Law Offices of Countryman & McDaniel
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
31 Aug. 2005
Good Wednesday Morning from our Observation Deck......overlooking the officially designated "Cargo City" area and...... Runway 25-Right, at Los Angeles International Airport, voted "Best Cargo Airport in North America." Here is our industry review for August 2005. For Hurricane Katrina, it was too late to include stories at press time -- for updates - visit our Casualties Site
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/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 _____________
***China EU & U.S. Talk Textile Crisis ...... they are are expected to launch a new round of trade negotiations to resolve their ongoing textile trade dispute, according to news reports. Mainland-based China Daily said in that at the recent talks in San Francisco both parties made good progress in resolving the contentious issue. China's Commerce Ministry spokesperson, Chong Quan, was quoted as saying that they agreed to continue consultations to find a mutually satisfactory solution after each party explained its stance. The newspaper said a new round of talks is expected to begin in Beijing near the end of this month. China's textile industry representatives were optimistic that the discussions would resolve the long-standing dispute. Meanwhile, the European Commission has come under more pressure after imports of blouses from China became the latest category of clothing to exceed its quota, according to news reports. Figures from the EU showed that the stockpile for blouses had hit its quota limit, with other items like bras & T-shirts also set to exceed their limits. Five of the 10 categories covered by the China-EU textiles agreement signed in June are likely to exceed quota agreements. However, European retailers have complained to the Commission that the quotas set are unrealistic and that action should be taken to resolve the issue.
***EU Looking Elsewhere ...... as with China exceeding this year's export limits on an increasing number of textile categories imposed by the EU, garment companies in Europe are turning to other low-cost quota-free manufacturing countries in Asia to overcome their problems. The Fianancial Times reported in an article that one German company was already negotiating with manufacturers in Indonesia & Cambodia for next year's summer collection. Another Swedish group, Hennes and Mauritz, that gets garments from China, was quoted in the report as saying that it "had found ways out the problem by redirecting production to other Asian countries & sending more of its clothings to shops located outside the EU, such as Norway, Switzerland & Canada." The EU Trade Commissioner, Peter Mandelson, who negotiated the agreement with China on restricting imports to Europe, is reported to be under intense pressure to resolve the problem of shipment blockades, and some companies have threatened to take legal action against Brussels.
***Britain Airs Its Laundry ....... as shipping agents fear that a backlog of Chinese textile imports could soon lead to chaos at British ports. The agents blame a lack of guidance from the Dept. of Trade & Industry over the handling of £50M-worth of clothing, including underpants, trousers, bed linen & bras, which have been blocked from entering the country as a result of a dispute between the EU & China over trade quotas. Shipping experts have criticized the EU for imposing quotas "without understanding the mechanics of the shipping business." A retail trade organization has also spoken of a "huge amount of uncertainty" over the situation, which is already costing some traders dearly, as they have to pay warehousing costs on paid for goods, which can't be imported. The warnings come as a team of EU negotiators entered into talks with officials in Beijing. After 8 hours of "constructive talks," the negotiators agreed to a 2nd day of discussions on Aug. 26. Retailers have already said British shoppers could be affected by shortages this autumn if the row continues. The quotas were brought in earlier this year to protect European manufacturers from a flood of cheap Chinese goods after long-term limits on imports were removed in Jan. Port agents say the full impact of the blockade has not yet been felt, and confusion over what to do with millions of garments shipped from China could lead to disruption in coming weeks. The warning from shipping agents echoed concerns from the British Retail Consortium, which has criticized the EU for the "huge amount of uncertainty" over the dispute, which it estimates has left £550M-worth of goods blocked at European ports, at least £50M-worth of which were destined for British stores. Among the blocked garments are at least 16 million pairs of trousers & some 59 million sweaters.
***Burma Block ...... as the U.S. Office of Foreign Assets Control (OFAC) amended & reissued the Burmese Sanction Regulations. The sanctions, which come into effect immediately, ban virtually all imports into the U.S. of products of Burma & blocks most trade between the U.S. & Burma. Persons trading with both the U.S. & Burma should exercise extreme caution so as to avoid inadvertent violations of these sanctions. Comments on the new sanctions should be submitted by Oct. 17.
***Soft Wood -- Hard Positions ........ as the U.S. lumber industry expressed disappointment Tuesday over the Canadian government's cancellation of scheduled talks in Ottawa on Aug. 22 to discuss the softwood lumber dispute. "Repeatedly, the Canadian federal & provincial governments have failed to come to the table with detailed proposals," said the Washington-based Coalition for Fair Lumber Imports, in a statement. "We remain committed to finding a workable solution & we remain committed to not allowing Canada's subsidized and dumped imports to devastate our industry."
