Law Offices of Countryman & McDaniel
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
31 July 2006
Good Monday 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 is what happened during July 2006 for our industry. This month may mark a brewing storm over proposed sale of both U.S. airlines & airports to foreign interests ..... shades of the Dubai Ports controversy?
We are often asked whether Countryman & McDaniel, conducts training seminars. Yes, from multiple Fortune 100 companies, to smaller forwarders, to the U.S. government, to insurance companies -- for years we have conducted inovative programs for domestic & Int'l claims, Customs, security, trade compliance & post 9/11 industry business practice. McD
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Our corporate sponsor &endash;- Interpool, Inc. -- named again to Forbes "Best 200 Small Companies" List -- for the 2nd consecutive year! -- http://www.interpool.com/The Cargo Letter Archives of Past Issues
Michael S. McDaniel, Editor, Countryman & McDaniel, forwarder/broker/trade consultant 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 _____________
***Middle East Logistics Future...... as it represents some of the best opportunities for express & logistics companies anywhere in the world, according to the latest report by industry leading market research company Transport Intelligence. However the report, Middle East Logistics 2006, also strikes a note of caution that stellar growth could be compromised by the latest conflict in the region. According to John Manners-Bell, CEO of Transport Intelligence, although there is no immediate region-wide threat to the prospects for the express and logistics sectors due to the size and socio-economic diversity of the geography, this could change if neighboring countries are drawn in. The main economic powerhouses are located in the Gulf far to the south of the present conflict. There, the logistics industry is being driven by the buoyant oil sector, rising consumer spend and the construction boom. The Gulf States also have incredibly ambitious infrastructure investment plans which, if successful, will see the region become a global hub for air and sea cargo. The vast amounts of money being spent on construction, and the rising standards of living will fuel growth of the logistics market for years to come. However this could all be risked if the present problems escalate. For example, the vulnerability of the Straits of Hormuz, the main channel through which crude oil is moved to the West, presents significant supply chain risks. The disruption of the supply of oil to the West, whatever the reason, would represent a major set back to the Gulf's investment plans.
***U.S. Logistics Costs Surge 15.2% in 2005 ........ as fueled by rising energy costs, interest rates, and security-related issues, the 17th Annual State of Logistics Report sponsored by the Council of Supply Chain Management Professionals (CSCMP) shows an increase of US$156Bn over 2004. The increase is nearly double last year's rise and the largest year-to-year change in over 30 years. "2005 U.S. business logistics costs rose from 8.8% to 9.5% of Gross Domestic Product (GDP)," said Rick Blasgen, President of CSCMP. "Transportation costs, driven mainly by the increased demand in trucking, coupled with tight capacity, jumped 14.1% over 2004," he added. This is causing some companies to rethink their lean inventory strategies.
***Trade Gap Grows ..... as the U.S. trade deficit rose by 0.8% in May from a month earlier to US$63.8Bn, the Commerce Dept. said. The growth was less than the US$64.9Bn economists had forecast, Bloomberg reported. Imports rose 1.8% to a record US$182.5Bn, led by petroleum, raw materials & business equipment. The U.S. trade gap with China also widened and China's trade surplus rose to a record US$14.5 Bn as that country's exports rose 23% from a year earlier, Bloomberg reported.
****U.S. Blamed For No Dough At Doha ....... as the World Trade Organization's Doha round of trade talks have collapsed after negotiators from 6 trading powers could not reach agreement on opening markets, especially in the area of agricultural trade, according to news reports from Geneva. EU Trade Commissioner Peter Mandelson blamed the U.S. for the failure, saying the United States did not show any flexibility on domestic farm subsidies -- perhaps for good reason.
***Japan Reopens The Drive-Thru Window - Again ....... as it has announced that it's officially re-opened its borders to U.S. beef imports after more than 2 years of rocky negotiations with U.S. Dept. of Agriculture officials and one false start. Japan, like many countries, banned U.S. beef shipments after the USDA confirmed a case of bovine spongiform encephalopathy (BSE), or "mad cow" disease, in a Washington state cow in late Dec. 2003. When Japan agreed to resume trade in Jan. 2006, inspectors found a violation to the agreement in a shipment & reset the ban on U.S. beef imports. Japan is considered the U.S. beef industry's largest export market by value. In 2003, the U.S. exported US$1.4Bn worth of beef to Japan.
***Vietnam Wants U.S. Grain ...... as it will soon import its 1st shipments of U.S. corn, according to the U.S. Grains Council. The 5,000-metric-ton order was made by Lai Thieu, a private company with 3 feed mills in Vietnam. The company has imported U.S. distiller's dried grains & U.S. soybean meal, and has sales volumes reaching 30,000 tons a month. The U.S. Grains Council, estimates Vietnam's demand for corn imports could grow 8% a year.
***U.S. "Danes" To Prohibit Poultry ..... as the U.S. Dept. of Agriculture's Animal & Plant Health Inspection Service has added Denmark to its list of regions free of exotic Newcastle disease, effective July 6. This rule relieves certain restrictions on poultry and egg imports from Denmark.
***California Remains Top Bread Basket ..... as it was the top agricultural products exporter in the U.S. during 2005, according to a report released by the U.S. Dept. of Agriculture's Economic Research Service (ERS). The state exported US$10.2Bn in agricultural products, up 7% from 2004. California accounted for 16% of all U.S. agricultural exports in 2005, the ERS report said. ERS ranked Iowa in 2nd place with US$4Bn & Texas in 3rd place.
***Uncle Sam Wants You - Step Up ...... as the Dept. of Homeland Security is soliciting industry representatives who are active in Int'l trade issues to serve on the Commercial Operations Advisory Committee. COAC members are eligible to serve 2 two-year terms. Half the membership usually turns over every cycle. COAC has 20 members, but is operating one person short since the spring when Jonathan Gold left his job at the Retail Industry Leaders Assn. to join U.S. Customs & Border Protection as a cargo security analyst. Importers are heavily represented on the panel, which also includes executives from the maritime, rail, broker & legal communities. Interested parties should send an application letter stating their qualifications for the position and party affiliation.
