Law Offices of Countryman & McDaniel
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
31 October 2004
Good Sunday Evening from our Observation Deck......overlooking the officially designated "Cargo City" area and...... Runway 25-Right, at Los Angeles International Airport, voted "Best Cargo Airport in North America." Here's what happened during Aug. 2004 in the supply chain.
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! -- http://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 ___________
Back To Main Page
OUR "A" Section: Trade, Financial & Inland News***
1. Freight Forwarder Trade Briefs _____________
***78th FIATA World Congress A Success ........ as the South African Assn. of Freight Forwarders hosted the "World Cup" of 3rd party logistics this month when the Int'l Federation of Freight Forwarding Associations gathered the forwarding associations of over 70 nations in the fantasy world of the The Palace of The Lost City, in Sun City (built in an ancient volcano), South Africa.
Amidst the jungle splendor, safari excursions & monkeys racing into hotel rooms to steal anything organic -- high points included the Airfreight Institute where the presentation of Robert Donald, Esq.,former IATA General Counsel, advanced the provocative question of whether IATA may be disintegrating. Mr. Donald observed that, "Some airlines are not currently pleased with IATA which undertakes certain activities not particularly focused on representing the airlines." He added,"If the pace of the last few years continues, there may be no more IATA in its present form." The Airfreight Institute also noted that the Montreal Convention of 1999 has now been ratified by 54 nations toward replacing the Warsaw Convention of 1929 & its protocols. Mr. Donald attended the Montreal Convention debate sessions back in 1999 which were mainly designed to address passenger issues. Only then did Donald then became aware that the Montreal Convention participants didn't understand airfreight issues when proceeding to adopt all cargo provisions of Montreal Protocol 4 within the new Convention -- without further discussion & change. Thus, the need for upgrade & questions concerning the 1976 drafted Montreal Protocol 4 may linger in the industry for many years.
FIATA Contributions From The United States -- Before a packed session of the World Congress, on Sept. 22, Mr. Matthew Zehner, V.P. Surety of Roanoke Trade Insurance Services led an all star panel, including the Director of the Canadian Border Security Agency in presenting current industry security initiatives in the post 911 environment. Michael S. McDaniel, Esq. of The Law Offices of Countryman & McDaniel attended as a Member of the FIATA Board of Legal Advisors and addressed the Regional Forum of The Americas, as did Mr. Kevin Sarsfield, Region V.P. of Avalon Risk Management.
The 79th FIATA World Congress will convene next Sept. 2005 at Moscow. The Cargo Letter has learned that after 4 years of planning by the Freight Forwarders of The Russian Federation -- the Gala Dinner will be held inside the Kremlin! Wow!
***UPS Steps Ahead....... as the world leader has made another major acquisition in the Int'l logistics industry with purchase of Menlo Worldwide Forwarding Inc., a subsidiary of CNF. UPS will pay US$150M in cash & assume about US$110M in long-term debt for the Palo Alto-based forwarder & customs broker. Menlo Worldwide Forwarding, which had US$1.9Bn in worldwide gross revenues in 2003, will further expand the forwarding, trade compliance & customs brokerage business of UPS, initially built after the acquisition of Fritz Cos. in 2001. Together the companies account for 21% of the Int'l transportation management market among North American-based logistics providers. Menlo Worldwide Forwarding's services include heavy air freight forwarding services, ocean services & Int'l trade management, including customs brokerage. The purchased activities include Menlo Worldwide Forwarding's air & ocean forwarding operations in more than 175 countries, its North American services & facilities, its operations hub in Dayton, Ohio, Menlo Worldwide Expedite! & Menlo Worldwide Trade Services. UPS said the acquisition allows it to expand its product portfolio for guaranteed heavy air freight. In its capacity as a freight forwarder, UPS Supply Chain Solutions moves some heavy freight for Int'l customers, mostly between gateway airports, but the Menlo capability allows it to offer guaranteed, door-to-door delivery service & expand the time-definite products in North America for the 1st time, UPS spokeswoman Peggy Gardner said. The price to be paid by UPS is said to be less than the book value of Menlo Worldwide Forwarding. CNF said it would recognize an after-tax loss on the sale of about US$260M. The deal marks another victory in the fierce global competition between UPS, FedEx, TPG & Deutsche Post to expand capabilities & transportation networks in an effort to become one-stop shops for logistics services.
***A Bigger Fight Against Terror ....... as the U.S. Congress has approved US$32Bn for the Homeland Security Dept., & sent it to President Bush for his signature. The funding for fiscal year 2005, which began Oct. 1, was an increase of US$1.1Bn from the previous year. Included is US$4Bn for 1st responders, US$9.8Bn for border protection & US$5.7Bn for transport security.
***West Coast Ocean Delays -- Delay Airfreight ....... as reports from the Marine Exchange of Southern California indicate that congestion is continuing to delay ocean cargo in the Los Angeles-Long Beach port complex, and that turnaround times for vessels in the port have been ranging from 6 - 10 days over the past several weeks. At times this month there have been over 76 total ships in port, with 30 at anchor -- 46 were container vessels, with 22 of those at anchor. Indeed, the Port of Long Beach says it is "moving record amounts of volume." "We have been experiencing 15% to 20% growth all year, and it's just been a phenomenal increase," said Don Snyder, Marketing Manager for the Port of Long Beach. While many U.S. importers are hesitant to do so, some are finding that they need to begin moving their more urgent cargo by air to speed delivery - - prompting airlines to initiate multiple rounds of rate increases & causing congestion at major airline hubs in South Korea, Hong Kong, Taiwan, Singapore & Japan.
***Some Mementos of Our Best Friends ....... as in closing a perceived national security gap, the U.S. has begun fingerprinting & photographing citizens of 27 countries -- including nations that are staunch allies - when they arrive for short visits. Travelers from the UK, Japan, Germany & other nations are now being required to deliver "biometric" information to customs officers. The program went into effect at 115 Int'l airports & 14 seaports, & will be expanded to border crossings later. The photos & fingerprints are matched with databases to determine if visitors might be wanted for immigration problems & crimes or were on lists barring them from entering the country because of suspected terrorist ties. The extra security requirements were passed by Congress in response to the Sept. 11, 2001 terrorist attacks & have been in place for nearly all nations since Jan. An exemption was made for people from 27 countries who were making short visits. They still don't need visas to enter the U.S. for 90-day visits, freeing them from having to undergo background checks. The 27 countries affected by the change are: Andorra, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland & the UK. There are no changes in unique rules covering visits by Canadians & Mexicans. For More Readng.
