The Cargo Letter
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
30 July 2001
Good Monday 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".
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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 "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
OUR "E" Section: The Forwarder/Broker World
6. The Cargo Letter "Cyber Ports Of Call"
7. New U.S. Related Legal Cases
- MPF To Extend .......... as the U.S. import industry
suffered a setback this month when the Senate voted against hearing its case
for striking language from a bill that would extend
the government's collection of the merchandise
processing fee for another 8 years. Importers have opposed MPF
since its implementation in the 1985 Consolidated Omnibus Reconciliation
Act, because the industry was led to believe by Congress that
the money would be used for Customs modernization
purposes. Instead the revenue is placed in the
government's general fund. Customs collected about US$1B in MPF last year.
- GSP To Expire ........ as the U.S. Generalized
System of Preferences is set to expire on Sept. 30,
and the chances of extending the trade program before
the expiration date are dwindling. Industry groups are vigorously lobbying
members of Congress to extend GSP, which grants duty-free status to imports
from developing countries. The GSP last expired on June 30, 1999. Congress
reauthorized the program in November 1999, retroactive to July 1, 1999.
For the past 10 years, Congress has repeatedly allowed GSP to expire,
which forces importers in the program to start paying duties.
Once the program is renewed by Congress, however,
Customs must issue thousands refunds to the importers.
- More Mexican Roadblocks ........... as in a new
challenge to President Bush's trade policies, the U.S.
Senate Appropriations Committee voted July 12 to
require that Mexican trucking companies get clearance from U.S. safety
inspectors before their vehicles gain full access to American
highways. The language, by Sen. Patty Murray, D-Wash.,
also would prohibit Mexican trucks from driving deep
into the U.S. until fully trained safety inspectors are in place
at the U.S.-Mexico border. That process could take 6 to 12 months, she
said. Other requirements include construction of truck scales
at all border crossings. "The truth is that
Teamster truckers don't want competition from their
Mexican counterparts," said Senator Phil Gramm of Texas, referring to
that union's support for the strict standards.
- The Problem Just Keeps Growing ......... as cargo
theft totals US$12B a year, according to the FBI, and
indirect losses cost 5 times that amount. Read
the Journal of Commerce article: http://www.joc.com/enews/20010725/sections/logis/w7940.shtml
Virgin Nigeria ........ as the African nation has
invited Richard Branson to consider running the
country's dilapidated railways & the British entrepreneur
is said looking into the possibility. President Olusegun Obasanjo
invited Branson to run the rail system during a July 5 meeting at which
the president welcomed the start of flights by Branson's Virgin Atlantic
Airways between London & Lagos. Branson said Virgin Rail would look
into the possibility of taking over Nigeria Railways in 2
years' time. "The experience garnered from the
revival of the British rail system would become very
useful if it eventually becomes the task of (Virgin Rail) to do the same
to the Nigerian rail system," a newspaper said. Wonder
if Branson got one of those "Nigerian Scam "
letters which requests help in disposing of US$65M?
Sunny China ........ as industrial output grew 11%
year-on-year to reach US$150B in the 1st half of 2001,
China's National Bureau of Statistics said. The growth
rate forecasts a sound 1st half GDP growth. In the 1st quarter,
the nation's GDP grew 8.1% on the back of a 11.2% industrial growth.
However, the annualized industrial growth slowed steadily
from 12.1% in March to 10.1% in June, as a gloomy
world economy took its toll on China's industrial
exports, which fell from 14% in the 1st quarter to 5.8% in June.
The bureau said the unfavorable growth in industrial exports
is likely to continue in the 2nd half of this year,
thus making industrial growth during the remaining 6
months slower. But economists predict that the impact would not
prevent China from reaching anticipated economic growth of 7% for the
year as the Chinese economy relies to a large degree on
Smoking EU ......... as the European Union is not
giving up its fight with U.S. tobacco companies
despite dismissal of a lawsuit that alleged Philip
Morris & R.J. Reynolds are involved in smuggling cigarettes into Europe.
"Fighting fraud, & cigarette smuggling in particular, is &
remains our top priority,'' EU Budget Commissioner
Michaele Schreyer said July 17. EU officials allege
the U.S. tobacco companies intentionally oversupply countries
in Eastern Europe & elsewhere so the surplus will be smuggled into
the 15 nation EU, resulting in billions of dollars in lost
taxes. The tobacco companies deny the allegations.
