revenues, which represent revenues less purchased
transportation costs, rose 11% in the 1st quarter this year to US$84.6M from
US$76.2M in 1st quarter 1999.
- Compania Sud Americana de Vapores. DOWN as the large Chilean
shipping group, reported a 40% fall in net profit for 1999, to US$31M.
- Deutsche Post World Net. UP with a 21% jump in income for 1999 to
US$996M & a 52% rise in revenue to US$24.6B. The company does not expect
a European Commission investigation of the company's initial public offering
plans. The offering is tentatively scheduled for Nov.
- Emirates Group. UP as at the close of the financial year 1999/2000,
Emirates Airline & Dnata - the 2 main entities of Emirates Group saw
profit levels increased 4.3% to US$122M, as total revenue increased by 15.9%
to over US$1.5B.
- Evergreen Marine. DOWN with a 13% drop in profits last year to
US$30M. At the same time, the company's turnover slumped 58% to US$721.6M.
The shipping giant's poor performance was also reflected in the profits of
its subsidiary Uniglory. Net profit for the operator fell 65% last year to
US$4.3M, although turnover was up 8% to US$178m and this rate of growth has
continued into this year. Evergreen was hit by last year's generally poor
freight markets & high fuel costs despite continuing its policy of
- Geodis. UP as the French logistics & trucking group revenues
increased 19% in the 1st quarter, to US$795M.
- GeoLogistics Corp. DOWN with a US$15.4M net loss for the 1st
quarter. The company also reported a US$15M deficit in the year-earlier
quarter. The operating loss for the latest quarter was US$10M, as compared
to a deficit of US$7M in 1st quarter 1999.
- Interpool, Inc. (NYSE:IPX) MAINTAINS with net income before
non-recurring & extraordinary gains for the 1st quarter ended March 31,
2000 was US$9,043,000 or $0.33 per diluted share, compared with net income
of $9,256,000, or $0.32 per diluted share, for the same period in 1999.
Revenues during the first quarter of 2000 were $61,152,000. Operating income
was US$24,627,000 in the quarter versus US$24,607,000 for the same period
last year. Interpool is a world leader in container & transportation
equipment leasing and corporate sponsor of The Cargo Letter library &
- Lufthansa Cargo A.G. DOWN as operating profit fell 35.5% in fiscal
year 1999, to US$49.5M. The German cargo carrier blamed the decline on a
weak Int'l economy & extensive spending on infrastructure and staffing.
- Martinair. DOWN for 1999 with a pretax operating profit of NLG 37.3
million (US$18M), down by 50% from the 1998: NLG 74.3 million
- Mercury Air Group. DOWN as revenues for the 3rd quarter ended March
31, 2000, increased to US$89,935,000, an increase of 68% from revenues of
US$53,643,000 in the 3rd quarter of fiscal 1999. Net loss for the period was
US$1,282,000 as compared to net income of US$1,076,000 for the 3rd quarter
of fiscal 1999.
- Pacer Int'l. UP with gross revenues for the quarter ended April 7,
2000 of US$304.2M, up US$140.6M or 86% over 1st quarter of 1999. Operating
income increased by US$9.9M or 130% to US$17.5M from US$7.6M in 1999.
- Panalpina. UP with a 16% increase in net income for 1999, to
- P & O Nedlloyd. DOWN with a pretax loss of US$29M in the 1st
quarter of this year.
- Target Logistics. UP with results for the fiscal 3rd quarter &
9 months ended March 31, 2000. The Company reported operating revenues for
the 3rd fiscal quarter of US$20,553,649, a 48% increase over operating
revenues for the fiscal 3rd quarter ended March 31, 1999 of US$13,850,340,
representing the 5th successive quarter of double- or triple-digit
percentage of revenue increases. For the fiscal 3rd quarter ended March 31,
2000, the Company reported a net loss of US$(331,168), or $(0.03) per share,
compared with a net loss of US$(565,438), or $(0.07) per share for the
fiscal third quarter ended March 31, 1999. Operating revenues for the fiscal
9 months were up 81% to US$ 64,488,698.
- Transprtcion Maritima Mexicana (TMM) UP as it has returned to
profit with a net income of US$6M in the 1st quarter, its first full quarter
of operations after selling its loss making liner business. Only a year ago,
TMM lost US$18Min the 1st quarter, which included almost US$15M in losses on
ventures that the company has now discontinued. The liner business was sold
to CP Ships in Dec. 1999.
- UPS has declared a quarterly cash dividend of 17 cents per share on
all outstanding Class A & Class B shares. The dividend is payable on
June 9, 2000, to shareholders of record, as of May 30.
- UTi (formerly known as Union-Transport) UP with a 25% increase in
earnings for the fiscal year ended March 31. The company reported earnings
of US$20.5M. Revenue rose 24% to $707.0M.
- Wan Hai Lines Ltd. DOWN as the highly profitable Taiwanese carrier,
reported a 12% drop in net income for 1999, to US$78M. Wan Hai is the
largest carrier in the intra-Asia trades.
- Yangming Marine. UP as it returned to operating profits last year
and doubled its net after-tax profit. For the year ended Dec. 31, the
operating result was a profit of US$50M, compared to an operating loss in
1998. Net income after tax increased by 90%, to US$54M.
- UAL To Buy U.S. Airways in US$4.3B Deal ........... as on May 24
UAL, parent of United Airlines confirmed plans to buy smaller rival US
Airways Group for US$4.3B in a deal that is certain to have far-reaching
implications for the nation's airline industry & travelers. The deal
calls for UAL, already the world's largest airline, to also assume US$1.5B
in US Airways debt and US$5.8B in aircraft lease obligations. The deal,
which will face definite regulatory hurdles in the U.S. & Europe, could
combine the world's largest airline with the 6th-largest U.S. carrier.
United has an extensive Int'l route network, particularly in the
transpacific market. US Airways brings deep regional route penetration in
the eastern U.S. & a presence on the transatlantic. The complementary
route networks make a good fit, according to analysts, and may be the two
airlines' best defense against arguments that the merger will hamper
competition. United claims that its route network overlaps just 17% of US
Airways' routes. UAL said it will divest itself of some assets, particularly
slots at Reagan National Airport in Washington D.C., to ease regulatory
approval. The deal is expected to close next year. Each share of US Airways
stock will be tradable for US$60 cash. Based on US Airways' stock price on
May 23, that represents a 130% premium. It is unclear what benefits shippers
will gain form a United-US Airways combination. Some U.S. shippers,
particularly in smaller U.S. East Coast markets, could realize faster
connections to Asian destinations in United's network. United & US
Airways have not announced any specific cargo plans, though James E.
Goodwin, CEO of UAL Corp., included a brief reference to shippers in a
statement announcing the deal. "For the passenger & cargo customers
of United, this merger will fill a geographic void along the East Coast
& offers new reach to the East and Southeast," he said.
- Europe's Aviation Policy Lacks Coherence: IATA ......... as the
aviation industry will fail to meet the expectation of the European shippers
because Europe's aviation policies lack coherence - specifically, while
"airlines are now fully liberalized, infrastructure providers, namely
airports & air traffic services providers are not" said IATA
Director General Pierre J. Jeanniot speaking on the opening day of the
"Economist" Global Airlines' Conference in London, 16 May. Our
industry continues to be heavily regulated through the sheer inefficiencies
of much of the world's aviation infrastructure - and the archaic approach of
some governments, who want to continue to control ATCs. "We are
becoming 'infrastructure supply' regulated" said Jeanniot. "Now,
we are also threatened with re-regulation from 2 other sources: the
political opportunism of moves to convince governments that a long &
detailed list of product features should be legislated, rather than simply
left to competitive forces. And, the attempts of some environmentalists to
convince ordinary people - and governments - that the growth of air
transport is sinful, and perhaps should be capped." Jeanniot pointed
out that world scheduled air freight has risen from a few thousand tons in
1945 to 25 million tons today. Around 40% of the world's manufactured
exports, by value, are transported by air. The average consumer of scheduled
airline products is paying 70% less, in real terms, than 20 years ago.
"For most airlines, in most parts of the world, deregulation &
liberalization have worked" said Jeanniot. "They have worked for
the economy of the world, and they have worked above all for the airline
consumer." Jeanniot concluded, "All components of the aviation
industry need to be made fully responsive to the market place: it is time to
deregulate and liberalize infrastructure. To fully meet the expectations of
European shippers, this industry needs less regulation - of all its
components - not more!" .
- Making Friends In Canada .......... as United Parcel Service (UPS)
is trying to grab the country's most lucrative courier market away from
Canada Post - and it's using the North American Free Trade Agreement (NAFTA)
to do it, says the Canadian Union of Postal Workers & The Council of
Canadians. In a claim made public by the Dept. of Foreign Affairs &
Int'l Trade early this month, UPS is demanding that Canada pay US$100M under
the investor-state provisions of Chapter 11 in NAFTA. UPS alleges that
Canada Post used the existing infrastructure of Canada Post mail delivery
service to expand into the courier business, and has also used the Canada
Post infrastructure to undercut the service & delivery charges of other
courier companies. "Once again, Canadians are being swindled by the
investor-state provisions of NAFTA," said Maude Barlow, Volunteer
Chairperson of The Council of Canadians.