***Proposed Law Could Motivate Importers ....... as on Sept. 22, 2004, the U.S. Senate passed S. 2279, titled the "Maritime Transportation Security Act of 2004." One of the provisions included in the bill calls for US$5,000 fines upon the consignee for cargo that is not cleared for importation & is left on U.S. piers for more than 7 calendar days. Passage of the law would mean a new source of potential liabilty for forwarders & brokers.
Read The Text. (Use search term: "S. 2279")
***Cuba Libre? ..... as free trade with communist Cuba could generate US$50Bn & 900,000 jobs for the U.S. over a 20 year period, according to a forecast presented at the National Summit on Cuba by Dr. Tim Lynch, director of the Center for Economic Forecasting & Analysis at Florida State University. Lynch said Florida would stand to benefit more than any state for 3 reasons -- a historic linkage to Cuba, Florida's proximity to Cuba and a large Hispanic population.
***China Gate ..... as Russia has agreed to introduce 24-hour customs clearance on its side of the Sino-Russian Frontier Economic Cooperative Zone that encompasses the border city of Manzhouli, an important land port in the Inner Mongolia Autonomous Region in northern China. The 24-hour border crossing will open on Jan. 1, 2005.
***Is Washington On Track? ...... as Anthony Williams, mayor of Washington, D.C., said he would sign an emergency measure keeping trains with hazardous cargo out of the city if the federal government does not enact a similar law by Nov. 9, the AP reported. Rail cars carrying dangerous chemicals routinely travel within blocks of the U.S. Capitol. Williams said he would give the Bush administration time to act, but would then ask the city council to approve an emergency bill.
***New Friends In the Big Apple .......FedEx Express says it has placed into service 10 environmentally friendly, low-emission, hybrid electric delivery vehicles in New York City to reduce air pollution. The New York State Energy Research & Development Authority awarded federal funds to FedEx Express to support the placement of the FedEx OptiFleet E700 hybrid electric vehicle in New York. The hybrid-electric powertrain effectively combines a diesel engine & electric motor to drive the vehicle. A computer determines the most efficient combination, depending on current operating conditions. A particulate trap has been added to the truck to further reduce emissions. The FedEx hybrid electric vehicle decreases particulate emissions by 96%, travels 57% farther on a gallon of fuel, reducing fuel costs by over a 33%.
***Road Tonnage Blown Down ....... as Aug. U.S. freight volumes dropped amid Hurricane Charley's disruption of freight flows in the U.S. Southeast, American Trucking Assn. said. The seasonally adjusted average fell 1.8% in Aug. after slipping 0.5% in July. The August drop-off was the 3rd decline in the past 4 months, ATA said in its Oct. report. The tonnage index now stands at 157.1. The index set a record high of 162 in April. The level was 100 in the index base year of 1993.
***Cook'n Up Kans-Mex ....... as Mexican regulators have approved Kansas City Southern's bid to buy the country's largest railroad company. The decision clears the way for Kansas City Southern to buy all of Transportacion Ferroviaria Mexicana, or TFM, from Mexican transport giant Grupo TMM. The railroad carries 40% of Mexico's rail freight. Kansas City Southern, which already held a 37% stake in TFM, plans to create a unified company called Nafta Rail. TMM would hold a 22% stake in Nafta Rail. The companies announced the US$412M deal in April 2003. Soon after, TMM shareholders vetoed the deal, leading Kansas City Southern to file suit. The sides declared a truce on litigation earlier this year and in Sept., extended the deadline of the original purchase agreement to June 15, 2005.
***Beefed Up ....... as U.S. & Japanese government officials concluded an agreement Oct. 28 to re-start exports of American beef to Japan in coming weeks. Japan closed its market to American beef shipments Dec. 23, after discovery of a Washington State cow infected with bovine spongiform encephalopathy, better known as BSE or "mad cow" disease. Under the new agreement, trade to Japan will resume after the completion of regulatory processes in both countries. Japan is revising its domestic regulations to alter its BSE cattle testing requirements, while the U.S. will initiate a rulemaking related to imports of Japanese specialty beef. A special marketing program will be developed for Japan under which the U.S. Dept. of Agriculture's Agricultural Marketing Service will certify that meat exports meet the terms of the agreement.
***Reminder....... Wal-Mart Stores Inc.'s RFID compliance deadline is just 90 days away.
***FTZs Gain Weight ...... as the combined value of merchandise entering U.S. Foreign Trade Zones (FTZs) totaled US$245Bn in 2003, a 20% increase over the US$204Bn in shipments the previous year, according to a study just released by the National Assn. of Foreign-Trade Zones (NAFTZ). Sixty-five percent of goods entering zones are from the U.S. The report illustrates that exports from U.S. foreign-trade zones reached US$19.8Bn in 2003 -- an increase of 27% over 2002. Employment totaled 338,225 in jobs associated with zone activities -- an increase of 6% over the previous year. FTZs were created in the U.S. to provide special customs procedures to U.S. plants engaged in Int'l trade-related activities. These procedures were aimed to offset customs advantages available to overseas producers who compete with domestic industry. The FTZ program requires that zone activities result in a significant public benefit & a net positive economic effect. In addition to fulfilling a number of critical roles, such as the duty-free assembly of imported components for duty-free export as finished product, U.S. FTZs are avenues for opportunity. They support 338,000 jobs in communities located throughout the 50 U.S. states & Puerto Rico. In fact, job activity in the 250 general-purpose zones, together with activity in the 538 sub-zones, rose by an impressive 6% between 2002 & 2003.
***Dumping on America's #1 Seafood? ..... as the U.S. Dept. of Commerce (DOC) could place duty as high as 112% on imported shrimp, America's #1 seafood, according to the CITAC/ASDA Shrimp Task Force. In coming weeks, DOC will issue its final ruling on the extent to which it will place antidumping duties on shrimp imports from Brazil, China, Ecuador, India, Thailand, & Vietnam -- that together account for 75% of all shrimp imported by the U.S. -- that are accused of dumping the product at prices unfair to the U.S. The Shrimp Task Force survey on seafood consumption:
***U.S. Xpress Enterprises Says Yes To Arnold ...... as the national motor carrier has agreed to participate in the buyout of Arnold Transportation Services, Inc. from Jefferies Capital Partners by Arnold's management team who will continue in this role after the buyout. Arnold's current management would obtain 51% ownership of Arnold and control of the board of directors. U.S. Xpress would obtain 49% ownership of Arnold. The transaction is expected to close by the end of Nov. 2004. Arnold Transportation is a truckload carrier that provides regional dry van service primarily in the eastern U.S. Arnold's principal operating centers are in Jacksonville, Florida; Dallas, Texas; & Camp Hill, Pennsylvania. For 2004, Arnold expects US$195M in revenue.
