Law Offices of Countryman & McDaniel
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
30 July 2003
Part 1 of 1
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."
The SARS epidemic is said to have started last Nov. in the city of Guangzhou, capital of Guangdong Province -- the very week Byron Countryman & Michael McDaniel of The Cargo Letter visited that city. SARS now gone, we've just now returned from our next Far East legal case review to have spent some days at the Glorietta Shopping Mall in central Manila -- just days before it was taken over by dissident Philippine Special Forces troops threatening to blow up the place & kidnapping the Australian Ambassador -- wiring explosives to the doors & taking American hostages last week! Do we have great timing or what? Geeez! But here are the transport events you should know about for July 2003.
The Top Story >>> Mr. Bob Hope (May 1903 - July 2003) 100 Years of Comedy & Service. Simply Irreplaceable.
To help you find what you need -- FAST -- there's now a transport search engine installed at our Cargo Law.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 website.
Our corporate sponsor &endash;- Interpool, Inc. -- named again to Forbes "Best 200 Small Companies" List -- for the 2nd consecutive year! -- www.interpool.com/Michael S. McDaniel, Editor, Countryman & McDaniel, forwarder/broker attorneys at LAX.
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 Ocean 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 "E" Section: The Forwarder/Broker World***
7. New Transport Related Legal Cases ___________
OUR "A" Section: Trade, Financial & Inland News***
1. Freight Forwarder Trade Briefs _____________
***Fighting Back ......... as orders for durable goods in the U.S. rose 2.1% in June, which was the largest increase since January, the U.S. Commerce Dept. reported last week. The increase in orders made to last at least 3 years increased to US$172.5Bn, following little change in May. Excluding transportation equipment, orders gained 1.4%, after rising 0.9%. Shipments of durable goods rose 1.3% in June after rising 0.1%. Economists expect durable goods orders to rise 1.1%, Bloomberg said. Orders for transportation equipment gained 3.9% after falling 2.1% in May, Commerce said. Bookings for motor vehicles & parts jumped 2.2%. The report also found that orders for non-defense capital goods excluding aircraft, a proxy for future business investment, increased 0.6% last month after increasing 0.5% in May.
***Hong Kong Trade On The Rise ....... as the value of total exports (comprising re-exports & domestic exports) increased by 14% over a year earlier to HK$142.3Bn (US$18.24Bn), after a year-on-year increase of 13.6% in May. Within this total, the value of re-exports surged by 16.5% to US$132.1Bn in June, but the value of domestic exports fell by 10.4% to US$10.3Bn. Concurrently, the value of imports of goods rose by 11.5% to US$146.4Bn last month, after a year-on-year increase of 9.4%. A visible trade deficit of US$4Bn, equivalent to 2.8% of the value of imports, was recorded in June, down from the corresponding deficit of US$6.4Bn in June 2002. For the 1st half of 2003, the total value of exports rose 14.7% over the same period in 2002. Within this total, the value of re-exports grew 17.2%, but the value of domestic exports shrank by 11%. Over the same period of comparison, the value of imports also increased by 13.4%.
***Canada Also Wants To Know ....... as timeframes have been proposed for Advance Cargo Reporting for goods being imported into Canada for all modes of transportation by Canada's Minister of National Revenue. Similar timeframes are also being proposed by U.S. Customs & Border Protection (CBP) -- (founded 1789, geez why did they have to change the name after 214 years?) . Under the proposals, carriers & freight forwarders involved in the importation of goods will be required to provide electronic data about the cargo being imported to Customs within specific timeframes: Rail -- 2 hours prior to arrival; air (for flights greater than 4 hours) -- four hours prior to arrival; air (for flights of less than 4 hours) --"wheel's up," at time of take off; Highway (for non-fast shipments) - one hour prior to arrival; Highway (for fast shipments) -- no advance reporting requirement; Canada Bound Marine -- 24 hours prior to lading (effective April 2004). New regulations and an implementation schedule governing mandatory Advance Cargo Reporting will be introduced later this year. See the full story.
***E-mail Your Explosive Notes ......... as the U.S. Bureau of the Census has issued a final rule that will require all Shippers Export Declarations (SEDs) for items on the Commerce Control List (CCL) or the U.S. Munitions List (USML) to be filed electronically by means of the Automated Export System (AES) starting Aug. 18, 2003. For those items regarding which the SED has been filed via AES, carriers are not required to attach a paper copy of the SED to the manifest filed with the Bureau of Customs & Border Protection upon departure. Instead, the manifest should include the transaction identification number or unique identifier to identify the electronic AES record. This number is obtained from the shipper.
***Cambodia Next For WTO ....... as on 15 July officials announced the impending accession of Cambodia to the WTO. All formalities for Cambodia's accession to the WTO are expected be completed by the 5th WTO Ministerial Conference in Cancún on 10-14 Sept. Cambodia would then ratify the agreement, becoming a member 30 days after informing the WTO that its parliament had ratified the documents. Other countries currently negotiating accession to the WTO include Bhutan, Cape Verde, Ethiopia, Laos, Nepal, Sudan, Vietnam & Yemen.
***Congo Revenue Scheme ....... as the National Shippers' Council of the Republic of Congo (CCC) has warned agents, liners, shippers, consignees & other trade that a cargo identification note (CIN) must be attached to any B/L covering cargo bound to the Republic of Congo. The Ministerial Order is applicable for all cargo originating from Asia. The CIN can only be issued by the CCC agent in the country of origin, to whom you must pay a fee. Nice try, but then again, times are tough in the Congo -- and there is that problem of arms smuggling.
***Brazilian Customs Work When They Want? ....... as personnel have decided to go on strike each Tuesday & Thursday throughout the summer, according to Expeditors Int'l. Don't we all just love the beach in summer? Ports & airports experienced service disruptions last week as almost half of the country's public sector employees went on strike. Customs officials refused to process import or export shipments unless they contained perishable goods, animals or other time critical merchandise. Well, you know work just gets too intense some times.
***Malaysia's Customs Wants To Work ....... as it is to buy 24 speedboats for its anti-smuggling patrols in a spending spree of MYR60 million (US$15.78M) aimed at curbing illegal trade. Customs will also acquire 4 more scanning machines, bringing the total to 12, to be installed at Port Klang, Port of Tanjung Pelepas, Pasir Gudang, Kuantan, Penang and ports in Sabah & Sarawak. To help combat cigarette smuggling, the "bandroll tax label system" would be used for imported cigarettes while locally produced cigarettes would have security ink marks. There are no plans for Malaysia's Customs to spend Tuesdays & Thursdays at the beach.