***Who Exactly Carries The Hot Cargo? ....... as the Transportation Security Administration (TSA) has announced that beginning Aug. 10 drivers licensed in Canada or Mexico to commercially transport hazardous materials will be required to undergo a background check under the Bureau of Customs and Border Protection's (CBP) Free & Secure Trade (FAST) program before transporting placarded amounts of hazardous materials (hazmat) in the U.S. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) requires that, beginning Aug. 10, commercial drivers licensed in Canada or Mexico may not transport hazmat, including explosives, within the U.S. unless they have undergone a background check similar to that required for U.S. operators with a hazmat endorsement. The fee is US$94.
***Iraq's New Foreign Investment Law ....... as the cabinet passed the country's first postwar law to regulate foreign investment, hoping it will attract badly needed cash to revive the country's shattered economy. But the legislation, which also requires parliamentary approval, does not cover investment in upstream oil production and exploration. The law gives Iraqi and foreign investors equal shares in investment projects, except in land ownership. It allows investors to move money in & out of Iraq with few obstacles, and also requires that at least 50% of the employees in a company must be Iraqis. The vast majority of foreign money since Saddam Hussein has been poured into security for western companies, not reconstruction projects. Investor bus tours have been diverted to Monte Carlo.
***Expansion of Detroit Border Crossing - At Last ....... as the owner of the Ambassador Bridge, the busiest & most congested Int'l truck crossing in the United States, filed an application July 13 to build another span of the bridge linking the U.S. & Canada. The proposed span would be next to the current bridge & add 6 more lanes crossing the Detroit River to link Detroit with Windsor, Ontario.
***Electronic Northern Border Security ...... as deployment & testing of the new automated truck manifest system is currently underway at border checkpoints in the state of New York, U.S. Customs & Border Protection announced in a Federal Register notice. CBP this year has been phasing in along the Canadian & Mexican borders its new electronic manifest system for collecting international shipment data from motor carriers. The system is voluntary but the agency will eventually mandate that cross-border truckers file their paperwork electronically to speed up processing at ports of entry. The system will be deployed at the Peace Bridge near Buffalo after July 10 and at the Lewiston Bridge, the other major crossing in the area, after Aug. 12. The installation process has been ongoing at smaller border stations since late June.
***U.S. Customs & Border Protection Gets Sluggish ...... as agriculture specialists at Washington state's Sea-Tac Int'l Airport announced this week that on July 12, they halted a shipment of mushrooms from Bulgaria that contained destructive slugs. The slugs, known as Lehmannia ncytelia, pose a threat to agriculture, particularly growers of trees, shrubs and greenhouse plants. They can also transmit the tobacco mosaic virus to some plants, which left unchecked cause severe damage to crops such as tomatoes, peppers, other vegetables, flowers & weeds, CBP said. The shipment of mushrooms arrived from Bulgaria via London. Slugs were found by agriculture specialists on the floor of the container. The shipment was bound for an importer in California. We have many slugs here, if you read the Hollywood Press.
***U.S. Boxcar Demand Surges ...... as need for railcars will remain at historically high levels throughout the next few years, according to FTR Associates. Total ton miles for rail freight is expected to rise 2.1% in 2006, 2.6% in 2007 and 2.1% in 2008, said the Nashville-based transportation forecast & research firm. Demand for transport by coal, intermodal and to a lesser extent farm products are high, while demand for housing materials & chemicals have slowed.
***Downward Road ...... as the American Trucking Assn. says its preliminary June for-hire truck tonnage index decreased for the 1st time in 3 months, falling 0.7% following gains of 2% and 0.4% in April & May, respectively. The gain put the seasonally adjusted index at 112.3 or 1.4% below the same month last year. The not seasonally adjusted index dropped 0.7% in May to 119.1.
***Phoenix International Set In Indian Subcontinent ....... as it has announced the opening of 13 new company offices located in India & Sri Lanka. Phoenix, the largest privately owned Int'l freight forwarder, NVOCC & Customs broker headquartered in North America, this month acquired majority shares of Eastern Logistics Private Ltd. in India, and opened an office in Colombo, Sri Lanka. The offices will allow the company "to offer our clients superior & enhanced services to/from the Indian subcontinent," said Bill McInerney, Phoenix founder & CEO. Phoenix has a network of 275 locations in 100 countries.
***UTi To Israel ..... as the Rancho Dominguez, Calif.-based forwarding & logistics company UTi Worldwide Inc., said it is in separate negotiations to acquire controlling interests in 2 Israeli freight forwarders. UTi is negotiating a US$20M purchase for a 51% share in Transclal Trade Ltd. -- and with Zim Integrated Shipping Services Ltd. for a controlling interest in Newlog Ltd.
***Schenker's New German Digs ...... as logistics property developer Eurinpro has delivered a 194,000-square foot warehouse in Grolsheim, Germany, to German logistics company Schenker. This is the 4th custom facility Eurinpro has built for Schenker, but the 1st in Germany -- located near highways to Wiesbaden & Mannheim.
***PWC Logistics Goes To The Alps ....... as the Kuwait forwarder is to acquire Cronat Group of Basel, Switzerland in a move that PWC says will strengthen its presence in Europe. Cronat offers services under the forwarding and logistics brand "Natural." Cronat said it will continue to be managed in Switzerland by existing management and that no layoffs were planned. PWC Logistics operates has 450 offices in over 100 countries.
***Con-way Sheds A Skin ..... as its expedited transportation unit, Con-way Expedite & Brokerage, is sold to Panther Expedited Services Inc. in a deal valued between US$7M & US$8M. For Panther, the acquisition helps expand the company's North American network of service contractors to about 1,900 vans, straight trucks & tractor trailers in North America, in addition to expanding its account base with Con-way Expedite's customer list. Con-way entered a non-compete as part of its agreement to sell to Panther. Con-way said the sale allows it to continue its corporate strategy of focusing on core business lines.
***Con-way Sheds Some Bucks .......... as it has paid US$9.2M to settle a suit by former pilots and crew members who worked for the company's airfreight unit until it was shut down 5 years ago, Bloomberg has reported. The California suit had sought US$500 M in damages related to the former Emery Worldwide Airlines, Con-way said in a regulatory filing, said Bloomberg. Con-way, which changed its name from CNF Inc. in April, closed Emery & switched its air freight shipments to contractors to save money, Bloomberg said. Last month, Con-way closed its domestic air freight forwarding operations under its Con-way Forwarding subsidiary.
