The Cargo Letter

THE CARGO LETTER [363]
Air & Ocean Logistics - Customs Broker News
24 May 2001

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 America."  Here are the top logistics stories for May 2001.

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

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INDEX to The Cargo Letter:

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 "A" Section: Trade, Financial & Inland News

1. Freight Forwarder Trade Briefs

• Show Me The Authority ......... as President Bush has sent a letter to
members of Congress urging them to enact presidential trade negotiation authority. Presidential authority expired in 1994, President Bush noted. "We can no longer sit still while our trading partners move ahead without us." Bush said he places the trading authority "at the top of my trade legislative agenda." "U.S. trade promotion authority tells the world that the president & Congress are united at the negotiating table seeking to strike the best possible deals for our country," Bush said
• WTO Says Going Slow ........ as it says World trade growth looks set to slow this year to 7% after hitting 12% last year & equaling its best performances over the past 5 decades.
• Here Comes Mexico ........ as Mexican trucks will carry freight to destinations throughout the U.S. beginning July, according to proposed U.S. Dept. of Transportation's (DOT) Federal Motor Carrier & Safety Administration regulations -- Mexican road transport companies would be able to deliver loads to any U.S. location. Currently, approximately 14,000 Mexican-registered trucks cross the border each day, but are not permitted to travel beyond a narrow zone parallel to the border. Under terms of NAFTA, the U.S. was to have completely opened the border to Mexican trucks beginning Jan. 1, 2000. But safety concerns & pressure from the Teamsters prior to last year's U.S. Presidential election saw the measure repeatedly postponed, despite Mexico's objections. A NAFTA expert panel earlier this year ruled that a U.S. blanket ban on Mexican trucks from serving destinations beyond the border zone could not be upheld under terms of the agreement. DOT is requesting information to indicate how Mexican trucking firms intend to comply with U.S. safety standards, & will also require applicants to make specific certifications of compliance. Applicants will be required to show operation with a valid license issued by Mexican government. Applicants also required to certify a system in place to ensure compliance with requirements covering driver qualifications, hours of service, drug & alcohol testing, vehicle condition, accident monitoring & HAZ MAT transportation. Another certification would highlight need to comply with the U.S. Internal Revenue Code for payment of heavy vehicle use taxes. U.S. is also requesting info on Mexican trucking firms' safety records, out-of-service rates, compliance review records & other data to permit the DOT bureau to focus on high-risk carriers. Such information required to be filed every 2 years. DOT says at least 139 additional safety inspectors would need to be deployed. We'll see.
• But What About 18 Year Old Mexicans? ........... as U.S. Dept. of Transportation is seeking public comment before deciding whether to approve a pilot program that would lower the interstate commercial driving age. Under that program, drivers under 21 would enroll in a minimum 48-week training course: 22 weeks at an approved training school, eight weeks of instruction and on-the-job training, and 18 weeks of team driving with an older, more experienced driver. Young drivers could go solo by age 19 if they pass performance standards. While 18-year-olds can drive trucks in 48 states, they cannot take the heavy vehicles on interstate runs, and almost 755 of truck cargo crosses state lines, according to Bureau of Transportation Statistics.
• StopCargo.com For GoCargo.com .......... as the New York-based online Web site for booking cargo, has ceased operations. In a short letter to creditors, the company said it had received written notice of default from its secured lenders, Silicon Valley Bank & GATX Capital, who foreclosed on GoCargo's loans & took possession of all assets. The shakeout continues.
• LogiGo No Go ......... as the Netherlands based logistics eMarketplace LogiGo.com filed for suspension of payments, which was officially granted by a Dutch court.
• OOCL Says "Open Wide" ......... as CargoSmart, the Internet shipping portal launched by Hong Kong-based Orient Overseas Container Line last Oct. has asked 5 other shipping lines to decide by June 30 whether to take equity shares of up to 20%. CargoSmart, now wholly owned by OOCL, said it has been talking about opening the portal to other carriers as users or investors. The architecture of the system was designed to support shipment transactions for multiple carriers, but has been used only by OOCL. Truly up for sale? Trouble?
• If You Can't Lick'em .......... as United Parcel Service has acquired "iShip", the multi-carrier shipping service assets from owner Stamps.com Inc.