Streamlined Customs? ........... as the World Customs
Organization said it will step up efforts to reduce
cumbersome customs clearance procedures in Int'l
trade. Heads of customs agencies from around the world met
in Brussels this month & agreed to create a global standard for customs
data requirements. The decision followed a request from the
Group of Seven nations, which includes the U.S., UK,
Japan, Canada, France, Italy, & Germany, for the
WCO to take over the maintenance & promotion of the G7 Customs
Data Harmonization Initiative. Similarly, the WCO developed the Int'l
Convention on the Simplification & Harmonization of
Customs Procedures, or Kyoto Convention, which was
revised in 1999. The G7 countries have agreed to implement
the data standard & electronic messages by 2005. The Kyoto Convention
comes into force when 40 WCO members have signed it. This month Japan
became the 8th country to ratify the convention. According to some studies,
border formalities, including customs clearance procedures, increase the
value of goods by 7% to 10%.
Cutback For Drawback? .......... as U.S. Customs has
notified of its proposal to close 4 of its 8 drawback
processing centers. The drawback processing centers
affected by the proposal would be San Francisco, Boston, New
Orleans & Miami. Customs' other drawback processing centers in New York,
Los Angeles, Chicago & Houston would remain. Drawback is
the refund of duties paid on imported materials, which
are either re-exported or used in the manufacture of
export shipments. Customs said the move would help the agency become
more uniform & efficient at processing drawback claims. The agency
also believes the timing is right to reduce the number of
drawback processing centers because of the decrease in
the number of drawback claims filed, largely due to
the NAFTA. Customs received 17,177 claims in 2000, compared to 38,915
claims in 1996.
More For ACE? ......... as the U.S. House
Appropriations Subcommittee for Treasury Postal has
added US$170M to raise Customs' new computer system budget
to US$300M for fiscal 2002, while the U.S. Senate Appropriations Committee's
Treasury Postal bill markup offers US$230M. The Bush Administration's
proposed budget for the development of the Automated Commercial
Environment provided only US$130M for fiscal 2002. The full House must
approve & then the Senate. Still, industry officials from the Coalition
for Customs Automation Funding say the US$300M is barely
enough to keep ACE on a 4 to 5 year development plan.
Customs said the estimated cost to build the system is
about US$1.3B -- but it received only US$130M for its ACE budget
in fiscal 2001.
National Permit Remote ........ as U.S. Customs has
announced that customs brokers participating in its
remote location filing program must hold a national
permit, effective Nov. 6. The process to obtain a national permit is
outlined in Customs' regulations (19 CFR 111.19 (f))
U.S. Customs Changing The Rules ....... as it has
proposed changes to how it issues administrative
rulings & related written determinations and decisions
on prospective & current import transactions under the agency's regulations.
Customs said the changes would amend its rulings process to include
Customs modernization provisions in NAFTA. Customs' Office of Regulations
& Rulings will take comments from the industry about the proposed
rulemaking through Sept. 17.
Hail Moldova ........ as it became the 142nd Member of
the WTO on 26 July. Moldova commenced its accession
process in 1993, its accession package was approved in
May 2001, & the terms of ratification were ratified by its Parliament
in June. Moldova's main trading partner is Russia, which accounts for
53% of its exports & 22% of its imports. In 1999, Moldova's exports
totaled US$470M & its imports US$560M. Main exports are
foodstuffs, wine & tobacco, and its main imports
are minerals products, fuel & machinery. Cambodia
is preparing for a bid to join the WTO by the end of 2002. However, sources
indicate that its severely criticized treatment of labor rights could
be an obstacle.
Now You See It -- Now You --........ as at the end
of July JoC Online will no longer be a free site.
In order to access all the daily and updated news,
ship fixtures, handbook of international trade and more, one needs to
become a subscriber to JoC Week. However, Journal of
Commerce has an online offer: access to JoC Online
and the issue of JoC Week (52 issues) electronically
for US$195 per year. Well, there's always The Cargo Letter!
Danzas Buys A Dane ......... as the forwarding and
logistics unit of Deutsche Post World Net, has
acquired Danish freight forwarder AEI (Denmark) A/S.
AEI Denmark, founded in 1990, will be integrated into Danzas' AEI Int'l
Business Unit, and will operate under the name Danzas AEI
Phoenix Int'l Plants New Flag ......... as it has
opened its latest branch in Jakarta, Indonesia -- in
taking over the NVOCC operation of PT Rica Kusuma
Lestari, a local customs brokerage & NVOCC that has been in operation
TNT Post Completes French Buy ......... as it has
acquired the remaining 49% of French Logistics Company
Barlatier S.A. The announcement comes one year after
TPG's initial purchase of a 51% stake in this company.
Maersk Logistics Buying Customs ......... as it has
acquired the 27-year-old Sydney-based customs
broker/forwarder O'Farrells Int'l, previously known as
"Howard O'Farrell & Co. Neutral Break Bulk Facilities & Plane
Trucking." The division will trade as Maersk O'Farrells Customs Brokers
& will be headed by O'Farrell's former managing director
Ed O'Farrell. In a 2nd acquisition this month, Maersk
bought D'Click Logistics, a French customs broker/forwarder
founded in 1997.