***TransCore Gets IntelliTrans ....... as the largest manufacturer of transportation-based RFID products, has acquired of IntelliTrans, a track & trace software platform for the rail & intermodal industry. TransCore will combine IntelliTrans' in-transit visibility, maintenance, repair, yard, & inventory management service offerings with TransCore's RFID products. The combination will provide integration for rail, truck, container, barge, & intermodal applications. IntelliTrans will continue to be based in Atlanta. Value of deal undisclosed.
***Harvey A. Isaacs Retires ....... as our pal has called it quits after 30 years as General Counsel for the National Customs Brokers & Forwarders Assn. of America, according to the association's summer newsletter. Isaacs, a partner in the law firm of Tompkins & Davidson, will continue to provide consulting services on broker regulatory matters. Harvey always has his hand on the pulse. Harvey, now you can cheer up!
***Battling Food Terror ..... as the U.S. Dept. of Agriculture has released a guide to help farmers better protect the nation's food supply against unintentional or deliberate introductions of plant & animal diseases. The "Pre-Harvest Security Guidelines and Checklist 2006" was developed based on recommendations from farmers throughout the U.S. The USDA said doors, windows, gates, roof openings, vent openings, trailer bodies, railcars & bulk storage tanks should be secured at all times. Truck deliveries should be verified against a roster of scheduled deliveries, while unscheduled deliveries should be held away from facilities pending verification of the shipper & cargo. View guidelines Online:
2. The Cargo Letter Financial Page _____
**AMR Corp.(parent of American Airlines) UP with a net profit of US$291M for the 2nd quarter, up 402% compared to a net profit of US$58M in 2nd quarter 2005.
**Burlington Northern Santa Fe Corp. UP as 2nd quarter helped its net income rise 28.4% to US$470M, from US$366M a year ago.
**Canadian Pacific Railway. UP with a 206% rise in second quarter net income to US$330.7M, thanks largely to a US$154.2M income tax benefit & a US$35.9M after-tax foreign exchange gain on its long-term debt.
**C.H. Robinson Worldwide. UP with 2nd-quarter net income of US$66.6M or 38 cents a share, up from US$49.3M or 28 cents a year earlier.
**Continental Airlines. UP as it nearly doubled its 2nd-quarter net income with a US$198M profit, compared to net income of US$100M in same period last year.
**CSX Corp. UP with 2nd-quarter net profit of US$390M, up 136$ from US$165M for the same period 2005.
**Deutsche Lufthansa AG. UP with a 57.7% jump in 2nd quarter net profit to US$233.4M.
**GATX Corp. DOWN withnd quarter net income from continuing operations of US$40.3M compared to net income of US$34.5M in same quarter 2005.
**J.B. Hunt Transport Services. UP with a record Q2 net profit of US$55.3M or 36 cents a share, up from $54.6 million or 33 cents a year ago.
**Kuehne + Nagel Int'l AG. UP with increased 1st half 2006 net income 62.2% to US$167M.
**Norfolk Southern Corp. DOWN with 2nd quarter net income of US$375M, down 11.5% from US$424M in the year prior quarter.
**Old Dominion Freight Line. UP as 2nd-quarter net income jumped 55.3% to US$21.6M or 58 cents a share from US$13.9M a year earlier.
**OMI Corp. UP with 2nd quarter Net Income of US$131.8M and basic & diluted Earnings Per Share ("EPS") of US$1.92.
** PACCAR. UP as earnings increased 53% to US$369.9M for the 2nd quarter of 2006 compared to US$241.5M in 2nd quarter last year.
**RailAmerica (holding company for 42 short-line railroads operating on 7,800 track miles in U.S. & Canada) DOWN with 2nd quarter net income of US$7.8M, down 16% compared to US$9.3M in same quarter 2005.
**Ryder System. UP as 2nd-quarter net income rose to US$70.3M or US$1.13 a share, from US$63.3M or 98 cents a year earlier.
**Union Pacific Corp. UP as 2nd-quarter profit rose 64% to US$390M or $1.44 per share, from US$233M or 88 cents a year earlier.
**UPS. UP with 2nd quarter net income of US$1.06Bn, up 7.6% from US$986M a year ago.
**U.S. Xpress Enterprises Inc. UP as 2nd-quarter income rose to US$5.7M or 37 cents a share, compared with US$482,000 or 3 cents a share in the previous year.
**World Air Holdings (parent of World Airways & North American Airlines) UP in 2005 results, which showed a 24% jump in net income to US$31.6M, compared to US$25.6M in 2004.
OUR "B" Section: FF World Air News***
3. Freight Forwarder World Air Briefs ___
***U.S. Airlines For Sale? -- Son of Dubai Ports Controversy? .... as according to a report in WorldNetDaily the U.S. Dept. of Transportation, acting under President Bush's orders, is preparing to issue an administrative ruling that would open U.S. airlines up to foreign ownership, despite specific prohibitions & warnings from Congress, as well as predictions by pilots that another Dubai ports controversy is in the offing. The proposed ruling puts the Air Line Pilots Assn. (ALPA) &endash; the largest airline pilot union in the world representing 61,000 pilots who fly for 40 U.S. & Canadian airlines &endash; at odds with the Bush administration. According to the report, the administration is determined to comply with European Union demands presented in the Nov. 2005 "open skies" negotiations. ("open skies" agreements are bilateral or multilateral agreements that liberalize the rules for Int'l aviation markets & minimize government intervention). ALPA is encouraging pilots to write letters in protest of the move, said the report.
***U.S. Airports For Sale ?-- Brother of Son of Dubai Ports Controversy? ..... as Chicago expects overseas bidders to dominate next year's sale of the city's Midway airport, in spite of lingering political concerns in the US over foreign ownership of critical infrastructure. The long-term lease of Midway is the latest initiative by Chicago to plug its budget gap following the US$1.83Bn sale of a toll road. The airport project is far more complex than the toll road, or parallel plans to sell 2 parking garages & 3 waste recycling plants, particularly in the wake of the furore over Dubai-based DP World's plan to operate 5 U.S. container ports. The privatization would be by far the largest for a U.S. airport. The airports are almost exclusively owned by cities or other local authorities, though many services have been contracted out to the private sector. Midway is twice the size of Indianapolis airport, which is managed by UK-based BAA. National Express, another UK transportation group, runs the small Stewart airport north of New York City under a 99-year lease.