- Kitty Hawk Wings Clipped ......... as the Dallas-based air freight
carrier, has followed Tower Air to file for U.S. Chapter 11 Bankruptcy
protection & to seek financial reorganization. The filing comes after
unexpected maintenance costs, higher fuel prices & lower air freight
demand in the 1st quarter drained Kitty Hawk's cash. The company has
suspended operations at its Kitty Hawk Int'l division, which flies older
B-747F, L-1011F & DC-8F freighters. The company said on May 4 that
Conrad Kalitta has resigned from the board of directors. Kitty Hawk's
acquisition of Kalitta Cos. in 1997 has led to most of the airline's
problems. Kitty Hawk said it "will seek to continue to operate their
businesses in the ordinary course under the protection of the bankruptcy
court while seeking to finalize a plan of reorganization to implement its
anticipated restructuring." The moves prompted a tailspin of the
company's stock & the removal of the company's chair & CEO, M. Tom
Christopher. Tom Christopher founded Kitty Hawk Air Cargo in the late 1970's
with just 1 charter plane. Stock value for KTTY.UX was recently down 80% to
less than US$1, but has now been delisted. But bankruptcy protection has not
caused U.S. domestic forwarders to abandon the company's overnight air
service, according to the Journal of Commerce. A spokesman for Eagle USA
airfreight was quoted saying that the forwarders continue to support Kitty
Hawk as long as its service continues as it has in the past. It is clear
that nobody in the forwarding sector wants to lose this service.
- UAL Spreads Global Wings Again .......... as United has announced
that it will resume 'Round-the-World' service on April 1, 2001, becoming the
only airline in the world to offer single-carrier service around the globe.
The flights will link Washington, D.C., Los Angeles, Hong Kong, Delhi &
London, and will cover 19,705 miles. United 1st launched 'Round-the-World'
service in Dec. 1995. In the fall of 1999, the airline temporarily suspended
Delhi service due to the Asian economic recession.
- The Giant Waits & Waits .......... as a future of the new Super
Airbus A3XX is still hanging in the balance. Despite the definite orders
placed by Emirates, it is not certain that the monster jet will be built.
Cathay Pacific says it has not decided whether to order the A3XX superjumbo
despite rival Singapore Airlines' apparent intention to buy about 16 planes.
Airbus Industrie estimates optimistically that 1400 of the planes will be
sold by the year 2020. However, many of the possible customers seem to be
wary of the craft, possibly because of its size.
- South America Prepares For "E" ......... as the Brazilian
courier Speed Cargo has built a larger facility in Tambore, State of Sao
Paulo so as to facilitate its e-business logistics. The company provides
services to portals like Americanas.com, Gibraltar, Lokau, IngressoFacil,
Gradiente.com, Terra & Musiclub. At present E-Commerce cargo represents
5% of the company's turnover, but its goal is to reach 45% by 2001. DHL has
recently signed an agreement with Silicon Grafics, which produces hardware
and software. The courier reserved space within the Barueri-based warehouse
(State of Sao Paulo) to store the company's parts, which are supplied to
Petrobras. At present E-Commerce generates nearly 5% of its income, but DHL
aims to double that until next December. UPS invested US$500,000 to build a
new distribution center in Santo Amaro, State of Sao Paulo. It also built a
warehouse within that facility to supply E-Commerce clients. The courier is
negotiating partnerships with several information technology firms.
- DHL Also Eyes A Bigger Electronic South America ............ as it
plans to accelerate logistics infrastructure investment in the region &
has earmarked a war chest of US$20M for the task. Last year, the company
poured US$10M into a distribution center in Sao Paulo, Brazil, which it
plans to upgrade to cater for electronic business companies with a
US$600,000 cash injection. Electronic sales made up 15% of the courier's
turnover in Latin America last year, and DHL forecasts that electronic
business sales will account for US$8B by the end of 2003. The company is
considering the construction of a strategic distribution center for the
Mercosur countries which include Argentina, Uruguay, Paraguay, Chile,
Bolivia & Brazil.
- The GF-X "E" Stake ........ as Global Freight Exchange,
the Internet start-up working to develop an online air freight marketplace
for airlines & forwarders, has added yet 3 more industry investors.
British Airways, Panalpina World Transport (Holding) Ltd. &
SairLogistics, the holding company for Swisscargo Ltd. have agreed to invest
in GF-X. They join Deutsche Post, which acquired a 10% stake in the
London-based company. Other investors are Consolidated Press Holdings,
Lufthansa Commercial Holding & Morgan Stanley Dean Witter. Bruno Sidler,
CEO of Panalpina, said his company is convinced that GF-X will become the
leading online platform for trading air freight capacity. "Our
customers will highly benefit from substantial productivity gains achieved
by both Panalpina & carriers." GF-X will begin testing its system
later this month with 9 airlines & 8 forwarders participating. It hopes
to link carrier & forwarder systems to its web site to provide a central
repository for global air freight capacity, scheduling & booking
information. The exchange is designed to help forwarders & airlines
reduce paperwork and manage the risk of preselling & pre-buying
capacity. Participating airlines are American Air Cargo, British Airways
World Cargo, Cargolux, Continental Airlines Cargo, DHL Aviation NV, Emirates
SkyCargo, Japan Airlines Cargo, Korean Air Cargo & Swisscargo. The
forwarders participating are Circle Int'l Group, Danzas AEI, Emery, Fritz
Cos., Kuehne & Nagel, MSAS Global Logistics, Panalpina and Yusen Air
& Sea Service.
- TNT, Without The Plane ......... as it has launched SecurEdoc
service, secure (i.e. 128 bits encryption) express delivery over the
Internet. SecurEdoc is the instantaneous & secure electronic alternative
to Express document delivery. By 2002 it is estimated the global e-mail
market size will be 7.9 billion messages a day, with 'a potential market
value for electronic document distribution of US$10B by the end of 2002.
- Air Canada Probe ......... as the UK Competition Commission is to
launch an inquiry into the recent takeover of Canadian Airlines by Air
Canada. Kim Howells, Minister for Consumers & Corporate Affairs, said
the takeover raised concerns about competition in the market for nonstop
flights between London's Heathrow airport & several cities in Canada.
The commission will investigate whether the takeover could operate against
the public interest.
- More HAZ MAT Hits ........ as the FAA is to assess US$810,000 in
fines levied against 2 airlines, 2 shippers & a forwarder for alleged
violations in transporting hazardous materials. Brazilian Airline, Viacao
Aerea Sao Paulo (VASP) incurred the heaviest fine, US$440,000, for accepting
transportation of hazardous materials. This included two 23 kilo drums of
oxidiser ammonium persulphate, 33 19 liter plastic Jerry cans of corrosive
chlorite solution, as well as solid poisons & flammable liquids. The FAA
alleges that the packages were not correctly labeled & prepared for
shipment and that VASP employees were not properly trained to package and
handle hazardous materials. The items were found during an inspection of
VASP's Miami cargo facility. Although the carrier then agreed to stop
accepting, storing and transporting hazardous materials, the FAA found VASP
in violation on two follow-up inspections. U.S. shipper, Valvoline, was
fined US$190,000 for passing on 4 improperly packaged one-gallon containers
of flammable liquid (tire dressing) to United Parcel Service. UPS notified
the FAA when their ground handling facility found the contents to have
leaked. Smaller fines were also levied against Miami Int'l Airport Cargo
Facilities and Services, Northwest & the Kinetics Group. FAA also plans
to sting United Airlines with a US$72,000 fine for allegedly passing on an
unmarked, undeclared, potentially explosive, damaged oxygen generator to
FedEx. The carrier allegedly passed on the 4 pound generator to FedEx to
courier on their flight from SFO to DFW in July 1999. The company that
received the package, Aviall Aircraft Parts, was alarmed to see that the
parcel was not properly labeled or packaged & spilled the beans by
calling the FAA. The FAA has come down hard on United because the package
was not accompanied by shipping papers, was not declared as hazardous
material, did not come with emergency response literature, & because
United had not applied for the necessary Dept. of Transport (DOT) approval
to fly such cargo.
- More Than A Merger? .............. as the alliance between KLM
& Alitalia failed (see The Cargo Letter 351) due to a merger proposal
from Alitalia which in fact amounted to a takeover bid. KLM considered that
unacceptable. So say representatives from the trade unions. Alitalia had
proposed a takeover to KLM, which was rejected by its partner, so the
transport union of left-wing Italian trade federation Cgil said in a
statement. The Dutch Association of Cabin Staff also states that Alitalia
overplayed its hand. In March, KLM suggested to Alitalia to examine the
possibilities of an accelerated merger. KLM has advanced 'the continuing
uncertainty about the privatization of Alitalia, together with the
opportunities of growth for Milan's Malpensa Airport' as official reason for
the split. In more news, KLM is in talks to acquire 49% of Air Europa,
Spain's 2nd-largest airline. The Spanish carrier confirmed the talks
involved a shareholding alliance. Such a deal would be similar to that of
its private-sector rival Spanair with the Scandinavian SAS group.
- Private India ......... as the Indian Government has decided on
privatization for the airports at Delhi, Mumbai, Chennai & Calcutta, all
of which are currently managed by the Airports Authority of India. The
government is waiting for the consultants' reports before inviting tenders
for the leases, but has already appointed legal advisors to oversee the
whole process. In a written reply to the Indian Parliament, the Minister for
Civil Aviation, Sharad Yadav, stated that the leases will not include
functions such as air traffic & air space management, customs, and
immigration & security. It is reported that Kuala Lumpur Int'l Airport
is among those interested in taking on the management of the 4 airports.
