The Cargo Letter
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
28 January 2003
Good Tuesday 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." Happy Lunar New Year -- starting Jan. 31 2003!
Tonight we watch the Jan. 27 -- Operation NIGHTHAWK -- as LAX runs the simulation of a major terrorist attack on our airport. There's a lot of activity out there we see tonight -- all to protect us. BRAVO ZULU to our LAX fire & police services! Quite a show! Quite a serious show!
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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
Freight Forwarder Trade Briefs
The Cargo Letter Financial Page
- Anti-Terror Chief ........
as the U.S. Senate confirmed Tom Ridge as the 1st secretary of the Dept. of Homeland Security, days before the new institution officially begins work. The vote was 94-0. Ridge will be responsible for melding 22 agencies & about 180,000 employees into a department tasked with protecting the nation's borders, transportation system, public health & infrastructure from terrorist attacks.
- INS Achieves Consistency ........
as Immigration & Naturalization Service has failed to correct significant security deficiencies at airports despite renewed attention since the Sept. 11 attacks, U.S. Justice Dept. auditors said in a report last week. The Transportation Security Administration is responsible for overall security at commercial airports, but the INS has oversight of foreign travelers. An audit by Justice Dept. found U.S. airports remain vulnerable to illegal entries by foreign travelers, smuggling of aliens, drugs & other illegal substances, and escapes by people detained for questioning. Illustrating the national security sensitivity, the public version of the audit was heavily edited to remove all references to specific airports, even deleting broader percentages of airports where various deficiencies were found. The report said the INS has largely failed to implement recommendations aimed at fixing problems 1st identified in a 1999 audit. These include badly located or inoperable surveillance cameras, inability to videotape interviews with detainees, alarms that don't work and other security features never installed. The INS inspected 43.1 million foreign passengers at 159 U.S. airports during the 2001 fiscal year. The audit focused on 12 unidentified U.S. airports that handle Int'l flights. There is an analogy here for cargo.
- No Big Deal ........
as the number of mergers & takeovers made by major European logistics operators almost halved last year when compared with 2001, according to a report by UK based Transport Intelligence Ltd. European logistics companies are now turning to "bolt-on deals" that give them access to the North American & Asia-Pacific markets, according to the report, the report said.
- Canadia Gets Hard On Softwood ........
as it has requested consultations through the World Trade Organization to settle a bitter dispute over softwood lumber imported into the U.S. The Canadian government would like the WTO to review the findings of the U.S. Commerce Dept. and Int'l Trade Commission in which the agencies allege the threat of injury to U.S. lumber producers from lower-priced Canadian softwood lumber imports. In its request to the WTO, the Canadian government alleges that the Commerce Dept. & ITC is inconsistent with the antidumping & countervailing duty provisions of the 1994 General Agreement on Tariffs & Trade (GATT) The U.S. Trade Representative has requested comments from the industry. Comments related to the findings should be e-mailed: FR0064@ustr.gov
- U.S. & Moroccan Free Trade ........
as the governments started negotiations in Washington on Jan. 21 to eliminate tariffs & other trade barriers between the countries. Subsequent negotiation rounds will alternate between Morocco & the U.S. with the goal of completing the agreement by the end of 2003. Morocco is an emerging market located near Europe, Africa, & the Mideast and imports about US$11Bn worth of goods a year. The U.S. currently exports about US$425M worth of products to Morocco each year. Leading exports include aircraft, corn & machinery, and most recently, there has been a rise in exports of fabrics & pharmaceuticals to Morocco. U.S. products entering Morocco currently face an average tariff of over 20%, while Moroccan products are subject to an average tariff of 4% in the U.S.