***Deadwood ....... as begining Sept. 16, no solid wood packaging material will be allowed into the U.S. unless it has either been heat treated or fumigated with methyl bromide. The move, which also requires shipments to be marked that they have been treated, was announced by the Animal & Plant Health Inspection Service (APHIS). A statement explained that "the rules and any accompanying costs associated with the treatment & marking of wood packaging materials is under responsibility of shippers and/or consignees".
***OJ Kills Again ..... as the U.S. Commerce Dept. has ruled that Brazil dumps orange juice on the U.S. market. Dumping is the import of goods at a price below the domestic market or a 3rd-country price, or below cost of production. In an Aug. 17 preliminary affirmative determination, the department calculated dumping margins ranging up to 60.29%. A dumping margin represents by how much fair-value price, as calculated by the Commerce Dept., exceeds the dumped price. Meanwhile, Customs & Border Protection will collect a cash deposit or bond on Brazilian orange juice imports equal to the preliminary dumping margins. The money will be returned if a negative determination is made by the Commerce Dept. and ITC. The value of U.S. imports of Brazilian orange juice amounted to US$98.6M in 2004.
***E-Certs ........ as U.S. Customs & Border Patrol is now accepting electronically submitted NAFTA Certificates of Origin. CBP issued a directive (3810-014A) that clarifies customs brokerage industry questions about the different methods for treating electronically generated Certificates of Origin in different ports of entry. the new CBP directive said that in order to use computer-generated Certificates of Origin, an importer must seek CBP headquarters approval in writing prior to using the certificates; and the computer-generated certificate must contain 10 elements specified in the directive, which is available on the CBP Web site. And see.
***Between The Chinas ...... as cross-border shipping manifests between Hong Kong & Guangdong have become computerized after a law recently came into force. Most customs checkpoints in the Pearl River Delta are now using the new computerized customs clearance platform known as EMAN, which was jointly developed by Nanfang Platform of Guangdong & Tradelink of Hong Kong. And See
***China Mart...... as China is forging ahead with its export business by bringing its products closer to its buyers, such as in Dubai where it recently opened a major shopping mall to display its goods to the world, the Financial Times reported. The complex is shaped like a dragon's head & appropriately named the "Dragon Mart" and extends nearly 2 kilometers across the desert. Built with mainland money, it's now home to more than 2,000 companies from China, featuring a wide range of Chinese-made products. The complex is part of a "broader Chinese push into the Gulf" & is being used as a "platform for the expansion of Chinese exports into the Middle Eastern, European & African markets." Traders to Africa, the Middle East & Eastern Europe use Dubai as a re-export center. In addition, the Gulf Emirate is expanding its ports & airports after cargo throughput surged 20% last year. There is no China Mart greeter.
***UPS On Long Haul .... as it has agreed to buy out Overnite Corp. for US$1.25Bn in cash, or US$43.25 per share, in a move to expand its service portfolio by offering a variety of less-than-truckload (LTL) & truckload (TL) services to North American customers. The acquisition will immediately position UPS as a top U.S. LTL carrier & comes just 5 months after the company expanded its air freight services by acquiring Menlo Worldwide Forwarding.
***Blasting Off ...... as Rock-It Cargo, USA, Inc. has acquired R.E. Rogers, Inc., which conducts business as Rogers Worldwide. For over 20 years, Rogers has been a leading provider of transport logistics to the Int'l trade show industry.
***NYK To Africa ...... as its joint venture with BLG Lead Logistics of South Africa has received formal approval from the government following completion of registration procedures. The joint venture company, NYK Logistics & BLL (NBL), was established April 15, 2005, marking the 1st time that NYK has set up its own logistics foothold on the African continent. Through the newly formed joint venture, NYK will provide logistics services not only for delivery of auto parts to Ford Motor's plant in South Africa but also for export of auto parts from suppliers in South Africa to Ford Motor's plants in other countries.
***Al-Qaeda Express?...... as an anti-terrorism consultant to the U.S. trucking industry has alleged that security of the logistics industry was in jeopardy because of the lack of a proper commercial driver license issuing system. "The safety of the nation's logistics industry and the security of the entire country has been seriously compromised by our failure to provide fingerprint screening for all Commercial Driver (CDL) applicants," said Terry Evans of Fleet Defender Consulting Services, a private company providing anti-terrorism consulting ."Without question, terrorists, convicted felons & other undesirables are traveling the country, legally driving 80,000 lb. big rigs throughout every community in America. We have quite literally made our highways a welcome mat for terrorism," he warns. Given that trucks are the #1 tool used by terrorists worldwide, the prospect that anyone can gain access to a tractor trailer is particularly chilling, the consultant said. The U.S. government recently mandated fingerprinting only for drivers carrying hazardous materials. However, the consultant said that this represents an extremely small fraction of the CDL driver population & having an endorsement is voluntary. Safety & security officers with trucking companies across the U.S. have reported thousands of drivers opting out of the Haz-Mat endorsement when confronted with fingerprinting. "You can bet there's a reason these guys are avoiding fingerprinting," said Mr Evans.