***Russian Rules ........ as amendments to the Russian Customs Code have introduced a number of changes to the country's customs clearance mechanism. Among other things, the code replaces the licensing of customs-related services with a registration system, and introduces special customs procedures related to the transportation of vehicles, their spare parts & equipment.
***Behind The Grass Curtain? ......... as U.S. Customs Bureau of Customs & Border Protection Commissioner Robert Bonner says the agency will step up efforts to interdict drugs at border crossings if the Canadian government approves a measure to decriminalize possession of small amounts of marijuana. Speaking at a symposium on North American trade & security at the Center for Strategic & Int'l Studies, Bonner said cross-border trade would be slowed if the agency has to inspect more people, vehicles & containers for drugs. U.S. deputy drug czar Barry Crane met with Canadian officials last week to express U.S. concern that more people will attempt to cross the border with drugs & to ask how Canada plans to prevent trafficking to the South, according to the Toronto Sun. Expect slow at U.S. trans-border crossings if this happenes.
***New Schenker Uniform ....... as it is to launch a new uniform software system for air & sea freight. The investment for this development is said to be about US$31M. The new software will replace all the current air & sea freight programs & create a uniform system. Around 5,000 Schenker employees worldwide will be using the new software in years to come. During the last 2 years, a team made up of specialists from the worldwide Schenker network has been working at the company's Essen head office to lay the groundwork for the project -- which goes by the name of "SALSA" (Schenker's Application for Logistics in Air & Seafreight). Prior to worldwide installation in 2005 and 2006, the new software will initially be implemented in several selected national subsidiaries.
***Stonepath Group Buys Again ......... as it has acquired the business of Customs Services Int'l, Inc. ("CSI"), a Miami-based, privately held Int'l freight forwarder & Customs Broker. CSI had revenues of US$15.4M for 2002. Founded in 1989, CSI has grown into one of the largest full-service International forwarding & customs brokerage companies in South Florida. Correction: Last month a typographical error resulted in our mention of one "Jed Darley" -- when the correct identification for a new Stonepath executive is none other than our good friend & subscriber -- Jed Shapiro. Our apologies.
***Follow The Yellow Roadway .........as major U.S. motor carriers Yellow Corp. & Roadway Corp. have entered into a definitive agreement under which Yellow will acquire Roadway for approximately US$966M. Yellow Corp. will also assume an expected US$140M in net Roadway indebtedness, bringing the enterprise value of the acquisition to approximately US$1.1Bn. The combined enterprise, which will be known as Yellow-Roadway Corp., will be one of the largest transportation service providers in the world, with the ability to move shipments domestically & internationally. Yellow-Roadway will also be the largest U.S.-based transportation service provider with a focus on big shipments for business-to-business customers. The combined revenue of both companies for the 12 months ending the 1st quarter of 2003 was nearly US$6Bn. A very big Yellow brick Roadway!
***More TNT In The Land of Bombs? ......... as TNT Express has entered into a partnership agreement with Baghdad's largest courier company, IKE Express, to provide door-to-door delivery services to & from Iraq. TNT Express is the 1st Int'l express company to link up with an Iraqi national operator since the lifting of UN sanctions & the partnership will provide more reliable services for customers in the region. A new daily TNT Express road service from across the border in Amman, Jordan, is now carrying documents, parcels & air freight into Baghdad with operations expected to extend to Basra as well as other Iraqi cities in the next few months.
***File Room To Pfantastic Phoenix Phenomenon ........ as Phoenix Int'l. the world's largest privately owned NVOCC & intermodal giant, has appointed Stephane Rambaud as president & COO. Mr. Rambaud began his 18-year career with Phoenix as a clerk in the Chicago import department. He was gradually promoted to supervisor, general manager, executive VP, chief operating officer and now president & COO. Very well earned congratulations to our friend Stephane!
***Fine Fellow ....... as Pacer Stacktrain's assistant VP for strategic planning, Ajay Amlani, has been appointed by President George Bush to be a White House Fellow for the year 2003-2004. Mr. Amlani will be one of just 12 Americans who will serve as White House Fellows beginning in Sept. -- the only one from the transportation industry. White House Fellows, selected for their professional accomplishment, leadership potential, commitment to public service & other attributes, typically work for 1 year as full-time paid special assistants to senior White House staff. Go Ajay!
***World Cargo Alliance Turns 500 ...... as the Miami, Florida-based global network of independent freight forwarders has enrolled its 500th member office. WCA's newest member office belongs to National Express Company, a Kuwait-based WCA forwarder that recently opened a branch office in Basrah. World Cargo Alliance will hold its 6th annual Int'll Meeting, Feb. 2004 in Bangkok, Thailand, where over 400 representatives of WCA member companies are expected to attend. World Cargo Alliance
***Big Rig Blessing ........ as fatalities in 2002 were at their lowest level since the 1st recorded statistics in 1975, according to the U.S. Dept. of Transportation's (USDOT) Federal Motor Carrier Safety Administration (FMCSA). U.S. Transportation Secretary Norman Mineta, although happy with the downward trend, re-emphasised his commitment to reducing deaths & injuries further during a meeting with NHTSA, the Federal Highway Admin. & Federal Motor Carrier Safety Admin. In 2002, truck-related fatalities decreased 4.2% from 2001 figures. The total number of people killed in truck crashes was 4,897, compared with 5,111 people in 2001. This is the 5th consecutive year for decreases in both the large truck fatality rate & fatalities in large truck-related crashes. We in the little cars thank you.
***Box Boyz ....... as a gang that used night-vision binoculars & other modern technology to steal railroad cargo has been broken up after a decade of exploits that far surpassed the James Gang and other fabled U.S. Western train robbers & outlaws. The "Conrail Boyz" stole millions of dollars of cargo, mostly consumer goods such as designer clothes. One 2001 robbery netted more than 17,000 Sony PlayStation units worth US$5M. In most of the robberies, "train jumpers" would board a slow-moving train to search for valuable cargo, said the Norfolk Southern's police force. Other gang members would pose as rail workers to find out where the train was stopping. The goods would be unloaded, then peddled on the street or in shops. Some gang members were arrested repeatedly over the years, but they avoided long jail terms because they did not carry weapons. The Conrail Boyz were the "largest single gang ever to attack North American railroads," Norfolfk Southern said, citing the size of their membership, their longevity & the value of the stolen merchandise. Authorities arrested 13 people & are searching for 11 others described as gang members. Indeed, why the the risk to rob a bank when there is -- cargo? Good work, Norfolk Southern police force.