- Big Changes At UK Customs ........
as Agency Sector Management (ASM), a lobbying body for UK air freight forwarders, reminds its members of HM Customsí Jan. 27 deadline for submitting cargo declarations electronically. Only one-third of ASM's 600 freight forwarder members have availed themselves of ASM's GeMS software, which enables users to make electronic declarations to British customs via community system CCS-UK or by e-mail. Next week, HM Customs will abolish the use of customs registered numbers (CRNs), the U.K.ís current system of simplified export entry procedures. After Jan 27, all simplified, pre-arrival declarations must be submitted electronically. The UK government has committed to provide full electronic services by 2005.
- Tomorrow The World? ........
as Deutsche Post World Net, the German postal company, confirmed that it is considering buying a share in logistics firm China Foreign National Transportation (Group) Co., better known as Sinotrans. Deutsche Post subsidiary DHL is a market leader in the express business segment in China with a market share of about 40%. Deutsche Post Global Mail and DHL Worldwide Express, both DPWN companies, also said yesterday that they will combine their international mail activities in Australia and New Zealand into an existing service called Global Mail Business. But wait, there's more, as Deutsche Post World Net has also acquired Casa di Spedizioni Ascoli SpA, Milan, Italy, effective Jan. 15, 2003. Ascoli will be part of the Euro Express European parcel network that is to be merged together with Danzas under the DHL umbrella in the framework of the "STAR" group.
- China Opens Wider ........
as it has issued regulations which allow foreign freight forwarding & express delivery companies to own a majority stake, of as much as 75%, in their local joint ventures. Good news for FedEx, UPS, TNT & local leader DHL with its 50-50 venture with Sinotrans.
- And Wider ........
as foreign firms that conduct commercial testing & inspections in China will be allowed to take a controlling stake in China-based joint ventures by the end of this year, an official said. By 2005 foreigners will be able to launch fully-owned enterprises in China to provide testing & certification services, said the State Administration for Quality Supervision and Quarantine. China already has more than 150,000 such service providers, which test and certify products ranging from household goods to high-tech gadgets.
- And Real Wide ........
as for the 1st time since Taiwan and the China split in 1949 after a bitter civil war, a Taiwanese airline has landed in mainland China. Over the next 2 weeks, half a dozen Taiwanese airlines will fly into Shanghai during the Chinese Lunar New Year festival.
- China Certification Ahead ........
as the American Society of Transportation & Logistics (AST&L) has signed an agreement with the China Communications & Transportation Assn. (CCTA) for certification of its members. The agreement is part of a plan to expand the Certification in Transportation & Logistics program in Asia. AST&L said as the largest association for transportation & logistics in China, and in cooperation with it's newly launched Beijing Logistics Institute, the CCTA will begin certifying members this year.
- UPS Has The Solution ........
as UPS has named Bob Stoffel as president of its "UPS Supply Chain Solutions" business. The unit provides integrated logistics, transportation & trade services around the world. Mr. Stoffel will oversee global operations for the US$2Bn unit that is composed of around 20 companies that have been acquired over the last 3 years, including Fritz Companies. The company said the UPS Supply Chain Solutions name will be rolled out globally throughout this year. UPS chairman & CEO, Mike Eskew, said: "UPS' strategy is to help customers improve their business performance by synchronizing the flow of goods, funds & information."
- Schenker Grabs Olympic Gold ........
as the Int'l Olympic Committee (IOC) has signed a long-term partnership deal with the global transportation player -- meaning that the Germany-based company is now official supplier to the IOC for freight forwarding and customs clearance services for the Olympic Games. The company said it will work with the IOC organizing committees for the Olympic Games in Athens 2004 (ATHOC), Turin 2006 (TOROC) & Beijing 2008 (BOCOG). The firm will also assign a team to focus on Olympic activities that will provide services for all major IOC meetings and sessions in addition to the actual games.