***Punched His Ticket Big Time ....... as a British train conductor stamped & carefully returned the ticket of a slumbering passenger on Oct. 29 without realizing the man was dead. Shortly afterwards the train pulled into York station in northern England & rail staff alerted paramedics when they realized the man was not breathing. "The conductor needn't have been so careful, as it turned out that the passenger had expired, long before his ticket ever did," said a report in the British Transport Police's staff magazine.
***But He Still Pays The Ticket ...... as an incensed Iranian motorist doused his car in gasoline & set it ablaze with a match after picking up a parking ticket on Oct. 21. The ISNA student news agency posted photographs of the charred shell of the car on its Web site & quoted witnesses describing the driver's frantic but fruitless pleas to the parking attendant not to issue a ticket. "Extremely angry, he took a jerrycan of gas out of the trunk & set fire to his car," according to a witness in poor south Tehran. Fines have increased heavily since March in an attempt to bring Iran's reckless drivers into line. Road rage is common on the gridlocked streets of Tehran.
2. The Cargo Letter Financial Page _____
**American Airlines Corp. DOWN with a net loss of US$214M in the 3rd quarter -- compared to last year's Q3net profit of US$1M.
**Burlington Northern Santa Fe Corp. UP as 3rd-quarter freight revenues increased 16% or US$373M to an all-time quarterly record of US$2.74Bn compared with 2003's Q3 revenues of US$2.37Bn.
**China Southern Airlines. DOWN in 3rd quarter as net profit dropped 45.49% to US$25M prompted by a reported 60% rise in oil prices plus higher government taxes & charges. Throughput rose 16.61% year-on-year to 141,100 tons.
**CN. UP with net income of US$346M for the 1st 9 months, an 18% increase from 2003.
**CNF. DOWN with a net loss for 3rd-quarter 2004 of US$216.2M, or $3.90 per share, compared with net income of US$24.8M, or 46 cents per share, in 3rd quarter of 2003.
**Delta Air Lines. DOWN a net 3rd quarter loss of US$646M ($5.16 per share) compared with a net loss of US$164M ($1.36 per share) during same 2003 period.
**Forward Air. UP as net income for 3rd quarter increased 42.9% to US$9.0M from US$6.3M in the prior-year quarter.
**CSX Corp. (largest rail system in eastern U.S.) UP with earnings of US$123M in 3rd quarter in contrast to a loss a year ago as revenue rose 5%.
**Int'l Shipholding Corp. UP with net income for the 3 months ended Sept. 30, 2004 was US$220,000 as compared to a net loss of US$1.644M for same period 2003. For the 1st 9 months of 2004, net income was US$4.945MM as compared to net income of US$3.840M for same period of 2003,
**Kansas City Southern. UP as 3rd quarter 2004 consolidated net income of US$11.1M, increased 158% compared with 3rd quarter 2003 consolidated net income of US$4.3 in Q3 for 2003.
**LAN (formerly Lan Chile). UP with record net income of US$36.4M for 3rd quarter compared to US$22.7M in 2003.
**Matson Line. UP as operating profit climbed 31% to US$33M in the 3rd quarter from US$25.1M, as the U.S. Jones Act shipping line enjoyed higher volumes & rates.
**Northwest Airlines Corp. DOWN with a Q3 net loss of US$46M, compared to net profit of US$42M in same quarter of 2003.
**Neptune Orient Lines. UP with a net profit of US$234M for the 3rd quarter, a rise of 13% compared to same period 2003. For the first 9 months of 2004, net income doubled to US$588M from US$295M, as its container shipping arm APL earned record profits from higher rates & full ships.
**Pacer Int'l, Inc. UP as net income increased to US$11.3M for the quarter ended Sept. 17, from US$4.9M earned in the same quarter of 2003, a gain of 130.6%.
**UAL Corp. (holding company of United Airlines) DOWN with a net loss of US$274M, which includes US$97M in special & reorganization items.
**UPS. Up as net income increased by over 20% to $890M in Q3 & Int'l profits rose by 50% -- worldwide average daily volume increased by 445,000 packages per day to 13.7 million, a 3.4% increase, while total Int'l export package volume grew 13.2%.
**USF Corp. DOWN as for 9 months ended Oct. 2 net income was US$17.2M, down compared with US$23.8M for same period last year.
**Yellow Roadway Corp. UP with a strong 3rd-quarter, with revenues of US$1.77Bn, up 129% from US$770M during same period last year, largely due to Yellow's acquisition of Roadway.
***Kuehne + Nagel Int'l AG Leaves -- SembCorp Logistics ..... as the forwarding & logistics company based in Schindellegi, Switzerland, has sold its stake in SembCorp Logistics Ltd., following termination of a commercial agreement. J.P. Morgan (S.E.A.) Ltd. Singapore acquired Kuehne + Nagel's stake of 42.5 million shares, or 5% of the share capital of SembCorp Logistics, for "subsequent placement with Int'l institutional investors. The total purchase price amounts to US$57M"
OUR "B" Section: FF World Air News***
3. Freight Forwarder World Air Briefs __
***Volume Up, But More Pain To Follow ....... as IATA has reported a 14.2% increase in Int'l cargo traffic for the 1st 8 months of 2004 over the same period in 2003. "The increase in traffic is well beyond our expectations. It will not mitigate the high cost of fuel, but it is certainly a much needed shot in the arm for a beleaguered industry," said Giovanni Bisignani, IATA's director general & CEO. The high growth figures for the Jan. to Aug. period are partially exaggerated by the comparison to a period in 2003 which was severely depressed due to the Sars crisis, said IATA. Year-on-year for Aug., freight was up 13.6%. IATA said airlines continue to be aggressive about cost cutting in light of the high cost of fuel. In 2003, the industry achieved a 2.5% reduction in non-fuel unit costs & indications are that a further 3.0% reduction for 2004 is likely. IATA also predicts that strong traffic & a low cost base will mean profitability for carriers that serve the Asian region. Europe's airlines have been partially sheltered from oil prices by hedging & the strong Euro, while the organization expects North American airlines to continue to experience very difficult trading conditions. "Overall, we expect that the airline industry (domestic & Int'l) will lose between US$3Bn & US$4Bn in 2004," said Mr Bisignani. "To recover from these extraordinary losses and build a healthy industry structure, we need our partners & governments working in tandem. Airports & air navigation providers must achieve the same efficiency gains as the airlines. And governments must come to grips with more structural issues like security, insurance & liberalization," he added.