***Airforwarders Face Heightened Security Role ....... as months after the 9/11 attacks, Congress enacted the Aviation & Transportation Security Act (ATSA).
Now a new Rule directly impacting U.S. airfreight forwarders under ATSA is expected in final form by Aug. 1, 2006.
Under the new rule, airforwarders will provide information to the TSA in the form of Security Threat Assessments (STA's) on employed individuals as well as cartage agents who have access to cargo. Indirect Air Carriers will not conduct the background check, but will submit all TSA required information to the TSA electronically so that TSA may conduct the check, as it has better access to greater databases. TSA projects a 10 day window for approval or denial.
TSA will also issue a new statement of "No Security Threat" concerning airport grounds. The new rule will extend Security Identification Display Areas (SIDA's) to where cargo is loaded, unloaded, sorted, staged or stored and includes cargo facilities loading/unloading docks & any area where airport operators load or unload freight. Companies performing these services are required to supply to TSA information relative to all persons having access for purposes of a Criminal History Records Checks (CHRS). Again, these background checks will not be performed by the airforwarder itself. The information will be supplied to TSA so that TSA will conduct the check. CHRC information will also be required of airport personnel who are screeners of freight. The New Rule also expands the "Known Shipper Rule" by condensing some 40,000 individual known shipper lists into the TSA database. Required information by TSA will be submitted to TSA electronically where TSA will "vet" and continually monitor & update the know shipper list. Shippers under the new rule will be required to give written consent to inspection & screening of their cargoes. Execptions will exist for certain commodities such as jewelry, currency, and drugs which cargoes are sealed and create high exposure to damage or loss if screened.
For More information contact Byron Countryman Esq. of the Countryman & McDaniel Law Firm.
Privacy Impact Assessment for Air Cargo
Federal Action Needed to Strengthen Domestic Air Cargo
TSA Air Cargo Security Requirements
National Research and Development Plan For Aviation Safety, Security, & Efficiency Compatibility
***Antitrust Probe Subpoenas ...... as both FedEx & UPS say they are cooperating with officials after a U.S. Dept. of Justice probe into air cargo price fixing resulted in separate subpoenas for the two transport & logistics companies. Both companies say they do not believe they have violated any laws. The probe into air cargo price fixing began in February when officials in the EU, South Korea and the U.S. simultaneously raided carrier offices to seize records or delivered documents requiring disclosure of pricing information by a number of Int'l air carriers. Though some government actions were more dramatic, entering offices and seizing records, many airlines were approached by investigators who conducted employee interviews and examined documents. Among the airlines contacted in the initial probe were United Airlines, Japan Air Lines, Cathay Pacific, Lufthansa, KLM/Air France, Cargolux, British Airways, Asiana and Korean. At the start of the investigation in Feb., all-cargo carrier CargoLux, Polar Air Cargo & integrator UPS had been contacted. The price fixing investigation centers on surcharges for fuel & security.
***IATA Points Traffic Up ..... as the Geneva-based Int'l Air Transport Assn. reports that Int'l air freight traffic was up 5.2% for the 1st half 2006. Middle Eastern carriers lead the growth in the 6 month period with a 19.3% year-on-year increase in freight-ton kilometers, followed by North America (6.4%), Africa (5.6%), Asia Pacific (4.8%), Latin America (4%), and Europe (2.2%). Giovanni Bisignani, IATA's director general and chief executive officer, said that rising oil prices have left airlines in the red despite average 10% revenue increases over the last 3 years.
***U.S. Participation Also Up ...... as Int'l air freight & express shipments carried by U.S. airlines increased 11.9 % year-on-year in May to 1.17 billion revenue ton-miles, according to the latest statistics provided by the Washington-based Air Transport Assn. For the year so far, ATA members' Int'l air freight & express shipments are up 7.6% to 5.59 billion revenue ton-miles. ATA Airlines are Aloha, Alaska, America West, American, ATA, Continental (including Micronesia), Delta, FedEx, Hawaiian, JetBlue, Midwest, Northwest, Southwest, United, UPS & US Airways .
***Civilian Air Cargo May Get A Miliitary Boost ...... as the U.S. Central Command's Deployment & Distribution Operations Center, or CDDOC, has initiated a test to determine the cost and effectiveness of using commercial air cargo aircraft to augment military aircraft in delivering supplies to troops in Iraq and Afghanistan. The purpose of this initiative, called the Commercial Government Air Program, CGAP, is to develop a commercial air capability to efficiently move cargo, establishing conditions to reduce the number of military aircraft in theater. The test began July 17, & will run 45 days to validate the cost & effectiveness of the new program for scheduling air cargo traffic in theater, testing commercial carriers' ability to handle cargo requirements. During this evaluation period, certain cargo -- because of its nature or priority -- will continue to be flown on military aircraft, but as part of this new process, select cargo will be analyzed to determine if a commercial carrier would be more cost-effective. CDDOC planners estimate 15% to 20% of routes now flown by military aircraft may be better served by commercial carriers & are potential candidates for CGAP. In addition to cost savings & better use of military cargo aircraft -- such as C-130 Hercules & C-17 Globemaster III's -- CENTCOM CDDOC planners believe increased commercial cargo routes will help spur economic development in the civilian sector.
***UPS Contract Sealed After 4 Years ..... as the Independent Pilots Assn. (IPA), representing UPS pilots, & UPS Airlines announced a tentative agreement in contract negotiations. The labor agreement provides wage & pension improvements and a variety of changes in work rules, according to UPS. Specific details of the agreement will not be released before the IPA presents the contract to pilots. A majority of UPS' 2,700 pilots must ratify the contract, which would not become amendable until 2011. Both sides commended the National Mediation Board for its guidance during negotiations. The sides have been in negotiations since the prior contract expired in 2002.
***UPS Airlines Hauls The Mail .... as it has won a 3 year contract by the U.S. Postal Service (USPS) to provide domestic air transportation of primarily First Class & Priority Mail. Effectiv July 1, UPS will initially airlift First Class & Priority Mail volume each week to & from 98 cities. The contract, which includes an option for a 1 year extension, expands an existing relationship between UPS and the USPS under which the company provides airlift for mail transportation between 16 cities. UPS said it will utilize existing capacity to handle the new postal volume, further optimizing its vast U.S. air network. With more than 575 aircraft either owned or chartered, UPS is one of the world's largest airlines & has capacity during the day to meet postal requirements.