***Hurricane Katrina May Call For This ....... as the U.S. Strategic Petroleum Reserve, the nation's emergency stockpile of crude oil, has been filled to the 700 million barrel level ordered by President George W. Bush after the Sept. 11 terrorist attacks. As of Aug. 18, the reserve held 700.1 million barrels of crude oil. According to a U.S. Dept. of Energy website, 41% was classified as sweet, or low sulfur oil. An Energy Dept. spokesman said that filling the reserve improves security & protects citizens from the huge impact a disruption of oil shipments would have on the U.S. So far this year, the strategic reserve has grown by about 805,000 barrels a week, or 115,000 barrels a day. Stockpiles are expected to rise by an average of 66,000 barrels a day in Aug. The reserve holds the equivalent of 280 days of U.S. imports from the Persian Gulf, according to U.S. Energy Dept. data.
***Care Where, Don't Care When ...... as BAX Global has started a service that allows shippers to move their cargo to any destination within the U.S. mainland by no later than 5 days. BAX's Economy product was developed for shippers who are less concerned about time and more about the price of transportation, said BAX. Shipments may arrive earlier than the 5-day delivery commitment, depending on the pickup and delivery destinations. It will be all ground and definitely not time definite.
***Burning Furniture To Heat The Home ..... as the state of Delaware may sell a 24-mile toll portion of U.S. Interstate 95 & 2 other highway sections to investors. The move would be to help reduce a US$270M gap at the Delaware Dept. of Transportation's trust fund. Such a sale could give the buyer rights to collect tolls on the highways for 99 years. It would be used to reduce US$900M in revenue bonds issued by DDOT.
***Near Rail Record ..... as by all 3 measures of rail freight traffic --- carloads, intermodal & ton-miles --- were up during the week ended August 13 in comparison with the corresponding week last year, the Assn. of American Railroads (AAR) reported. Carload freight for the week totaled 339,019 cars, up 1.1% from last year. Carload traffic was up 3.3% in the East, but down 0.8% in the West. Intermodal volume, which is not included in the carload data, totaled 234,558 trailers or containers, up 7% from last year, with containers up 8.4% & trailers up 3%. It was the highest volume for any week this year, and the 4th highest week ever for intermodal. Total volume was estimated at 33.5 billion ton-miles, up 1.8% from last year. This was the 2nd busiest week ever for total rail freight volume.
***Mega Rail ...... as statistics provided by the Ministry of Railways reveal that freight moved by rail in China reached 224.82 million tons in July, a growth of 5.6% compared with same month last year. The total railway cargo transport volume included 109.66 million tons of coal, 9.13 million tons of cereal, 12.68 million tons of petroleum and 5.71 million tons of fertilizer & pesticide.
***Mega Union Station....... as the Chinese city of Nanjing & capital of Jiangsu province plans to construct not just the biggest railway station in the Yangtze River Delta region but Asia's largest. The station is intended to act as a transit hub for the 240km Beijing-Shanghai High Speed Railway. Once open, the new South Station will be 6 times larger than the existing Nanjing Railway Station, consisting of 3 sections including a yard to accommodate high-speed locomotives, reported Xinhua.
***Manager, Manage Thy Time ..... as a class-action lawsuit brought by supervisors in California was dismissed Aug. 23 because the court found the managers do not qualify for overtime pay -- thus solving a current transport industry issue. U.S. District Judge Dean Pregerson in Los Angeles granted a UPS motion for summary judgment, Aug. 25. UPS said it proved that its supervisors spend the majority of their time performing exempt managerial tasks. The ruling "defines for employers the evidence it takes to support the exempt status of supervisors," UPS said. "These employees are an essential part of the management team & we trust them to make important decisions on a daily basis." Bloomberg News reported the lawsuit represented about 1,200 current & former supervisors who had accused UPS of violating California labor law by not providing overtime pay & meal breaks. Not so.
***Of Course I Know How To Get There! ....... as here come audio & visual route directions on your cellular telephone, linked to global-positioning satellites. Electronic navigation, a staple of dashboard displays more recently available for portable computers, is beginning to show up on cellphones embedded with GPS chips. Indeed, a federal mandate requires all new cellphones made for the U.S. market to have GPS capability as the mainstay for e911, the emerging, nationally coordinated emergency notification system for the cellular world ("e" is "enhanced" 9-1-1). So, wait a month before your new purchase -- then track your people -- or yourself.