***Fueling Up! ......as the Lufthansa Cargo Fuel Index, which is used by much of the air freight industry as a benchmark for adjusting fuel surcharge levels, reached an index number of 290 for the week of Oct. 22, raising the possibility that fuel surcharges might soon go up again. Recent history shows that when Lufthansa adjusts its fuel surcharge, most of the world's air carriers follow. Lufthansa's fuel index methodology states that if the index number remains over 290 for 2 consecutive weeks, the airline will increase its fuel surcharge from the current level of 0.35 USD/kg, or 0.35 EUR per kilo, to a new level of 0.40 USD/kg, or 0.40 EUR per kilo.
***Casualty List Grows ....... as ATA Airlines, the 10th-largest airline in the U.S., filed for Chapter 11 bankruptcy Oct. 26, joining United Airlines & U.S. Airways in seeking protection from creditors. Delta Air Lines has warned it is on the verge of bankruptcy unless it can negotiate wage concessions with its pilots. ATA, which also has a cargo operation that carries small packages, said high fuel prices, low fares induced by tough competition & a decline in its military charter business contributed to growing losses. For the 6 months ended June 30, the airline lost US$90M.
***Sounded Out ...... as DHL has confirmed it plans to abandon its night-flight hub in Brussels in 2008 as the company sets its sights on moving its operation to airports in France & Germany. Parent company Deutsche Post AG said DHL's departure from Belgium would result in 1,400 "staff redundancies" (meaning you're fired) at Brussels Zaventem airport. However, the Brussels operations would not be completely closed, as DHL is expected to leave its European Coordination Center plus logistics & national service at Zavantem. Reacting to DHL's plans, angry DHL workers were reported to have set up temporary road blocks on access routes to & from the airport week before last. The scrapping of DHL operations was prompted by the failure of DHL & the Belgium government to reach agreement over the long disputed issue of night flights into Zaventem airport amid concerns about noise pollution & greater flight frequencies. DHL said to be eyeing 2 airports for its new int'l hub in Europe, which are Vatry in France, & Leipzig in eastern Germany, which is believed to enjoy no restrictions on night flights.
***New-Baby-Roo ....... as name, brand, livery & uniform for the new Qantas Airways-backed Singapore low-cost carrier has been unveiled -- to be called "Jetstar Asia" -- will be an Int'l regional extension of Jetstar, the budget carrier launched by Qantas in the Australian domestic market in May 2004. Jetstar Asia will begin flying to destinations within 5 hours of Singapore by the end of the year. Up to 200 jobs will be created and some pilots & cabin crew are already in training. Jetstar Asia's fleet will be made up of new Airbus A320 aircraft, which seat 180. The company expects to grow the fleet to 20 aircraft over the next 3 years.
***Just Friends ..... as American Airlines Cargo & DHL Express have agreed to increase cooperation to pursue additional opportunities in the marketplace. Highlights include the introduction of interline agreements that allow American to use DHL Express freighters to reach Eastern Europe, Africa & parts of the world not directly served by American. American also is joining DHL Express Air Carrier Management Program, further extending the traditional business relationship the companies have had over the past 2 decades.
***New China Wings, a 1st...... as Chinese carrier Shenzhen Airlines & Germany's Lufthansa Cargo have established what is believed to be the 1st carrier with foreign participation in the Chinese airline market. Named "Jade Cargo Int'l," the new airline is a joint venture company between Shenzhen Airlines, with a 51% stake, Lufthansa Cargo (25% share) & the German investment company Investitions-und Entwicklungsgesellschaft (24% share). Joint ventures in China have to be structured so that Chinese partners own a majority of the venture. The new carrier's headquarters is located at the Chinese hub of Shenzhen, 4th biggest airport in China. The airline will begin operations after the Chinese New Year festival in Feb. 2005 & will provide airport-to-airport general cargo services for intra-Asian and other Int'l forwarders. In addition to China, it will initially serve intra-Asia routings to countries such as India, Malaysia, Singapore & Thailand with 2 Airbus A300-600 freighters. Lufthansa Cargo also has ground-handling joint ventures, in Shanghai & Shenzhen, with Chinese partners.
***Taiwan Moves Closer To Beijing ...... as Hong Kong's flagship carrier Cathay Pacific has entered into a memorandum of understanding (MOU) with Air China to purchase a 9.9% share of the mainland airline when it goes public. David Turnbull, CEO of Cathay Pacific said: "We look forward to becoming Air China's strategic partner and to a mutually beneficial relationship between our companies." In related news, Cathay Pacific has been allocated rights by China to operate 4 additional weekly services from Hong Kong to Beijing during the Winter 2004 season & a further 7 weekly flights from Summer 2005. The airline will also be allocated rights upon designation to operate 3 weekly passenger services from Hong Kong to Xiamen & 12 weekly freighter services from Hong Kong to Shanghai, both starting Winter 2004.
***Sino Air Cargo Void Filling ....... the U.S. Dept. of Transportation (DOT) has formally selected Polar Air Cargo as a new entrant in the Sino-U.S. aviation market. This makes Polar the 1st of 5 additional airlines from the U.S. to be chosen to serve the rapidly expanding China market over the next 6 years in the wake of the signing of an aviation agreement in Beijing this summer. In addition, a DOT release said that the 3 American all-cargo carriers currently serving China - FedEx, Northwest Airlines & UPS - will receive additional flights to expand their services.
***UPS Covers More Sky ..... as it has announced plans to hire at least new 100 pilots next year & said most of them will be based in Louisville. Additional flight crews are needed because the company has new airplanes & is expecting to do more Int'l flying, company spokesman Mark Giuffre said Oct. 12. The pilots will be added through next year. About 40% of UPS's 2,500 pilots live in the Louisville area. The company has its main sorting hub at Louisville Int'l Airport. New pilots also will be based in Ontario, Calif. & Miami. An agreement between the U.S. & China to expand aviation rights is the reason UPS announced the hirings, Giuffre said. The U.S. Dept. of Transportation has not permanently awarded those rights to UPS, but it has tentatively approved 12 new weekly flights. UPS said in June that it is considering building an air hub in China & might increase flights between Louisville & China. UPS currently has 6 flights to Shanghai and would increase its service there as well as starting flights to Guangzhou, just inland from Hong Kong. UPS pilots typically earn between US$138,000 & US$172,000 a year. Where do we sign up?