KLIA already has a management role in the Pochentong Int'l Airport in Phnom
- BA Cuts It's Losses ......... as British Airways has sold its stake
in Air Liberte, the loss-making French Airline, for US$61.6M. British
Airways had held an 86% stake in the carrier.
- Korean Storm Rising ........... as about 300 Korean Air Lines
pilots rallied in Seoul on May 19 demanding the government & the company
recognize their union. "Korean Air is one of 2 national carriers in the
world that ban the establishment of (pilot) labor unions," said Lee
Sung-jae, the leader of protesting pilots. "Prohibiting pilots from
setting up a union is an antiquated idea." Korean Air's 1,200 pilots
last August formed what management and the government see as an illegal
union, but have fought a losing battle to win legal recognition. They have
threatened to strike later this month unless the government promises to
abolish laws barring them from legally forming a union. KAL boosted a
spending package on safety to US$200M after a KAL cargo plane crashed in
China and another in Britain last year, killing a total of 13 people. A KAL
Boeing 747 crashed on approach to Guam's Agana Int'l Airport in August 1997,
killing 228 of the 254 passengers & crew.
- Emirates SkyCargo Ego Rising .......... as for the 2nd year running
it has won the overall title of "Cargo Airline of the Year 2000"
at the Cargo Airline of the Year Awards ceremony held in London. Emirates
SkyCargo, which achieved increases during the financial year just ended of
26% in tonnage carried, & 28.4% in revenue, also won two subcategories.
They are Best Cargo Carrier to the Middle East, which the airline won for
the twelfth year in a row; and for the 3rd time Best Cargo Carrier to the
- Air France Cargo Rising ........... as the 4th largest air freight
carrier, is experiencing a positive change of fortunes for the year 2000
with improved revenues resulting from the strong recovery in Southeast Asian
markets. Asian cargo capacity is to be raised by 14%, with Hong Kong,
Bangkok & Seoul being served by an additional B-747F freighter service.
A further 7% freight capacity is on offer for South American markets with
flights to Mexico City & Buenos Aires being upped from a biweekly
service to three times a week. Air France Cargo saw further improvement
during March this year, recording a 12.2% increase in throughput & 7.2%
increase in ton kilometers. The airline has a total performance of 4.9
billion ton kilometers. But now it appears there will be more competition,
as 3 regional French airlines 3 regional French airlines have announced
merger plans to form one company to rival Air France. The merger between
airlines AOM, Air Liberte & Air Littoral will create one company, which
will be 51% owned by European financial institution Taitbout Antibes, &
49% by SAirgroup, the parent company of Swissair.
- Our PAL's Owner Would Like To Cut Losses ........... as Philippine
Airlines Inc. (PAL) majority owner Lucio Tan says he is in talks with 3
foreign airlines including Germany's Deutsche Lufthansa AG for the sale of
his 70% stake in the flag carrier. "Some 2 or 3 airlines (are) in
discussions (with PAL) but those airlines are not allowed to announce until
(we) close (a) deal," Tan said. "Lufthansa is one of them but (we
are) still negotiating. (We) keep talking," he said. Tan earlier said
he will sell his 70% stake in PAL for an estimated US$800M to end industry
talk that he is a crony of President Joseph Estrada. Tan is a close
associate of Estrada, who has been largely criticized for tacit efforts to
revive cronyism in the government. Tan said on May 4 that the US$800M price
tag is "negotiable," a sentiment we find quite easy to believe.
Tan earlier agreed to unload his 46% stake in another firm, Philippine
National Bank (PNB). He signed an agreement with the government April 24 to
jointly sell their combined 76% stake in PNB through a public auction this
- Atlas Air On Sale ........... as it plans to sell approximately 3
million primary shares of common stock under its currently effective shelf
registration statement. The proceeds of the offering will be utilized to
prepay certain indebtedness of Atlas and for general corporate purposes. In
conjunction with this offering, Michael Chowdry, Chair & CEO of Atlas
Air, along with certain other senior executives, will sell approximately 2.2
million additional shares. Morgan Stanley Dean Witter will act as market
maker for the offering.
- Aloha? ......... as Hawaiian Airlines Inc. has secured the services
of a financial advisor who will assess the company's strategic alternatives.
The Honolulu-based carrier began a share buy back program last month &
may reconsider this course of action. The company will wait until the study
is complete before taking any action. Analysts speculate that the airline
may be up for sale.
- Latin American First ....... as Mexico's largest airline,
AeroMexico will inaugurate daily nonstop flights between Hermosillo,Mexico
& Las Vegas from June 15, making it the 1st carrier to provide scheduled
service to the Mexico-Las Vegas market. Huge quantities of money will be
left behind in Las Vegas to make room for additional Mexico bound cargo.
- New BX Chief ......... as Joseph L. Carnes has been appointed
president of BAX Global Inc., succeeding C. Robert Campbell as the head of
the BAX Global organization. Carnes joined BAX Global as president, U.S.
& Canada, in September 1999. Before joining BAX Global, Carnes spent 12
years at Fritz Cos. Inc. Earlier, he worked for Jennings Co., an
import/export company, & for the U.S. Customs Service.
- 10 & 11 Don't Add Up?.......... as the FAA effectively froze
pilots out of the certification process when deciding to establish the same
pilot type-rating for 2 distinctly different aircraft, ignoring legitimate
safety concerns, the FedEx Pilots Association (FPA) contends. The president
of the 3,700 member association said he learned that the FAA has announced
that it is allowing FedEx Corp. to use the same flight crews to fly both
MD-10 & MD-11 cargo jets despite pilot objections. Boeing Corp. is
converting DC-10 aircraft into more technologically advanced MD-10s. The
FedEx Corp. is among many cargo & passenger airlines that have added the
MD-11 to their fleets. An advantage to FedEx is that both the MD-10 &
MD-11 use new technology. While the FAA is poised to issue a certification
treating both aircraft as the same, the pilots contend that the planes have
numerous differences -- including different landing techniques, handling
characteristics & levels of automation.
- Scorpions Sting South African Air ......... as South Africa's elite
Scorpions crime fighting unit said on May 2 it was investigating possible
drug trafficking & prostitution (sorry, in flight upgrade not currently
available) by cabin crew at the state airline. News of the investigation
came after reports that crew at South African Airways (SAA) were suspected
of involvement in smuggling cocaine back home & criminal activity
ranging from prostitution to money laundering. SAA, 20% owned by Swissair,
said it had begun hearings into 92 of its staff who it had suspended after
allegations they had bribed the firm's roster clerks in order to be based
for longer periods overseas. "We are involved in a wide investigation
together with SAA, focusing on possible drug trafficking & are looking
at all the information we can get," said Advocate Gerrie Nel, who is
involved in Scorpions investigation. The Scorpions have wide-ranging powers
& spearhead the government's attempt to crack down on the country's
rampant crime rate and growing reputation as a major conduit point for hard
narcotics to the West. Scorpion recruits are trained by the U.S. FBI &
Britain's Scotland Yard and are backed by state of the art computer
- Looking For A 1986 "Signed Original" of That Brown Shirt
.......... as UPS has opened an online store of its own called "Brown
& Brown", part of the E-Commerce Web
site. It is an interactive store selling UPS collectibles such as model
planes & delivery trucks to overnight express groupies for the 1st time.
The site also offers advice on E- commerce strategy & transportation
issues along with detailed descriptions of how to incorporate UPS shipping
& logistics tools into Web sites.
- Atlas Air 1st At MIA ......... as it handled more cargo at Miami
Int'l Airport in 1999 than any other airline, according to the Miami Airport
Authority. The carrier's Miami volume rose by 13% from 1998. Atlas carried
260,000 metric tons of cargo at the MIA last year. This is particularly
significant since there was an overall decline of 8.4% in freight tonnage at
the Miami airport between 1998 & 1999. This is the 2nd year in a row
Atlas has held the top spot.
- Dangerous Cargo ........... as a baggage handler for Alaska
Airlines was killed when his baggage cart pinned him against a plane at
Seattle-Tacoma Int'l Airport. The man, who had worked for the carrier for
about a month, was taking bags out to Alaska Flight 191 on the night of May
19 when the accident happened. The man got off his tug to pull open the
MD-80's cargo door. As he did so, the cart rolled forward, pinning him
against the plane. An investigation will try to determine whether a bag fell
off the cart seat, causing the vehicle to move, or whether it had not been
left in park. The plane, with about 140 passengers & 5 crew members, had
been scheduled to leave for Anchorage but the flight was canceled after the
- A Little Something From Delta Air
......... as it's giving "free" Palm VII handhelds to U.S.
customers who purchase their transoceanic BusinessElite or BusinessElite
U.S. tickets online at the airline's Web site:
- Sit Down & Shut Up! .......... as Japan's 3 biggest carriers _
Japan Airlines, All Nippon Airways & Japan Air System _ began telling
customers in April that they will forcefully restrain any passenger who
threatens others or refuses to heed orders by crew members. The tighter
regulations follow airline reports that rowdy behavior by airline passengers
more than doubled in 1999 compared with the previous year to 330 cases,
including sexual harassment & drunkenness. In early April, flight
attendants aboard a Japan Airlines flight from Osaka to Los Angeles bound a
drunken man to his seat with adhesive tape after he refused to stop shouting
& pushing passengers & crew. An alternative suggestion of
pre-binding all passengers to their seats was rejected.
