|
The Cargo Letter
|
|
THE CARGO LETTER [360]
Air & Ocean Logistics - Customs Broker News
21 February 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". We are a little early this month due to required travel,
but here are the top industry stories for February 2001. It was a fairly quiet
month.
To help you find what you need -- FAST -- there's now a
transport search engine installed at our www.CargoLaw.com website!
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.
NOTE: The Cargo Letter is designed to be read using a 12 point
Geneva font on a standard 6 inch e-mail field. Our TECHNICOLOR edition requires
AOL v3.0 or better.
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
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
- The Transport Dotcom Shakeout Has Begun
......... as the online multi-modal market place FreightWise,
which had the backing of Burlington Northern Santa Fe Railways & General
Electric, has stopped operations, as one of the 1st of the E-logistics
companies to bite the dust. Freightwise had been named 'Best of the Web '
company by Forbes. From a launch report on the web site of FreightWise:
"There is a lot of hype in the industry right now, with companies not
delivering. FreightWise is the 1st thick exchange that allows participants
not only to offer & select, but actually buy and pay for transportation
services entirely online," said Greg Fox, president & CEO of
FreightWise at the time. It is observed by many that the transport Dotcom
sites are often used by shippers to locate the best available rate -- and
then telephone their regular freight forwarder to demand a match. With a
hundred or so of these web sites around, we predict more crashes.
http://www/Freightwise.com
- Shakeout Begun & Continuing........ as
Webfreight, the Internet-based freight forwarding organization, has been put
up for sale by its parent J2C, a business-to-business trading community. J2C
said, perhaps in code, that the move to sell Webfreight reflects a
"change in direction" and the company's intention of making the
best use of its cash assets. Be ready for more of this.
- FedEx Arm Wrestles UPS For Fritz?.......... as
FedEx has filed a lawsuit against Fritz Cos. alleging that the San Francisco
based customs broker-forwarder giant had revealed trade secrets to United
Parcel Service during acquisition talks. The lawsuit was filed on Feb. 5 in
the Shelby County Circuit Court in TN (aka down home at Memphis). FedEx said
that it was considering acquiring parts of Fritz's operation when the UPS
deal to buy the entire company was announced last month (see The Cargo
Letter [359] for Jan.). During that time, FedEx alleges, sensitive
information about its operations with Fritz were passed to UPS. The court
granted a temporary restraining order prohibiting Fritz from violating its
agreements with FedEx & from disclosing any confidential FedEx
information, a FedEx spokesman said. Fritz said in a statement that it would
"vigorously" fight the lawsuit.
- Mexican Truck Issue Looms ......... as
President Bush believes American motorists & Mexican trucks can someday
share U.S. highways with relative safety, but he has no plan yet on how that
should be done. "The president believes we can have both, that we can
have safe standards for trucks that enter this country & free trade with
Mexico. He thinks they are both important," White House spokesman Ari
Fleischer said. An arbitration panel has ruled that the U.S. violated NAFTA
by refusing to allow Mexican trucks full access to American highways. Trucks
from Mexico were supposed to be able to travel throughout the U.S. by Jan.
2000. The panel said the U.S. cannot bar the trucks, but can enforce safety
standards that don't have to be the same as those it enforces for U.S. &
Canadian trucks. Bush could refuse to allow the trucks in and negotiate
compensation with Mexico, including trade sanctions, but the White House
said Bush supports opening U.S. highways to the trucks. "The president
has indicated that he does think the NAFTA trucking provision should be
implemented. "We haven't made decisions yet on how to do it but the
report indicated we may use our U.S. highway safety standards," said a
White House spokeswoman. Opponents of greater access for Mexican trucks say
enforcing American standards is difficult because the U.S. lacks enough
inspectors to verify that the approximately 5 million trucks crossing the
border are safe. The vast majority of the truck traffic from Mexico travels
through Texas and officials in the state say they can only inspect about 1%
of the trucks. The Dept. of Transportation said that last year 35% of trucks
that were inspected in the U.S. were taken out of service because they had
significant safety violations. Currently, Mexico's truck are allowed only
within a 20-mile zone north of the border, although some trucks have been
found further north of that zone when pulled over for safety problems. So
far 184 Mexican trucking firms have applied to transport cargo across the
border into the U.S. Sen. Kay Bailey Hutchison, a member of the Senate
Transportation Committee, said she would oppose allowing any trucks to cross
the border unless they meet U.S. standards. "I would prefer to inspect
every truck, get the technology that would expedite that and wait until we
do. I'm never going to allow trucks that don't meet our standards to go on
our highways. I'm going to fight it and I have fought it every time the
issue has come up," she said. James Hoffa, president of the Teamsters
Union said the country had "surrendered control of our U.S.
