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The Cargo Letter
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THE CARGO LETTER [359]
Air & Ocean Logistics - Customs Broker News
31 January 2001
Good Wednesday morning from our Observation Deck...... overlooking the
officially designated "Cargo City" area and....... Runway 25-Right, at
Los Angeles International Airport, voted "Best Cargo Airport in North
America". Be kind to errors, as we were on the road for two weeks this
month!
Note To Our Readers: This month we experiment with a changed format. Instead
of trying to bring you all the news, this edition will attempt to focus upon
only the most important events -- in a single mailing. Your comments &
suggestions regarding this shorter format are invited. McD
Contribute your knowledge, stories & company information ........ by
e-mail to The Cargo Letter. We strive to
bring you useful information which is timely & topical. Be sure to visit our
web site:
Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel,
forwarder/broker attorneys at LAX.
INDEX to The Cargo Letter:
OUR Top Story
1. UPS Acquisitions Take Center Stage
OUR "A" Section: Trade, Financial & Inland News
2. Freight Forwarder Trade Briefs
3. The Cargo Letter Financial Page
OUR "B" Section: FF World Air News
4. Freight Forwarder World Air Briefs
OUR "C" Section: FF World Ocean News
5. FF World Ocean Briefs
6. The Cargo Letter Vessel Casualty Dispatches
OUR "D" Section: FF in Cyberspace
7. The Cargo Letter "Cyber Ports Of Call"
OUR "E" Section: The Forwarder/Broker World
8. New U.S. Related Legal Cases
It has been a busy New Year for global express giant United Parcel Service --
a month that will change the company's face & reach in the Int'l transport
marketplace.
A.] Fritz Companies, Inc. .......... as UPS will acquire Fritz for
approximately US$450M in UPS Class B common stock. Fritz is one of the world's
leading freight forwarding, customs brokerage & logistics concerns, with
US$1.6B in gross revenue & net revenues of US$619.3M during its latest
fiscal year ended May 31 . The Fritz acquisition will allow UPS to offer a
broad, integrated portfolio of services for moving everything from small
packages to heavy commercial freight, by any mode of transport, anywhere in the
world. Freight forwarding, customs brokerage and logistics customers of Fritz
will gain easier access to global supply chain management, service parts
logistics & financial offerings through UPS.
Headquartered at San Francisco, Fritz was founded in 1933 & has grown
into a forwarding, customs brokerage & logistics powerhouse with significant
operations in every region of the world. Fritz currently owns & operates 400
facilities in more than 120 countries around the world and has over 10,000
employees globally. In addition to its forwarding, customs brokerage &
logistics services, the company offers a range of intermodal transfer services,
duty drawback options, consulting on tax, trade & tariff matters, market
research & training services. Approximately 28% of Fritz's net revenue was
generated from air freight forwarding; 21% from ocean freight forwarding; 30%
from customs brokerage operations, and 21% from logistics services.
UPS expects to complete the transaction during the 2nd quarter of 2001. It
will be the 1st UPS acquisition since it's initial public offering in Nov. 1999.
Fritz Chairman & CEO Lynn C. Fritz, who holds approximately 36% of the
outstanding shares of the company, has entered into an agreement to vote the
shares he controls in favor of the merger. Said Lynn Fritz. "We have grown
into an industry force over the past 67 years, but we can do even more with
UPS's systems, network and vision of enabling global commerce."
B.] First International Bancorp Inc. ............ as UPS will acquire
the financial house for approximately US$78M in UPS Class B common stock. This
announcement came 1 week after the Fritz acquisition news. The deal will add
First International's trade finance & commercial lending programs to the
capabilities of UPS Capital Corp., the financial services subsidiary of UPS.
C.] Emery Worldwide? ........ as rumors continue, including reports at
AirlineBiz.Com, that UPS may be in talks
to acquire CNF subsidiary Emery Worldwide in a deal that may have been set on
Jan. 13. Insiders suggest the agreement could be announced within the next few
days.
UPS today reported record earnings and revenues for its 4th quarter &
full year, as strong growth in Int'l volumes and its logistics business helped
offset its lagging U.S. domestic business. Fourth quarter net income rose 9.5%
to US$724M on revenues of US$7.9B, up 6.1%. Operating profit rose 4.8% to
US$1.14B. Revenues for U.S. domestic package operations rose 4.4% to US$6.3B,
while revenues from Int'l package operations rose 6.2% to $1.1B. Non-package
operations revenue rose 35.2% to US$465M, reflecting a 58.5% gain in UPS
Logistics Group revenues. Global package delivery volume increased 3.6% in the
quarter to an average 14.7 million pieces a day. Effective on Feb. 5, UPS rates
are to be increased by 3.7%, with its commercial ground services to be increased
by 3.1% across the board. More, this month the U.S. Dept. of Transportation gave
final approval for UPS to fly directly to & from China 6 days a week. UPS
has just announced a firm order for an additional 60 A300-600 freighters from
Airbus Industrie, bringing to total pending order to 90 planes.