- Fido Embargo ........ as Delta Air Lines will embargo the
acceptance of pets as checked baggage to all destinations worldwide during
the months of June, July & Aug. This embargo will apply to all tickets
purchased with Delta on or after May 15, 2000 for travel on or after June 1.
Delta will continue to accept small, domesticated pets for travel in the
cabin, in kennels that fit under a passenger seat. Also during this time,
Delta Air Cargo will accept animal shipments only from commercial animal
shippers or licensed pet breeders, which must be booked in advance of
shipment. Extreme weather guidelines will apply, preventing cargo shipment
of any live animal when the temperature is forecast to exceed 85 degrees
Fahrenheit at any point in the animal's journey. An important exception to
this guideline occurs with the shipment of pug- or snub-nosed dogs, which
may not be transported when the temperature on any portion of their flight
will exceed 70 degrees Fahrenheit. The "Pug-Snub Liberation Freedom
Union" has threatened suit.
- Priracy Summit Concludes .......... as authorities from 15
countries - including Japan, China, Indonesia, Malaysia, India & South
Korea - wrapped up a 2 day conference in Tokyo on piracy on May 12 by
adopting an action plan calling for increased cooperation between countries.
"Taking into account that recent piracy & armed robbery against
ships seems to be connected to Int'l syndicates, seems therefore to be more
brutal, and seems to be operated beyond one country's administration (we)
shared the view that it is necessary to promote mutual cooperation," a
communique issued at the end of the conference said. The countries agreed to
beef up information exchange & work towards formulating concrete
measures to be taken in the event a ship is attacked, including possible
joint patrols of hazardous areas. China however has ruled out its
participation joint patrols or exercises and has made it clear it will
retain sole responsibility for what it regards as Chinese waters. Of the
estimated 285 attacks throughout the world that year, 158 took place in
- Taking A Stand In The Strait ....... as a part of the fight against
piracy in the Strait of Malacca, all vessels sailing along the 900 kilometer
route will be asked to report their positions to a new Indonesian Naval
Center. The Indonesian Government is to make a stand against the growing
number of marine crimes. One-third of all maritime crimes worldwide were
committed in Indonesia in the 1st quarter of the year & consisted of 19
pirate attacks. This is an increase on the same period for the previous 2
years, when there were 18 attacks in 1999 & 10 in 1998. These attacks
all took place in the Strait of Malacca. Accordingly, the government will
set up a center on Batam Island to monitor the movements of the ships in the
Straits & provide help when needed. Success will depend on the
cooperation of the vessels passing through which will be required to give
their positions. The Indonesian navy plans to deploy 15 patrol boats to
provide an effective security system. However, there are some difficulties
for the new plan. Foremost of these is the geography of the area. The
low-lying coastline of Sumatra, where ships have to slow down on their entry
to Singapore, consists of thousands of inlets, covered in thick foliage.
Pirates using speedboats can lie in wait undetected and then rush out to
attack the passing vessels. Only effective air reconnaissance can find these
natural hiding places. The other problem for the Indonesian navy is the
state of its fleet & aircraft. Many of the patrol ships & planes are
obsolescent, some even dating back to the 1940's, and they struggle to match
the performance of the vessels the pirates use.
- Making Use of That New Canal ........... as the China Ocean
Shipping Company (Cosco) has begun a new container line in the Panama Canal.
The new line will reach from the Far East to U.S. east coast, & will
have 9 container ships. The ships include 7 from Cosco, 1 of the Yaming firm
of Taiwan, & one from the "K" line Japanese firm. The opening
of the new route will produce more than US$10M in tolls to the interoceanic
waterway, that has been administered by the Panama Canal Authority (ACP)
since Dec. 31, 1999. The ACP will obtain more than US$2M from the Chinese
conglomerate from the sale of fuels to its ships, all of them under
Panamanian registry and of the "Panamax" class, the biggest that
traverse the waterway. Cosco, which has 600 ships of assorted types, is the
bigger user of the Panama Canal among the shipping companies. The Chinese
conglomerate, whose operations cover almost all the world, has 6 branches in
Latin America: Brazil, Argentina, Uruguay, Peru, Chile & Panama, where
it started to extend its commercial ties since the decade of the 1970's. The
Panama Canal handled fewer -- though larger -- vessels through the first 6
months of its fiscal year 2000, resulting in a marginal 0.7% decline in
revenue, the Panama Canal Authority reported. For the 6 month period, ending
March 31, the canal reported US$292.7M in revenue. Average vessel size
transiting the canal rose 4.4%, offsetting a 4.6% reduction in overall
transits. Vessel transits dipped from 6,521 last year to 6,221 vessels for
the first 6 months of fiscal 2000. The canal handled 2,186 Panamax vessel
transits, representing 35.1% of total vessels using the canal, a 2.8%
increase over the year-earlier period.
- Meanwhile, Over At The Suez Canal .......... as China & Egypt
have taken a further step along the road to what has been termed "close
cooperation." An agreement has been signed between the 2 countries
which will allow China to use Port Said as a distribution center for
containers. The hope is that this development will encourage transit trade
as well as bring other Int'l shipping lines to the port. The loser in this
is the port of Haifa in Israel from where the Chinese previously transited
their cargo to Egypt. It is reported that the Cosco plans to provide a
service of at least one container ship calling at Port Said every week. Last
year, the Port of Vancouver decided to reexamine a deal between its port
authority & COSCO. In fact, the deal is set to be scrutinized by a
special parliamentary committee of the Canadian government responsible for
looking into organized crime.
- Canal Alternative Begins ............ as Mexico's Secretariat of
Communications & Transport has announced that the Trans-isthmus
railroad, which stretches coast to coast across the narrowest strip of land
in Mexico, has been turned over to state company, Ferrocarril del Istmo de
Tehuantepec. Although this may seem a meaningless, piece of bureaucracy it
will allow negotiations to begin with private companies for cargo shipping
on what has been described as the "Panama alternative." Cargo
shipping will begin this month.
- China Just Can't Contain Itself! ......... as it has become the
world biggest container producer, with its output sharing 70% of the world's
total. Figures released by an Int'l shipping research organization show that
China produced 1.06 million TEUs last year, compared with the world gross
output of 1.35 million TEUs. The production of southeastern Asian countries
and West European countries in 1999 reached 132,000 TEUs & 96,000 TEUs
- So What Is Sinotrans? ............ as having already missed one
deadline, China National Foreign Trade Transportation Group (Sinotrans) has
until May 26 to file information with the FMC so the agency can determine if
the company is directly owned or controlled by the Chinese government &
is operating as an ocean common carrier in the U.S. trades. Sinotrans failed
to meet an April 30 deadline set by the FMC for the trade data. Failure to
comply with the request could result in fines of up to US$27,500 per day,
the FMC said.
- Final Carrier Rule ........ as the FMC has issued a final rule
clarifying the definition of "ocean common carrier." The rule will
become effective in 90 days. The rule defines ocean common carrier as a
vessel operator between at least one U.S. trade, or between the U.S. & a
foreign port. In addition, a vessel operator defined as a "common
carrier" in one U.S. trade is an ocean common carrier in all U.S.
trades, according to the rule. Some had questioned this approach, claiming
that an entity need only to utilize a single vessel to qualify as an ocean
common carrier. The FMC said that when Congress passed the 1984 Shipping
Act, the legislative branch intended that ocean common carriers
"actually operate, not merely utilize, vessels." The rule is
consistent with Congress' intent to delineate between ocean common carriers
& non-vessel-operating common carriers (NVOCC). "Congress clearly
wanted to distinguish between those common carriers that operate vessels
& those that do not," the FMC said. The distinction is important
because ocean common carriers receive antitrust immunity & can enter
into service contracts with shippers, the FMC said. "An NVOCC can do
neither." The FMC turned down a request by the ocean carrier industry
& the National Industrial Transportation (NIT) League to extend the
ocean common carrier definition to shipping lines belonging to vessel
sharing agreements that serve U.S. ports, even though a VSA member line may
not call at U.S. ports. "The inclusion of VSA participants in the ocean
common carrier definition would effectively confer antitrust immunity to
carriers who do not make a commitment to serve the U.S. trades by operating
their own vessels," the FMC said.
- Big Carrier Hit ......... as the European Commission has imposed
fines of US$8M on 15 major shipping lines operating in the Asia/Europe trade
for breaking European competition laws. The EC said that the now-defunct Far
East Trade Tariff Charges & Surcharges Agreement was "an illegal
price agreement on the Europe/Far East trade." Under the Far East Trade
Tariff Charges & Surcharges Agreement, which operated from 1991 until it
was disbanded in 1994, the conference & non-conference carriers agreed
not to charge customers less than certain published surcharge levels, the EC
said. In its decision, the EC rejected the carriers' contention that their
agreement on charges & surcharges was merely a "technical
agreement" permitted under the European competition rules applicable to
shipping services. The carriers within the Far East Trade Tariff Charges
& Surcharges Agreement had a combined market share of more than 80%
between northern Europe& the Far East. The punitive fines are:
- P&O Nedlloyd, US$1.38M.
- Maersk Sealand/A.P. Moller, US$929,000.