highways" to the arbitration panel and that the panel had erred. For
more reading on the Net:
For a copy of the ruling, U.S. Trade Representative site:
http://www.ustr.gov
National Assn. of Independent Insurers site:
http://www.naii.org
Int'l Brotherhood of Teamsters site:
http://www.teamster.org
American Trucking Associations:
http://www.truckline.com
- Customs Reform Group Forms.......... as
4 of the country's largest industry groups have strengthened their joint
efforts to reform the U.S. Customs import process. The U.S. Business
Alliance for Customs Modernization, American Assn. of Exporters &
Importers, Joint Industry Group and National Customs Brokers &
Forwarders Assn. of America have announced the formation of the Customs
Reform Coalition. "We believe that industry should work together &
change the focus on customs and border clearance reform by developing and
advocating proposals that reflect the modern trade environment and global
supply chain," the coalition said in a statement on Feb. 7. "The
administrative costs associated with U.S. border clearance procedures are
too high & the process should be streamlined & simplified to reflect
the way businesses do business." The groups met last year in Washington
to discuss the formation of a coalition that would allow them to speak to
Customs with one voice on the reform issues on which they agree. The
coalition will also help the industry to communicate more efficiently to
Congressional leaders & their staff about "promoting modern,
progressive trade facilitation processes while maintaining strong &
effective border controls." The coalition added that "industry
will support the need for reform in meetings with members of Congress and
the administration by bringing real examples of companies and constituents
whose productivity, competitiveness, and job security are negatively
impacted by outmoded customs & border clearance processes."
- Low Risk Reward......... as
U.S. Customs has given 150 importers the status of "low risk" for
their record of complying with the country's import rules. "Low risk
importers will be rewarded for their efforts with fewer cargo exams, fewer
requests for information & fewer reviews," said Charles Winwood,
acting commissioner of Customs. "U.S. Customs in turn can divert
resources to focus on companies most likely to violate U.S. laws." The
low risk designation means that the agency has conducted a thorough review
of an importer's compliance & found no significant problems. The review
includes a combination of compliance assessments, targeted cargo exams &
document reviews, account manager evaluations, compliance measurement,
enforcement results, & financial health.
- U.S. Customs Inspections More Costly ........
as it proposes increasing the rate of charge for reimbursable
Customs inspectional services to 158% of an employee's regular pay, up from
137% of the hourly rate as currently computed. Customs, under certain
circumstances, provides inspectional & supervisory services to
parties-in-interest who require such services during regular hours of duty
or on Customs overtime assignments. Under these conditions, the private
interest is required to reimburse the government for the Customs employee's
compensation. A recent audit of Customs' inspectional services by the
Treasury's Office of the Inspector General determined the 137% rate does not
represent full reimbursement for actual inspectional service costs. The
current formula uses two outdated cost factors, the OIG said: the number of
legal public holidays & the ratio of employer paid benefits to an
employee's salary.
- Customs Pulls Tickets ....... as
it has revoked the customs brokerage licenses of Overseas Transport Co.,
based in Norfolk, VA.; and World Freight Services Inc., of Houston. Customs
has also canceled the customs brokerage licenses of SDV Logistics (Texas)
Inc., of Houston; Brinkley & Associates Inc., of Los Angeles; Lynx Int'l
Inc., of Minneapolis; & KCC Transport Systems Inc., of Chicago. The
revocations & cancellations were announced by the Office of Field
Operations for failure to maintain a proper bond.
- Mexico Customs Cleans House ........ as
new chief of Mexico's customs agency has fired 43 of the department's 47
supervisors and said the ax would fall on the rest soon, citing widespread
corruption, inefficiency & apathy among customs agents. Jose Guzman
Montalvo, who took over the customs agency 45 days ago as part of President
Vicente Fox's new administration, said he would revamp the entire department
- widely known for extorting people & collaborating with criminals
entering ports & crossing checkpoints along the 2,000-mile border with
the U.S. Guzman said some of those fired were under investigation for
possible wrongdoing. The firings came as Fox's administration announced a
new government commission to end decades of corruption among public
servants. Go Guzman!