***Reward of Two Year Supply of Yoo-hoo Double Fudge ......... as the beverage company has sought return of the Yahoo delivery van "Sweet Melissa" which was stolen on July 18 in New York City. Yoo-hoo
***Billy Takes The Slow Boat ....... as a racing pigeon that lost its way while flying from France to Britain & ended up in New York, finally reached home soil on July 2, as a passenger pigeon on British Airways. Billy the pigeon was feared dead after he failed to complete a 425-mile flight from N. France to Liverpool, England, a trip begun 3 weeks before & which should have taken 7 or 8 hours at a speed of about 50 mph. But Billy turned up some 3,000 miles off course at the New York home of a pigeon racer who identified the bird from a plastic racing tag on his leg. After Billy's application for U.S. asylum was denied, British Airways flew him free of charge to Manchester Airport, where he was briefly reunited with his owner John Warren before beginning a 31-day quarantine. Since pigeons can fly up to 600 miles a day, but need a place to rest at night, it is thought Billy landed on a ship that was headed for New York. Billy says he hated the BA food & vows that next time he will surrender to a CNN crew in Ireland.
***Weapons of Mass Destruction Are Found In Iraq! ........ as in breaking news, The Cargo Letter has just learned that the illusive Weapons of Mass Destruction have now been officially located in Iraq. This news having arrived just at the time we publish to you today, please go directly to the Website for details. The site.
2. The Cargo Letter Financial Page _
**Alaska Air Group. UP with 2nd quarter net income of US$45.2M, compared with a net loss of US$2.9M in 2nd quarter of 2002. Without the non-recurring compensation of US$71.4M received under the U.S. Emergency Wartime Supplemental Appropriations Act, the company's net income during the quarter was US$0.9M. Net loss for the 6 months ended June 30 was US$11.1M, compared to a net loss of US$88.0M during same period in 2002.
**AMR Corp. (American Airlines parent) DOWN with a net loss of US$75M for 2nd quarter.
**Boeing. DOWN with a net loss for 2nd quarter of 2003 of US$192M, on revenues of US$12.8Bn -- compares with net earnings of US$779M, on revenues of US$13.9Bn for 2nd quarter of 2002. The company will cut 4,000 to 5,000 jobs by the end of the year due to continued weakness in the commercial airline industry.
**Canadian Pacific Railway. DOWN as net income declined to US$29M in the 2nd quarter, from US$169M in 2nd quarter of 2002.
**Continental Airlines. DOWN with a 2003 2nd quarter net income of US$79M including a security fee reimbursement of US$ 111M, & a special charge of US$8M, both net of taxes.
**J. B. Hunt Transport Services, Inc. UP with 2nd quarter 2003 net earnings of US$25.1M, or diluted earnings per share of 62 cents, compared with 2002 2nd quarter earnings of US$15.5M, or 40 cents per diluted share.
**Kuehne & Nagel. UP with net income of US$61M, an improved result of 11.8% in comparison to the previous year.
**Northwest Airlines. UP with 2nd quarter 2003 net profit of US$227M compared to a 2nd quarter 2002 net loss of US$93M.
**Pilot Air Freight. UP for 2nd quarter of 2003, with record revenue of US$60.9M, an increase of 18% from 2002.
**Roadway Corp. UP with Q2 net income of $6,308,000, or $0.33 per share (diluted), compared to net income of $5,674,000, or $0.30 per share (diluted), for 2nd quarter of 2002.
**US Xpress Enterprises Inc. UP as net income for 2nd quarter was US$2.2M compared with a net income of US$931,000 in 2nd quarter of 2002.
OUR "B" Section: FF World Air News***
3. Freight Forwarder World Air Briefs _
***2002 Safest Ever ........ as last year was the safest ever for U.S. airlines, with no deaths & only 9 serious injuries due to accidents on U.S. commercial flights. According to the National Transportation Safety Board, there were 34 commercial airline accidents in 2002, but most were considered minor. The only accident designated "major" was the July 26 crash of a FedEx cargo plane at Tallahassee, Fla. The plane was destroyed, but the crew survived. The NTSB classified one 2002 passenger aircraft accident as "serious." That occurred Aug. 28 when an American West plane ran off the runway in Phoenix, injuring 10 people, one seriously. Though 2002 was the 1st in 20 years with no fatal airline accidents on U.S. commercial flights, it continues the recent trend in which accident rates have declined to very low levels.
***But Not Watching The Hen House ......... as U.S. Government investigators found that contract mechanics working for airlines used incorrect parts, improperly calibrated tools & outdated manuals at 18 of 21 aircraft maintenance facilities they visited. As a result, the U.S. Transportation Dept.'s inspector general concluded the FAA does not adequately oversee the growing number of outside contractors repairing commercial airplanes. "The vulnerabilities all relate to a lack of effective FAA oversight that needs to be improved," said the FAA Inspector General's report issued this month. The agency agrees. It has a plan to improve oversight, add more inspectors and do a better job of documenting & sharing information about repair station inspections, said FAA chief Marion Blakey. "We need to reorganize," Blakey said. For example, FAA inspectors finished 400 inspections of the in-house operations of one airline last year, but completed only 7 on its repair stations even though the airline outsourced 41% of its maintenance.
***SARS Wake ....... as China Southern Airlines said its domestic Chinese traffic is rapidly returning to pre-SARS numbers. On the week ending July 12, China Southern was serving 87% of its domestic flights with an overall load factor of 65.2% compared to the same period in 2002. Air Canada has reinstated flights on several of its Asian routes that had been reduced due to SARS. Cathay Pacific Airways is to reinstate more flights in July, taking the airline to 71% of normal capacity. Gulf Air is flying to Hong Kong daily via Bangkok again.
***DOT Clears The Way ........ as the U.S. Dept. of Transportation (DOT) has tentatively selected 6 airlines to operate new all-cargo air services between Hong Kong & 3rd-country cities in conjunction with their U.S.-Hong Kong services. Carriers selected are FedEx, UPS), Evergreen Int'l Airlines, Kalitta Air, Northwest Airlines & Polar Air Cargo. If the DOT's show-cause order is made final, all carriers filing applications will have a share in the new opportunities. With the new services, U.S.-carrier all-cargo flights between Hong Kong & 3rd countries will rise from 8 weekly round-trip flights available prior to last year's agreement up to a new weekly total of 48.