***China Focus Tightens ..... as UPS has opened a new operations center in Kwai Chung which is located at the ATL Logistics Center in a move to to strengthen its business in Hong Kong. The 36,421 square-foot package-sorting facility has been built at a cost of HK$8M & will have a sorting capacity of 5,000 packages per hour. The company said that together with UPS's operations hub at the Hong Kong Int'l Airport, the Kwai Chung operations center would significantly increase the express shipment throughput capacity.
***Fresh Troops ...... as Atlas Air & Polar Air Cargo, subsidiary companies of Atlas Air Worldwide Holdings, have been awarded a US$25M contract from the U.S. Air Force Air Mobility Command to provide fixed air cargo services in fiscal year 2005.
***Sounds Like An Airforwarder ...... as Scandinavian Airlines Systems' cargo division said it has reserved 50 tons of space on a new weekly Korean Air Cargo 747-400 freighter leg from Chicago to Oslo, Norway. SAS Cargo, which does not own any of its own freighters, sought the extra capacity to meet demand for larger shipments, particularly for the oil industry. SAS said the round-the-world flight (Seoul/Chicago/Oslo/Seoul) will depart Chicago on Friday night, enabling North Sea oil rigs to receive needed equipment early the following week. Under an existing contract, SAS Cargo blocks 50 tons of space apiece on weekly flights from New York's JFK Int'l Airport to Copenhagen, Denmark, & Oslo.
***Boeing Says Goodbye To A Faithful Friend ...... as it has ended its 757 commercial airplane program. The 1,050th & final 757, a Shanghai Airlines 757-200, was the last to roll out of the Renton, Washington factory late this month. The now discontinued 757 is known for its fuel efficiency and clean & quiet operation. Boeing delivered the 1st to launch customer Eastern Airlines in 1982.
***Beach Heads ....... as DHL has opened a new Regional Sort Center in Phoenix, Arizona. The facility is the 6th of 7 new Regional Sort Centers being added to the DHL network as part of a US$1.2Bn investment program launched by DHL in June 2004. In the last month, the company announced the opening of new Regional Sort Centers in Denver, Colorado; Salt Lake City, Utah; Memphis, Tennessee; Baton Rouge, Louisiana; & Erie, Pennsylvania.
***Universal Solution ..... as Alpine Air Express, Inc. & its subsidiary, Alpine Aviation Inc., which is the 3rd largest regional cargo airline in the U.S., with a fleet of 30 planes & projected annual sales of $20M+, has announced that Universal Express, Inc. has agreed to purchase 80% of its outstanding shares. "Alpine's cash acquisition cost is approximately US$12M, not including debt refinancing. With over US$30M in assets, along with its U.S. Postal Service contracts, this is an undervalued cargo airline," said Universal Express. Alpine is located in Provo, Utah.
***Chameleon Cargo Container ...... as Aerospace Composite Structures, LLC, & Kelvin Technologies, Inc., have unveiled the KelvinBox, the 1st specialized air cargo container designed to protect valuable shipments from extremes of heat & cold for up to 7 days. Products shipped using the KelvinBox will never experience temperature variations of more than +/- 2 degrees C even when outside temperatures range between -30 degrees C & +55 degrees C. The revolutionary container, developed jointly by ACS & KTI, targets the pharmaceutical, food & related industries.
***FedEx Space Project ...... as it will construct California's largest corporate solar electric system atop its hub at Oakland Int'l Airport. The 904-kilowatt solar array will provide approximately 80% of the peak load demand for the company's Oakland facility, which employs 1,700 people. Completion is expected in May 2005. FedEx's solar generation system will cover 81,000 square feet on the roofs of 2 buildings.
***Primaris Airlines Dreams ... as the newly organized 1st class U.S. airline -- leather seats, no middle seats, high speed Internet -- has chosen the Boeing 7E7-8 Dreamliner & the 737-800 for the airlines' future fleet development. The airline announced plans to purchase 20 737-800s & 20 7E7-8s, with options for an additional 25 737-800s and 15 7E7-8s. The purchases are worth US$3.8Bn at list prices. Deliveries of the 737-800s will begin in 2007 & the 7E7-8s in 2010.
***Tail Dragging ......as a Ghanaian-registered MK Airlines Boeing 747 freighter crashed early Oct. 14 while taking off from Halifax, in Nova Scotia. The jet's tail struck the runway on take off. The severed tail was found in a field at the end of the runway. The plane then cut a swath through nearby woods. All of the 6 crew died. Crew came from Zimbabwe, South Africa & the UK. Eyewitnesses reported seeing a massive fireball caused by the plane's 200,000 liters of fuel. The blaze took 60 firefighters & 20 foam-pumping trucks 3 hours to extinguish. The 20-year-old MK Airlines 747, described as "an absolute gem" with "an exemplary service record" by the airline, had first loaded freight in New York & stopped in Halifax to pick up a shipment of seafood en route to Zaragosa, Spain. MK Airlines has been operating in Ghana since 1994, with 16 planes registered in the former British colony.
***Gentlemen, Count Your Engines! ...... as Kalitta Air operating a Boeing 747 N709CK left Chicago's O'Hare Int'l Airport bound for New York's JFK Int'l Airport when it experienced mechanical difficulties with 1 of the 4 engines. Five crew were aboard the airplane when it landed safely at Detroit Metropolitan Airport. No injuries were sustained. It is believed that one of the 4 engines separated from the airplane while in flight over Lake Michigan. The airplane originally departed Hong Kong with a full load consisting of general merchandise cargo. From Hong Kong the plane stopped in Khabarovsk, Russia for fuel & then continued to Anchorage, Alaska for fuel before stopping at O'Hare in Chicago, Illinois, bound for JFK in New York. Kalitta Air is based in Ypsilanti, Michigan.
***Precision Landing ...... as the retrievable payload of China's 20th recoverable satellite returned to Earth with a bang, crashing through the roof of a house on Oct. 21. The capsule returned back to Earth safely, but unfortunately hit a 4-story civilian house. A photograph of a house in Penglai in southwestern Sichuan province showed it had been all but destroyed, with wooden rafters, bricks & tiles scattered around. No injuries.
***Deadly Passage ...... as a man's body was found Oct. 22 in the wheel well of an American Airlines B-737 from Miami landing at Detroit Metropolitan Airport. The body was found about 1 a.m. EDT by an airport worker after passengers had disembarked. A cause of death & identity for the man, who was in his 20s, were not immediately known. The flight originated in the Caribbean. People have attempted to stow away on flights in the wheel wells of airliners, a practice made particularly dangerous by severe temperature & pressure conditions.
