The Cargo Letter

THE CARGO LETTER [373]
Air & Ocean Logistics - Customs Broker News
30 January 2002

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."

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

INDEX to The Cargo Letter:

Section A: Section: Trade, Financial & Inland News|
Section B: FF World Air News |
Section C: FF World Ocean News | Section D: FF in Cyberspace |
Section E: The Forwarder Broker World

OUR "A" Section: Trade, Financial & Inland News

Freight Forwarder Trade Briefs

• Concern For Argentina Deepens ........ as President Bush warned on Jan. 15 that Argentina will face a "bleak & stagnant future" unless it embraces Int'l trade & other free-market economic policies amid a devastating recession. He reiterated that U.S. aid through global lending institutions will come only after Argentina assembles a long-term economic plan. Bush also said he will propose an increase of almost US$50M in the American contribution to World Bank programs that help the poorest countries. On hemispheric matters, Bush said he will press for free-trade pacts with Central American countries, which could pave the way for the Free Trade Area of the Americas that Bush seeks. Argentine President Eduardo Duhalde also has expressed interest in pursuing that hemispherewide free-trade zone, he said. Bush had sharp words for Duhalde, a fierce critic of Argentina's last decade of free-market reforms that brought growth but often failed to close the gap between the few rich & the legions of poor. Bush answered that "free markets & open trade are the best weapons against poverty, disease & tyranny" Some analysts say Argentina is drifting toward greater projectionist policies & away from engagement in the global marketplace. Argentina's bankruptcy could force trade barriers to protect domestic industries, they say. "Those who promise painless protectionism or security through statism assure a bleak & stagnant future for their people," Bush said at the Organization of American States. Cargo trucks in past weeks have turned back from Argentina's borders since the government started changing the rules on when foreign firms will be paid abroad & devaluation near-halved dollar values. Ever-changing government regulations has also roiled shipping & even multibillion dollar manufacturers. Consumer demand has withered for imports whose prices have up to doubled on store shelves in past weeks. "Cargo has been left at the border or returned to point of origin," said Alejandro Sproviero, Argentine operations chief at Hellmann Worldwide Logistics. Maersk Sealand says all freight to/from Argentina is now required to be paid in U.S. dollars. As of Jan. 3, all shipments must also be paid outside of Argentina, Maersk said.
  www.oas.org
• New Life For World Trade Center ........ as steel from the wreckage is destined for India & China, where it has been sent for recycling & new construction. One firm taking steel from the huge project to clear Ground Zero is New York's Metals Management, which has bought 70,000 tons of scrap from the ruined twin towers, some of which has been shipped across the Pacific to S.E. Asia. 4 or 5 vessels have already sailed from New York with the scrap. In the cargo are "very dense" steel girders from Ground Zero, which could finally yield 250,000 to 400,000 tons of scrap for recycling. The World Trade Center's broken steel outer skeleton is composed of steel beams up to 2 feet thick. Sources in Chennai port, India said two 33,000 ton shipments had already arrived, a 3rd was on its way & a 4th was soon to arrive at India's West Coast port of Kandla. The M/V Borzna arrived in Chennai in early Jan, a 3rd of it's cargo from the twin towers. A 2nd ship, M/V Shen Qua Hai, being unloaded. Sources said beams were so dense that a full load would probably break through the bottom of the ship, so they sail partly loaded. It is said that demand for 20 or so crane-fitted ships to do the job could well be enough to boost the freight market.
• Taiwan Is No. 144 ........ as on 1 Jan, Chinese Taipei became 144th Member of the WTO, 30 days after it had notified the WTO that it had completed domestic ratification of its accession package. Accession marks end of attempt to enter the WTO dating back to 1990, & raises hopes for better ties with its giant neighbor China. WTO Membership will mean mostly cheaper prices for Taiwanese consumers, though agriculture & labor-intensive industries are expected to suffer, causing already record-high unemployment levels to rise further.
  www.wto.org/english/news_e/news_e.htm#mem
• Railing To Free Enterprise ........ as a federal oversight panel for troubled Amtrak voted Jan. 12 to recommend opening the nation's intercity rail system to competition. Amtrak, for 3 decades the nation's monopoly provider of long-distance trains, would be competing with private companies. But Amtrak's tracks & stations, as well as its authority to make rail policy, would be distributed among state, federal & private entities. The plan, approved 8-1 by Amtrak Reform Council, is only a recommendation. Congress will decide Amtrak's future after it receives a final version of the plan Feb. 7. The council opted for the most radical & free market-friendly option among three plans it considered. The only member to oppose the plan was Charles Moneypenny, representing labor interests on the panel. Established by Congress in 1997, the panel has drawn praise from critics of Amtrak who contend mismanagement is responsible for its perpetual financial problems. Amtrak supporters retort that problem is a paucity of federal financing for an overlooked mode of transportation. Amtrak Reform Council:
  www.amtrakreformcouncil.gov
• Intermodal Woe ........ as U.S. intermodal rail traffic finished 2001 down 2.6%, to 8.94 million units, according to the Assn. of American Railroads. Intermodal volumes fell 1.5% in Dec. & 2.3% in the 4th quarter of 2001. While intermodal traffic was down, total freight ton-miles reached a record 1.49 trillion, up 1.1% from 2000. Carload traffic -- which excludes intermodal - was also off for the year, despite improvements of 2.9% in Dec. and 1.8% for the 4th quarter. For the year, carloads fell 0.7% to 17.25 million units. Healthy gains in coal volumes, up 5.2%, were offset by declines in nearly all other commodity categories, AAR said.
• The Little Engine That Got Big ........ as RailAmerica Inc., the big short-line & regional railroad operator, has acquired ParkSierra Corp., which operates 3 U.S. West Coast railroads, for US$48M. The purchase price comprises US$23M in cash & about US$25M in RailAmerica stock. ParkSierra, based in Napa, Calif., includes the Arizona & Calif. Railroad, the California Northern Railroad, and the Puget Sound & Pacific Railroad. The railroads operate 751 mile of track in 4 western U.S. states with 31 locomotives & 98 employees. With the purchase, RailAmerica now owns 50 short-line & regional railroads operating 13,200 route miles in the U.S., Canada, Australia & Chile.
• Moscow Holds The Line ........ as Russia delayed a rise in prices for railway freight on Jan. 15 to hold back inflation & said it would be sensitive in carrying out further increases in state-regulated tariffs. Russian inflation was above target last year, coming in at 18.6% after 20.2% in 2000. But electricity & gas firms as well as railways are clamoring to raise prices nearer to world levels to cover costs & attract investment. The spokeswoman for Prime Minister Mikhail Kasyanov said he had canceled a planned 14% rise in railway freight tariffs which had been due to take effect from Jan. 20.
• Mountain Freight Link To Return ........ as the Mont Blanc road tunnel linking France & Italy beneath the Alps could be reopened to cars & light traffic by mid-Feb. The tunnel closed after a fire in March 1999 killed 39 people. Reopening of the vital north-south European road freight link has twice been postponed from an original date of mid-December, angering freight firms sick of being forced to make expensive and time-consuming detours.
• Eurotunnel Clogged ........ as the Anglo-French Channel Tunnel railway operator Eurotunnel said on Jan. 22 it lost around US$29M of freight revenues last year because of illegal immigrants trying to cross into Britain from France. The firm, which launched a new bid this month to close down the Sangatte refugee camp in northern France, said operating revenue fell 6% to 548 million pounds in 2001. The Anglo-French firm said its freight service had been "seriously disrupted" by stowaways, but that it had restored service quality in recent months by tightening security.
• Twenty To One ........ as the U.S. Postal Service has selected trucking giant Consolidated Freightways to manage all USPS non-mail LTL freight delivery in the continental U.S. The contract comes with options that allow the USPS to extend the partnership through Feb. 2012, with a value of at least US$9M per year. The decision condenses the USPS LTL freight network from 20 national, regional, & local carriers to just one transportation provider.
• Insuring Your High Value Motor Freight ........ as Minnesota's trucking firms are only an example of many areas which have been hit hard with insurance rate increases according to results of a joint survey conducted by the Minnesota Trucking Assn. (MTA) & the American Trucking Assn. (ATA). Survey shows that primary, or general liability, rates increased by 32% for carriers renewing in 2001, with those renewing their policies after Sept.11, 2001 paying an average 37% more. Renewal rates for umbrella insurance in 2001 were pegged at an average 74%, while rate increases after the terrorist attacks climbed to 120%, with one hike of over 1000%. All this said, the motor truck cargo coverage problem is nationwide. The study does not mention the much greater problem of many insurers not being willing to insure freight carried over a value of about US$200,000. Be prepared to either pay higher rates -- or run the risk of your motor carrier not being insured for the full value of your cargo. BE CAREFUL in selecting a motor carrier to haul your high value freight ... or YOU could responsible for the result.
• C.H. Robinson Worldwide Gets FTS ........ as the non-asset-based logistics provider, has acquired Smith Terminal Transportation Services Inc., which does business as FTS. Terms were not disclosed. FTS, Miami-based 3rd-party logistics company, provides FTL, LTL consolidation &intermodal transportation brokerage services.