- Hanjin, "K" Line, Mitsui O.S.K. Lines, NYK,US$689,000 each.
- DSR-Senator, Evergreen, Hapag-Lloyd, Neptune Orient Lines &
Yangming, US$409,000 each.
- Cho Yang, CMA CGM, Malaysia Int'l Shipping Corp. & OOCL,
- Busy But On A Budget ......... as the liner shipping industry can
look forward to strong volume growth & slowing increases in capacity,
but that won't automatically translate into higher profits, shipping
analysts say. Read the entire Journal
of Commerce article.
- From FMC To NOL ......... a Singapore based Neptune Orient Lines
(NOL) has appointed ex-U.S. Federal Maritime Commissioner Hsu Ming Chen as
its senior adviser for shipping policy. NOL group boss Flemming Jacobs said
that the Beijing-born Ms Hsu will provide policy advice across all regions
& in all arenas. But he added that the 75 year-old U.S. citizen will
"help NOL make the most of opportunities brought about by China's
promising developments & opening up to Int'l trade." Ms Hsu, served
on the U.S. FMC from July 1990 to Dec. 1999.
- Asia To Europe Rates Up ......... as carriers of the Asia Westbound
Rate Agreement, a division of the Far Eastern Freight Conference, said they
will increase rates from Asia to northern Europe by US$350 per TEU on Aug.1.
The FEFC had announced last Oct. a preliminary plan to raise rates by US$250
in August, but revised the figure upwards because of a strengthening
westbound market, said the FEFC conference secretary. Traffic volumes from
Asia to Europe were up 10% in the 1st quarter, compared to the same period
of 1999. The rate increase will not apply to shipments from Japan to Europe,
which are covered by a different division of the FEFC conference. The FEFC
said that it will also increase rates for certain customers by more than
US$350 per TEU "to remove certain rating anomalies." FEFC lines
are APL, CMA CGM, DSR-Senator Lines, Hapag-Lloyd, Hyundai, "K"
Line, Maersk Sealand, Malaysia Int'l Shipping Corp., Mitsui O.S.K. Lines,
National Shipping Co. of Saudi Arabia, NYK, OOCL, P&O Nedlloyd &
- FTC Cries Foul .......... as the UK government is being strongly
urged by the Freight Transport Association to appeal to the European
Commission regarding current regulations in the container shipping industry.
The FTA is concerned that current rules in the EU are obsolescent & no
longer work in favor of shippers. One particular problem area is Regulation
4056/86 which effectively strikes out the chances of healthy competition
within the market. Container shipping companies do not have to adhere to
this EU regulation and this results in price fixing & the manipulation
of other service conditions. The FTA is hoping to see the UK Government call
for a review of the controversial regulation at the next OECD meeting on May
25. Currently, over 50% the liner market is monopolized by the 20 largest
companies in the industry and this has left disgruntled shippers dealing
with rates that have risen by up to 100% in the past 12 months.
- In Discussion ......... as Industrial Maritime Carriers (USA) Inc.,
operating as Intermarine, & Associated Transport Line have filed an
agreement with the U.S. FMC to set up the "Gulf/South America
Discussion Agreement." The agreement permits the carriers to discuss
and voluntarily agree on rates and related matters in the trade between the
U.S. Gulf & Colombia, Ecuador, Peru, Chile, Argentina, Brazil, Venezuela
- South American Woe .......... as despite the development of trade
in Latin America & the Caribbean in the last decade, the region
generates only about 7.6% of world port traffic, when measured in TEUs
According to a report by the U.N. Economic Commission for Latin America
& the Caribbean on the maritime profile of the region says that its
Several ports have even seen TEU decline (see "Throughput", below)
full report, published on the Internet in Spanish.
- 5.5% of the world's Int'l trade.
- 8.3% of the world's coastline.
- 2.3% of the world's shipping companies.
- 20.3% of the world's fleet, including the open registries such as
Panama and the Bahamas.
- 7.6% of port traffic measured in TEUs.
- 5th Morning Landbridge .......... as Burlington Northern Santa Fe
& Norfolk Southern Railway Corp. have agreed to provide nonstop
transcontinental intermodal service between the West Coast, Southwest &
Southeast, starting May 21. The service will link Richmond, Modesto, Fresno,
Los Angeles & San Bernardino, Calif.; and Phoenix; with Atlanta;
Charlotte, NC, & Jacksonville. The service will provide 5th morning
availability for westbound & eastbound freight moving between southern
California & Atlanta. NS will add at least 1,300 53-foot containers to
the fleet it provides for the North American Container System, a stacktrain
network composed of 10 North American intermodal rail networks. NACS has a
dedicated fleet of nearly 11,000 48-foot & 53-foot intermodal
- For Sale: Hapag-Lloyd ........... as Preussag AG, the German
conglomerate that owns Hapag-Lloyd, said it plans to sell 50% of the shares
of its transport & logistics subsidiary. The sale is designed to help
finance Preussag's US$2.7B acquisition of the British travel company Thomson
- Wan Hai In The Game ......... as Taiwanese shipping line Wan Hai
Lines will enter the transpacific trade within 2 weeks, confirming an
agreement to take space on the services of CMA CGM & Norasia. Largely
unknown in North America, Wan Hai is the largest intra-Asia carrier & a
sister company of Trans-Pacific Lines, based in the Philippines. Wan Hai
will enter the Pacific trade this month, with two weekly container services.
Wan Hai will take space on the "China California Shuttle" service
& on the transpacific leg of the U.S./Asia/Mediterranean
"MEX/TPX" service of CMA CGM, of France, & Norasia, of
Switzerland. In addition, Wan Hai will start a monthly transpacific service
in June, with CMA CGM taking space. The new service will be called
"HTP" and will call at Hong Kong, Taiwan & Los Angeles. Wan
Hai's involvement in the China California Shuttle service started when M/V
Norasia Sheba called at Shanghai on May 11. The service rotation is Los
Angeles, Shanghai, Xiamen, Hong Kong & Los Angeles.
- Insurance Giants Slammed ......... as capital-rich marine insurers
offer no model for the future development of quality marine insurers
according to the director of The Swedish Club's Hong Kong office. Tord
Nilsen told delegates at the Marine Hull & Machinery Insurance
Conference in Singapore on May 10: "In our view, the impersonal,
distant service provided by the market giants - with their concentration on
U.S. stock movements rather than marine claims & loss prevention -
offers no model for future evolution."
- It's Like "The Discover Card" ........... as the
Australian government says it will offer refunds for its new Goods &
Services Tax on port costs to all shipowners operating in the country's
ports. The tax, to be implemented July 1, will be levied against vessels'
port disbursements accounts at a rate of 10%. Earlier reports indicated that
refunds would only be available to shipowners whose vessels are loading
cargo in Australian ports, while no refunds would be available for vessels
carrying imports. "It's not as bad as we initially feared," said
Thomas Timlen of the Baltic & Int'l Maritime Council. Vessel operators
in the Australian coastal trades will also be able to receive refunds on tax
accessed on their port costs. However, they will now have to pay a 10% Goods
& Services Tax on their freight income.
- P&O Nedlloyd Looses It's Head ........ as CEO Tim Harris has
unexpectedly left, due to a difference of opinion about 'issues relating to
future management of the Group.' The conflict may be connected with the
spending of financial means and the company's expansion strategy. P&O
Nedlloyd must focus on an increase in scale, but seems continually unable to
take any decisive steps. Harris has headed P&O Nedlloyd since the merger
of P&O Containers & Nedlloyd Lines in late 1996 and was earlier the
chairman of P&O Containers since the early 1990s. P&O Nedlloyd has
lost money for its 1st three years of operations since the merger. Since the
Anglo-Dutch merger of P&O Containers & Nedlloyd Lines in 1996. The
carrier had a pretax loss of US$29M in the 1st quarter of this year.
- Happy Marriage ........ as the merger of CMA & CGM to form
"Holding CMA CGM SA" one year ago, the new company's board has
released its 1st annual results. The carrier's consolidated annual revenue
has soared 18% to US$1.29B. This reflects the strong revival of activities
on the Asia-Europe trade and the positive impact on revenue of a series of
new lines launched last year as a result of both internal growth &
acquisition. Holding CMA CGM's net income rocketed 56% in 1999 to reach
US$42.4M, pushing shareholder equity up to US$244.8M. To sustain this
increased volume of activity, the group pursued its strategy to modernize
both vessel & container fleets. Two new vessels were delivered in 1999
and orders were confirmed for 6 containerships, 4 of which are 6,500-TEU
vessels. Over the course of the year, the group purchased some 40,000
containers. On Dec. 31, 1999, CMA CGM was operating a total of 81 vessels.
Income from operations within Holding CMA CGM reached US$61.7M, an
impressive 20% rise on the 1998 figure of US$51.5M.
- P&O Acquires Festival Cruises ......... as the Peninsular &
Oriental Steam Navigation Co. is merging with the European cruise ship
operator Festival Cruises for up to US$400M in cash & stock. Under the
deal P&O will acquire Festival's cruise business including its fleet of
4 ships, ships currently under construction & the group's European
marketing network. Festival will continue as independent brand. Founded in
1822, P&O operates cruise ships, ferries, container ships, bulk
carriers, coastal tankers & offshore service vessels. It also has
interests warehousing, cold storage & distribution; construction and
property development and property management & investment.