• Where Angeles Fear To Tread ....... as Cargoarena.com wants to be anew B2B interface between shippers & carrier/forwarders. Partners of Cargoarena.com are Trexito, a company developing e-tools, & GloMaP.com, of Hamburg. Did we mention that this might not exactly be a new idea? We truly wish good luck, but is this a Christian late to the lion convention? http://www.Cargoarena.com/
• Danzas Group Buys Columbia ........ as the unit of Deutsche Post World Net, has acquired Florcarga S.A. Bogota, a Colombian customs broker & logistics provider. Florcarga served as exclusive agent since 1980 for former Air Express Itn'l Corp., which was acquired by Danzas. Combined companies will be known as Danzas S.A. Yes, Danzas could likely buy Columbia.
• Sounds Fishy ........ as Norway's leading forwarder of seafood products, Quality Cargo AS, has also been acquired by Danzas AEI Intercontinental.
• TNT Logistics Buy ........ as the Post has acquired ALS (Advance Logistics Services), a player in the Italian logistics & transport market.  ALS, with sales of 209 million Euro in 2000, strengthens TNT's Italy position. ALS has grown steadily, with annual growth of 23% since 1997. ALS logistics division has a staff of 440 -- active in France & Spain.
• OTR Express Is DOA ......... as the 48 state nationwide truck company will cease operations within 60 days -- because of adverse business conditions, high fuel costs, high insurance costs & declining used truck & trailer values. Watch your freight!
• Schneider Logistics Now Visible .......as the LTL truck giant has released "Supply Chain Integrator", a new Web-enabled application in its MySUMIT suite that allows shippers, suppliers & carriers to obtain "product-level visibility at every point along the supply chain & stay connected with supply chain partners."  http://www.schneiderlogistics.com
• J.B. Hunt Will Be Visible......... as the national motor carrier has placed an initial order for 17,000 FleetView Trailer Monitoring Systems. Sign of the times.
• Turkish Rail Link Returns ......... as its 1st train to Iraq for 19 years arrived in Baghdad on May 6 as a test run ahead of the resumption of rail services between the countries. The train, which left the southern Turkish town of Mardin on May 5, passing through Syria, stopped in the N. Iraqi city of Mosul before heading to Baghdad, with freight & 26 passengers.  Turkey plans to resume regular train trips to Iraq, but did not say when.
• Great Locomotive Chase ......... as on May 16 a runaway freight train of CSX with nobody aboard covered 66 miles in NW Ohio, before it was halted safely by a daring railroad worker -- jumped onto the moving train - which carried thousands of gallons of hazardous molten phenol acid -- & pulled its brake. The 47-car trained was slowed down by another engine in a coupling maneuver.
• Lonely Road Anniversary ........ as the 297-mile Arizona & California Railroad, celebrated its 10th anniversary on May 9, 2001. The Arizona & California provides a direct route through the desert between the Pacific Coast & Phoenix, Ariz., via the Burlington Northern and Santa Fe Railway, & serves the Lower Colorado River Valley with a 49-mile branch line extending from Rice to Blythe & Ripley, Calif. -- exploding atomic bombs gain little notice there. The A&CRR is a subsidiary of the Park Sierra Rail Group, which also owns the California Northern Railroad and the Puget Sound & Pacific Railroad, together operating nearly 700 route miles of track in Arizona, Calif. & Washington.
• New U.S. Rail Hub ......... as Burlington Northern & Santa Fe Railway Company (BNSF) has celebrated the grand opening of its new US$80M intermodal facility in Stockton CA -- covering 425 acres & designed to improve the efficiency of moving merchandise in/out of No. California, giving customers improved access to the interstate highway system & other railroads.
• For Sale: Big Train Set ......... as Burlington Northern & Santa Fe Railway said May 8 it will begin offering coal transportation option contracts, to be auctioned on the Internet starting May 25. Option contracts give purchasers right to move a trainload of coal via BNSF from 1 of 3 groups of Powder River Basin mines to one of 11 rail/water terminals at a specified price & at time intervals from 3 to 18 months. Purchasers not required to use underlying transportation. Register on BNSF Web site. http://www.bnsf.com/business/coal/options/
• E-Rail ....... as Norfolk Southern now has an Internet system that gives customers an enhanced ability to electronically create bills of lading -- claimed 1st in the rail industry to give the customer an estimated rate immediately upon requesting a shipment. http://www.nscorp.com/access