Headquartered in Atlanta, GA, UPS is already the world's largest express
carrier & largest package delivery company serving more than 200 countries
& territories -- but it's reach is now significantly extended by Fritz
Companies. What began in that that well known, brown delivery truck shuttling
the packages of local merchants, now wields a supply chain portfolio ranging
from small package to air, ocean & ground freight, logistics, brokerage
& financial services around the globe. http://www.ups.com
- Faster Out ......... as the U.S. Defense Dept. has launched a
program that promotes data sharing among the federal agencies which govern
the export licensing process. The U.S. Export Systems Interagency Program
Management Office will attempt to reduce and even eliminate some of the
paperwork that has been traditionally required to evaluate export license
applications. Ultimately, it should help to increase the speed at which
license applications are processed by the government. The program is fully
funded for US$30M over the next 3 years. It will initially involve the
departments of Defense, Commerce & State. A test between Defense and
Commerce is already underway to support electronic delivery of technical
documents from the industry to the government. http//:www.defenselink.mil/news/Jan2001/d20010116exportfacts.html
http://www.defenselink.mil/news/Jan2001/d20010116exportchart.html
- Bangladesh & India Reunite ........ as the 1st freight train
for a quarter of a century rolled out from this Indian border post towards
Bangladesh on Jan. 21 as the government revived a long-dormant link between
the two neighbors. Officials said the service on the Petrapole-Benapole
sector would bring Nawapara, Bangladesh's biggest freight terminal, closer
to India and also ease pressure on the Petrapole-Benapole road link, through
which most of the trade takes place. The link was closed in 1976, because of
a lack of traffic. Trade between India & Bangladesh was valued at
US$882M in 1999/2000 with most of it taking place on the Petrapole-Benapole
sector, Bangladesh Commerce Minister M.A. Jalil said last month.
- To The Rescue .......... as Atlas Air donated a flight to carry
relief supplies to El Salvador earthquake victims. One of the company's
747-400 freighters departed Miami airport Jan. 19 carrying 80,000 pounds of
rice & beans and approximately 30,000 pounds of water. The goods will be
delivered to the El Salvador relief agency, CEON.
- Taking A Bite Out of Cargo Crime ......... as MRC Investigations,
the specialist investigation division of MRC Business Information Group
Ltd., based in Oxford, UK, has opened a U.S. office in Wheaton, Il. MRC will
investigate & try to recover domestic cargo crime losses, and also
offers pre-risk consultancy services. The company's target clients are U.S.
based insurers & Lloyd's syndicates, marine underwriters, trucking &
intermodal transport operators. The unit will be led by national cargo crime
expert, Mr. Alan Spear, noted for his founding of "Operation
Intercept" at Xl Specialty Ins. Co.
- FedEx Corp. To Realign ........... as its current logistics
subsidiaries will shift. -- FedEx Supply Chain Services, based in Hudson,
Ohio, will become a subsidiary of FedEx Services, specializing in
comprehensive logistics & transportation management & eLogistics
solutions. -- Caribbean Transportation Services, based in Greensboro, N.C.,
will become a subsidiary of FedEx Trade Networks, which specializes in
customs clearance & Int'l trade facilitation. Caribbean Transportation
Services is a provider of air freight forwarding services between the U.S.,
Canada & Puerto Rico.
- Canadian National Gets Wisconsin Central......... as the two rail
giants have approved a merger agreement under which CN will acquire all of
the common stock of WCTC for US$1.2B in cash valued at US$17.15 per WCTC
share. Wisconsin Central's North American railroad system comprises Class II
and Class III railroads with approximately 2,850 miles of track and trackage
rights in Wisconsin, Illinois, Minnesota, Michigan's Upper Peninsula &
Ontario. On another rail note, despite continued growth in intermodal
traffic, the 3.6% decline in U.S. rail car loadings in Dec., following the
3.9% Nov. decline, reinforces the notion that the economy has quickly
developed downward momentum.
- APL Logistics Buy ........ as it is purchasing GATX Logistics,
which is the 2nd largest warehouse-based contract logistics company in the
U.S. & one of the top logistics players throughout North & South
America. The $210M acquisition will increases APL Logistics' revenues by
70%, or over US$300M. GATX Logistics & its 3,000 employees operate about
21 million square feet of warehousing & a comprehensive distribution
network throughout the U.S., Mexico, Canada and Central & South America.
- FedEx Snaps Up American Freightways ....... as it has successfully
completed its offer to purchase up to 50.1% of the outstanding shares of
common stock of American Freightways Corp. at a price of US$28.13 per share.