- Welcome Aboard! .......... as on April 29, Orient Overseas
Container Line (OOCL) celebrated the christening of M/V OOCL Malaysia &
M/V OOCL Los Angeles. The two 5,000-TEU container vessels are designed for a
service speed of 25 knots.
- Sharpening Water Skills ........ as the U.S. Military Traffic
Management Command has completed the largest National Guard deployment by
barge in the command's history. MTMC, which provides ocean & overland
logistics management to the American armed forces, moved 1,173 pieces of
cargo on 65 barges 800 miles in 7 days through the Ohio, Mississippi &
Red River systems. The barges were loaded at the river ports of Clarksville
& Evansville, Ind.; and Peoria, Ill. The cargo will be used to support
maneuvers by the Indiana Army National Guard's 76th Infantry Brigade at the
Joint Readiness Center at Fort Polk, La. Another 449 pieces of cargo were
shipped on 116 railcars to Fort Polk for the same military exercise.
- Tall Ships Coming .......... as major ports along the East Coast
will evoke an earlier era this summer as an int'l fleet of tall ships fills
harbors with towering masts & acres of sail. The majestic vessels begin
their northward journey up the East Coast this month after an appearance at
San Juan, Puerto Rico. They'll reach New York Harbor in time for an
Independence Day - 4th of July celebration organizers say will eclipse the
city's massive 1976 bicentennial event. New York will be the centerpiece of
the tour with about 150 tall ships, 3 dozen warships & up to 70,000
spectator craft, organizers say. The tour continues until late July when
about 2 dozen of the ships make a final stop at Portland. The parade of
ships is organized by "Operation Sail," a nonprofit group that has
promoted tall ship visits since the 1964 World's Fair. Former President
Bush, who has a summer home in Kennebunkport, will be Portland's parade
marshal, riding into the harbor aboard the USCGC Eagle, the Coast Guard's
295-foot, 3 masted training barque. On their way from Puerto Rico to Maine,
the ships also will stop at Miami; Norfolk, Va.; Baltimore; Philadelphia;
New York; & New London, Conn.
- The Internet Guides Towboat Operators ........... read the Journal
of Commerce special article
- L.A. Just Won't Stop! .......... as the Port of Los Angeles topped
400,000 TEUs in April, breaking records for imports, exports & total TEU
volume. The port handled 407,032 TEUs, a 44% increase over April 1999 &
topping the previous monthly record of 387,166 TEUs set in Oct. 1999.
Inbound loaded containers topped 200,000 TEUs for the 1st time in port
history. The 211,262 TEUs handled marked a 44.4% increase over the
year-earlier period, and passed the previous record of 198,681 TEUs, also
set last Oct. Shippers are moving peak holiday season cargo earlier,
coordinating with ocean carriers to try to ease congestion problems that
have plagued West Coast ports in the past few years. Export containers
totaled 85,232 TEUs, up 34.3% over April 1999, and surpassing the previous
record of 83,446 TEUs handled in March 1997. For the year, the port has
handled 1.36 million TEUs, 33.7% ahead of the same period in 1999. These
figures do not include those of giant Port of Long Beach next door.
- U.S. Reserve Fleet Stays Ready .......... as 9 U.S. companies have
won contracts from the Maritime Administration (MARAD) to manage 74 ships in
the government's Ready Reserve Force. The basic value of the contracts is
US$316.3M, but the total estimated combined value for the 33 contracts is
US$1.1B, when expected costs of shipyard work & operational expenses for
which the ship managers will be reimbursed are considered. Contract winners
are: American Overseas Marine Corp. (US$41.3M to manage 9 ships); Crowley
($34.9 million to manage 8 ships); Interocean Ugland Management Corp.
(US$35.3M to manage 11 ships); Keystone Shipping Co. (US$57.1M to manage 12
ships); Marine Transport Lines (US$49.2M to manage 9 ships); Mormac Marine
Enterprises (US$34M to manage 9 ships); Ocean Duchess, Inc.(US$2.6M to
manage 3 ships); Pacific Gulf Marine (US$31M, to manage 8 ships); &
Patriot Contract Services (US$30.8M to manage 6 ships). In related news,
MARAD Administrator Clyde Hart will leave his post for 90 days to
temporarily head up the Motor Carrier Safety Administration, a new agency
within the Dept. of Transportation.
- Master Sentenced ......... as master of the 89,427 dwt Greek-flag
M/T Nissos Amorgos has been given a 16-month jail sentence in his absence by
a court in Venezuela. The tanker ran aground in the Maracaibo Channel in
Feb. 1997, spilling 4,000 tons of oil in the country's worst ever pollution
case. Captain Konstantinos Spiropulos is currently on bail in Greece, and
seems certain to appeal against the result of the controversial legal case.
Doubts have been cast both on the strength of the prosecution evidence &
on the condition of the channel at the time of the incident.
- World Port Volume Up ......... as world container port throughput
increased 7.8% last year to about 201 million TEUs -- the 1st time volume
exceeded 200 million TEUs -- according to a report by U.K.-based Drewry
- Other Throughput: The Port of Charleston said outbound container
volume was up 19% in the 1st quarter. In March alone, the port handled a
record 62,401 TEUs of containerized exports, up 18% from March 1999. The
Port of Le Havre, France's largest containerport, handled a record 129,882
TEUs in March, a 14.2% increase over March 1999 & setting a record for
containers handled in a month. The port of Montreal handled 12% more cargo
traffic in the 1st quarter, reaching 4.2 million tons, while containerized
cargo traffic was 2.3 million tons in the 1st quarter, up 8%. Buenos Aires
handled 1.08 million TEUs in 1999, 5% down from 1.14 million in 1998.
Traffic at the Brazilian port of Santos fell 3% to 774,000 TEUs last year,
from 799,000 TEUs in 1998. San Antonio, the largest Chilean container port,
handled 375,000 TEUs in 1999, down 10% from 415,000 TEUs in the previous
year. Uruguay's port of Montevideo saw its annual volume drop by 6%, to
250,000 TEUs, from 266,000 TEUs in 1998. At Port of Seattle container
throughput for the 1st quarter dropped 11% to 335,756 TEUs, due to a drop in
Asian traffic through the Pacific Northwest port.
- This Month In U.S. Naval History .......... as on May 17, 1987 USS
Stark (FFG 31) was struck by 2 Iraqi Exocet missiles while on patrol in the
Persian Gulf and 37 Sailors were killed. Also this month in 1945, World War
II ends in Europe. Germany surrenders to the Allies after losing 800
submarines in the Battle of the Atlantic.
- Submarine Centennial History ....... as on May 10, 1960 USS Triton
(SSN 586) completes the 1st submerged circumnavigation of the Earth. The sub
followed Ferdinand Magellan's route & covered more than 41,000 miles in
just 84 days. Visit & click on
Visit our new Vessel
Casualties & Pirate Activity Database ......... where daily updates of
this news are posted. Stay up to date!
This is only a partial list of casualties for the month in that most
dangerous place ....... out there.
Panamanian M/V BAO JI SHAN (3,957 tons gross, built 1984) grounded on reef
outside Port Moresby harbor on May 21. Refloating attempt to be made with
assistance of local tug. (Mon. May 22 2000)
The Maltese-flagged bulk carrier M/V Evelyn sank off Aden on today after
catching fire earlier, Lloyds Shipping Intelligence Service said. The crew had
already been evacuated from the 22,546 dwt vessel by rescue vessels & taken
on board a chemical tanker. The Evelyn had been sailing from Novorossiysk,
Russia, for Malaysia, carrying fertilizers. Its position was 12 59 N, 47 58 E,
in the Gulf of Aden. (Sat. May 20 2000)
A pier holding a new open-air bar collapsed & plunged into the Delaware
River at the Port of Philadelphia tonight, killing at least 3 people &
injuring more than 24, with 7 missing. At least 30 people were on the pier when
it dropped into the water about 8:25 p.m. A canvas tent over the pier also
collapsed, covering many people who fell into the water. The pier held the new
bar, "Heat", which is attached to a ballroom dancing area at the four
masted S/V Moshulu restaurant or Eve McCarney, a converted vessel docked on the
river. "Heat" opened this month. (Thurs. May 18 2000)
F/V HANNOVER (2,172 gt, built 1994) had a fire on board, approximately 280
nautical miles southwest of Iceland, May 14. The vessel, which may still be on
fire, was towed into Reykjavik May 17, where firefighters are due to board her.