***The UPS View ....... as it believes the new U.S.-Hong Kong air-service rights recently announced by the U.S. Dept. of Transportation (DOT) will generate massive financial gains for carriers in addition to opening new trade routes. UPS has been tentatively awarded 6 immediate round trip flights to Clark Philippines from Hong Kong. And on Oct. 28, 6 flights from Hong Kong to Cologne Germany, via Mumbai or Dubai. UPS management believes the new routes are expected to generate US$2.4Bn over the next 3 years just in additional revenue for U.S. air cargo carriers. UPS CEO Mike Eskew added that the pact's greatest significance lies in faster & more efficient movement of goods. He said that since winning direct air rights to China in 2001, UPS China's annual revenue more than doubled.
***Philippines Open? ....... as it may have to open its skies to U.S. carriers starting in Oct, when its existing air services agreement with the U.S. expires. Foreign Affairs Secretary Blas Ople said in a statement last week that a Philippine panel failed to secure an extension of the air agreement which now restricts frequency, capacity & destinations of flights by carriers from both countries. "We were interested in deferring for 15 years the lifting of these restrictions," Ople said. "We were willing to consider any reasonable conditions that the U.S. might want in exchange for agreeing to our proposal. However, the counteroffer of the U.S. was too onerous." In exchange for keeping the flight restrictions, the U.S. wanted rights allowing American cargo carriers to operate in the country as if they were Philippine carriers. That would allow U.S. cargo carriers to fly to other destinations using the Philippines as a base of operations. Ople said this would have qualified U.S. carriers as public utilities, an industry that is restricted by Philippine laws to Filipinos. Local airlines are wary of an open skies arrangement with the U.S., whose bigger carriers could pose stiffer competition & further erode the profitability of local carriers.
***FedEx Buy Back ....... as it is to repurchase up to 5 million shares of the company's common stock. These shares augment the 3.1 million shares remaining under the existing repurchase program. FedEx currently has 298 million shares outstanding.
***Astar Is Born ........ as John Dasburg, chairman & CEO of DHL Airways, and 2 other American investors have completed the acquisition of the airline & are operating it under the new name Astar Air Cargo. DHL Airways said in April that new CEO Dasburg was leading a group to buy the company as part of an effort to assuage the U.S. Dept. of Transportation, which is investigating whether DHL is properly controlled by U.S. citizens. A holding company for parcel delivery company DHL Worldwide Express owned a minority stake in DHL Airways, but Worldwide Express is part of a larger DHL network owned by German postal & logistics conglomerate Deutsche Post. DHL said in late May it would change its name to Astar immediately following the sale of the cargo charter airline.
***Continental Airlines Says Not So Fast ........ as it is to defer firm deliveries of 36 Boeing 737 aircraft originally scheduled to be assigned in 2005, 2006 & 2007. This will impact on Continental's fleet size, which is expected to decline slightly through 2005 & remain flat through 2007, assuming there are no further retirements of aircraft beyond those in the carrier's current fleet plan. Continental expects that the deferred aircraft will be delivered in 2008 & beyond.
***Singapore Airlines Cuts ...... as it has laid off 410 other Singapore-based employees, comprising office staff, airport workers & engineering personnel. The redundant staff represent 1.5% of the SIA Group's total staff in Singapore. Other moves included deferring discretionary spending, freezing recruitment, asking management to accept wage cuts of up to 27.5%, & introducing compulsory no-pay leave for cabin crew.
***KLM Cuts More ....... as the line said on June 25 that it may cut as many as 4,500 jobs, about 50% more than announced in April, in a bid to reduce costs by US$745.48M a year. The airline said in statement that it was looking to implement staff cuts when its winter schedule commences in Oct. For those left, a pay cut is proposed.
***Thai Airways Int'l Raises ........ as it is looking to raise US$436M through a share offering in Nov. & will issue 300 million new shares to the public. Funds raised would be used to invest in the carriers facilities at the new Suvarnabhumi airport & to buy new aircraft. The Stock Exchange of Thailand has gained nearly 40% this year, making it the best performer in Asia & this has prompted the airline to make its move. Thai Airways plans to cut state ownership to 70% from 93% through selling shares to the public.
***United Cargo Crash ........ as cargo ton system miles in June dropped a whopping 22.2% compared to June 2002 while cargo ton miles for freight fell 26.8% year-on-year.
***Lufthansa Cargo's New Apple Home ...... as it has moved to a new cargo terminal at New York's JFK Int'l Airport. Cargo Building 23, one of the most technically advanced facilities in the world. The terminal is part of the largest cargo project in the airport's 54-year history & was built at a cost of US$161M. As the main tenant of the new facility, Lufthansa Cargo has an option to take over the remaining area in 5 years' time.
***Lufthansa Helps "Ride Home" ....... as to mark the 100th Anniversary of Harley-Davidson, Lufthansa Cargo is transporting 140 of these chrome bikes to the U.S. The total value of this unusual cargo: about EUR2.8 million (US$3.2M). The highlight of the festivities will be the anniversary parade on August 31 in Milwaukee, Wisconsin, which is home to the Harley-Davidson Motor Co. About 200,000 Harley fans with their high-horsepower machines are expected. The event will be preceded by the Harley-Davidson 100th Anniversary Ride Home involving thousands of bikers riding across America to Milwaukee. One of the routes is the legendary Route 66. Lufthansa Cargo is contributing to the Ride Home by transporting bikes to various destinations in the U.S. Most of the Harleys will be flown to Chicago, Denver & Los Angeles, but some will also be airlifted to New York, Atlanta & San Francisco. Transportation History: 100 years of Harley - Davidson.
***easyJet Quits ........ as it will stop carrying cargo at the end of Aug. & concentrate on being a passenger-only airline. The move ends easyJet's arrangement whereby it continued "Go's" cargo business for a year after the merger. The company said that it had became clear that the aim of the new easyJet would lie in providing low cost, point to point passenger travel. Yes, perhaps now they will fix those seats.
***Air Freight Asia Conference & Exhibition ....... as for 2004 it will again be staged in Bangkok, Thailand, organizers said. The 11th Air Freight Asia event will take place at the Miracle Grand Convention Hotel in the Thai capital from Feb. 17-20. Thailand was the host country for the event in 1996. Air Freight Asia 2004, which is organized by Payload Asia, a trade magazine for the air freight industry in the Asia-Pacific and Middle East region, has been held every other year at various locations in the Asian region since 1986, including Singapore, Hong Kong, Sapporo, Bangkok, Kuala Lumpur & Seoul.
***Flying Fool ......... as this amazing film clip must be seen to be believed (requires Quicktime).
***Flying Fool ........ as an off-duty Singapore Airlines steward took off all his clothes & threw the contents of his wallet around the cabin last week as stunned passengers on a flight from Australia looked on, Singapore's Straits Times reported. The 31-year-old man had been traveling as a passenger on the flight from Perth in Australia's west to Singapore on July 11. An airline official said the man has since been placed on medical leave. He could be offered an executive position.