***German Baby Bomb Drop Foiled ..... as an "Electronic Nappy" used to monitor diaper wetness sparked a bomb alert in a German post office when it arrived in a parcel ticking suspiciously, police in the southwestern city of Heilbronn said Aug. 18. "They suspected it was a bomb so they put the package into an empty room & called police," said a police spokesman. "It was supposed to respond to wetness with bleeping sounds but this one ticked." Squad cars rushed to the scene & immediately contacted the sender. Police later gave the all clear after they contacted the woman who told them the intercepted package contained only a malfunctioning sensor .... designed to detect the dropping of a different kind of bomb.
2. The Cargo Letter Financial Page _________
**A P Moller - Maersk Group, parent company of world's largest ocean carrier. UP with a 14% increase in first half net revenue of DKK88.04 billion (US$14.51Bn), from DKK76,939 million in the same period in 2004.
**China Shipping Development (domestic ocean carrier). UP as 1st-half net profit rose 81%%, compared to the same period a year before, to US$197.37M.
**EGL Inc. DOWN as net income slipped to US$12.70M in 2nd quarter ending June, from US$14.12M in the same period in 2004.
**El Al. UP as net profit up 326% to UP$29M in Q2.
**Goodyear Tire & Rubber Co. UP as 2nd-quarter earnings doubled to US$69M or 34 cents a share.
**K Line. DOWN with a 10% drop in its net profit to US$140.17M for 1st quarter of its financial year ended June 30
**Lufthansa UP with a a 78% rise in 1st-half operating profit to EUR103M despite soaring fuel prices.
**Malaysia Airlines. DOWN with a post-tax loss of US$74.43M for the 1st quarter ended on June 30.
**MOL. UP as net profit jumped to US$914.9M for the fiscal year ending March 31, up 77% compared to the previous fiscal year.
**Neptune Orient Lines (NOL). UP with 1st half net profit of US$392M, an 11% year-on-year increase.
**Northwest Airlines. DOWN with a 2nd quarter net loss of US$225M, compared to loss of US$182M in same period 2004.
**OOCL. UP as net profit for 1st half of the year rose to US$308.9M, which compares with the US$268.4M in same period last year.
**P&O. UP as 1st half profit jumped 377% to US$403.71M, compared to its 2004 interim profit.
**Qantas. UP with net profit of US$580.66M for the year ended June 30, up 17.8% over the same period in previous year.
**Thai Airways. DOWN with a net loss of US$115.78M for 3rd quarter of fiscal year 2004/05 from April to June 30, 2005.
**UAL Corp., parent company of United Airlines. DOWN with a net loss of US$274 M in July, including US$350M of reorganization expenses.
**World Air Holdings, parent company of World Airways & North American Airlines. DOWN with net profit of US$4.2M in 2nd quarter, compared to US$2.6M in the same period in 2004.
**Xata Corp. DOWN as the fleet management technology firm lost US$1.2M or 16 cents per share during its fiscal 3rd quarter ended June 30, compared with a loss of US$270,000 or 2 cents per share year earlier.
***Hub Group Buys Itself ...... as the board of directors of this 3rd party logistics provider has authorized the repurchase of up to US$45M of its Class A common stock through Dec. 31. The company said it intends to hold the repurchased shares in its treasury for future use. Hub Group is a non-asset based freight management company providing intermodal, truckload brokerage and logistics & distribution services.
OUR "B" Section: FF World Air News***
3. Freight Forwarder World Air Briefs ____
***Air Trend Remain Positive ...... as Geneva-based Airports Council Int'l has forecast air freight tonnage will increase 5.4% annually over the next 15 years, with the highest rates of growth in the Asia/Pacific & Middle East regions. The worldwide forecasts are based on data collected earlier this year from 273 ACI member airports.