(Thurs. May 18 2000)
The Russian M/V SKRIPLEV, 416 gt, built 1963, sank at 0615, May 15, in
Valentine Bay, 3.7 miles off the coast, in lat 43 03N, long 134 20E. All 14 crew
members were rescued & proceeding to Slavyanka, Russia. (Wed. May 17 2000)
On 14.05.2000 at 0205 LT in position 03:54.1N 098:46.0E at Belawan anchorage,
Indonesia, 5 pirates armed with long knives boarded a general cargo vessel from
starboard side. They tied up duty sailor & threatened to kill him. They
broke into forecastle store & stole a large amount of ship's stores. Pirates
jumped overboard & escaped at 0225 LT after realizing that the other crew
had been alerted. At 0320 LT the same pirates re-boarded the vessel. However,
seeing the alert crew they aborted the attack & escaped in a small unlit
wooden boat. (Tues. May 16 2000)
On 10.05.2000 at 1230 LT at Chennai anchorage, India, 1 pirate boarded a bulk
carrier from stern. He was noticed by the duty officer but he jumped overboard
and fled in a waiting craft with 6 other people in it. Ship's stores were
stolen. (Tues. May 16 2000)
On 10.05.2000 at 2350 LT at Chittagong anchorage, Bangladesh, 4 armed pirates
boarded a general cargo vessel. They stole ship's stores & escaped by
jumping into the water. (Tues. May 16 2000)
Five stranded travelers, including famed pilot Dick Rutan, were rescued from
the North Pole about 12 hours after their Russian-designed biplane landed and
then sank through the ice, the Coast Guard said on May 16. The group boarded a
commercial plane late May 15 for Eureka, Nunavut, Canada, a small settlement in
the Queen Elizabeth Islands west of Greenland. Another plane hired by their
families was going to transport them back to Alaska. The travelers had been
stranded about a mile from the North Pole on the North American side. Among the
group was Rutan of Mojave, Calif., who became famous in 1986 as one of the 2
person crew who made the 1st flight around the world without stopping or
refueling. The 5 aboard the An-2 biplane were traveling with a single-engine
(Mon. May 15 2000)
The Bahamas M/V MULTIFLEX SPRINT (2,854 gross), Valletta for Aviles in
ballast, sustained engine-room damage & arrived Corunna, in tow of tug
Remolcagure Bat, May 10. Repairs under way May 12. (Sat. May 13 2000)
Three dead stowaways & 4 survivors were found inside a steel cargo
container at Miami aboard M/V Seaboard Caribe, exposed to the hot sun from the
Dominican Republic. Temperatures inside the containers, which can't be opened
from the interior, can reach 125 to 130 degrees F. "It appears that they
baked inside one of the containers," said a spokeswoman for the U.S. INS.
The Capt. of Seaboard Caribe had notified authorities of the stowaways. The
ship, operated by Seaboard Marine, left Puerto Plata on Monday. The 4 survivors
will likely be repatriated. One was taken to a hospital after complaining of
dizziness & vomiting. Smugglers often use shipping containers to bring
illegal immigrants into the U.S. In January, authorities in Seattle found 3
Chinese men dead in a cargo container along with 15 other men trying to reach
the U.S. The men, who had become seasick, died of acute malnutrition &
dehydration. (Thus. May 11 2000)
The Danish ro-ro M/V DANA MAXIMA (17,068 gross), Esbjerg for Immingham, was
in collision with the Danish trawler F/V SOLVEIG HOLM (495 gross) at the
entrance to Esbjerg May 6. Dana Maxima sustained hole above waterline. Solveig
Holm sustained bulwark damage. (Wed. May 10 2000)
The Syrian M/V DALIA S. (804 gross), Tartous for Alexandria with concentrated
nitric acid, had an acid tank fall over, contents eroded hull bottom &
vessel sank about 6 km off Alexandria May 6. All crew rescued. Over 160 tons
acid spilled into sea. Clean up under way May 8. Prosecutors are questioning
officials in nearby ports. (Tues. May 9 2000)
The Hong Kong bulk carrier M/V APTMARINER (17,677 gross), Ventspils for
Montreal, struck an obstruction in fog near the entrance to the Neebish Rock
Cut, St. Mary's River, May 5. Refloated same day. Sustained water ingress. Still
anchored nearby May 6. (Mon. May 8 2000)
The German refrigerated M/V ACONCAGUA (9,074 gross), Puerto Bolivar (Ecuador)
for Gdansk with bananas, grounded on sand in lat 55 52.4N, long 10 51.5E, May 5.
No pollution. Vessel attempting to refloat by own means. (Sat. May 6 2000)
The Cambodian M/V Conan carrying steel sank after colliding with a Panamanian
M/V Robin Forest, in ballast, in the lower reaches of the Yangtze River. No
injuries or casualties reported. The Conan bound for the eastern Chinese city of
Nanjing from Mokpo of South Korea, with 10,000 tons of rolled steel, collided
with the Robin Forest, at 1035 GMT on Wednesday in the waters of Nantong,
between Nanjing & Shanghai. The captain of the Conan ordered his crew to
abandon ship that night & by early Thurs. morning the deck was almost fully
submerged. China has sent its largest water rescue crane to salvage the ship.
(Fri. May 5 2000)
The United Kingdom passenger vessel M/V AURORA (76,152 gross), Southampton
for the Mediterranean with passengers, had propeller shaft problems May 2 &
returned to Southampton May 3. To be dry-docked for inspection and repairs.
(Thurs. May 4 2000)
Two ferries caught in a storm sank in the Meghna River in eastern Bangladesh,
killing 46 people &leaving 150 missing. Police divers recovered 30 bodies
from the M/V Dolphin after it capsized May 3 with over 150 people aboard some 50
miles east of Dhaka, the Bangladesh capital. An additional 125 people on board
were missing and feared drowned. In neighboring Narsingdi district, at least 20
passengers swam ashore as their ferry, M/V Bengal Bird, began sinking with 61
people on May 2. Rescuers found 16 bodies from a nearby shoal. They resumed the
search Wednesday for 25 missing passengers. Efforts also were being made to
salvage the 2 sunken vessels. (Wed. May 3 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.
Maritime Events Quarterly
Maritime Training Resources
..........information for shippers about their shipments with this enhanced web
site. Maersk-Rail Van was formed in Jan. through a joint venture between Rail
Van, a privately held, 3rd-party logistics provider based in suburban Columbus,
Ohio, & Maersk Inc.
Sea Change in
Liner Shipping: Regulation & Managerial Decision-Making in a Global Industry
.......... new book from Oxford: Pergamon Press.
ShipDesk ......... new
chartering market start up.
Production Symposium ......... in historic Colonial Williamsburg, site
of previous successful symposia, from August 23-25, 2000. A full technical
program of papers, panels, workshops, &industrial visits as well as the
Expo, featuring U.S. shipyards, marine manufacturers & vendors The theme for
the Symposium is: "Advancing U.S. Shipbuilding in the New Millennium."
Forklift Operator Training Courses
for Forklift Certification ........... Forklift Courses said to meet the
Federal OSHA Standard 29CFR1910.178
Tradiant ....... E-Commerce
solutions for carriers & forwarders has now signed Wan Hai Lines. The
company has introduced ForwarderPlus, which the company said will allow
forwarders to streamline their process of arranging transportation services.
ForwarderPlus allows forwarders to secure confidential contracts & quotes
from the 30 vessel-owning carriers participating in Tradiant's Web-based
OpenOcean marketplace. ForwarderPlus offers a portfolio of sailing schedules,
transit times, currency tables & other information. The system also includes
a directory of forwarders, including their service features.
TransitGroup .......... the
new site will link agents, trucking companies, and shippers to create a virtual
marketplace for trucking logistics, addressing the problems of poor
communications & a lack of load visibility that presently characterizes the
highly fragmented trucking industry.
Rail News Direct .......... a
monthly electronic newsletter featuring the latest rail industry news &
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American Airlines vs. Cruz
U.S. Supreme Court
Case No. 99-1565
The Warsaw Convention Strictly Construed -- Always
This month the U.S. Supreme Court has let stand a ruling that could force
airlines to pay a lot more to some passengers whose luggage was lost or damaged.
The court, without comment, rejected an appeal in which American Airlines sought
to limit how much it may have to pay for 5 suitcases that disappeared, or
arrived empty, during a family's 1995 trip from Washington, D.C. to the
The nation's major air carriers told the justices that a federal appeals
court ruling in the American Airlines case "will senselessly harm the
airlines and raise the cost of air travel for their passengers." At issue
was a now-amended provision of the Warsaw Convention that generally limits air
carrier liability for lost or damaged luggage to US$9.07 per pound, or US$20 per
kilo. The English-language translation of that provision listed various
information to be contained on luggage receipts given to passengers. That
information includes the weight of each package checked with the airlines.
Article 8 of the original Warsaw Convention states that a carrier's failure to
provide for two other pieces of information "and" the piece of
luggage's weight on the receipt disqualifies that carrier from liability limits.
The required listing of luggage weight on passenger receipts was dropped last
year under Montreal Protocol 4, but not retroactively to 1995.
Fourteen members of the Cruz family from Silver Spring, Md., checked 28 bags
with American at Washington's Reagan National Airport as they began a trip. Four
of the bags never arrived at the airport in Santo Domingo, and a 5th eventually
arrived damaged & empty. American initially refused to pay any compensation,
and the Cruz family sued for US$15,000 _ the claimed value of the bags &
contents. A federal trial judge ruled that the US$9.07-per-pound limit applied
even though American had failed to record any weight for the lost luggage on the
passengers' receipts. American's policy is to assume that any lost piece of
luggage weighed the allowable free maximum, usually 70 pounds.
The judge said the treaty's language meant that the liability limit applied
if any of the 3 required pieces of information were listed on a passenger's
receipt. Listing all 3 pieces of information was not required, the judge
reasoned. The U.S. Circuit Court of Appeals for the District of Columbia
reversed that ruling last October, and sent the Cruz family's case back to the
judge to reconsider what compensation should be paid. "Although we
recognize that the district court's interpretation is linguistically possible,
we do not think it is a reasonable construction" of the treaty's language,
the appeals court ruled. "The convention obliges a carrier to comply with
each of the 3 particulars."