Bax Global Buying Austrian ......... as it is
acquiring the operations from Austrian logistics
operator Schier, Otten & Co. -- now Bax Global GmbH, Austria.
Ist Business To Blame Decline On A Bad Homelife
....... as CNF Inc. said will write off US$23M, net of
taxes, over the next 2 quarters & has laid off 400
employees due to the business failure of one of subsidiary Menlo Logistics'
customers, "Homelife". The majority of the charge will be taken in
the 2nd quarter. Homelife, a retail furniture business that
was formerly a unit of Sears, said it has closed its
stores nationwide due to adverse financial conditions
(i.e., it's broke). Menlo Logistics had a contract with Homelife
to provide supply chain services.
RailAmerica Is Up ....... as the world's largest short
line & regional railroad operator reports that
year-to-date, "same railroad" carloads for 2001
increased 5% to 612,311, from the 584,132 in June 2000. Up is good.
- LTL Up ........ as Viking Freight, American
Freightways (both FedEx companies), Overnite & other
U.S. LTL carriers will boost rates by 5.9% on Aug. 6.
- Canada Clears CN To Become Cheesehead ........ as
Canada's Competition Bureau has cleared Canadian
National Railway Co.'s proposed acquisition of Wisconsin
Central Transportation Corp. The proposed deal is still being reviewed
by the U.S. Surface Transportation Board, which is treating it as a minor
transaction for regulatory review purposes. The STB said it expects to make
a final decision on the proposed merger by Sept. 7, if no environmental
assessment is required & there is no oral argument.
- Re-Linked ........ as the 1st Turkish freight train to
arrive in Baghdad for 20 years has brought in
commodities bought by Iraq under an "oil-for-food"
deal with the United Nations. The train carrying 450 tons of goods
arrived in Baghdad late on July 13 night -- passing through Syria & the
N.E. Iraqi city of Mosul before arriving in the capital.
- E-Logisitics Consolidation Continues ........ as
ShipLogix & nPassage two Internet-based
transportation management systems, have joined forces as called
SLX Inc. The new entity acquires the assets of both companies & will
operate under the ShipLogix names. ShipLogix has already
implemented the integrated ShipLogix/nPassage system
with several customers, including Dedicated Logistics
& Matushita Avionics Systems Corp. The sales transactions were
followed by another round of funding, though terms were not disclosed.
- INTTRA In For Kuehne & Nagel ........as the
logistics groups has selected the B2B as its Web-based
ocean-going transportation portal of choice & has
committed to use INTTRA for its FCL shipments. Kuehne & Nagel Int'l AG
is now one of the world's 10 leading logistics providers upon
completion of the US$300M acquisition of USCO
Logistics this month. USCO is one of the largest
warehouse-based logistics service providers in N. America with more than
15 million square feet of shared & dedicated space throughout the U.S.,
Mexico & Canada.
- Canada Pallets OK ........ as the U.S. Dept. of
Agriculture has issued an interim rule to allow U.S.
exporters to use packing materials heat-treated in
Canada & certified by the Canadian Food Inspection Agency. The interim
rule aims to increase access to softwood packing materials
for exports to China. Under coniferous wood packing
regulations issued by the USDA last Aug. to comply
with Chinese trade rules, all coniferous solid-wood packing material,
or SWPM, sent to China had to be heat-treated in the U.S. According to
the USDA's Foreign Agriculture Service statistics, about 21% of coniferous
SWPM used in the U.S. in 1999 was of Canadian origin. USDA
estimates that China SWPM rules affect about 125,000
shipments to china a year from about 5,000 exporters.
- Bamboo Embargo Not Lucky ........ as the U.S.
Centers for Disease Control & Prevention has
imposed an immediate embargo on Dracaena shipments in
standing water. On June 14, the CDC was notified by the U.S. Dept. of
Agriculture's Los Angeles office about ocean containers that
contained mosquito-infested shipments of Dracaena, or
"lucky bamboo," shipped in small boxes
containing 2 to 3 inches of standing water. CDC found the so-called Asian
tiger mosquito, a species unknown to California. The agency is concerned
about the public health threats these mosquitoes impose. Shipments of
Dracaena with no standing water or mosquito infestations have been arriving
in the U.S. from China, Taiwan, Thailand, Indonesia, Malaysia, Costa Rica
& other countries for 3 years. These shipments unaffected by the
- Tariff Not Sweet.......... as Japan may introduce
next April tariffs on salt imports when it privatizes
the salt business, which is currently under the
state's domain. There is currently no tariff on the 500,000 tons of salt
that Japan imports annually because the trade is considered part of state
affairs. A Finance Ministry advisory panel has been discussing transition
measures in handing over distribution, marketing 7 imports of salt,
and import tariffs were likely to be introduced to cushion the impact
on local producers.