- New Vision? ........
as a new forwarder network aims to allow forwarders to cooperate on a non-exclusive basis. The Globalink network offers Internet shipment tracking & access to lower transportation rates through consolidated buying, as do most networks. However, it said its approach is "to be more comprehensive in its offerings." For instance, Globalink said members would be able to represent a major NVOCC. The forwarder network said it also provides to its members data entry for large projects or tariffs, marketing support services, production of marketing materials and a sourcing service for point of sale materials. Bill Siemens, founder of the Globalink network, said a number of firms had contacted Globalink regarding joining the network over the past several months.
- Rail Rules ........
as U.S. Customs Service is proposing that railroads transporting goods from Mexico or Canada submit manifest information 24 hours prior to departing a foreign terminal as part of the government's effort to use electronic information to sift through cargo shipments for those posing a potential terrorist threat before they reach the border. An Automated Manifest System for rail already exists and is used by most major rail carriers, but the Trade Act of 2000 will make its use mandatory by all railroads shortly after Oct. 1.
- Rail Rescues ........
as the European Commission has approved loans made by the state-owned Belgian railways to its subsidiary ABX Logistics, the major Belgian Int'l transport & logistics service provider that is in financial difficulty. The EC approved "rescue aid" in the form of 3 bridging loans to 3 companies belonging to ABX Logistics in France, Germany & the Netherlands. The rescue aid, which must be repaid in the medium term, "is intended to enable the 3 recipients to remain temporarily afloat & to avoid job losses, which should benefit all of ABX's activities," the EC said. The Brussels-based regulator said that if the ABX companies filed for bankruptcy, it would have "disastrous direct repercussions" on 7,619 jobs (4,578 in France, 2,702 in Germany & 339 in the Netherlands).
- Eurotunnel Keeps On Chunneling ........
as it had solid growth in shuttle service revenue in 2002 & continued strong growth in truck revenue. In the truck business Eurotunnel delivered strong revenue growth with higher yields & volumes. Eurotunnel achieved strong revenue growth from the truck business in 2002 through a combination of higher yields and a 3% increase in volumes. Short straits market growth was 4% for the year reflecting slightly lower growth of 3% for 4th quarter. Eurotunnel maintained its market leadership with its full year share down less than one point to 41 per cent despite having held a firm stance on pricing throughout the year. For 4th quarter, market share returned to the prior year level of 42%. High levels of reliability & punctuality were achieved throughout 2002 as a result of service quality initiatives.
- Alto! ........
as the U.S. Ninth Circuit Court of Appeals ruled that the Dept. of Transportation violated federal environmental laws by taking steps to allow trucks from Mexico full access to U.S. roads without adequately assessing how such vehicles would affect air quality. The court, which ordered the DOT to prepare an impact statement and conformity determination, issued its ruling in response to a lawsuit filed in May by a coalition of environmental, consumer and labor groups. The coalition's petition alleged that trucks from Mexico emit twice as much particulate matter & nitrogen oxides as U.S. trucks.
- Life In The FAST Lane ........
as the joint U.S.-Canada Free & Secure Trade (FAST) initiative, announced on Sept. 9, 2002, by President George W. Bush & Prime Minister Jean Chretien, is now operational at 3 major commercial crossing points. These crossings include Detroit, Michigan/Windsor, Ontario; Port Huron, Michigan/Sarnia, Ontario; & in Buffalo, New York/ Fort Erie, Ontario. U.S. Customs said FAST is expediting trade through these 3 locations, which are responsible for processing over 20,000 thousand inbound & outbound commercial trucks per day--representing more than 40% of trade between the U.S. & Canada. In mid-Jan, the FAST lane program will be extended farther west along the US-Canada border, to Blaine, Washington/Douglas, British Columbia, and to the East, at Champlain, New York/Lacolle, Quebec. To be eligible for the FAST lane, a shipment must be destined for an importer enrolled in the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT), transported by a carrier enrolled in C-TPAT, & driven by a registered driver in possession of a valid FAST--Commercial Driver Card.