***Northwest Airlines Down, Not Out .... as it has vowed to keep its planes in the air despite an ongoing strike by 4,400 mechanics & maintenance workers. In the 1st U.S. airline strike since 2001, Aircraft Mechanics Fraternal Assn. (AMFA) workers walked off their jobs at the airline on Aug. 19 after failing to reach a new contract. According to the Washington Post, the company is maintaining services largely because it's other labor groups, representing pilots, flight attendants & baggage handlers ignored the strikers & reported to work. Airline officials have called in 1,500 replacement workers, who are mostly workers laid off from other airlines, to help keep its flights running. The world's 4th largest airline reported that it "continues to operate its normal early-fall flight schedule, with approximately 1,600 daily flights". But the company experienced some turbulence on Aug. 21. Fulcrum Global Partners said in a report that Northwest completed 98% of its flights over the weekend. Northwest switched to a fall flight schedule 2 weeks earlier than usual, as part of a US$107M contingency plan to keep flights operating during the strike. Northwest wants to find US$176M in labor cost savings from the mechanics union as part of total cost cuts amounting to US$1.1Bn it said it needs in order to stay out of bankruptcy court. Northwest & other large U.S. carriers are trying to cut costs in the face of high fuel prices & stiff competition from low-cost carriers. United Airlines & US Airways are both in bankruptcy protection. "Northwest has been able to continue flying, but still needs to reach concessionary contracts with not only its mechanics, but also other unions, before the Oct. 17 bankruptcy law change," said Standard & Poor
***Union Pilots of Asiana Airlines Take Wing ...... as they started returning to work on August 12 after a 25-day strike, but the carrier was not expected to resume full operation until about Aug. 30, according to the Korean Times. Of the 400 pilots who participated in the strike, 33 of them began a 2-day restoration program before sitting in the cockpit. The plan was to have all of the pilots back in the cockpit in 10 or 15 days. The company expected full operation Aug. 30. The strike was forcibly ended on Aug. 10 by the Labor Minister Kim Dae-hwan who invoked the right to conduct an emergency arbitration to end the industrial action & prevent it from more causing damage to the economy & from causing havoc during peak summer season.
***Delta Airlines Sells The Furniture .... as it has entered into a definitive agreement to sell its wholly owned regional airline subsidiary Atlantic Southeast Airlines (ASA) to SkyWest for US$425M in cash. ASA will continue to serve Delta customers under a new 15-year Delta Connection agreement, with ASA's fleet of more than 150 aircraft continuing to fly Delta routes.
***UPS Jumps Ahead ..... as part of expansion in the commercial air freight business, UPS plans to construct 5 regional freight hubs at airports across the U.S. that will support the company's main freight hub in Louisville. Presently, UPS' Louisville facility is home to the company's main all-points air hub. The new facilities will be constructed in Ontario, Calif.; Rockford, Ill.; Dallas; Philadelphia; & Columbia, South Carolina; which already serve as regional hubs for UPS's separate small package network. The 6 facilities will form the backbone of an expansive air network for the movement of heavy freight for customers of UPS Supply Chain Solutions. UPS is expected to spend US$24M to build & equip the 5 new facilities, each of which will be constructed solely to handle freight. Operation of the regional freight hubs initially will create more than 200 new jobs. Last Dec., UPS acquired Menlo Worldwide Forwarding, a US$1.9Bn air freight forwarder based in Redwood City, Calif. After acquiring Menlo, UPS announced it would build a new main freight hub in Louisville to tie the Menlo network into the UPS Airlines.
***DHL Beachead Expands ....as it has broken ground on a new East Coast distribution center in Allentown, Pa., part of a US$1.2Bn U.S. network expansion announced last year by the express parcel carrier. The new distribution hub will cost US$107M & is scheduled to be completed in the fall of 2006, DHL said. The 500,000-square-foot facility will be equipped with the latest sorting technology, enabling it to handle 40,000 letters & 50,000 parcels per hour. DHL is racing to put a full-scale ground network in place to compete throughout the U.S. with UPS & FedEx, but faces many operational & financial challenges.
***Boeing Smiles ...... as 4 Chinese airlines signed purchasing contracts for 42 Boeing 787 aircraft on Aug. 8, worth US$5.04Bn, says a Xinhua agency report. Air China & China Eastern will buy 15 planes each while Shanghai Airlines will buy 9 planes, & Xiamen Airlines 3 aircraft. In the next few years, China will introduce more aircraft, said Li Jun, vice minister of the General Administration of Civil Aviation of China. The price of each 787 will be between US$125M to US$135M each.
***Monogrammed Boxcutters OK? ...... as the largest flight attendants' union in the U.S. has voiced its opposition to a federal government proposal to relax rules on banning of knives, ice picks & razor blades aboard planes. Patricia Friend, Int'l president of the Assn. of Flight Attendants, said in a letter to the Transportation Security Admin. (TSA), "as the front-line personnel with little or no effective security training or means of self defense, such weapons could prove fatal to our members." Ms. Friend pointed out that such instruments might not help in breaking through a flight-deck door, but they "could definitely lead to the deaths of flight attendants & passengers." The proposals also included a possible end to the ban on certain items allowed in carry-on luggage. However, the flight attendants union said that easing the ban on some prohibited items could pose a safety risk on board the aircraft & lead to incidents that terrorize passengers even if they do not involve a hijacking. "We urge you to reconsider allowing such dangerous items - which have no place in the cabin of an aircraft in the first place - to be introduced into our workplace," Ms. Friend added.