***China's 2nd Biggest Ties To Sky Team ..... as moving one step closer to official alliance membership, the addition of China Southern to SkyTeam will expand service offerings. In addition to expanded coverage in China, SkyTeam members will add a well-positioned, modern hub, at Guangzhou to the alliance network. China Southern operates in China with more than 600 routes & a fleet of 259 aircraft. It serves a number of Int'l destinations that match up with SkyTeam member destinations, including Dalian and Changsha in China & Melbourne in Australia. Working since 2004, when it signed an initial agreement, China Southern has established relationships for cargo & passenger handling with 5 of SkyTeam's 10 members &endash; Air France, Delta, KLM Royal Dutch Airlines, Korean Air and Northwest Airlines. Remaining membes are Aeroflot, Aeromexico, Alitalia, Continental Airlines & Czech Airlines.
***Southwest Airlines Gets Heavier ...... as it will increase its per-piece weight limits on cargo shipments to 200 pounds from 150 pounds on Aug. 1. The Dallas-based airline will also raise seafood shipment limits to 175 pounds from 80 pounds, allowing commercial customers to ship large items such as whole tuna.
***Target Logistics Makes Discovery.........as the freight forwarder has acquired Discovery Air Cargo, a freight forwarder that operates in the New York area. Terms were not disclosed, though the acquisition is expected to add US$7M in annual revenues to Target, the company said. Target began trading on the American Stock Exchange last month.
***Down Under At The Border ..... as Mexico will become the 40th country in Qantas' Int'l network starting Aug. 1, 2006, following the signing of a codeshare agreement between Qantas & Mexicana. Qantas will codeshare on Mexicana flights from Los Angeles to Mexico City, Cancun, Guadalajara and San Jose del Cabo, and from San Francisco to Mexico City. Mexicana will codeshare on Qantas flights from Los Angeles to Sydney, Brisbane & Melbourne.
***Down Under The Seat ..... as armed police removed a woman from a Cathay Pacific flight after she refused to stow her Gucci handbag under the seat in front of her or in the cabin overhead, Apple Daily reported on July 30. The flight from Hong Kong to Tokyo was delayed for an hour as the woman contested the cabin crew's instructions to put her luxury handbag on the floor or in the compartment above her seat. Other passengers clapped when the woman with the bag was finally escorted off the airplane. The woman later apologized & she & 4 friends who also got off the plane were put on a later flight to Tokyo. Geez, what if it was a knock-off?
OUR "C" Section: FF World Ocean News***
4. FF World Ocean Briefs
***No Peak Season West Coast Congestion This Year? ..... as although record cargo levels are expected at major U.S. based retail ports for the rest of this summer and into the fall, it will not result in congestion problems, which have previously hindered port operations, according to the recently-released July Port Tracker report by the National Retail Federation, a retail trade association, and Global Insight, a provider of financial information. The U.S. based ports surveyed in the report, including Los Angles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston & Savannah, handled a cumulative 1.34 million Twenty-foot Equivalents (TEUs) of container traffic in May, most recent month for which data is available. May's total slightly edges out the 1.32 million TEUs handled by the surveyed ports in April, and is 9% more than May 2005. The report added that this year's numbers-to date-are already higher than the peak figures for all of 2005. And the records that were set last year will likely be broken, without significant West Coast congestion, said Global Insight. To finish a season without West Coast chaos will be a blessing.
***The Cost Of Calling At Beirut ...... as HSBC Insurance Brokers said it is seeing war risk premiums for vessels calling at Beirut of 60 times the market norm, with the call limited to 24 hours. Underwriters also expect safe passage to have been arranged with the Israeli & Lebanese governments through the UN, by the country whose citizens are being evacuated.
***The Pirate Cost of Being At Sea ...... as a new report from the Int'l Maritime Bureau has revealed a sharp rise in maritime piracy cases in which seafarers have been killed, injured, kidnapped & assaulted. According to the IMB, the first 6 months of 2006 witnessed a total of 127 attacks on shipping throughout the world &endash; the same figure as in the 1st half of last year. There were 74 cases in which ships were boarded by pirates, and 11 in which ships were hijacked. A total of 156 crew were taken hostage, 13 crew kidnapped & 6 crew killed. These statistics underline a continuing need for concerted action to combat piracy & the wider threat of terrorist attacks on shipping. At a time when a Hollywood movie is topping the charts, the world ignores the 'brutal reality' of modern day piracy.
***Natural Cause For Lost Ships? ....... as freak ocean waves that rise to a height of 10 story buildings may be sinking ships in accidents that are attributed to nothing more than poor weather. Once dismissed as a nautical myth, freak or "rogue" waves have been recorded by shipping vessels and more accurately measured from oil & gas platforms at sea. The waves arise by chance when others combine, leading to giant walls of water that momentarily tower above the rest of the ocean, at heights in excess of 30 meters. Research at Imperial College, London, shows that far from being rare events, rogue waves can emerge frequently, and may be responsible for some of the 200 supertankers and container ships longer than 200m that have sunk in poor weather conditions in the past two decades. Andrew Linington of the National Union of Marine, Aviation and Shipping Transport Officers, said: "We have to stop calling these freak or rogue waves because all the evidence seems to be suggesting they're to be expected with more frequency than people believed in the past. If these were passenger ships going down there'd be an outcry. There aren't many people in the industry taking it seriously."
***Who Should Set The Container Security Standard? ........ as the World Shipping Council has slammed the GE Security division for trying to unilaterally develop global standards for container security devices it has developed rather than go through the industry-accepted International Standards Organization. The council, which represents international container lines serving the U.S. market, called GE's move "unnecessary and counterproductive" to the formation of a single uniform international container security standard that would cover electronic seals as well as container security devices. "It is also a strange coincidence that GE would undertake this initiative just as the ISO is about to finalize its years of effort in developing a consensus international RFID (radio frequency identification) container security technology standard -- a standard that differs significantly from GE's product," the council said in astatement. The ISO is expected to develop the maritime security RFID standards by the end of the year. GE Security & its marketing partners, Siemens AG and Mitsubishi Corp., announced last month the formation of an International Container Standards Organization (ICSO) to quickly develop common protocols. The Port of Antwerp & terminals operated by the Virginia Port Authority in Norfolk, have said they plan to install a network of GE CommerceGuard readers. Starbucks, the 1st commercial customer for CommerceGuard, has started using the device on trade lanes from Guatemala to the U.S. & Europe.