- Biggest Truckstop? ........
as The (U.S.) Teamsters Union representing 90,000 drivers & cargo handlers has broken off contract talks with some of America's top truckers amid differences over healthcare costs & wages. Both the Teamsters & the trade group bargaining on behalf of LTL carriers such as Roadway Corp. & Yellow Corp. had started talks last autumn & reported steady progress with a goal of a new contract well before a March 31 expiration of a current agreement. Both sides acknowledged that close-to-the-wire bargaining in 1998, when the current pact was fixed, had allowed nonunion rivals such as the Overnite unit of railroad Union Pacific to lure away cargoes and thousands of union jobs. A spokesman in Washington for the Teamsters, said union officials were organizing a strike-authorization vote among workers at the trucking companies and expected to announce the results on Feb. 3.
- Less Roadway Corp. ........
as it has closed the previously announced sale of its Arnold Transportation Services subsidiary to a management group led by Michael S. Walters, the unit's president & CEO and private equity firm, Jefferies Capital Partners. The transaction is valued at US$55M. Roadway expects to use the proceeds to reduce debt levels & pursue additional LTL opportunities.
- C.H. Robinson Worldwide In The Squeeze ........
as it has settled the 1st of 3 previously disclosed wrongful death lawsuits stemming from a multi-vehicle accident. C.H. Robinson & a motor carrier hired by C.H. Robinson are named with others as defendants in the lawsuits, filed in Illinois state court. C.H. Robinson's insurance carriers had issued letters potentially denying coverage for some or all of the categories of possible damages. The company believes its insurance carriers subsequently failed to discharge their good faith obligation to settle the lawsuit. C.H. Robinson has contributed US$4.25M as part of a complete settlement of its liability in this lawsuit, while reserving its rights to proceed against its insurers. "An extremely unusual combination of circumstances, including insolvency of the insurance carrier for one of the defendants, led us to this point. We continue to believe we were not at fault, but concluded that it was in the best interest of the company and our shareholders to settle this case, rather than proceed to trial and risk potentially higher jury awards. We will vigorously pursue our reimbursement claim against our insurance providers," the company said. We have few facts, but this does not sound like a case for which C.H. Robinson should be held responsible.
- X-ray Makes Connection ........
as U.S. customs has seized more than 4.5 tons of marijuana hidden in a tractor-trailer that was supposedly hauling bottles across the Mexican border, largest ever at the decade-old Colombia-Solidarity Int'l Bridge. The 9,331 pounds of marijuana had a street value of US$9.3M. An X-ray scanner revealed abnormalities in the cargo, & a drug-sniffing dog caught the scent of marijuana, officials said. The marijuana was found wrapped in plastic & stuffed into 15 large cardboard boxes. The trucker's Mensa card may be revoked.
- What's In Your Container? ........
as Silicon Graphics of Mountain View, Calif. pled guilty to felony charges that it violated U.S. Commerce Dept. regulations by illegally exporting high-performance computers to a Russian nuclear laboratory in 1996. The shipper agreed to pay US$1M in criminal charges & will pay another US$182,000 to settle charges arising from the same exports to the Russian nuclear laboratory, as well as additional charges related to illegal computer exports to Israel, China, Qatar & the UAE.
- View From The UK ........
as Plimsoll Publishing's Sea Transport Analysis suggests the following:
- 21.2 - percentage of shipping companies for whom success in 2003 will be mere survival.
- 17.1 - percentage of shipping companies for whom success in 2003 will be to improve margins.
- 39.7 - percentage of shipping companies for whom success in 2003 will be to get back into the market.
- 100 - percentage of shipping analysts for whom success in 2003 will owe as much to luck as to judgment
- Thanks For The Memories ........
as Mail Boxes Etc. (MBE), a UPS company, has teamed up with Hope Enterprises Inc. for "Operation: S.W.A.K." (Sealed With A Kiss) 2003. From Jan. 20 through Feb. 14, participating MBE locations will provide free commemorative Bob Hope stationery & free 1st-class postage (37 cents) for one-ounce valentines & letters to U.S. military personnel stationed overseas or to veterans in VA hospitals. MBE is joining with Hope Enterprises Inc. to celebrate a "Year of Hope & Humor" in honor of Bob Hope's 100th birthday on May 29.