***DHL & The Secret Service ...... as it has been awarded an exclusive 5 year, multi-million-dollar contract by the Dept. of Homeland Security (DHS) for the transportation of all of its letters and small packages in the U.S. & worldwide. A statement from DHL said under the contract, which takes effect immediately, DHL will handle same day, next day, 2nd day & ground delivery of parcels for all DHS components, including, among others, the U.S. Secret Service, Coast Guard, Customs & Border Protection, Immigrations & Customs Enforcement, Transportation Security Admin., and Border & Transportation Security. The value of the contract will be at least US$250,000 but could be as high as US$60M over the 5-year term of the contract. So the German Post Office will now deliver official U.S. security mail. What became of FedEx & UPS?
***A 2nd UPS Workhorse ....... as UPS has made a firm order for 8 new Boeing 747-400F freighters from the U.S. aircraft manufacturer as part of its on-going effort to cope with strong Int'l volume growth. Terms of the deal were not disclosed, but UPS said that deliveries of the aircraft will begin in June 2007 & run through 2008. UPS currently relies on the Boeing MD-11 freighter as its primary workhorse, and has 20 of those planes & another 8 on order. The new 747-400F aircraft, which can handle a larger payload than the MD-11, will be used to "upsize" MD-11 routes as Int'l volume grows. The new aircraft have the capacity to carry a structural payload of 250,000 pounds with a range of 4,400 nautical miles.
***Singapore & Sri Lanka Open Wide ........ as they have signed an Open Skies Agreement which allows airlines of both countries to operate passenger flights between & beyond Sri Lanka & Singapore with no restrictions on capacity, routing or aircraft type. This complements the open skies agreement on cargo services that was concluded in the previous round of consultations in Oct. 2003. Passenger & cargo movements between Singapore & Sri Lanka grew 10% & 16% respectively from Jan. to June 2005 as compared to same period last year.
***BAX Global Bigger In Big Orange ...... as it has more more than doubled the capacity of its new Los Angeles station. Located near LAX, the new facility is 243,000 square feet & has 106 truck bays. The previous station had 96,000 square feet & 52 truck bays.
***World Airways Converts ....... as it will convert a MD-11 passenger plane to a freighter next year, bringing the Atlanta-based company's cargo fleet to six MD-11s & two DC-10-30s. World will lease the plane for 7 years in the fall of 2006.
***FedEx Beaming ...... as it has activated California's largest corporate solar power installation at its Oakland Int'l Airport hub. The installation is able to fuel 80% of the hub facility's energy needs, substituting the sun for fossil fuel & other sources of electricity. At peak output, the system will produce the equivalent amount of power used by more than 900 homes during the daytime. In addition to generating electricity, the solar panels will help insulate the buildings, reducing heating & cooling costs. "The solar electric system at our Oakland hub powers one of our major FedEx Express hubs, which handles more than 260,000 packages daily & serves as a major gateway for shipments to & from Asia," said FedEx Express.
OUR "C" Section: FF World Ocean News***
4. FF World Ocean Briefs ________________
***Container Shipping Industry looks Up ....... as it may experience a shorter & shallower downturn next year than many analysts expected at the start of this year, says a report. The report by UBS said that demand in the box trade should grow 12-13% in 2005-06, well above estimates from shipping research houses Drewry & Clarksons, which forecast just 7.7% & 10.1% growth respectively. The shipping consultants' estimates look too conservative when one considers the outlook for container volume growth, particularly given the encouraging macro data being released, the research note said. It said the key risk to their view is whether shipping companies intend to target market share or to maximize profits. The competitive landscape is heating up & how companies manage capacity growth will largely determine the level of freight rates and how profitable 2006 would be for the industry. The report said ship owner-operators are still positive about the outlook for container shipping due to resilient demand. To understand how positive or negative owners are, one should note how shipping companies are deploying cash & leveraging their balance sheets, the report said. The pace of new orders has begun to slow after surging in the last quarter of 2004 & 1st quarter of this year. The report said the research house's proprietary Container Freight Rate Index, which indicates average rates, is up 4% year-to-date.
***More With Less ..... as the era of the mega-carrier has dawned in the world of container shipping. In contrast to the 55 box ships with a capacity greater than 7,500 TEU in service, there are 168 such ships on order. Korean yards have secured the lion's share of these newbuilding orders, although Japan is beginning to make some inroads into this market lead. Furthermore, the carrying capacity of this current mega-carrier orderbook, at 1.47 mill TEU, is some 331% greater than that of the in-service fleet of such ships. Even the total containership orderbook, at 1,142 vessels totaling 4.39 mill TEU, represents an impressive 59% of the cargo-carrying capacity of the existing containership fleet.