***Short Is Successful ...... as the European Commission has reported on its efforts to promote short sea shipping, reviewing actions introduced in 2003 to enhance the efficiency of short sea Shipping in Europe. The EC said an initial list of 161 bottlenecks identified in 2000 have been reduced to 35. Such bottlenecks range from complexity in customs documents & procedures for intra-EC trade to waiting times in ports for unloading ships. The report said the ton-kilometer performance of short sea shipping in the EU-25 improved 32% from 1995 to 2004, compared to road performance growth of 35%. The fastest growing segment of short sea shipping is containerized cargo with average yearly growth rates of 8.8% since 2000.
***Belize Makes QUALSHIP 21 .... as the U.S. Coast Guard has praised the leadership of the Int'l Merchant Marine Registry of Belize for its work during the past 5 years to root out substandard vessel operators from its membership. A spokesman said he was "not surprised" the Belize flag registry would qualify for the Coast Guard's Quality Shipping for the 21st Century (QUALSHIP 21) award earlier this year, since detentions of Belize-flagged vessels in U.S. ports had dropped off to well below 1%. To qualify for QUALSHIP 21 status, flag states must average at least 10 distinct U.S. arrivals a year and have a 3 year running detention rate of 1% or less. The cleanup within the Belize flag registry has been credited to Director General Angelo Mouzouropoulos, who took over the registry's administrative role in 2001 after serving 25 years in ship management with Hamburg Sud.
***Dubai Ports - Next Stop Peru...... as it plans to invest US$430M in Peru's 1st modern container port as the company expands its presence in South America. DP has signed signed a 30-year concession agreement with the Peruvian government to build and operate the 1.3-million TEU (twenty-foot equivalent unit) annual capacity terminal adjacent to the port of Callao outside the capital Lima. The 1st phase development will cost US$256M, while US$217M will be spent on the 2nd phase expansion. The world's 3rd biggest port operator last month won an Int'l bid to build the container terminal in partnership with Peru-based group Unimar. DP World holds a 70% stake in the development company through its subsidiary P&O.
***APL Will Remain At Oakland ..... as the Singapore-based ocean carrier has announced an agreement to keep its vessels calling at the Port of Oakland for decades to come. APL & Port of Oakland finalized a 15-year lease extension for APL's Middle Harbor Terminal in Oakland. With two subsequent 5 year options, the agreement could last a quarter century. APL opened the terminal in 1974. Middle Harbor Terminal is one of 3 major marine terminals managed by APL on the U.S. West Coast -- the others are in Los Angeles & Seattle. The Oakland terminal employs up to 200 longshore workers a day and processes about 239,000 cargo containers annually laden with cargo valued at more than US$5Bn.
***PierPASS New Requirements ....... as it has announced that an open testing period will begin on July 31, for the new procedures for handling export containers under the OffPeak program at the Ports of Los Angeles & Long Beach. PierPASS urges all exporters to begin using the modified system during the testing period to ensure they are ready for the change. Beginning Monday, Aug. 7, 2006, exporters delivering containers during peak hours will be required to claim their booking numbers before the containers arrive at the marine terminals. Under the revised procedure, exporters claim their booking numbers at the PierPASS website & entering the booking numbers. Export containers subject to the Traffic Mitigation Fee (TMF) that arrive at terminals during peak hours (Mon. - Fri., 3:00 a.m. to 6:00 p.m.) without having been claimed in this manner will be turned around & encouraged to use the OffPeak hours of operation. More information is available Online, including a a link to a free webinar on the procedure change. NOTE>> Since the start of the program, between 30% & 35% of container cargo at the ports has moved during the 6 night & Sat. shifts.
***Ultimate Backhaul Charge ....... as the U.S. Dept. of Justice has announced that Italia Marritema SpA and Yang Ming Transport Corp. -- who are owners & operators of container M/V Med Taipei -- have agreed to pay US$3.25M to the U.S. to resolve allegations that 15 containers lost overboard in 2004 resulted in long-term damage to the Monterey Bay National Marine Sanctuary. The containers fell overboard in rough seas as the ship was transiting from San Francisco to Los Angeles. In June 2004, the Monterey Bay Aquarium Research Institute discovered one of the containers carrying car tires during a research project. The container was found by a remotely operated vehicle in 4,000 feet of water the registration number being easily identified & traced back to the ship. A U.S. Coast Guard report revealed the containers were improperly loaded on board -- there were faulty welds on anchor points for the containers, as well as missing d-rings from the deck of the vessel. This development of financial penalty could signal the opening of a whole new front on the federal government's battle against marine pollution, given thousands of overside containers each year. The funds provided from the settlement will be used to restore habitats within the National Marine Sanctuary.
Settlement is subject to a 30-day public comment period & final court approval.
***Laying Down On The Job ....... as Japanese ocean cargo line Mitsui O.S.K. has hired Titan, a subsidiary of Oakland-based Crowley Maritime Corp., to salvage the 55,328 gt. disabled car carrier M/V Cougar Ace from the North Pacific. MOL said, based on the captain's report, it believes instability created during a procedure to adjust the water level in the ship's ballast tanks caused the sudden list. See our dramatic photo feature of vessel -- floating at a 90 degree list with 4800 cars! Sadly, a death is reported tonight. Incredible photos.
***Matson Marshalls Resources ...... as for the past 30 years, has delivered freight once a month from Hawaii to the Marshall Islands, but starting Aug. 15th, ship frequency will double and Matson will begin to use its expanding port hub in Guam. This will enable Matson to make port calls every 14 days as opposed to every 28 days, the current cycle out of Honolulu.
***U.S. Coast Guard Wants You ...... as it is seeking applications for membership on the Navigation Safety Advisory Committee (NAVSAC). NAVSAC provides advice & makes recommendations to the agency on issues related to the prevention of collisions, rammings, and groundings and related navigational matters. Applications should be submitted by Sept. 30.
***Now Voyager ...... as the National Oceanic & Atmospheric Administration (NOAA) has launched its On-line Chart Viewer. The service allows persons with Internet access to display virtually any nautical chart in the national suite. It also allows for panning & zooming.