American's Supreme Court appeal was supported in a friend-of-the-court brief
submitted by the Air Transport Assn. of America, which represents all major
domestic airlines & 5 foreign airlines. The association told the court that,
although 99.5% of all checked bags reach their intended destination without
incident, more than 450,000 pieces of baggage are delayed, lost or stolen each
Because the so called "disputed" treaty language was changed by
Montreal Protocol 4 in March 1999 and owners of lost or damaged luggage have 2
years to make a claim, the association said, "There is a risk that similar
suits against other airlines, including foreign carriers, may be filed in
districts across the country until March of 2001." This said, The Cargo
Letter has often reminded that as a treaty, the Warsaw Convention must be
strictly applied. Carriers & airforwarders must take care to remember that
the liberal terms of Montreal Protocol 4 apply to flights only after March 1999
and only where both the origin & destination countries have adopted the new
protocol. For a full review of the new rules, please study our full
analysis & suite of training tutorials on the Internet.
In re Air Crash Off Long Island, New York, on July 17, 1996
2000 U.S. App. LEXIS 5637
2nd Circuit Court of Appeal
March 29, 2000
TWA 800 Crash Did Not Occur on "High Seas"
- Claimants May Recover Non-Pecuniary Damages
- But U.S. Congress Steps In
The Court held that TWA Flight 800 crashed into the Atlantic Ocean 8 miles
offshore New York, in U.S. territorial waters, not waters of "the high
seas," and thus the Death on the High Seas Act, 46 U.S.C. App. §§761-767
(DOHSA) did not apply, along with its prohibition on the recovery of
nonpecuniary damages (such as those for pre-death pain and suffering & loss
of consortium). DOHSA's limitation to the recovery of pecuniary damages is
contained in §2 of the Act, which limits recovery to "a fair & just
compensation for the pecuniary loss sustained by the persons for whose benefit
the suit is brought." 46 U.S.C. App. §762. The issue had been certified by
the trial court for interlocutory appeal pursuant to 28 U.S.C. §1292(b). TWA
Flight 800 departed from JFK Int'l Airport in New York on July 17, 1996, for
Paris & Rome. Shortly after takeoff, the plane exploded in midair &
crashed. According to the National Transportation Safety Board, the crash
occurred approximately 8 nautical miles south of the shore of Long Island, New
York. All 230 persons on board were killed.
The trial court, in denying the defendants' motion to dismiss, had rules that
DOHSA applies only where death occurred on both the high seas and beyond a
marine league (3 nautical miles) from shore. Section 1 of DOHSA (46 U.S.C. App.
§761) provides for a right of action: "Whenever the death of a person
shall be caused by wrongful act, neglect, or default occurring on the high seas
beyond a marine league from the shore of any State, or the District of Columbia,
or the Territories or dependencies of the U.S...." The parties agreed that
the crash occurred 8 nautical miles off the coast of Long Island, which is
"beyond a marine league from the shore of any State." However, the
parties disagreed on the meaning of "high seas."
The plaintiffs argued that "high seas" refers to those waters
beyond the territorial waters of the U.S. Under Presidential Proclamation No.
5928, issued in 1988 by President Reagan, the territorial waters of the U.S.
extend 12 miles from the shore of the U.S. As the crash occurred 8 miles
offshore Long Island, the plaintiffs claimed it occurred in U.S. territorial
waters, rather than on the high seas, and thus that DOHSA did not apply.
The defendants contended that the term "high seas" means all waters
beyond the low-water mark. The defendants argued that because the crash occurred
both beyond the low-water mark and more than a marine league from the shore of
Long Island, DOHSA applied.
This said, since this decision was handed down, Congress retroactively
amended DOHSA to exclude from its scope commercial aviation crashes occurring on
or after July 16, 1996. See H.R. 1000, 106th Cong. §404 (2000).
Garris v. Norfolk Shipbuilding & Drydock Corp.
2000 U.S. App. LEXIS 6160
U.S. 4th Circuit Court of Appeal
April 3, 2000
Recognizes General Maritime Action For Worker Killed in State Territorial
Christopher Garris was killed while working as a sandblaster aboard the
vessel USNS MAJ. STEPHEN W. PLESS, a ship berthed in the navigable waters of the
U.S. The sole issue on appeal was whether the Court should construe or extend
the U.S. Supreme Court's decision in Moragne v. States Marine Lines, Inc., 90
S.Ct. 1772 (1970), which recognized a general maritime law cause of action for
wrongful death based upon unseaworthiness, to include a general maritime law
cause of action for wrongful death based upon negligence.
The 4th Circuit agreed with the trial court that the Supreme Court did not
create a general maritime law cause of action for wrongful death based upon
negligence in Moragne. The appellate court, in reversing the trial court,
however, applied the principles of Moragne and its progeny to recognize one.
Garris was employed by Tidewater Temps but worked on behalf of Mid-Atlantic
Coastings (MidAtlantic), a subcontractor of Norfolk Shipbuilding & Drydock
Corporation (Norfolk). E.T. Gresham, Inc. (Gresham), another subcontractor for
Norfolk, had employees aboard the same ship. On April 8, 1997, a crane operator
working for Gresham accidentally caused Garris to fall off a reserve hopper on
the ship, which was used to load sand for sandblasting. Garris died as a result
of the accident.
After receiving statutory death benefits under the Longshore and Harbor
Workers' Compensation Act, 33 U.S.C.A. § § 901-950 (West 1986 & Supp.
1999)("LHWCA"), Garris's mother, Celestine Garris, brought suit in
Virginia federal court seeking recovery for wrongful death based upon negligence
under general maritime law and the Virginia wrongful death statute. The district
court dismissed her suit on the ground that general maritime law does not
recognize a negligence-based cause of action. The district court dismissed with
prejudice Garris's general maritime law wrongful death claim. The district court
dismissed without prejudice her state law claim under the Virginia wrongful
death statute. Garris did not appeal the district court's dismissal of her state
law claim. She later filed that claim in state court.
The Court held that the language of Moragne v. States Marine Lines, Inc., 90
S.Ct. 1772 (1970), combined with its historical & legal context and the
absence of persuasive authority to the contrary, caused it to conclude that the
Moragne case recognized only a general maritime law cause of action for wrongful
death based upon unseaworthiness and not for wrongful death based upon
negligence. However, the Court continued, "because Congress has not
affirmatively precluded a negligence-based cause of action, and because such a
cause of action is consistent with the principle of uniformity expressed in
Moragne & Miles v. Apex Marine Corp., 111 S.Ct. 317 (1990) ("Today we
restore a uniform rule applicable to all actions for the wrongful death of a
seaman, whether under DOHSA, the Jones Act, or general maritime law."), we
find it appropriate to recognize a general maritime law cause of action for
wrongful death based upon negligence. Accordingly, we reverse the district
court's dismissal of Garris's general maritime law negligence based claim &
remand for further proceedings."
Coca-Cola Vs. Pardhan
Supreme Court of Canada
Canada Supreme Court Goes "Gray"
Mushi Pardhan had a can't-miss business plan -- buy Coca-Cola wholesale in
Canada & ship it to the Far East, where it sells retail for much higher
prices. Coca-Cola took exception to the small Canadian exporter, & the
ensuing legal battle reached Canada's Supreme Court before Pardhan won an
improbable victory on May 10 over one of the world's most powerful corporations.
The David vs. Goliath case underscores the thorny global issues that also are
confronting courts in the U.S. & Europe -- a clash between established
business practices & a growing entrepreneurial spirit exploiting tighter
economic ties between nations. For Pardhan, an immigrant from Tanzania,
exporting Coke was good business, with annual sales reaching US$4.8M. He bought
more than 50,000 cases of Coca-Cola a week, then shipped them to Hong Kong and
Japan. He paid about US$4.25 a case along with a transport charge of US$1 each,
then sold it for more than US$6 a case. Nice deal.
But in 1995, Coca-Cola sued, claiming Pardhan's practices violated its
trademark protection and won a court order to shut down the business. A federal
judge in Canada eventually ruled in favor of Pardhan, saying that he had bought
and sold the product legally, and an appeals court agreed. The Supreme Court on
May 10 refused to hear the final Coca-Cola appeal. Atlanta-based Coca-Cola said
it's worried about unsupervised shipping & handling hurting the quality of
its product, whose sales reached US$20B last year. But the court victory was
just the latest against companies worried about entrepreneurs exploiting lowered
trade barriers among nations. Courts in North America generally have supported
so-called gray marketeers -- traders who operate outside the official
distribution network of vendors. Those traders make money off the price
differences in different markets. Major brands also realize significant profits
off the price differences, the only defense they have is to keep harassing these
traders through the courts. Gray marketing is a growing occurrence in the 11
European Union countries preparing for full conversion to the euro currency next
year. Consumers will quickly spot so-called "profit havens" where the
same product sells for less & take advantage, forcing efficiency on the
marketplace. For Pardhan, who moved with his family to Canada in 1985, the case
was about more than profits. When the legal tussle began, Coca-Cola lawyers
armed with civil search warrants arrived at his Markham, Ontario, home to seize
business documents. As the case dragged on, Pardhan said he considered giving up
but was inspired by his mother to keep battling. The devout Muslim family prayed
Written from wire stories, the Associated Press,
Reuters, Hong Kong Shipping News Lloyds & other world sources.
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