***The Vibrating Terror .... as a vibrating object in a rubbish bin sparked a security scare and shut a regional Australian airport for almost an hour on Oct. 4. An emergency was declared at the Mackay airport, 500 miles N. of Brisbane in tropical Queensland state, after airport staff heard a strange noise coming from the bin, "It was rather disconcerting when the rubbish bin started humming furiously," cafeteria manager Lynne Bryant said. Police evacuated the terminal & were about to call in bomb experts when an unidentified passenger came forward to identify the contents of a package left in the bin. A police spokeswoman said the package was an "adult novelty device." The report satisfied officials.
OUR "C" Section: FF World Ocean News***
4. FF World Ocean Briefs ______
***Entering The Promised Land ........ as the Federal Maritime Commission voted Oct. 28 to issue a Notice of Proposed Rulemaking which would allow non-vessel-operating common carriers (NVOCCs) to offer "NVOCC Service Arrangements" (NSAs) -- individually-negotiated contracts between NVOCCs and their shipper-customers. In the last 5 years, the FMC staff noted there has been "a huge growth in confidential service contracts negotiated by vessel-operating common carriers (VOCCs). There is a need to make NVOs more competitive." NVOCCs that utilize these new arrangements would be exempt from the tariff publication requirements of the Shipping Act of 1984, but NVOCCs that do not wish to take advantage of this exemption would continue to be able to offer their services under published tariffs. Copies of the otherwise confidential NSAs would have to be filed with the FMC to ensure compliance with other applicable provisions of the law. The proposed rule was developed in response to numerous petitions filed with the commission urging the FMC to grant NVOs the authority to offer service contracts, VOCCs are currently permitted to do. VOCCs are able to offer or enter into service contracts collectively. However, under the proposed rule, only one NVO will be able to enter a service contract as a carrier. The "essential terms" of a NSA will be subject to publication requirements, just as service contracts. The proposed rule is expected to require NVOs offering NSAs to file their service contracts via the FMC's "ServCon" online computer system. ServCon is an Internet-based system by which VOCCs can send copies of service contracts to the FMC as Word documents. FMC will publish the proposed rule in the Federal Register with a 15-day comment period.
***Too Much of A Good Thing? ....... as physically inspecting 10% of America's 9 million inbound cargo containers would be costly, harmful to Int'l supply chains & would not substantially increase maritime security, a senior executive of APL has warned. "Even a 10% physical exam rate, as suggested by some lawmakers, would be extremely expensive & would cause unacceptable delays to the Int'l supply chain," Earl Agron, V.P. of Security at APL, told the business advisory committee of the transportation center at Northwestern University last week. "That's why we support the current system, which provides security with less expense & delay." APL estimates that inspecting roughly 900,000 containers a year would require 6,000 to 7,000 more customs officers than the approximately 19,000 employed today. Agron said about 5% to 6% of inbound containers receive non-intrusive, external inspections by sensing equipment. Of those, "only a few" are opened & searched by customs officers, he said. However, shipping information for 100% of inbound cargo containers is reviewed by U.S. Customs & Border Protection before the boxes are permitted onboard U.S.-bound ships -- a policy that CBP has recently reaffirmed after the Bush administration was accused by political opponents of not doing enough on maritime security.
***The "Experts" Are Packing ...... as Japanese carrier MOL has hired ST Education & Training Pte. Ltd. (STET) to supervise security aboard the company's ships which travel through piracy-plagued Malacca & Singapore straits. STET will place "experts" on board 6 MOL-operated vessels. They will board vessels bound from the Middle East to Japan before reaching the Strait of Malacca, & confirm security measures are in place around the clock, especially the bridge.
***West Coast Shuffle ......... as COSCO Container Lines & Hanjin Shipping are the latest carriers to reduce the number of port calls on some of their Asia/WestCoast of North America services since port congestion worsened in Los Angeles & Long Beach (inbound up 5% for Sept.). The Asian carriers' "SEA" service, which had called at Long Beach & Vancouver, British Columbia, has stopped calling at Vancouver & Yokohama. The service has a revised rotation of Ningbo, Xiamen, Hong Kong, Yantian, Long Beach & back to Ningbo. Conversely, Hanjin line's U.S. West Coast/Asia/Europe/Asia/U.S. West Coast weekly "PDE" pendulum service will stop calling at Long Beach & Oakland & will instead call at the less congested ports of Vancouver & Portland. The service will have an eastbound transpacific rotation of Port Kelang, Yantian, Hong Kong, Kaohsiung, Busan, Seattle, Vancouver & Portland. The "PDE" service employs 12 Hanjin ships of about 5,500-TEU capacities. The revised transit times of the services are posted on ComPair Data, the liner shipping database. According to industry sources, many transpacific services are running 3 days behind their scheduled rotations because of time lost in Southern Californian ports. In Sept, box traffic at Seattle soared 33% to 162,000 TEUs.
***West Coast Needs New Deal?...... as James Spinosa, president of the Int'l Longshore & Warehouse Union (ILWU), suggests ways "to break the jam and get the cargo moving" in the seriously congested ports of Los Angeles & Long Beach. Spinosa's suggestions followed a warning to the Pacific Maritime Association (PMA), which hires port workers, that the ILWU would not accept rising on-the-job hazards. The PMA should hire more casual workers (called 'casuals' by the ILWU) and move their training "to the wee hours of the morning when there is equipment available for them to learn on," Spinosa said. Also helpful would be the use of container gangs, "in which an entire team of workers is dispatched to a terminal the night before as a unit. Since a gang works together every day, they are more productive than gangs made up of people dispatched as individuals," he said. Spinosa also suggested that ports move to 24-hour gates to expedite the flow of containers. "There's no question that the shipping industry on the West Coast is in a crisis, with dozens of ships backed up at the ports of Los Angeles & Long Beach. Diverting ships to other West Coast ports has not relieved the problem in southern California, but only spread it to those other docks," Spinosa said in a statement. "It's not as if this wasn't foreseen. Manufacturing jobs have been sent to Asia in search of cheap labor and, since little is made here any more, all those goods must be shipped in. China's monster economy continues to export at an accelerating rate, & Wal-Mart's Asian-made Christmas goods could by themselves overwhelm just about any port," Spinosa said. "As the railroads restricted the numbers of containers they would accept from each terminal & the docks backed up, container yards had to switch from 'wheeled' operations, where containers are stored on chassis & are ready to roll, to 'decked' operations, where containers are stacked 3 to 5 high," he said. "Decked operations require six times more skilled cargo-handling equipment operators to run top picks, side picks and strads (straddle carriers). The employers' solution has been to ask workers to double back, to work 2 shifts back-to-back. But fatigue is a major factor in accidents. And the congested docks with containers stacked high & more heavy equipment running around are raising the risks of an already dangerous job," Spinosa said.