***World's Largest Container Vessel At Sea ....... a the 9,600 TEU M/V Xin Los Angeles, built by Korea's Samsung Heavy Industries, has been christened & handed over to its owner, Chinas CGS. To get a sense of the capacity of the 321 meters long & 46 meters wide ship, builder explains it can hold 1.3 million 29-inch color television sets or 50 million mobile phones. Structural safety has been strengthened particularly on the bow & stern of the ship and special attention has been paid to minimizing its vibration. In order to do so, the angle of vessel's propeller tips was adjusted in a way to reduce pressure on it by as much as 20%.
***But There Is A New OOCL Giant ..... as Hong Kong-based Orient Overseas Container Line has named its 10th in a series of 12 8,063-TEU "SX-class" containerships built by Korean shipyard Samsung Heavy Industries. The vessel M/V OOCL Europe was named at the Geoje Shipyard, on Geoje Island, South Korea. It will be deployed on the Grand Alliance's weekly Asia-Europe EU4 service.
***Throughput >>> Container traffic at the Port of Antwerp jumped 10.7% in the first half 2006 to 3.5 million TEUs, compared to 3.1 million TEUs in the same six-month period last year. >>> Box volumes at the Port of Hong Kong increased 3.8% in June to 2.02 million TEUs & after 6 months, Hong Kong's container throughput is up 6.6% at 11.42 million TEUs. >>> Port of Long Beach's container throughput rose 7% in June to 617,002 TEUs, compared to 576,604 TEUs in the same month last year. >>> Port of Los Angeles container throughput increased 14.6% in June to 726,872 TEUs, compared to 634,048 TEUs in the same month last year. >>> New Jersey's Port of Camden handled 1,864,205 tons of cargo on 219 ships in the 1st half of 2006, compared with 1,810,674 cargo tons on 184 ships during the first half of 2005. >>> Singapore state-owned PSA International handled 24.41 million TEUs globally in the 1st six months of 2006, up 28.6% year-on-year, while PSA's flagship Singapore terminals posted a 4.2% rise in volume to 11.39 million TEUs, from 10.93 million TEUs a year ago.
***FMC Revokes 12 OTI Licenses ....... as for failure to maintain valid bonds the companies are AMF Global Transportation, Elk Grove Village, Ill.; Allcargo Net, Miami; Commonwealth Custom Broker, Miami; Container Innovations, Kearny, N.J.; JCL Consolidators, Medley, Fla.; Jet-Mar Corp., Miami; Lee Ann Tyus, Cornelius, N.C.; Road Runner Int'l, Union, N.J.; Ultimate Media Express, Springfield Gardens, N.Y.; Robert J. Semany & Co., Detroit; The Hawken Group, Los Angeles; & United Aero Marine Services, Los Angeles.
***This Month In U.S. Navy History .......
1802 - Frigate Constellation defeats 9 Corsair gunboats off Tripoli (current Libya).
1812 - Frigate Essex captures British brig Leander.
1815 - Commodore Stephen Decatur concludes agreement with Bey of Tunis to compensate U.S. for seizure of merchant ships during the War of 1812.
1823 - After pirate attack, Lt. David G. Farragut leads landing party to destroy pirate stronghold in Cuba.
1846 - First visit of U.S. warships (USS Columbus & USS Vincennes) to Japan is unsuccessful in negotiating a treaty.
1865 - East India Squadron established to operate from Sunda Strait to Japan.
1874 - Commissioning of USS Intrepid, 1st U.S. warship equipped with torpedoes.
1918 - Armored cruiser USS San Diego (ACR 6) sunk off Fire Island, N.Y. by a mine laid by German U-boat U-156.
1933 - USS Constitution commences tour of principal U.S. seaports.
1934 - First President to visit Hawaii, Franklin D. Roosevelt, reaches Hilo on board USS Houston (CA 30).
1945 - USS Callaghan (DD 792) is last ship sunk by a Japanese kamikaze attack, off Okinawa.
1964 - All-nuclear task force with USS Long Beach (CGN 9), USS Enterprise (CVN 65) & USS Bainbridge (CGN 25) leaves Norfolk, Va., to begin voyage, Operation Sea Orbit, to circle the globe without refueling. They returned Oct. 3.
***They Have Not Yet Begun To Search ...... as search for Bonhomme Richard, the flagship of Capt. John Paul Jones, father of the U.S. Navy, kicked off in the waters off Flamborough Head, July 18. led by the Ocean Technology Foundation, a U.S.-based non-profit organization, research team includes the U.S. Navy's Naval Historical Center & Osiris Projects, a survey company in Wirral, U.K. This is the 1st year of a multi-year survey project to find the shipwreck. However, the team has been preparing for this expedition for more than 2 years. Sept. 23, 1779, Jones engaged HMS Serapis in one of the most memorable battles in U.S. naval history. It was during this 3.5 hour fight, most of it taking place at point blank range, that Jones shouted his legendary words, "I have not yet begun to fight!" Ultimately, he emerged victorious & took control of Serapis. Bonhomme Richard had served him well; 36 hours later, Jones watched his ship disappear beneath the waters of the North Sea. John Paul Jones and Bonhomme Richard are as important to the U.S. as Adm. Lord Nelson and his ship HMS Victory [are to the British.
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!! Don't miss the pirate attack on M/V Seabourn Spirit
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. You will be amazed.
SPECIAL NOTE: Please view the dramatic new pictures at our special "Gallery of Cargo Loss" website feature.
See our new photo feature for July 2006: "Happy Landings" AMAZING !
See our newest photo feature "Singles Only" - Transportation Disasters Told In A Single Photo! Includes our photo coverage of currently stricken M/V Cougar Ace!
Our new features were not quite ready to post for this edition, but get ready for:
"Full Speed Ahead"
"Where The Tradewinds Blow"
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..............
A 5 Step Plan for Improved Supply Chain Security
Dangers of Encountering Unexploded Munitions at Sea
Greening of the Supply Chain
Homeland Security Office of Inspector General.............. review of Customs & Border Protection (CBP) actions to intercept terrorists at U.S. air, land, & sea ports of entry.