- Ryder To Cut .......... as the
Miami-based transport & logistics provider, will eliminate 700 jobs in
2001, about 2% of the company's 30,000 employees. At a recent shareholders'
meeting, Leon Cooperman, Ryder's ranking shareholder, asked if the company
is considering splitting its 2 main businesses, truck leasing &
logistics management. Gregory Swienton, Ryder's CEO, replied that Ryder is
studying "all possible ways" to increase its value for
shareholders. Some employees have already left Ryder's corporate
headquarters in Miami, where up to 125 of 1,100 workers will be laid off.
Ryder has just sold one of its Brazilian subsidiaries, Translor Veiculos
Ltda., to Axis Sinimbu Logistica Automotiva Ltda., an affiliate of Ryder in
Brazil.
- Railtrack To Derail? ........ as
the owner of Britain's rail infrastructure has denied growing speculation
that it is facing bankruptcy. The company released a statement confirming
that its financial position remained unchanged from Jan. 15 when it said it
was in talks with regulators over the payment & timing of US$1.4B in
deferred government grants.
- Union Pacific RR Feels The Slow Down ........
as it has offered early retirements to 1,800 employees as
part of its plan to cut 2,000 jobs. Employees who are 52 or older and not in
senior management positions received packets outlining the early retirement
option. The employees have until March 5 to decide whether to accept the
package, which includes a monthly annuity, monthly paycheck & medical
coverage. The benefits are based on age and years of service. The company
plans to complete the 2,000 job cuts by midyear. Of the 2,000 cuts, 1,200
will be the remainder of the 5,200 jobs cut due to the railroad's 1996
merger with Southern Pacific Rail Corp. The other cuts are the result of
decreased demand for shipping freight with the economic slowdown. Normally
employees become eligible for a reduced pensions at age 55 & full
pensions at 65.
- But Rail Intermodal Traffic Up ......... as
traffic grew 5.3% during 2000, with container traffic continuing to outpace
trailers, according to an Intermodal Assn. of North America report. Int'l
container trade grew 9.5%, while domestic container traffic increased 12.8%
last year. Intermodal traffic in older 40 & 45-foot trailers continued
to drop to the point where it now accounts for less than 10% of the total
intermodal business, the IANA report said. The decline in trailer traffic
was the slowest in the Midwest, chiefly Chicago, which originates more than
44% of all trailers. The California ports of Oakland, Los Angeles & Long
Beach accounted for 25% of all container moves, the report said. Growth in
Canadian traffic was strong, showing a 6% increase in East Canada, and 11%
growth in the West, according to the report. For Jan. 2001, U.S. rail
carload traffic fell 2.35% to 1.61 million carloads, while intermodal
traffic was down 1.7%, according to figures reported by the Assn. of
American Railroads.
- Canadian Pacific Railway Doubles Up ........ as
it has a become a participant in the North American Container System (NACS).
NACS was created in Feb. 1996 as a North American doublestack network
encompassing almost every major U.S. market. It is designed to facilitate
the free interchange of 48- & 53-foot domestic containers between member
railroads without restrictions. Other participants are BNSF, Canadian
National Railway Company (CN), CSX Intermodal (CSXI), I & M Rail Link,
Kansas City Southern Railway Company (KCS), Norfolk Southern Railway Company
(NS), Texas-Mexican Railway Company (TM), Transportacion Ferroviaria
Mexicana (TFM) & Wisconsin Central Transportation Corporation (WCTC).
- High Steel ........ as the 1st
railway linking Tibet with China has been sanctioned by China's State
Council. Once completed, the railway will be the longest & highest of
its kind in the world, measuring 1,118 km in total. It will start out from
Golmud & end in Lhasa.