OUR "C" Section: FF World Ocean News***
4. FF World Ocean Briefs***
***Maritime Transportation Security Act -- Blasted ....... as the former chairwoman of the U.S. Federal Maritime Commission (FMC), Helen Bentley, has called on the U.S. Congress to reconsider pending legislation that requires private-sector shipping terminal owners & the nation's seaports to absorb nearly all of the costs involved in a massive security overhaul of America's maritime industry. "Congress gave the airports more money than they knew what to do with. Then they turn around and give the maritime industry a boatload of unfunded mandates, which are nothing more than taxes in my book, and a few million here & there," said Ms. Bentley. "The Maritime Transportation Security Act, now working through Congress, is already 700 pages long. And it could be 2,000 pages in length when finished. This bill contains page after page of rules & regulations soon to be imposed on the maritime industry," she said. Ms. Bentley said the bill could cost as much as US$15Bn to implement over 10 years. Official estimates are now US$8Bn.
***It's Not Disney -- Calling The Navy ....... as pirate attacks worldwide hit record numbers in the 1st half of 2003 with the heaviest violence in the waters of Indonesia & Bangladesh, the Int'l Maritime Bureau said in a report released by its Kuala Lumpur-based Piracy Watch Center. The shipping industry suffered 234 attacks from Jan. through June this year, up 37% compared with 171 incidents during the same period in 2002. This was the 1st time in more than a decade of the bureau's record-keeping that more than 200 pirate attacks were recorded in the first 6 months of any year. Indonesia's waters remained the world's most dangerous. The sprawling Southeast Asian archipelago suffered 64 attacks in 6 months, far outstripping the next worst &emdash; Bangladesh with 23 attacks. India & Nigeria followed with 18 each. Bandits who once relied on knives & crude weapons were becoming more organized & better equipped, the Maritime Bureau warned. The number of attacks using guns climbed to 53 this year compared to 31 in the 1st half of 2002. Sixteen seafarers were killed in attacks, mostly in Bangladesh, the Philippines & Indonesia &emdash; almost tripling the 6 casualties reported in the same period last year. Injuries surged from 21 to 52, & hostages taken nearly doubled to 193. IMB Director Capt. Pottengal Mukundan urged affected countries to boost surveillance so that pirates could be captured & prosecuted. Where is the Navy?
***NVOCCs Demand Service Contract Parity ........ as a group of 3PL firms & NVOCCs wants the U.S.'s ocean transportation tariff structure reformed. "Tariffs in ocean shipping play a minimal commercial role, but yet are a substantial expense, and expose all carriers, including ocean carriers, to substantial regulatory risk," the NVOCC-Government Affairs Conference (NVOCC-GAC) said in a statement issued after its July 9 meeting in Washington. Tariff publishing was maintained for the U.S. ocean shipping business under the 1998 Ocean Shipping Reform Act (OSRA). The FMC enforces the statutes of the law. "We believe that the FMC has the ability to exempt certain tariff publication requirements, and that most of the industry segments would be supportive," said the NVOCC-GAC. It was also decided at the group's meeting to pursue so-called "service contract parity" for NVOCCs. OSRA only allows vessel operators to enter confidential service contracts with shippers. "It doesn't make sense that a company undertaking to perform turnkey services is not legally competent to enter ocean contracts on a confidential basis," the NVOCC-GAC said. "This is even more important now when some of the larger logistics firms are ocean carrier owned." "We need to change the regulatory infrastructure to meet the requirements of the times," the group added. The NVOCC-GAC members include Airborne Express, Menlo Logistics (Emery), DSL Star Express, UPS Supply Chain Services, DHL-Danzas, NACA Logistics Group, Shipco Transport, CaroTrans Int'l, Eagle Global Logistics, OEC, & APL Logistics.
***Work On "New" COGSA Continues ....... at a recent meeting in Vienna of the UN Conference on Int'l Trade Law (UNCITRAL), a delegation from the U.S. State Dept. presented its final position paper on reforming Int'l law pertaining to the Carriage of Goods by Sea. The U.S. position paper proposes that ocean carriers be permitted to "opt out" of legal limits of liability by setting lower limits in confidential service contracts with their customers. The present US$500 per package limit of liability under the U.S. Carriage of Goods by Sea Act (COGSA) is mandatory & cannot be reduced by private contract. The Transportation Intermediaries Assn. argues the "opt-out" provision would place NVOCCs at a substantial disadvantage, since NVOs cannot execute confidential service contracts with their customers. "NVOs also believe the U.S. position is supported mainly by the large ocean carriers who would benefit from it, and who, they feel, have played a strong behind-the-scenes role in drafting the U.S. position paper," said Michael S. Brown, regional VP of Avalon Risk Management Inc. UNCITRAL's full Working Group III will meet in Vienna in Oct. and in New York next March to complete the final text of a draft instrument for an Int'l convention on harmonizing cargo liability rules.
***More Pacific Boxes ....... as vessel capacity supply by ocean carriers on the transpacific container trade has increased by 13% since April, or 27,000 TEU a week, according to a report released by ComPair Data Inc., a global ocean shipping research & database provider. Weekly eastbound transpacific capacity amounted to about 252,000 TEU on July 1, as compared to 223,000 TEU on April 1 of this year and 225,000 TEU in July 2002. The substantial addition of capacity means that carriers now provide an annual one-way capacity of more than 13 million TEU a year in the transpacific trade. Carriers have added 10 weekly transpacific services in the last 3 months. Of these, 3 were new all-water Asia/US east coast services & one was a direct Asia/US Gulf Coast link, the July report said.
***SA CSI ........ as the Bureau of Customs & Border Protection (CBP) has announced that the Government of South Africa signed a declaration of principles to join the Container Security Initiative (CSI). The Government of South Africa is planning to station customs personnel in the U.S. as CBP makes preparations to deploy a team of officers to the port of Durban. More Study.
***U.S. & Canada A Bit Short ....... as they have an agreement to share "Short Sea Shipping" information and experience. Short Sea Shipping will help ease freight transportation congestion and improve air quality by encouraging the movement of cargo and passengers by water over short distances along coastlines, to and from nearby islands, or within lakes & river systems. The Memorandum of Cooperation (MOC) will facilitate increased transportation productivity, and energy efficiency by applying advanced ideas & concepts to Short Sea Shipping. More Study.