- The Party's Over ........
as Tupperware said its army of sales agents will be scrapped. For around half a century, women used to hold get-togethers in their front rooms, so-called Tupperware parties, to sell the plastic food containers. Nothing to do with transportation -- but we had to tell you. Who else would?
- Countryman & McDaniel Law Firm News ........
as this is what's happening in the LAX firm which brings you The Cargo Letter
- Cameron Roberts, Esq. ........
the new law firm partner has become President of the Los Angeles Harbor Transportation Club & will continue his teaching this semester of the Masters Degree level course in logistics at California State University at Long Beach.
- Andrew Kehagiaras, Esq. ........
settles in to his 3rd month at the firm -- a Masters in Law graduate of Tulane University in Maritime Law, he brings blue water hull experience to the firm, from a long family maritime history.
- Byron E. Countryman, Esq. ........
begins his 26th season of trust & estate planning for senior level executives in the Int'l transportation industry.
- Company Training ........
several Int'l logistics companies have already signed up for the next 1 or 2 day intensive transport & customs risk management courses offered by C & McD staff. Past users have included Abbott Laboratories, Expeditors Int'l of Washington, Inc, & UPS.
- HELP WANTED ........
We may be looking for a non-lawyer Int'l claims specialist/adjuster. Send resume & requirements.
This month, it's good to be Yellow!
- American Airlines.
Down with a 4th quarter 2002 net loss of US$529M, or US$3.39 per share. This compares with 2001's Q4 net loss of US$734M before special items, & US$798M, US$5.17 per share, after special items. AMR Corp, the parent company of the world's largest airline, added it had a net loss of US$2.0Bn before special items, & US$3.5Bn after special items last year -- the largest in airline history. For 2001, the company had a net loss of US$1.4Bn before special items, and US$1.8Bn, or US$11.43 per share, after special items.
- Arkansas Best Corp.
DOWN as net income for the full year of 2002 - after an accounting change - was US$16.8M, compared to net income of US$41.1M for all of 2001.
- Burlington Northern Santa Fe Corp.
FLAT as freight revenues of US$2.27Bn for the 4th quarter of 2002 were flat compared to Q4 of 2001.
- CMB (diversified Belgian shipping)
DOWN 41%, to 48 million Euro (US$46M), from 82 million Euro in 2001.
- Continental Airlines.
DOWN with 4th quarter 2002 net loss of US$109M, a US$1.67 diluted loss per share. The carrier said the result was a 27% improvement over its final quarter 2001 loss of US$149M.
- Delta Air Lines.
DOWN with a net loss for 4th quarter of US$36M & a US$2.98 loss per common share, which compares to net loss of US$743M for same quarter in 2001.
DOWN with loss of EUR63 million (US$67.82M) for the 3rd quarter, ended Dec. 31, 2002, compared to an operating loss of EUR76 million during the same quarter in 2001.
- Neptune Orient Lines.
DOWN as full year loss could hit a record US$335M for 2002 as exceptional items take a huge toll. The forecast of a record loss for the Singapore shipping giant comes two weeks after president & CEO Flemming Jacobs was ousted from the top post. Heads roll for this -- see our "Ocean News" reports, below.
- Northwest Airlines.
DOWN with a 4th quarter net loss of US$488M or US$5.68 per common share.
- Yellow Corp.
UP with operating revenue of US$717M, up 19% from US$600M in 2001. Operating income, excluding unusual items, of US$25.5M, representing a fourfold increase over US$6.3M in 2001.
Please click below for other sections:
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
Written from wire stories, the Associated
Press, Reuters, Hong Kong Shipping News Lloyds & other world sources.
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