- Chunnel Staggers On ........... as
Anglo-French group Eurotunnel said on Feb. 19 that its chairman Patrick
Ponsolle is stepping down, ending a tenure that dates back to the start of
cross-Channel rail services in 1994. The resignation comes as Eurotunnel
trimmed its 2000 operating loss after financial costs to 1.135 billion
francs (US$158.5M) from 1.270 billion in 1999. The debt-laden cross-Channel
rail tunnel operator -- hit by the loss of revenues from the abolition of
duty-free shopping in the EU -- posted a net loss of 1.132 billion francs
for the year versus net profit of 2.192 billion francs in 1999, a year that
was boosted by exceptional gains.
- ICC Too .........
as President Clinton's legacy includes abolition
of the nation's oldest regulatory agency, the mammoth Interstate Commerce
Commission. Only it's not really gone. The commission now operates quietly,
under a new name, on an US$18M budget & without congressional
authorization. Clinton proposed the commission's demise in 1995 to save
money. Congress instead set up the Surface Transportation Board to handle
railroad oversight & other ICC duties. The staff, more than 2,000 in the
1970s, has been trimmed to 135. They work in a high-rent Washington business
district far from most other government agencies. President Bush has a
chance to reshape the board's future by designating the chairman and one new
member. The ICC was established in 1887 to combat train magnates and
regulate transport costs. Board chairman Linda Morgan predicted that
"we'll be around" awhile. Some politically influential companies
are following developments in the knowledge that the board still oversees
railroad company mergers, freight charges & other items. Congress has
refused since 1998 to reauthorize the agency, but the money has continued to
flow.
http://www.stb.dot.gov
- FedEx Mushrooms On The Ground ......... as
the subsidiary of FedEx Corp. has just opened new FedEx Home Delivery
terminals in 85 cities to meet increasing demand. The terminals opened Feb.
8 will increase the coverage of the FedEx Home Delivery network from 50% to
70% of the U.S. population; phase 2 will expand the FedEx Home Delivery
network to serve 80% of the U.S. population by Sept. There is also a new
subsidiary to manage the company's regional LTL business, following the
completion of its acquisition of American Freightways. "FedEx
Freight", a US$1.9B operation, will combine the LTL services of
American Freightways, based in Harrison, Ark., with FedEx's other trucking
subsidiary, San Jose, Calif.-based Viking Freight.
- Oregon Trucker Hit......... as
The U.S. Dept. of Transportation's Federal Motor Carrier Safety
Administration (FMCSA) has announced that Rudco Transport, Inc., of
Clackamas, Ore., a for-hire motor carrier of general freight, was served
with a "Notice of Claim" letter for US$368,200 in civil penalties,
alleging multiple violations discovered during an investigation conducted by
FMCSA's Oregon Division. FMCSA investigators issued a proposed
unsatisfactory safety rating and cited Rudco president, Sergey Rudnitsky,
for violations involving drug & alcohol testing, commercial driver's
licenses standards and requirements, qualification of drivers, and
inspection and maintenance of motor vehicles. In addition, it is alleged
that Rudco allowed for the falsification of records of duty status &
allowed its drivers to drive when they had already exceeded their hours of
service limits. The company reportedly employs approximately 88 drivers
& operates 64 trucks.
- Take 3,500 & Call Me In The Morning
......... as a Dutch citizen has been arrested & charged
with attempting to smuggle the synthetic club drug Ecstasy into the U.S. by
swallowing 3,500 pills encased in packets. Andy Ramon Jacobs, 24, was
charged with trafficking of Ecstasy, and was being held Feb. 12 at
Miami-Dade County Jail in lieu of US$500,000 bond. Jacobs was detained by
U.S. Customs agents at Miami Int'l Airport after his arrival on a flight
from Amsterdam. Customs agents interviewed Jacobs & determined he had
ingested the pills. Officials said 84 packets were recovered containing
pills worth about US$70,000. Ecstasy contains methamphetamine and is known
chemically as MDMA. It can cause hallucinations & euphoria, but can
cause strokes & heart attacks and has been shown to impair intelligence
(for example Andy Ramon Jacobs).
- Airborne Express. DOWN
with a loss of US$11.9M for the 4th quarter, compared to earnings of
US$17.3M in the year-earlier quarter. 4th quarter revenue rose 5.3% to
US$847.9M. Domestic revenue rose 5.5% while Int'l revenues grew 3.3%.
- Atlas Air.