***Ship Trap ......... as more than 7,000 ships are stranded in Grand Canal in east China's Jiangu Province due to severe flooding in Huaihe River, resulting in daily economic losses amounting to millions of U.S. dollars. The 1500 year old canal, which starts from Beijing & ends in Hangzhou, capital city of east China's Zheijang Province, is an important waterway crisscrossing the Huaihe & Yangtze River in Jiangsu. On July 10, local water transport authorities stopped navigation on river for safety of ships, because flooding in Huaihe had caused water level in canal to surge rapidly, stranding ships that were heading for the Yangtze. Authorities keeping order in canal & helping stranded sailors with daily necessities. Expect container delivery delays from this region as problem may continue for another week or more.
***Count Us Out ......... as Sinotrans Container Lines Co., Ltd. (SINOTRANS) has petitioned the FMC for a limited exemption from the tariff publishing requirements of Section 9 of the Shipping Act of 1984. SINOTRANS seeks the exemption so that it can lawfully reduce rates to meet or exceed the tariff rates of other ocean common carriers on 1 day's notice. Comments on the petition should be submitted no later than Aug. 8, 2003. More Study.
***Conference Suspended ....... as carriers of the United States Australasia Agreement have suspended the conference role of their agreement until Dec. 31. In a notice to the U.S. FMC, the carriers said they had amended their cooperative agreement, which would now permit "certain limited activities to continue." A year ago the carriers ended the revenue pool mechanism of the agreement. The Agreement's membership, which includes most of the carriers in the direct trade between the 2 regions, comprises P&O Nedlloyd; Australia-New Zealand Direct Line and Contship Containerlines, both owned by CP Ships; Hamburg Sud, the parent company of Columbus Line; Wallenius Wilhelmsen Lines; & CMA CGM. Despite the suspension of the conference, a discussion agreement called the United States Australasia Discussion Agreement continues to operate in the trade.
***Fixing An Oops......... as the FMC is amending its regulations on electronic filing of service contracts for ocean transportation. The amendment will allow authorized persons to correct, within 48 hours, an original service contract filing or amendment that is defective due to electronic transmission errors.
***So, There You Are ......... as the U.S. Emergency Personal Locator Beacon (PLB) System has become operational nationwide. This advanced system includes global positioning system (GPS) technology making it easier for NOAA satellites to relay accurate locations to rescuers. PLBs are to be registered with NOAA prior to being placed into operation. More Study.
***Surcharging The China Goods? ......... as California Congressman Dana Rohrabacher has introduced federal legislation allowing ports to set container fees to pay for infrastructure improvements. Rohrabacher says he introduced the bill, which has yet to be assigned a number, on the basis that those who benefit most from the improvements are those shipping goods into the U.S. As proposed, any U.S. port interested in levying the fee would set the rate & collect it.
***M/V Hanjin Pennsylvania A Phoenix?........ as the containership so badly ravaged by fire last Nov. that it was written off as a total loss, could be back in service early next year. But its repair is considered highly controversial by the original owning company, which was under the impression that the 4,389 TEU vessel was to be scrapped. Instead, Hanjin Pennsylvania has been purchased by Zodiac Maritime Agencies & is being rebuilt. Following an explosion last Nov. off the coast of Sri Lanka in which 2 sailors died, the ship was declared a constructive total loss & sold for scrap. Hanjin Pennsylvania was taken over by Chinese Breakers, a holding group to 3 companies, at the end of March, under a contract which allegedly says that the ship has to be scrapped. In mid-June, the ship left Singapore in tow for demolition -- but now may have a different fate. The original purchase price from Hanjin Heavy Industries shipyard was US$44.7M. Please see our quite amazing "Photo Feature" --- Indeed, how could this vessel ever sail again?
***Building Again ....... as Kvaerner Philadelphia Shipyard christened its 1st containership ship on July 12, 2003. The day marked a historic milestone - the 1st ship to be built in Philadelphia in 34 years, & the 1st of its kind to be built in the U.S. since 1992. The M/V Manukai, which means "bird of the sea," is the 1st of 2 for Matson Navigation Co. A thorough review carried out in connection with the commissioning of the ship has revealed higher costs & lower productivity than previously expected. Delivery of the ship has been delayed for a month, & costs are estimated to be higher than previously reported.
***Building No More ........ as competition from subsidized shipbuilders around the world & a lack of orders at home has sunk Canada's largest shipyard. Saint John Shipbuilding, which had been idle for 3 years as its owners lobbied the federal government for a national shipbuilding policy, was formally closed at the end of June. The move will force 600 employees to look for other jobs. It also leaves Canada with only one shipyard, located in Levis, Quebec, capable of building ships to replace the aging fleet of the Canadian Navy.
***Oily Marriage ........ as Neptune Orient Lines Limited (NOL) & Malaysia Int'l Shipping Corp. (MISC) have finalized the sale & purchase of American Eagle Tankers (AET), NOL's wholly owned crude oil tanker company, for US$445M.
***Green Hands ........ as an U.S. federal indictment has been filed charging Greenpeace, Inc. with boarding a vessel before its arrival in port. If convicted, Greenpeace, Inc. faces a maximum penalty of 5 years' probation and a fine of US$10,000. The indictment charges that on April 12, 2002, Greenpeace conspired with its members & employees to place 2 members onboard the M/V APL JADE as it entered the Port of Miami. Six members & employees of Greenpeace, Inc. have already been convicted of boarding the vessel before its arrival in port. More Study.
***BIMCO Mocked ....... as the Baltic & Int'l Maritime Council, an association of shipowners & ship managers, will sponsor a mock arbitration in New York Sept. 30 as part of an all-day seminar at the Southgate Tower Hotel. The Society of Maritime Arbitrators Inc. will assist BIMCO in presenting the mock arbitration. Another part of the seminar will discuss who loses when a ship arrives late in port & then loads late. Registration deadline Sept. 12. This is an event YOU should attend. More Information.
***Come On Down .......... as the Center for Seafarers' Rights (CSR) of the Seamen's Church Institute of New York & New Jersey has formally protested the elimination of the personal appearance waiver for visa applicants by the U.S. State Dept. The ship's operators will now have to bring the entire crew to a consular office in order for the seafarers to receive the crewmember D-1 crew list visas required for shore leave in the US.. In Dec. 2002, the U.S. State Dept. announced its intention to eliminate crew list visas.
***The Big Bucks? ......... as a Subcommittee of the Joint Maritime Commission (JMC) of the Int'l Labor Organization (ILO) has agreed to extend the validity of the current ILO minimum monthly wage for seafarers of US$465 to 31 Dec. 2004. That figure became applicable on 1 Jan. 2003. It also agreed to increase this minimum wage to US$500 effective 1 Jan. 2005. Ten nations, including the Philippines, Indonesia, China, Turkey, the Russian Federation, India, the U.S., Ukraine, Greece & Japan supply almost 60% of the world's seafarers.