- Pacer Int'l Now Has Rail Van ........ as the non-asset-based
third-party logistics company, has concluded its acquisition of Rail Van,
Inc., an Ohio-based logistics provider. With combined pro forma revenues of
US$1.8B in 1999 & US$1.4B for the 1st nine months of 2000, the combined
company becomes one of North America's largest providers of intermodal
marketing, truck brokerage & other logistics services.
- Alps Tube .......... as Giuliano Amato, Italy's prime minister,
& France's President Jacques Chirac and Lionel Jospin, the prime
minister, app roved preliminary plans for a 52 km two tube rail tunnel &
high-speed train link under the Alps, estimated to cost at least EUR 6
billion.
- Mexico Waits ........ as a North American Free Trade Agreement (NAFTA)
dispute-settlement panel will issue its final ruling Feb. 8 on a Mexico-U.S.
conflict over the right of Mexican trucks to carry freight throughout the
U.S. The panel made a preliminary ruling in Mexico's favor in late Nov., but
it reportedly requested more info from the parties on Jan. 8, & has 30
days from that date in which to release its final ruling. If the panel
confirms its preliminary ruling, the U.S. will have 30 days in which to open
its borders to Mexican road transport companies.
- New China At FIATA ........ as the China Int'l Freight Forwarders
Assn.s, the Beijing-based forwarders association created last Sept., has
become a national association member of the Int'l Federation of Freight
Forwarders Associations. The mainland China organization replaced the
company Sinotrans as the Chinese member of FIATA.
- Germany Will Smoke Them Out? ......... as it has become the 2nd
European Union country to back an EU claim for compensation from tobacco
companies alleged to have been involved in cigarette smuggling into the
15-nation bloc. The EU executive European Commission said last November it
would sue Philip Morris, R.J. Reynolds, Japan Tobacco Int'l & Nabisco
Group for compensation for lost EU customs duties which could add up to
billions of dollars. In a 188-page civil lawsuit, filed in a New York
District Court under the U.S. anti-racketeering RICO act, the Commission
accused the companies of "involvement in organized crime in pursuit of
a massive, ongoing smuggling scheme." In Brussels, the Commission
welcomed Germany's move, which followed a similar decision announced by
Italy on Jan. 17.
- Phoenix Int'l Freight Services On The High Plains ........ as the
logisitcs company aims to boost the Int'l business markets of Minnesota,
northern Wisconsin & the Dakotas. Phoenix's Minneapolis office is a new
18,000 square-foot office/warehouse facility, with the added distinction of
being one of the few full-service forwarders in the market offering a U.S.
Customs bonded Container Freight Station (CFS). http://www.phoenixintl.com
- Customs Chief Steps Down ........ as U.S. Customs Commissioner
Raymond W. Kelly has tendered his resignation to the agency after a 2 year
stay. Charles Winwood, Deputy Commissioner, will assume overall management
of the agency until a new commissioner is appointed.
- Curse of The Devil Monkey ........... as a monkey loaded with
cannabis, 700 boxes of papier-mache avocados stuffed with cocaine,
swallowing 117 drug-filled condoms -- these are just a few tricks of the
smuggling trade. British Customs & Excise officials recently discussed
some quirky smuggling ruses which include stowing ecstasy & amphetamines
in the arms of a giant digger & hiding half a kilo of cocaine beneath an
afro-style wig. A hollowed-out primate has been dubbed the "devil
monkey" because it weighed 14.5 lbs. and was used to carry 666 grams of
herbal cannabis, according to a spokesman for Customs & Excise in the
south east of England. Its owner, a Rastafarian carpenter from Ghana, is
believed to have put a curse on the animal after his arrest & several
officials have since complained of injuries. "It's been a bit
bizarre," Knott said. "It fell off the table on to someone's foot
& there have been some quite sharp splinters. "It then degenerated
into sort of folklore. Anything that went wrong, the monkey got the
blame."
- Invisible Asian Elephant? ......... as the animal has been
delighting Mexican circus audiences with his tricks, but his owners face
legal action for smuggling him into the country. "Benny" was
smuggled across the U.S. border from Texas on April 1, 2000, in a trailer
with the help of a "pollero," or migrant trafficker, and brought
down to the circus in central Mexico state. Despite his 3 ton weight, the
pachyderm became "invisible" with the help of a US$4,500 payment
to Mexican border customs officers. The circus owners of Benny, 7, who plays
the harmonica, dances & stands on his hind legs, are facing
investigation in the U.S. & Mexico. The Asian elephant is a threatened
species & its sale for commercial use is banned, said an official for
the U.S. Fishing & Wildlife Service.