***Going Up Is TACA ...... as the Trans-Atlantic Conference Agreement (TACA) of ocean carriers has announced tariff rate increases for 2005. On eastbound routes, tariff rates will be subject to increases of US$640 per TEU & US$800 per FEU or 45-foot container. These rate increases will be implemented over four phases, each of US$160 per 20-foot & US$200 per 40 or 45-foot container, effective from Jan. 1, April 1, July 1, & Oct. 1. TACA members are A.P. Moller-Maersk Sealand; Atlantic Container Line, Hapag-Lloyd, Mediterranean Shipping Co., NYK Line, OOCL and P&O Nedlloyd.
***Going Up Is FEFC ..... as the Far Eastern Freight Conference (FEFC) member lines have raised freight rates for international container shipments in Oct. Cargo shipped between Asia (excluding Japan) & the Mediterranean is now subject to a fee of US$150 per TEU, while containers transported between Asia - apart from Japan - and North Europe are being charged an extra US$150 per TEU. Freight rates are higher for Japanese goods bound for the Mediterranean or North Europe, following the introduction at the beginning of October of a US$275 per TEU rate hike. FEFC member lines are: ANL Container Lines Pty, APL Co Pte Ltd., CMA CGM, Egyptian Int'l Shipping Co., Hapag-Lloyd Container Linie, Hyundai Merchant Marine, "K" Line, Maersk Sealand, Malaysia Int'l Shipping Corp, MOL, NYK, Norasia Container Lines, OOCL, P&O Nedlloyd &Yang Ming Marine.
***Faster Ditch ....... as the average time it takes ships to transit the Panama Canal, a factor called "canal waters time," decreased 4.8% in the canal's fiscal 4th quarter (July to Sept.), to 25.5 hours from 26.8 hours in the 4th quarter of 2003, according to the Panama Canal Authority. Transit time for booked vessels, those ships holding reservations, decreased 3.3% in the 4th quarter to 16.6 hours from 17.1 hours. Booked vessels account for 50% of all canal transits. Vessel transits increased 5.4% to 3,159 from 2,996. There were 3 accidents reported in the 4th quarter this year, the same number as a year ago. The Panama Canal Authority recently denied charges that it is about to reach capacity.
***Jobs In The Ditch? ....... as the Int'l Brotherhood of Teamsters says it will picket Maersk Inc. headquarters in Madison, N.J. in a dispute over a transfer of jobs (more "staff redundancies"?) from the U.S. to Central America. Maersk said it will transfer a regional office from New Jersey to Panama, but denied it amounted to a major outsourcing of its U.S. operations. "Recently the North American Area has been reorganized and the Caribbean, Latin American region of the business was separated from the North American Region & structured as a separate operating region," said Russell Bruner, head of Maersk Inc. "As a natural consequence of this reorganization, the headquarters of this new region (for the Caribbean & Latin America) will be relocated from the U.S. to Panama.
***APL Retail Tool ...... as it has launched a tool that allows customers to access the APL vessel schedules & select multiple point-to-point services, which can then be customized into a single report. Push technology automatically generates reports, which can be e-mailed to a customer or multiple recipients.
***China Giants ....... as COSCO Container Lines has christened 3 new 7,500-TEU containerships built in Korea by Hyundai Heavy Industries & financed by the German non-operating owner Nordcapital. The vessels -- M/V COSCO Seattle, M/V COSCO Vancouver & M/V COSCO Yokohama -- will operate in the fleet of the Chinese shipping line under a long-term charter. COSCO has already taken delivery of two 7,500-TEU containerships, M/V COSCO Long Beach & M/V COSCO Shenzhen, which operate in the Asia/U.S. West Coast "SEA" service.
***Assembling The Ultimate China Giant ..... as the soon-to-be world giant port of Shanghai takes a next step. Shanghai Int'l Port Group (SIPG) & Hutchison Port Holdings (HPH) Group have entered into an agreement to form a joint venture to invest in a container terminal at Shanghai Waigaoqiao Phase V -- to be known as Shanghai Mingdong Container Terminals Limited. The joint venture term is for a period of 50 years & will have a registered capital of US$.48Bn. Phase V will have : 4 deepwater berths, 2 feeder berths, 14 Quay cranes, & a depth of 12.8 meters.
***China Reacts Deeply .... as it has unveiled plans to spend US$1.93Bn to dredge the Yangtze River by 2020 in a bid to harness the potential of the world's 3rd largest river, said a Xinhua report. Statistics quoted by the newswire said 90% of the Yangtze River's capacity as a waterway for the transport of goods is not being utilized despite the mainstream of the Yangtze River accommodating 216 ports which collectively handle 300 million tons of freight annually.
***Port King Learns Polish .... as Hong Kong-based Hutchison Port Holdings, the world's largest terminal operator, has entered into agreements to acquire a majority stake in Wolny Obszar Gospodarczy, a general cargo terminal in the port of Gdynia, Poland, with a plan to develop it into a container terminal. The terminal has a waterfront of 550 meters (1,804 feet) with a depth alongside of 10.5 meters (34 feet).
***FMC Revokes 5 OTI Licenses ....... for failure to maintain valid bonds: Bestway Shipping of Gardena, Calif.; Distribution Transportation Services Co. of O'Fallon, Mo.; JB Han Co. in Carson, Calif.; Ram's Cargo Brokers of Miami; & Worldwide Group in Gardena, Calif.
***This Day In U.S. Navy History .......
1775 - Congress authorizes 4 vessels for the defense of the United Colonies.
1799 - William Balch becomes the Navy's 1st commissioned chaplain.
1814 - Launching of Fulton I, 1st American steam powered warship, at New York City. The ship was designed by Robert Fulton.
1842 - The sloop, USS Concord, wrecks with the loss of three lives in the Mozambique Channel.
1863 - Confederate steamer CSS David seriously damages USS New Ironsides with a spar torpedo off Charleston, S.C.
1864 - Lt. William Cushing sinks Confederate ram CSS Albemarle with a spar torpedo attached to bow of his launch.
1913 - OWL (Over Water Land Type), the Navy's 1st amphibian flying boat, is tested at Hammondsport, N.Y.
1941 - German submarine U-552 sinks USS Reuben James (DD 245), which was escorting Convoy HX 156, with a loss of 115 lives -- 1st U.S. ship lost to enemy action in World War II.
1942 - USS Hornet (CV 8) lost & USS Enterprise (CV6) badly damaged during Battle of the Santa Cruz Island.