***FMC Revoked 13 OTI Licenses ....... as they failed to maintain bonds. The firms are A.G. Int'l Freight Forwarding of Staten Island, N.Y.; A.T.M.C. in Seattle; America First Int'l of Miami; Balor Marine Corp. in Spring, Texas; Beckers Int'l Corp. in Miami; Caribbean Shipping Services of Jacksonville, FL.; E.I.B. Brokers in Miami; Eagle Transportation Services of Gainesville, GA.; Eastern Trans Line in Habrouck Heights, NJ; Int'l Equipment Logistics of Hillside, NJ; Namgene Paik in Los Angeles; Neville Johnson of St. Albans, NY; and Deborah S. Witte in Cross, SC
***The Biggest Has Landed ........ as Overseas Container Line's M/V OOCL Long Beach, one of the world's 2 largest container ships with a capacity of more than 8,000 TEU, has made its maiden call at the Port of Long Beach -- docking at Long Beach Container Terminal, a Pier F. The OOCL Long Beach is among a new generation of 8,000 TEU vessels that have leapfrogged a generation of 6,600 TEU ships that made their 1st calls to Long Beach only 4 years ago. The newly built OOCL vessel is the 2nd of 10 8,063 TEU "SX-class" vessels that the Hong Kong-based company will take delivery of during the next 3 years from shipbuilder Samsung Heavy Industries of South Korea.
***Midway Home ....... as on July 8, 2003, acting Secretary of the Navy Hansford T. Johnson announced his intent to award USS Midway to the San Diego Aircraft Carrier Museum --the capstone of an 11-year campaign to bring Midway to San Diego for its final tour of duty. Late in Oct. 2003, Midway will return to San Diego, hopefully in time for at least a portion of Fleet Week activities. In Spring, 2004: Midway will "deploy" as naval aviation museum, memorial, education center and visitor destination, via one of the most memorial grand opening "launches" ever seen in San Diego! Now comes the final leg of Midway's 58-year odyssey, an unparalleled journey that began only a week after the end of WW II. Midway
***This Month in U.S. Navy History
*1802 - Frigate Constellation defeats 9 Corsair gunboats off Tripoli.
*1812 - Frigate Essex captures British brig Leander.
*1866 - Rank of Admiral created. David G. Farragut is appointed the 1st Admiral in the U.S. Navy.
*1912 - First airborne radio communications from naval aircraft to ship (Lt. John Rodgers to USS Stringham).
*1912 - First specifications for naval aircraft published.
*1934 - First President to visit Hawaii, Franklin D. Roosevelt, reaches Hilo on board USS Houston (CA 30).
*1943 - Launching of USS Harmon (DE 72), first ship named for an African-American.
*1943 - German submarine shoots down K-47, the 1st & only U.S. airship lost during WW II.
*1948 - President Harry S. Truman orders desegregation of the Armed Services.
*1954 - Three aircraft from USS Philippine Sea (CVA 47) shoot down 2 Chinese fighters that fired on them while they were providing air cover for rescue operations for a U.K. civilian airliner shot down by a Chinese aircraft.
*1958 - USS Nautilus (SSN 571) departs Pearl Harbor for 1st submerged transit of North Pole.
*1993 - Sarah Deal becomes first female Marine selected for naval aviation training.
5. The Cargo Letter Cargo Damage Dispatches
**Back By Popular Demand**
We're sorry, but there were so many sinkings, explosions, pirate attacks, fires, cargo mishaps, battles on the water & other disasters at sea that we do not have room to print even the highlights this month. Many people lost their lives at sea this month!!
But you can read all this month's disaster news at our special Internet web feature which provides full details of each event -- our Vessel Casualties & Pirate Activity Database. Bookmark the site and visit every day! Updated twice daily.
SPECIAL NOTE: Please view the dramatic new pictures at our special "Gallery of Cargo Loss" website feature. Have you seen our new "Denise & Polargo?"
NOTE: The historic dangers of carriage by sea continue to be quite real. Shippers must be encouraged to purchase high quality marine cargo insurance from their freight forwarder or customs broker. It's dangerous out there.
OUR "D" Section: FF in Cyberspace***
6. The Cargo Letter "Cyber Ports Of Call"
Here are our suggested world wide web sites of the week for your business, your information and your amusement..............
California Trade Report
California Transportation Report ......... a comprehensive agenda for creating a strategic supply chain.
China Official Foreign Investment Website
E-Supply Chain Report
Freight Forwarders Warned of New Scam
Hawaii Integrated Maritime Information System ......... provides users with a one-stop-shopping location for the automated collection, analysis, and dissemination of static and real-time harbor management & port security information for all Hawaiian ports. Vessels may use site to input their Advance Notice of Arrival. From U.S. Coast Guard & State of Hawaii.
Logistics Management Magazine
Methods To Improve U.S. Business Performance
Montreal Protocol 4 ......... countries which have ratified.
The Quest ........ the First Class Int'l Transport Newsletter. Electronic presentation of cargo information.
The Shipbuilding Report ...... "Faster Phase-Out for Single Hull Vessels"
Stupid Security Competition
Supply Chain Management: Spending Down Worldwide ....... SCM revenue dropped from US$2.7Bn in 2001 to US$2.1Bn in 2002. See the "Big Picture" graph from Gartner Dataquest
U.S. Food & Drug Administration ........ ensuring the safety & security of the U.S. food supply.
U.S. Homeland Security Industry Assn.
U.S. Dept. of Transportation's Maritime Administration -- Inland Waterways Research Project.
Emirates SkyCargo ........ now in Russian.
Trailer Search ......... buying & selling.
Vehicle Stopping System Offers Deterrent as Illegal Smuggling Across U.S.-Mexican Border Increases
2nd Container Shipping Security Conference .......... Sept 9-10, 2003, Stuurboord Conference Center, Antwerp.
13th Annual Int'l Air Cargo Conference .......May 10-12, 2004, Beau Rivage Casino & Hotel in Biloxi, Mississippi. Sponsored by Gulfport-Biloxi Int'l Airport,
14th Annual Break-bulk Conference & Exhibition ....... Sept. 25-27, 2003, New Orleans Marriott in New Orleans, LA.
2003 National Maritime Conference ......... sponsored by American Salvage Assn., Sept. 9-11, 2003, Hyatt Regency, Crystal City Hotel, Crystal City, VA.