• USF Eastern Adventure Comes To Close ........ as USFreightways Corp. & its freight forwarding subsidiary USF Worldwide have relinquished interest in USF Asia Group, Ltd., USF Worldwide's freight forwarding joint venture in Asia. A one-time payment of US$10M has been made to Asia Challenge, Ltd., a Hong Kong based logistics company & USF Worldwide's former joint venture partner. In addition, US$6M in loans will be provided to USF Asia Group. A pretax charge of approximately US$13M to earnings will be taken in the 1st quarter of 2002. USFreightways & USF Worldwide concluded that continued participation in the venture was not in their best interest.
• Togther Again ........ as Stinnes AG, parent of Schenker forwarding group, & Japan's Seino Transportation Co. Ltd., have established a 2nd joint venture in Japan. At the beginning of 2000, Stinnes' subsidiary Schenker had already forged a strategic alliance with Seino. The 1st joint venture -- Schenker-Seino Logistics -- has provided logistics services for the Japanese market. With the 2nd venture, Stinnes & Seino will also contribute their air & sea freight activities to the new company, called Schenker-Seino Co. Ltd. Stinnes holds a 60% stake in the new venture, & Seino 40%, which will become operational on April 1 with a workforce of 200 employees at 11 locations. Stinnes said that the joint venture is expected to generate sales of US$112M during its 9 months of operation in 2002. In 2003, sales revenues are expected to increase to approx. US$156M.
• Phoenix Int'l To The Islands ........ as it will provide services to Pacific Trucking Co. Inc. for shipments to/from island of Guam -- the privately owned North American forwarder, CHB, & NVOCC, offers weekly ocean & daily services to/from Guam.
• Kuehne & Nagel Seeks In-House Japan Edge ........ as it has been granted a sea freight customs clearance license for Tokyo ports by the Customs Clearance Division of Tokyo Regional Customs. The company says it is one of the 1st Int'l logistics companies to have obtained such license in Japan.
• Schenker Puts On The Show In China ........ as it has acquired a holding in Shanghai Expotrans Ltd, the Shanghai-based Chinese company specializing in freight-forwarding for trade fairs. While Schenker had cooperated with partner Expotrans to serve its customers in the trade fair segment in China, it can now develop its own trade fair activities in Shanghai. Schenker has been active in Chinese market for many years. Three of Schenker's 18 special Trade Fair Offices in Asia are located in China. Schenker has already provided services for trade fairs on the new Exhibition Grounds in Shanghai/Pudong.
• U-Freight Group Buys In China ........ as its network has bought a 50% stake in Shanghai Rijin Int'l Freight Co. Ltd which offers sea & air import/export freight forwarding, CAAC & customs brokerage services at offices in Shanghai, Nanjing, Guangzhou & Wuhan. Anthony Fong, managing director of U-Freight said, “With China accepted for membership of the WTC, it is important we increase our network to cover important centers where we have a limited capacity at present."
• One Big Happy Danzas ........ as it has acquired the 50% holding it did not own in Universal Air Express AB, based in Sweden -- plans to merge the company with another Swedish affiliated company, Danzas AEI Intercontinental AB.
• Big Deal In German Logistics ........ as Thiel Logistik AG has acquired a majority of the business divisions of Birkart Globistics AG, Aschaffenburg.
• U.S. Customs Wool Duty Refund Extends ........ as it has extended the deadline to file a wool refund claim for year 2000 until Dec. 31, 2002. The original deadline was Dec. 31, 2001. Customs said deadline extension is needed to "reflect the fact that proposed legislation is currently pending before Congress which would significantly alter the scope of section 505 (of the 2000 Trade & Development Act) in regard to the amount of payment manufacturers would be eligible to receive, as well as documents that a manufacturer needs to file to be entitled to a refund, and in part, because of destruction of records at the New York Customshouse on Sept. 11, 2001." Wool duty refund docs should be sent to U.S. Customs, Office of Field Operations, Wool Duty Refund Unit, 1300 Penn. Avenue, NW, 5th Floor, Washington, D.C. 20229. Contact Bruce Ingalls at (202) 927-1082.
• Out of The Ashes ........ as evidence pulled from a vault in the rubble of a collapsed building at the World Trade Center site enabled authorities to dismantle a drug money-laundering network, U.S. Customs said Jan. 15. Officials arrested 37 people & seized US$8M & hundreds of pounds of cocaine on 14 Jan. as part of an investigation made possible by evidence once stored in a vault at 6 World Trade Center, the destroyed 8 story U.S. Customs building. The arrests were made in Bogota, Colombia, and in New York, Miami & San Juan, Puerto Rico. Customs agents were lowered into the pile of debris in Oct. to retrieve evidence pertaining to several cases. Customs would not describe the evidence or say whether arrests are expected from other evidence collected in the vault. Customs refuses to say whether it is looking for more evidence in the rubble.