***Thanks FMC ....... as 7 prominent U.S. transportation associations & logistics service providers have filed joint comments with the Federal Maritime Commission approving the commission's proposed rule that would amend a prior FMC rule authorizing NVOCCs to offer & enter into non-tariff-based confidential ocean transportation agreements. Signing the joint comments were the Agricultural Ocean Transportation Coalition; BAX Global Inc.; FedEx Trade Networks Transport & Brokerage Inc.; the National Industrial Transportation League; the North Atlantic Alliance Assn.; the Transportation Intermediaries Assn., & UPS. The FMC's amended rule would permit NVOs, when acting as shippers, to enter confidential ocean transportation agreements with other NVOs acting as carriers. The amended rule would also permit shippers' associations that include NVOs as members to enter into such agreements with other NVOs acting as carriers. "The joint commenters thank the FMC for its expeditious handling of this matter," saying that, "it is widely recognized that confidential service contracts are the preferred means for conducting ocean transportation in the liner trades, but currently only vessel-operating common carriers (VOCCs) may offer confidential contract rates to all classes of shippers -- including beneficial cargo owners, shippers' associations and NVOs." Without the amended rule, "VOCCs will continue to enjoy a distinct commercial advantage in attracting the business of shippers' associations with NVO members & other NVO-shippers who prefer to tend cargo under confidential arrangements," the commenters told the FMC.
***Punching Pirates ... as the chiefs of the defense forces in Malaysia, Indonesia & Singapore have announced a joint initiative for combating piracy in the Malacca Strait called "Eye in the Sky." This new initiative supplements the Joint Waterborne Patroling Initiative of 2004 by adding an aerial anti-piracy surveillance of the Strait. Bimco, a leading association of shippers, said it appreciates the delicate nature of the coordinated fight against piracy for the 3 states involved, which include issues relating to national sovereignty & territorial integrity between the 3 countries as well as in relation to other governments.
***Walking The Plank ....... as in a statement on 11 August, the A.P. Moller-Maersk Group confirmed that it was consigning 3 great names in shipping to the deep. It's goodbye to Sealand as well as to P&O Containers and Nedlloyd. Starting Feb. 2006 the world's largest container shipping company will be known once again simply as Maersk Line.
***Goodbye Royal P&O Nedlloyd ....... as A.P. Moller-Maersk said it had secured 99.67% of the shares of Royal P&O Nedlloyd. The Danish company said it will initiate the statutory squeeze-out procedure contemplated by the Dutch Civil Code in order to acquire all shares held by minority shareholders by Sept. 2. Royal P&O Nedlloyd's listing on Amsterdam's Euronext stock exchange will be terminated Sept. 13, A.P. Moller-Maersk said.
***Goodbye CP Ships Ltd. ....... as its board of directors has unanimously recommended that shareholders accept an offer from Europe's biggest tourism company, TUI, to acquire CP Ships in an all-cash transaction for US$21.50 per share or US$2Bn. Including the assumption of net debt of US$300M on June 30, the transaction has a total value of US$2.3Bn, CP Ships said. The offer price represents a premium of 28% over CP Ships average closing share price over the past 3 months. TUI, the parent of Hapag-Lloyd, plans to combine Hapag-Lloyd & CP Ships to create the world's 5th-largest container shipping company with a fleet of 139 ships - and a further 17 on order - for a capacity of 400,000 TEU on over 100 routes spanning the globe. Before the effects of consolidation, the combined shipping business would have had sales of approximately US$7Bn in 2004.
***Can't Beat Oil? - Buy It ....... as AP Moller-Maersk says its subsidiary, Maersk Olie og Gas (MOG) is to spend US$2.95Bn to buy the majority of Kerr-McGee Corp.'s UK oil & gas interests, including its North Sea oil assets. Under the deal, MOG will acquire interests in 10 oil & gas fields, 5 of which as operator, with a current total share of production of 60,000 barrels oil equivalent per day. In addition, a number of smaller oil & gas discoveries as well as an exploration portfolio will be acquired.
***Woes Continue At Vancouver, Canada ....... as after the 6 week strike ended Aug. 4, truckers are not taking advantage of extended operating hours at various ports in the area which is holding up the clearance of the backlog of containers . The Vancouver Port Authority (VPA) warned on Aug. 11 that not addressing the problem in a timely way will result in continued inability to accept Canadian export cargo, as well as delays in delivering import cargo to customers. According to the port's container terminals, more than 1,000 reservations were booked at Deltaport Aug. 6, but only 400 transactions were completed. Similarly low numbers were recorded on Aug. 7, and even lower figures were recorded on the two successive days at the start of the week resulting in terminals discontinuing with their extended hours of operation. About 9,000 containers continue to be held up at the lower mainlands container terminals, while an additional 2,000 containers are at the ports of Seattle & Tacoma, waiting for the Vancouver backlog to clear before they are loaded aboard ships destined for Vancouver. The port estimates that at the current rate the backlog will take more than a month to clear up, while successful extended hours initiatives could have it removed in a fraction of that time.