- Knock Offs Knocked Off ....... as French customs
seized over 3,900 fake Vuitton, Fendi & other
luxury-brand goods in cargo from South Korea to Venezuela
via a Paris airport. The fake watches, bags, clothes & leather goods
were aboard a cargo plane flying from Seoul to Caracas via Paris. Seizure
was the 3rd of its kind by customs officials at the Charle-de-Gaulle airport
in the last month.
- Imdelda Marcos Theme Cruise ......... as 4 cruise
ship passengers tried to smuggle US$3M worth of
cocaine & heroin into the country inside dozens of
shoes. The women were arrested July 19 after Carnival's M/V Imagination
docked at Port of Miami after a cruise to Jamaica & the Cayman Islands.
A Customs inspector sent the women to a 2nd checkpoint because they seemed
nervous during disembarkation interviews. Customs agents then found bags
of cocaine & heroin stuffed inside the soles of sneakers, sandals &
high-heeled pumps. Beverly Patterson-Scott, 45; Deborah
Hamilton, 33; Maryann Hollis, 23; & Lashanda Love, 23, were charged with
possession with intent to distribute drugs in ladies shoes -- which carries
a minimum sentence of 10 years in prison if convicted.
- Expensive Eggs ........ as Grigori Oudovenko, age
39, was sentenced on July 6 to 27 months of federal
imprisonment by the U.S. District Court, Eastern
District of New York, for attempting to smuggle US$2.5M worth of caviar
into the U.S. -- the single largest seizure of caviar -- 1,700 pounds
-- since trade controls went into effect 3 years ago. A
Russian citizen, Oudovenko is president of MNA
Atlantic, a caviar exporting firm with offices in St.
Petersburg, Moscow & New York. Osetra caviar & sevruga caviar, less
expensive than well known beluga caviar, were in a container
with dried fish & labeled to match the rest of the
shipment. Service special agents & inspectors
discovered the illegal shipment in July 2000 at the Port of Newark,
N.J. Companies dealing in caviar must obtain export permits certifying
that the fish were taken legally & that trade represents no threat
to the survival of wild populations. Permits must correctly
identify the fish species & the country where the
fish were caught.
small package shippers & banks) DOWN with a 2nd-quarter net loss of
US$354,000, due to US$2.7M in non-recurring charges.
Aeroflot. UP with reported return to the black with
net income of US$8.6M for 2000.
Atlantic Container Line. DOWN with 2nd-quarter net
income of US$5.2M, down 9.7% from the year-earlier
quarter. Operating income rose 11.6% to US$11.6M, due
to an improved cargo mix, higher freight rates & a strong U.S. dollar,
Alaska Air Group Inc. UP as parent company of Alaska
Airlines & Horizon Air Industries earned US$4.7M in
the 2nd quarter, beating Wall Street expectations &
joining short list of carriers recording profits for 2nd quarter.
AMR. DOWN as parent of both American Airlines & TWA
reported a 2nd quarter net loss of US$105M, or US$0.68
loss per share, before special items.
Continental Airlines. DOWN 72% as earnings of US$43M, or
74 cents per share, for the 2nd quarter ended June 30,
were down from US$149M, or $2.39 a share, a year ago --
still, this marks the 25th consecutive profitable quarter
CP Ships. DOWN as operating income in 2nd quarter was
US$39M, down from US$45M over same quarter last year,
but up from US$31M in 1st quarter this year.
CSX Corp. UP with net income of US$108M, or 51 cents a
share, compared with US$55M, or 26 cents a share, in 2nd
quarter of 2001.
Delta Air Lines. DOWN as it lost US$90M in 2nd
Northwest Airlines. DOWN with a US$55M loss in 2nd
quarter & announced it would cut staff by 1,500 to
save US$135M in 2001.
Southwest Airlines. DOWN with earnings of US$175.6M in
2nd quarter, down 8% from a year ago.
Ryder Systems. DOWN as 2nd quarter net income fell
32.7% to $19.9M.
Tropical Shipping. DOWN as the profitable
Florida/Caribbean container line, posted 39% lower
operating income of US$3.6M for the 2nd quarter.
Union Pacific Corp. DOWN with net income for the 2nd
quarter of US$243M, or US$.95 per diluted share. This
compares to net income of US$244M, or US$.96 per diluted
share, in 2nd quarter of 2000.
United Parcel Service. DOWN as net income in 2nd
quarter of 2001 was US$630M, 9% lower than the US$695M
USFreightways. DOWN as net income for 2nd quarter was
US$11,423,000, or 43 cents diluted earnings per share,
compared to US$27,498,000 net income for last year's 2nd
- AirNet Systems Inc. (time-sensitive air transport service provider
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Written from wire stories, the Associated Press,
Reuters, Hong Kong Shipping News Lloyds & other world sources.