• Eagle Moves Uncle Sam ....... as the Military Traffic Management Command (MTMC) of the U.S. Army has launched a new pilot program in 3 S.E. states for 3rd party logistics to move military freight. Eagle Global Logistics has been awarded a US$33M contract to handle selected military freight in Anniston - Alabama, Jacksonville - Florida, Albany & Warner Robins Air Force base in Georgia. Contract was awarded by MTMC for the period July 2001 to June 30 2002, with 2 one-year renewable terms. Currently the Dept. of Defense moves its freight on a global basis via transport offices at the different installations. Within 90 days Eagle Global Logistics will begin managing most military freight shipments outbound from these installations. The usual proposal drew interest from 111 firms. Final decision was made from 12 firm contract bids.
• U.S. Steel IN House ........ as it has reorganized its logistics services dept., creating a new subsidiary called Transtar Logistics LLC. Transtar Logistics will provide supply chain services for shipping the parent company's steel products, & market its services to other related industries.
• Vegetables Are Our Friends ........ as the U.S. Dept. of Agriculture has made it easier for importers & overseas exporters of fruits & vegetables to know what's permissible to import into the U.S. While USDA has produced a hard copy of this information for years, this is the 1st time it's available as an online manual -- includes fresh herbs & sprouts, determines what permits are needed for U.S. import. Inspectors also use the manual, which contains pictorial identification guides. http://www.aphis.usda.gov/ppq/manuals/
• Customs Turns Up Heat On Boiler Rooms ......... as one of Canada's fastest-growing exports to the U.S. is telemarketing fraud, which takes in some US$70M a year mainly from elderly Americans. In an operation called "Project Colt," U.S. Customs & the FBI have been working with the Royal Canadian Mounted Police & local Canadian police to fight telephone scams. So far, they have recovered US$12M. Officials say Canada has become a paradise for this kind of fraud because the penalties there, usually a fine or short prison term, are generally much lighter than in the U.S., where offenders can be sentenced to 5 years in prison for each defrauded victim. Perpetrators, mostly Canadians & some Americans, operate "boiler rooms" where hundreds of people make calls 16 hours a day, 7 days a week -- often using lists of people who are widowed or have Alzheimer's disease. Officials say there are 40 to 50 boiler rooms operating in Montreal alone. One of the largest phony lottery operations netted US$120M last year.
• Fatal Cargo ......... as in a case that dramatized Europe's illegal immigration crisis, a Dutch court has convicted 7 men in the deaths of 58 Chinese migrants who suffocated in a truck container while seeking a better life in Britain. The 7 were given prison terms of up to 9 years each - less than half the punishment demanded by prosecutors. They were acquitted of manslaughter by the 3 judge panel, who ruled the defendants never intended to kill the migrants. Two men were acquitted of all charges. The bodies of 54 men & 4 women were discovered last June 18 by customs officials in Dover, England. Only 2 Chinese survived the ferry crossing from Zeebrugge, Belgium. A British court last month sentenced the truck driver, Dutchman Perry Wacker, to 14 years imprisonment. Strange name for Perry, under the circumstances.
• The Dog Didn't Finish Eating My Homework ........ as Richard "Mick" Connors says he just finished writing an adventure novel called "Cigar Runner: Sex, Cigars & Con Men in Castro's Cuba." But U.S. prosecutors say he crossed the line between fiction & reality. A federal grand jury indicted on charges of smuggling large numbers of fine Cuban cigars into the U.S. Cuba's celebrated cigars are covered under an embargo imposed against Fidel Castro during the Cold War, 4 decades ago. The 52-year-old Chicago lawyer claims this a horrible mistake by federal investigators who read crumpled pages of his novel in the trash & thought he actually smuggled cigars. "For a while, I was throwing away whole pages," he says. "It doesn't look like a book. It looks like a letter." Connors charged with smuggling & trading with the enemy & could get as much as 5 years. No trial date set. In Connors' book, a 391-page work he says was 6 years in the making, an American goes to Cuba on vacation & becomes tangled in a web of intrigue involving cigar smuggling. But the U.S. claims Connors writes from experience: Starting in 1996, he & coconspirators flew between Canada & Cuba to get around the U.S. ban on travel to the communist island, & ran cigars across U.S. border. Illicit cigar trade can be lucrative. Snapped up for a few dollars in Havana, such legendary brand names as Montecristo, Romeo y Julietta & Cohiba are prized by connoisseurs & can fetch upward of US$50 on the U.S. black market. Cuban cigars were embargoed in 1962 when President Kennedy placed Cuban products under the Trading with the Enemy Act. (According to the American Cigar Assn. -- before signing the order, Kennedy sent Pierre Salinger out to scour for as many of his favorite Cuban cigars as he could find.) Connors says his novel is not just hot -- "It's smoking."