- Customs Sniffs Cash Under Pressure ......... as
agents recently seized more than US$5.5M in cash and such things as
travelers checks & money orders that people tried to smuggle out of the
country in unlikely hiding places - including TV sets & shoe soles. The
U.S. Customs Service has announced the results of the agency's latest
nationwide effort to nab currency smugglers, "Operation Pressure
Point." The operation began Nov. 15 & ended Dec. 20. It led to the
arrest of 30 individuals for smuggling currency, 163 currency seizures &
62 arrests for other violations. Customs Commissioner Raymond Kelly said the
operation was "part of our overall anti-money-laundering
strategy." Most money laundering involves illicit profits from drug
trafficking, prostitution or other criminal activities. The profits are
moved through a series of bank or brokerage accounts to make them appear to
be proceeds of legitimate business activity. Each day, criminal groups
generate huge sums of cash from illegal activities but face difficulties
depositing large amounts into U.S. banks. As a result, criminals often
smuggle cash to foreign locations where it can be more easily deposited into
banks. Then it can be instantly wired anywhere, customs officials say. Half
of the more than US$5.5M seized was destined for the Dominican Republic
& Mexico. There's no limit on the amount of money that a person can
legally transport when entering or leaving the U.S. But federal law requires
that amounts of more than US$10,000 (in cash, travelers checks, cashiers
checks & securities that can be easily converted to cash) must be
reported to customs. Those who don't report the sums can have their
currency confiscated. To detect hidden currency, customs officers use a
variety of methods, including routine searches, X-ray machines that scan
large containers -- and specially trained dogs that sniff out cash. Thus the
practice of hiding your smuggled cocaine in shipments of money is likely not
a good idea.
- Atlas Air. UP
with net income for the quarter ended Dec. 31, 2000 of US$31.2M, or US$0.81
per diluted share.
- Boeing. DOWN with net
earnings for the year 2000, excluding non-recurring items, of US$2,513M, or
US$2.88 per share, but operating margins increased 25%, excluding
non-recurring items.
- Burlington Northern Sante Fe Corp. DOWN as it expects to lose
US$13M this year because of high fuel costs.
- C.H. Robinson Worldwide, Inc. UP for the 4th quarter of 2000 as
gross revenues reached US$733.5M, up 27% on the year-earlier quarter. Net
revenues increased 38% to US$107.4M. Income from operations increased 34% to
US$30.3M. Net income increased 28% to $18.6M.
- CNF Inc. DOWN with "disappointing" results from
Emery Worldwide. DOWN with 3rd-quarter net income US$4.8M
compared with US$7.6M for the year-earlier quarter. The 3rd quarter included
a non-cash charge of US$2.3M for distribution of a stock award plan for
certain employees. The decline in income also reflected a higher effective
tax rate for the quarter. Revenue for the 9 months rose 23% to US$642.8M
- Continental Airlines. UP as diluted earnings per share jumped
45% in the 4th quarter to US$0.61. It's been 6 straight years of profit for
the carrier, as net income increased 31%.
- Delta Air Lines. UP with reported Dec. 2000 quarter net income
& diluted earnings per share of US$79M & US$0.60, respectively,
versus US$171M & US$1.22 in the Dec. 1999 quarter, excluding unusual
items.
- Fritz Cos. Inc. Net revenues for the 2nd quarter, ending Nov.
30, fell 1.6% to US$158.2M. Revenues totaled US$422.1M, down 1% from the
comparable period last year. United Parcel Service announced on Jan. 10 that
will acquire Fritz for about US$450M in UPS stock.
- J.B. Hunt Transport Services. UP as 4th quarter net income
reached US$10.9M, nearly double the US$5.6M reported in the year-earlier
quarter.
- Northwest Airlines. UP with 4th quarter operating profit of
US$19.8M, an increase of 8% over year earlier period.
- United Airlines (UAL Corp.). DOWN with a US$124M loss, or
US$2.41 loss per basic share in 4th quarter 2000, excluding one-time items.
- Union Pacific Corp. UP as income from continuing operations
increased 17% to US$914M in 2000 from US$783M in 1999, before a US$72M
after-tax charge for workforce reduction costs.This equates to US$3.61 per
diluted share (excluding the workforce reduction charge) in 2000 and US$3.12
in 1999.Net income for the year totaled US$842M, or US$3.34 per diluted
share. This represents a 4% increase over the US$810M earned in 1999.
- US Airways Group Inc. DOWN with a net loss of US$269M for
2000. During the 4th quarter, the company reported a net loss of US$101M.
- USFreightways Corp. DOWN with 4th quarter net income of
US$22.6M, down from US$30.7M for year earlier period.
- Not Bullish On Maersk? DOWN with 4th quarter net income of
US$22.6M, down from US$30.7M for year earlier period.
Please click below for other sections:
Section B
Section C
Section D
Section E
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Written from wire stories, the Associated Press,
Reuters, Hong Kong Shipping News Lloyds & other world sources.