1943 - Lt. Hugh D. O'Neill of VF(N)-75 destroys a Japanese aircraft during night attack off Vella Lavella in 1st kill by a radar-equipped night fighter of the Pacific Fleet.
1943 - 1st women Marines report for duty on the West Coast, Camp Pendleton, Calif.
1944 - Battle of Leyte Gulf ends with Navy carrier & U.S. Army Air Forces aircraft attacks on retreating Japanese ships. U.S. forces sink many Japanese ships, including 4 carriers, 3 battleships, 10 cruisers & 9 destroyers, for a total of 26 capital ships.
1957 - Minitrack, a satellite tracking net developed by the Naval Research Laboratory, becomes operational. This network, with stations from Maine to Chile, tracked the Vangard satellite.
Naval Historical Center
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.
See our new photo feature for Oct. 2004: "Coal Face - The Cargo Was Danger"
See our newest photo feature "Singles Only" - Transportation Disasters Told In A Single Photo! Current through Oct. 2004 with a pitrate's booty of photos!
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..............
Bureau of Customs & Border Protection's Textile Critical Lists
Bureau of Customs & Border Protection -- Valuation Encyclopedia ...... a reference for importers determining which Int'l transactions are subject to duty & fees.
Commissioning of USS Virginia Ushers in New Era of Undersea Warfare
Global Logistics Specialist Prograam Online ...... from California State University at Long Beach
Implementation of the Wood Packaging Material (WPM) Regulation ....... from U.S. Dept. of Agriculture's (USDA) Animal & Plant Health Inspection Service.
RFID: Beyond The Mandate
U.S. Dept. of Commerce's Int'l Trade Administration ..... dumping & antidumping.
U.S. Food & Drug Administration Food Compliance Information
Evandale's London Insurance Market Directory 2004/2005
Ships For Sale
World Trade Portal
14th Annual Int'l Air Cargo Conference & Exhibit- Houston 2005........17 to 19 May, 2005 (National Transportation Week). At IACC- Houston 2005.
Los Angeles Tranportation Club ....... Nov. 6 2004, Installation Dinner Dance, The Reef Restaurant, Long Beach Harbor.
Managing Reinsurance Disputes ...... Nov. 30 2004, Radisson SAS Portman, London. Legal & practical advice on dispute prevention & management.
"Maritime & Port Security Summit: Getting to Best Practices & Standards."........ Nov. 16-17, 2004 in Washington, DC., from Defense Today
Twin Cities Chapter of the Council of Logistics Management Annual Conference........ March 4, 2005 in Minneapolis, MN, Airport Marriott, Bloomington, MN
U.S.-Mexico Supply-Chain Security & Management Symposia .......... schedule for meetings is Nov. 30 in Mexico City; Dec. 2 in Monterrey; Jan. 25 at Guadalajara; & Jan. 27 in Tijuana. Sponsors are the U.S. Commercial Service & the Mexican Trade Council.
Find Out Your Pirate Name
Halloween Game ....... submitted by our crazy Cuban, a must!
Kite Borne Aerial Photography
NASA Dryden Research Facility Airplane Movies
Presidential Politics -- A New Jib Jab
OUR "E" Section: The Forwarder/Broker World***
7. New U.S. Transport Related Legal Cases _______
Norfolk Southern Rwy. V. Kirby Pty.
Argued: 6 Oct. 2004
Court below: 300 F.3d 1300 - 11th Circuit U.S. Court of Appeals 2002
Argued to the U.S. Supreme Court...... The 3rd party logistics world holds it's collective breath as the high court decides the ability of freight forwarder to enforce a Himalaya Clause against the cargo owner.
The issue in this case is whether a vessel carrier's bill of lading, which included a Himalaya Clause, issued to a freight forwarder, is unenforceable against the cargo owner. Kirby Ltd. (Kirby), a Sydney-based Australian machinery firm, contracted with Int'l Cargo Control Pty Ltd. (ICC), an Australian freight forwarder that arranges Int'l shipping, to ship 10 containers of machinery to the General Motors Corp. plant in Huntsville, Alabama. Because Huntsville is located approximately 300 miles inland, the machinery needed to be transported by railway for that distance. ICC then contracted with Hamburg Sud, an ocean carrier company, for the actual transportation of the machinery from Sydney to Huntsville. Governing the transaction was a bill of lading agreed upon by both Hamburg Sud and ICC. The bill stated included a Himalaya liability clause that limited Hamburg Sud's liability to US$500 per package & extended liability limitations to any additional parties used to carry out the contract. Norfolk Southern Railway (Norfolk) assisted in transporting the goods by railway from Savannah, Georgia to Huntsville. During rail transportation the train derailed, causing approximately US$1.5M worth of damage to the machinery. Kirby filed suit against Norfolk to recover the amount lost in the transaction along with punitive damages. The U.S. District Court for the Northern District of Georgia held that pursuant to the bill of lading's limited liability clause, Norfolk was only liable for US$500 per package. The U.S. Court of Appeals for the 11th Circuit (Court of Appeals) reversed, holding that an ocean carrier's bill of lading is unenforceable against the cargo owner because the bill was issued to a freight forwarder (Norfolk) that itself had liability to the cargo owner as a carrier. Specifically, the Court of Appeals stated that Norfolk was not a "servant, agent or other person," entitled to protection under the bill of lading's limited liability clause & thus, there was no privity of contract between Norfolk and Kirby. On appeal to the U.S. Supreme Court, Norfolk argues that the bill of lading's language clearly indicates Norfolk to be protected by its limited liability clause. Norfolk cites U.S. Supreme Court precedent that upheld such a limited liability clause for a 3rd-party carrier. Norfolk further argues that the Court of Appeals' decision undermines COGSA & other efficient trading practices that exist under Int'l business transaction law. Full Text
Stevens Technical Services, Inc. v. Mormac Marine Enterprises, Inc.,
Sept. 28, 2004).
No. 01 CV 8391 (ARR) (E.D.N.Y.)
The U.S. District Court for the Eastern District of New York ruled that the pilot ticket & pilotage contract commonly used in the industry exonerates a pilot and the pilotage association from liability for damages resulting from the simple negligence of the pilot. In the instant case, a ship grounded on a sunken pier while under control of a docking pilot. The ship operator contended that, because there had been a disagreement between the pilot and the master as to exactly how to maneuver the ship, actions by the pilot contrary to the opinion of the master constituted gross negligence. The court ruled that the master could have taken control of the ship from the pilot & failed to do so, indicating that whatever negligence might have occurred did not rise to the level of gross negligence.
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
Libby Thompson (Countryman & McDaniel)
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