• Cargolux. UP as operating profit for year 2000 more than tripled to US$36.2M, up from US$10M in 1999, on a turnover of US$739M., a 5% return on sales, with net profits after tax of US$32.955M, an increase on 1999, which saw US$30M. Revenues increased by 15% to US$739M, while ton km flown grew 17% to 3,813 million.
• CMA CGM -- The French Line --UP 39% for year ending Dec. 31 2000 with annual revenue of US$1.79B, & operating profit of US$107.8M, twice as high as last year's figure. Net was US$95.3M compared with US$42.3M in 1999.
• Deutsche Post. DOWN as 1st quarter 2001 saw net profits coming down 6% to EUR 539 million.
• Emirates SkyCargo. UP with record total revenues of US$287.3M & lifted 335,194 tons in financial year 2000/2001, a revenue growth of 25.1%, & increased tonnage carried by 24.2% over previous year.
• Evergreen Marine. UP with a 15% rise in turnover last year to US$1.9B, up from US$1.7B in 1999.
• Expeditors Int'l of Washington Inc. (Seattle-based customs broker/forwarder giant) UP as net earnings increased 58% for 1st quarter 2001, compared to the same period last year. Net earnings stood at US$21.2M, as opposed to US$13.4M for 1st quarter 2000. Net revenue up 26% to US$145.7M.
• Interpool, Inc. UP with RECORD 1st quarter net income rise of 22% to US$11.8M, or US$0.41 Per Diluted Share. Revenue during 1st quarter 2001 increased by 41% to US$86.4M. Operating income was US$36.4M versus US$24.6M for same period 2000. 1st quarter 2001 results include contributions from North American Intermodal Division of Transamerica Leasing, Inc., which was acquired Oct. 1, 2000. Revenue & pretax profit from Interpool's containers & chassis operating leases showed strong growth year-over-year due to increases in size of fleets, & continued strong fleet utilization. Operating lease revenue grew 55% from last year, while pretax profits from operating leases increased by 46%. Interpool is the corporate sponsor of The Cargo Letter archive & library. GO INTERPOOL!
• Japan Airlines. UP with 75% jump in operating profits to JPY 78.64 billion for the year ended March -- net profit soared 108% -- but it forecasted a 39% tumble in net profits for the coming year.
• Kuehne & Nagel (Swiss logistics/forwarding) UP with a 55.6% jump in 1st-quarter net income, to US$24.2M.
• Panalpina. UP with net income of US$57M for 2000, up 27%, as revenues, ocean & air freight volumes all increased by more than 20%.
• P&O Nedlloyd Container Line. UP with pretax profit of US$18M for 1st quarter, compared to loss of US$29M in the year-earlier period, as volumes continued to climb. Operating profit for 1st quarter was US$31M, compared to operating loss of US$14M in 1st quarter 2000.
• Schenker (it's parent) UP as 1st quarter gross revenue increased by 53.3& to Euro 78.3 million.
• Sea Containers (marine container lessor) DOWN with net earnings for 1st quarter of US$0.9M, US$0.05 per common share diluted, on revenue of US$291M.  For prior year 1st quarter there was a net loss of US$7.9M.