Comite Maritime Int'l 38th Conference ........Vancouver, Canada May 31st to June 4th, 2004, Westin Bayshore Resort & Marina. The conference will attract over 300 maritime industry experts, including ship operators, bankers, insurers, adjusters & lawyers.
First Ever Orange County Transportation Club Golf Tournament ........ Fri., Aug. 22, 2003 12 Noon, Green River Golf Club-Riverside Course, CA
Int'l Chemical & Oil Pollution Conference & Exhibition 2003 ........ 27-29 Aug. 2003, Shangri-La Hotel, Singapore.
Int'l Trade Fair ......... 10-12 Sept. 2003, Cancun, Mexico.
L.A. Harbor Transportation Club .......6PM, Thurs. Aug. 7th, The Reef Restaurant, Port of Long Beach, CA. Speaker, Carol Coy, Air Quality Management District, Deputy Executive Officer.
Marintec China 2003 .......... 2- 5 Dec, 2003, Shanghai New Int'l Expo Center, Pudong, Shanghai. Both Marintec China & Port China will be held concurrently at Shanghai -- world's 4th busiest port & center of the China's maritime industry!
Seatrade London Int'l Maritime Convention ........16-18 Sept. 2003, ExCeL, London, UK
Supply Chain Excellence 2003: Procurement & Inventory Strategies Symposium .......... Oct. 17, 2003, Chicago.
World Customs Exhibition On New Technologies ....... Sept. 22-24, in Budapest, hosted by Hungarian Customs at direction of the World Customs Organization.
World Maritime Technology Conference ....... 17 - 20 Oct. 2003, San Francisco.
Auction of The Disney Sign
Chrysler Million Dollar Film Festival.
OUR "E" Section: The Forwarder/Broker World***
7. New Transport Related Legal Cases _______
Texas A&M Research Foundation Vs. Magna Transportation, Inc.
5th Circuit U.S. Court of Appeals
July 9, 2003
Special Damages For Cargo: For special damages to be recoverable for breach of a maritime contract, the damages must be foreseeable. Plaintiff oceanographic research institute contracted with defendant transportation company to have specialized research equipment shipped to South Africa to meet a chartered research vessel. The transportation company was aware of the time-sensitive nature of the shipment, having worked with plaintiff previously. The research equipment failed to arrive on time. Some research was not performed. Some research was delayed & additional expenses incurred while some of the research equipment was transported by alternative means. Plaintiff sued for breach of contract, asserting damages that included, among other things, the additional expenses & the cost of the vessel charter for the 3 days in which no research could be performed. The court held that it was foreseeable that plaintiff would incur additional expenses in transporting the equipment, but that, on the facts, it was not foreseeable to defendant that plaintiff would be totally unable to do oceanographic research for 3 days due to the delayed arrival of certain equipment.
Malaysia Int'l Shipping Corp. Vs. Visa Australia Pty Ltd.
Court of Appeal of Victoria, Australia
30 May 2003
Bills of Lading: Terms of its own bills of lading left a Malaysian carrier without recourse recently when an Australian appeal court held that the carrier's only possible claim for the late return of its containers was against a 3rd party that was not contractually bound to it. The vessel in this case, owned by the Malaysian Int'l Shipping Corp. Berhad (MISC), had carried goods to Melbourne & Sydney in its containers. Under Clause 13(4) of the standard B/L issued by the carrier, if its containers are unpacked at the merchant's premises, the merchant is responsible for returning the empty containers, with interiors brushed & clean, to the point or place designated by the carrier within the time prescribed. The 2nd part of the clause stated that if a container was not returned within the prescribed time, "the merchants shall be liable for any demurrage, loss or expense which may arise from such non-return." The term "merchant" was defined in Clause 1 as including "the shipper, holder, consignee, receiver of the goods, any person owning or entitled to the possession of the goods or of this bill of lading and anyone acting on behalf of any such person."
CONTENTIONS: The parties did not dispute that the consignee, a forwarder in Australia, had not opened the containers and had simply forwarded them to its clients. The forwarder's clients did not return the containers to the carrier on time. The carrier sought compensation from the forwarder for the losses & expenses caused by the delays. In its defense, the forwarder said that because it had not opened the containers at its premises but had instead delivered the containers to its clients who had opened the containers at their premises, it was not liable under clause 13(4). The carrier argued that liability for demurrage, loss or expense arising from the failure to return the containers on time was imposed on all or any of the persons answering the descriptions contained in the definition of 'merchant' in clause 1. The trial judge in the Supreme Court of Victoria held that under clause 13(4) it was the merchant at whose premises the container was unpacked that was liable, which, in this case, was the forwarder's customer.
THE JUDGE: Rejected the carrier's argument that because of the plural, "merchants", in the 2nd part of Clause 13(4), anyone falling within the description of "merchant" in the definition was liable. The judge said the plural, "merchants," was another one of the many typographical errors that were found in the B/L.
The fact that liability could not be enforced against the forwarder's customers (as they were not privy to the contract of carriage between the carrier& the forwarder) did not compel a different construction of the clause, said the judge. The carrier appealed to the Court of Appeal of Victoria but lost.
ON APPEAL: The carrier argued the carrier's case differently -- that the opening words of Clause 13(4), namely, that which referred to the premises where the containers were unpacked, together with the definition of "merchant" in clause 1, were sufficiently broad to include unpacking the containers at the premises of the freight forwarder's clients. The remainder of clause 13(4) was concerned with the freight forwarder who was contractually bound to return the empty containers after cleaning them & therefore became liable if that obligation was not met by its clients, argued the carrier. However, the Court of Appeal held that the words "merchant" & "merchants" wherever they appear in Clause 13(4) only include those persons falling within the definition in Clause 1 who are also parties to the contract of carriage. It is not possible to say that the word "merchant" when it 1st appears in Clause 13(4) refers to anyone covered by the definition & then takes on a more limited meaning in the 2nd part of Clause 13(4) as referring only to those bound by the bills of lading, said the court. "The (forwarder's) customers were strangers to the contracts of carriage," said the Court of Appeal, which stressed that liability under Clause 13(4) depended only on where the containers were unpacked, and this was not fulfilled to make the forwarder liable.
Written from wire stories, the Associated Press, Reuters, Hong Kong Shipping News, Lloyds & other world sources.
The Cargo Letter Correspondents:
Michael S. McDaniel Esq, Editor (Countryman & McDaniel)
David Schuchman -- Interpool Corp. -- Webmaster of The Cargo Letter Archive
Cameron W. Roberts, Esq. (Countryman & McDaniel)
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