• Chile Lowers The Bar ........ as it has trimmed customs tariffs by 1% to 7% as part of a plan implemented in 1999 to cut general tariffs to 6% by 2003. In compensation, the government raised the tax charged on credit stamps and fees from 0.1% to 0.134%, moving the maximum rate to 1.6%.
• NCBFAA Move To Right A Wrong ........ as the National Customs Brokers & Forwarders Assn. of America has launched a "grassroots" campaign to reform the country's bankruptcy law. "Currently, if an importer files for bankruptcy, Customs has a priority over other creditors in the proceeding while customs brokers must go to the back of the line to pursue a claim," said Jon Kent, legislative rep. for the NCBFAA. "This is unfair to the brokers as they advance duty payments to Customs. Customs benefits greatly from this service that brokers render." Last year, Rep. Lindsey Graham, R-S.C., introduced legislation (H.R. 2569) to amend the bankruptcy code so that brokers would receive some measure of protection against insolvent importers. WRITE YOUR CONGRESSMAN IN SUPPORT OF H.R. 2569.
• Arzoon Appears To Have Made It ........ as this leading provider of Logistics Resource Management solutions on the Internet has been named a 2002 Vision Award recipient by SiliconIran, at the SiliconIran High-Tech Forum & Awards Ceremony on Jan. 17. With blood on the ground from a two year industry shakeout -- Arzoon seems poised to succeed in the world of Internet shipping. As you know, so many have failed.
  www.arzoon.com
• Celarix Refuels ........ as one of the early logistics software dot-coms, has had to raise another US$17M of financing led by Austin Ventures (Celarix's existing investors also participated in this latest round) to bring total investment in Celarix to more than US$75M. Celarix, based in Cambridge, Mass., said it will use the funding for operations & further product development. It expects to achieve break-even in the next 6 months. The company was founded in 1998 to provide electronic systems for supply chain visibility.
• Can't Be Replaced ........ as Raymond P. Meade passed away Sun, Jan. 13, 2002 of conjunctive heart failure complicated by bronchial pneumonia. Ray's vast knowledge of claims spanned 45 years -- covering everything from the underwriting side of the industry, to adjusting claims on blue water hulls & oil rigs, to his latest post as Claims Manager for the Conterm Group/brand name worldwide. His understanding of insurance & the claims process, his ready availability & prompt, accurate responses made him an invaluable part of the industry team. His wisdom & fairness gained him respect from us all. Ray was 71.
• At Least They Keep Their Heads ........ as 4 Vietnamese were sentenced to death by firing squad Jan. 12 for smuggling & selling heroin from neighboring Laos, a court official said. Thirteen others were given prison sentences. The 17 suspects admitted to smuggling a total of 15.4 pounds of heroin on 11 occasions from March 1998 until their arrests in Feb, the court official in the central province of Ha Tinh said. Vietnam has some of the world's toughest penalties for drug-related crimes. Trading, possessing or trafficking more than 3 1/2 ounces of heroin or 11 ounces of opium are punishable by death. Courts sentenced 55 people to death last year on drug-related charges.
• Manifest Destiny ........ as the U.S. Attorney's office for the N. District of California, in San Francisco, has announced that Steven Schneider, 54, of Malboro, N.J., Pres. of Fleet Shipping Lines, & Charles Centorrino, 40, of Farmingdale, N.J., G.M. of Fleet Shipping Lines, have pleaded guilty to felony charges of illegally transporting hazardous materials & illegally placarding hazardous materials. Fleet Shipping Lines consolidated cargo for shippers which included paint, adhesives, oxidizers, acids & poisons. Under the plea agreements, Fleet will pay a US$300,000 fine. If a presiding judge agrees with U.S. Attorney recommendations, Schneider will pay a US$5,000 fine, serve 100 hours of community service, & be placed on probation for 5 years. Centorrino will be placed on probation for 5 years. Sentencing is scheduled for May 3, 2002.
• Puppy Love? ........ as Macau officials seized 2 skinned & gutted puppies taped to illegal meat smugglers on Jan. 22. The puppies were part of some 290 kilos (640 pounds) of fresh meat & innards that 14 people were accused of trying to smuggle into the Macau territory from mainland China on Jan. 21. The meat was carried in plastic bags taped to the smugglers' bodies. Fresh meat imports into Macau require permits & each of the 14 accused faces a fine of US$625 -- 7 kg. of the contraband was dogmeat -- rest was pork & chicken. Consuming dog meat is not illegal in Macau, where some people believe it is beneficial to health. Many dog-meat lovers travel to mainland, where canine dishes are widely available. That mankind has domesticated only two species over the past 4,000 years should be a matter of record. Quite gross. Did we say gross?
• Thought For The Day ........ as we found this in "Bow Wave" the quite great newsletter of our UK friend Sam Ignarski: Never be afraid to try something new. Remember that amateurs built the ark. Professionals built the Titanic!