How to Choose the Best Database for Your Business
IMO &endash; Award For Exceptional Bravery At Sea ......... new Int'l recognition for those who, at the risk of losing their own life, perform acts of exceptional bravery.
IMO &endash; Considerations For Current Evacuations From Lebannon in E. Mediterranean
IMO &endash; Piracy & Armed Robbery &endash; Report For May 2006
Int'l Lake Ontario-St. Lawrence River Study Board ......... free report.
M/V Queen of The North ............. Transportation Safety Board of Canada underwater images -- sinking of the BC Ferry Services vessel on March 22, 2006.
Panama Canal Authority Advisory ........ booking slots will be increased
RFID Bill of Rights?
Short Product Lifecycles Pose Supply Chain Challenges
Supply Chain Organizations Enter Second Decade
Supply Chain Software More Important Than Ever
U.S. Coast Guard Crew Endurance Management Newsletter
U.S. National Geospatial - Intelligence Agency Daily Report .......Eastern Mediterranean Sea - Warning - Israeli Navy established closure area.
2006 Official Export Guide
Warehouse Floor Bar Code Label ........ free kit.
World Trade Organization Events
Air Cargo India 2006 ........ Nov. 16-18, 2006, World Trade Center in Mumbai.
ASG Security Summit & Expo
Council of Supply Chain Management Professionals .......... 15-18 Oct. 2006 Henry B. Gonzalez Convention Center, San Antonio, Texas
Freight Russia 2006 ......... 24 - 26 Oct. 2006, Expocentr, Moscow, Russia
GCC Low Cost Airlines Conference ........ Sept. 19-20 2006, Dubai UAE
Global Automotive Logistics 2006 ......... 17- 18 Oct. 2006, Hilton, Antwerp, Belgium
Intermodal Exhibition & Conference 2006 ........... 5-7 Dec. 2006, Hamburg Messe, Hamburg, Germany
Middle East Combating Financial Fraud Practices Summitt ........ 1 Nov. 2006, Dubai, UAE
The Next Generation of Lift Truck Productivity ........ Video Webcast Available On-Demand
Shipbuilding-Machinery & Marine Technology Int'l Trade Fair ..........Sept. 26-29, 2006 -- Hamburg, Germany.
NOAA North Atlantic Right Whale &endash; Ship Strike Reduction ...........meetings Jacksonville (Aug. 8); Baltimore (Aug. 10); & Boston (Aug. 14)
TOC2006 Americas ......24 - 26 Oct. 2006, Fairmont Princess, Acapulco, Mexico
Transtec 2006................ 25-28 Sept. 2006,Int'l Euro-Asian conferences on transport, St Petersburg, Russia
Underwater Vehicle Showcase (UUVS) ........ 27th-28th Sept. 2006, National Oceanography Center, Southampton, UK.
Ballistic Recovery Sytems
Cuba In Pictures
Experts Confirm Discovery of USS Lagarto
Goodbye USS Grapple
Las Vegas Monrail
Top 10 Weird Games
UPS Contest Rewards Most Innovative and `Out-of-the-Box' Entrepreneurs ........ win cash & prizes.
OUR "E" Section: The Forwarder/Broker World****
7. New U.S. Transport Related Legal Cases _____
Sompo Japan Insurance Company of America v. Union Pacific Railroad Co.
U.S. 2nd Circuit Court of Appeals
July 10, 2006, No. 04-4066
Court ruled that the requirements of the Carmack Amendment prevail over contractual provisions extending application of the U.S. Carriage of Goods at Sea Act (COGSA) to the shoreside transit of an intermodal shipment. In the instant case, plaintiff's insured contracted with an ocean carrier to ship merchandise from Tokyo to Georgia. The cargo was transported by ship from Tokyo to Los Angeles and then loaded on a train for final delivery in Georgia. Unfortunately, the train derailed in Texas, destroying much of the merchandise. The ocean bills of lading were 'through' bills and included a provision applying COGSA to the entire shipment and a Himalaya clause extending to third parties (such as the rail carrier) defenses available to the ocean carrier. The trial court held that the US$500 per package limitation of COGSA was available to the rail carrier. On appeal, the court held that the contractual provision extending COGSA's terms ashore must yield to the Carmack Amendment. The rationale of the decision is that because intermodal ocean bills of ladings do not reference the Carmack Amendment they can not give a package limitation. The decision effectively reverses the U.S. Supreme Court's 2003 Kirby decision. The Court left open the possibility that if another railroad contract with e shipper did reference the Carmack Amendment then a limitation might apply, but many railroad circulars today reference COGSA not Carmack for intermodal shipments. As a result of this decision all intermodal bills of lading involved in the U.S. will likely be rewritten. Geez! The Opinion
Continental Insurance v. Federal Express
U.S. 9th Circuit Court of Appeals
29 June 2006 No. 03-57162
Warsaw Convention & "Lower Common Denominator Test" --Federal Express ("FedEx") appeals the lower court's decision granting Continental Insurance Company ("Continental") US$109, 023.24 for goods lost in a shipment by FedEx. Continental was the insurer for electronic goods FedEx shipped from Hong Kong to Pasadena, CA. The 9th Circuit found that the lower court had abused its discretion in 2 ways. First, the lower court erred when deciding FedEx's motion of summary judgment. FedEx had argued that even if the original Warsaw Convention applied, liability was limited. FedEx did not concede that the Warsaw Convention applied even if the motion was denied. The summary judgment motion did not determine what law was to be used at trial. Second, the lower court erred in applying the Original Warsaw Convention. To determine what law applies, a court must use the "lower common denominator" test, which states that the latest treaty ratified by both origin and destination countries supplies the governing law. The Hague Protocol is the most recent common treaty between the US and Hong Kong, which is what should have been used. VACATED & REMANDED. The Opinion
Dynegy Midstream Services, LP v. Trammochem
U.S.2nd Circuit Court of Appeals
June 13, 2006, No. 05-3544-cv
The court ruled that the Federal Arbitration Act does not authorize nationwide service of process. In the instant case, maritime arbitrators issued a subpoena directing a non-party in another state to produce documents and electronic data. The subpoena was ignored and a motion was filed in federal court to compel compliance. On appeal, the court held that the law evidences a Congressional intent to protect entities that are not party to an arbitration from having to participate in the arbitration to a greater extent than they would if the dispute had been filed in a court of law. The Opinion
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
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