UP with record net income for the quarter ended Dec. 31, 2000, of
US$31.2M. Revenues for the quarter rose by 13% to US$223.7M, operating
income increased by 12% to US$69.2M, & pre-tax income increased from
US$38.7M to US$50.3M, an improvement of 30%. The 4th quarter results
represented a 31% operating margin, & the pretax margin increased by
over 3 points, to 22.5%. 4th quarter revenues, block hours, operating income
& pretax income all represented new records for the company. The
company's 4th quarter net income of US$31.2M reflected a 32% increase
compared with net income of US$23.7M for the year earlier quarter.
- Evergreen Marine Corp.
UP
as operating revenue, including that of Panama-based shipping subsidiary
Greencompass Marine S.A., reached US$1.8B last year. The annual sales
revenue marked a 12% increase. Consolidated operating revenue, including
that of Greencompass Marine S.A., was US$135M for the month of Dec., up 16%
on Dec. 1999.
- Expeditors Int'l of Washington Inc.
UP with a 40% jump in its net earnings for the quarter & year ended
Dec. 31. For the latest quarter, earnings rose to US$25.9M, as compared to
US$18.6M in the 4th quarter of 1999. Revenues increased by 10%, to
US$466.3M. Net revenues were up by 24%, to $153.4M. Operating income for the
quarter increased by 33%, to US$39.2M, from 4th quarter of 1999. For the
year, net earnings totaled US$83M, up from US$59.2M in 1999. Revenues
increased by 17%, to US$1.7B. Net revenues were up by 24%, to US$548.4M.
- GeoLogistics. UP
as its Americas region has returned to the black, with a US$2M profit for
the 4 months ending Dec. 31. The logistics and forwarding company said the
result was ahead of plan. For 2000, the company reported a profit swing of
more than US$20M for its U.S.-based forwarding operations, when compared to
1999. Revenues for the Americas increased 18%, to $376M. GeoLogistics no
longer discloses its full financial results.
- Hub Group Inc. DOWN as
the intermodal marketing & logistics company, reported a 65% drop in its
4th quarter net income, to US$1.1M, with annual earnings halved when
compared to 1999 net result of $3.1M. The 4th quarter, revenue rose 6% to
US$356.7M. Intermodal revenue improved 4% to US$260.7M. Brokerage revenue
declined 3%, to US$51.1M, & logistics revenue jumped 32%, to US$44.9M.
- Iberia. UP as
estimated profits in 2000 rose by 19% to US$209M.
- KLM Royal Dutch Airlines. UP
with reported net income of 4 million Euro (US$3.7M), for its 3rd quarter,
compared to a loss of Euro 18 million for the year-earlier period. Operating
income was Euro 46 million (US$42.8M), compared to a loss of Euro 30 million
in 1999. Revenue rose 13.4% to Euro 1.75 billion (US$1.63B). Operating
expenses rose 8.3% to Euro $1.70 billion. Excluding aircraft fuel costs --
which jumped 61% from the year-earlier quarter -- and operating expenses
increased only 1%. Cargo revenues rose 25% to Euro $313 million (US$291M).
Cargo revenue showed a particularly strong increase of 25%.
- Mercury Air Group, Inc. UP
as revenue for its 2nd quarter of fiscal 2001 rose to US$135,526,000, an
increase of 62%.
- Pilot Air Freight. Up as
revenue for the year 2000 increased 16% to US$223.1M, while 4th quarter
revenue rose 5% to US$56.7M.
- Ryder System Inc. UP with
4th quarter net earnings of US$27.4M, compared to US$5.9M for the
year-earlier quarter. The improvement was due mainly to the non-recurrence
of US$47.4M in restructuring charges in the 4th quarter of 1999. Revenue
increased to US$1.33B for the 3 months ending Dec. 31, up from US$1.32B in
year-earlier quarter. Pretax earnings from continuing operations, before
unusual items, were US$48.2M in the latest quarter, compared with US$58.4M
in the year-earlier quarter.
- SAS Airways. UP as
operating profit before depreciation & exceptionals rose 35% to SKr
3.72bn (US$382M) for the 12 months to Dec. 31 up from SKr 2.75bn in 1999.
Please click below for other sections:
Section B
Section C
Section D
Section E
Please click below to go back to the Cargo Letter home page.
Cargo Letter Home Page
Return to the top of Section A
Written from wire stories, the Associated Press,
Reuters, Hong Kong Shipping News Lloyds & other world sources.