***U.S. Northwest Ports Strike Back ...... as they expect to gain back market share from their rivals in Southern California for the 1st time in 13 years. Last year, ports along the Pacific Northwest coast saw a boost in business after heavy congestion outside Southern California ports forced shippers to find new places to unload their cargo. Some of the major shipping lines, MOL, AP Moller-Maersk & APL shifted some transpacific routes to ports like Oakland, Seattle, Tacoma & the Port of Vancouver, Washington. Port officials in the Puget Sound region are now making sure they do everything possible to keep business flowing their way. The amount of west coast cargo making its way through Puget Sound's ports increased to 19% as of May. The gain is a 3% improvement over the same time 2004, and is "the 1st real jump after 13 straight years of market-share losses to Southern California." The story also pointed to port officials who say the railroads which serve the region, specifically Burlington Northern Santa Fe (BNSF) & Union Pacific, are introducing new ways to move the cargo inland at a faster rate. BNSF is experimenting with a new satellite-based system which reports how close inbound ships are to shore so rail cars can be positioned before the cargo arrives. The flight to other ports was predictable, as it is estimated that congestion at the Los Angeles/Long Beach complex resulted in the diversion of 115 incoming vessels carrying US$4Bn worth of goods in 2004. The Port of Oakland alone is reported to be spending US$1.2Bn over a 10-year period on port improvements, including recent purchase of two 24-storey cranes worth US$14M, to attract shippers.
***Short-Sea Shipping Solution? ..... as this could soon be an option for shippers at smaller, underdeveloped West Coast ports, especially as the cost of moving goods landside increase, Lyn McLelland, Northwest states representative for the U.S. Maritime Administration. "It seems to me that we should learn lessons from the Europeans about the need to base freight mobility funding on a cost/benefit analysis basis rather than a specific mode. The EU collects transportation funds from marine & vehicle fuel, road, and other taxes & applies the funds to transportation solutions that create the greatest public benefit at the lowest cost," McLelland said. She noted the European Union has funded several start-up short-sea projects in the last few years. Short-sea shipping, at least in the Pacific Northwest, will become an increasingly viable option "as the cost of surface transportation escalates. Between the shortage of drivers on the West Coast & the degrading of service on the railroads, shippers are looking more at the maritime option," McLelland said. She said Int'l Longshore & Warehouse Union members have talked about short-sea shipping increasing services through "underdeveloped" ports. "The pressure to relieve congestion in marine container yards, at the yard gate, and on surface streets in the port areas is also driving forward the (short-sea) conversation because it can respond to all of these needs."
***Box Tax Nix? ...... as the president of the Pacific Merchant Shipping Assn. (PMSA), John McLaurin has condemned California's Senate Bill 760 (SB 760), which seeks to impose a tax of US$60 per container on the majority of import & export cargo that passes through the ports of Long Beach & Los Angeles. He also described the bill as "an illegal & inequitable tax" and said "marine terminals & ocean carriers did not create the unceasing appetite for inexpensive consumer products that is fueling trade with Asia. They are not responsible for the unconscionable neglect of highways & roadways in Southern California that were built in the 1950s & 1960s & have had little improvement or upgrade since," he said. >>> The Bill was pulled late last week, but will be reintroduced in 2006, according to its author.
***New MOL Digs ...... as it held contract signing & groundbreaking ceremonies for a new container terminal at the U.S. port of Jacksonville, Fla. on Aug. 3. The terminal is slated to start operations in late 2007 or early 2008.
***Chilly Record ...... as reefer container output reached an all-time high last year and is on track for another record in 2005. The world's reefer container manufacturing industry is continuing to perform strongly, with another record production in prospect for 2005. Global reefer output has been growing annually by more than 15% in recent years, having increased from almost 100,000 TEU in 2001 to over 150,000 TEU in 2004. It has not declined during any year since 2001.
***Cool New Carrier ..... as NYK Reefers & LauritzenCool have received clearance from the European Commission to merge their reefer activities. The new company will be called NYKLauritzenCool AB, owned on an equal basis by NYK Reefers and J. Lauritzen, LauritzenCool's parent company. NYKLauritzenCool will operate more than 70 specialized reefer vessels. The headquarters for the new company will LauritzenCool's former head office in Stockholm, Sweden. NYK Reefer's office in London will become a branch office.
***Back in 1966 ...... as James Lubeck bent over to secure his sailboat against a gathering storm -- his wallet slipped from his back pocket into Marblehead Harbor. The wallet & credit cards were seemingly gone forever. Then Lubeck got word recently about a mind-boggling discovery: A fisherman had hauled in the wallet's sheath of credit cards in a net full of cod, flounder & haddock. "I can't find the adjectives," Lubeck, 74, said. "I don't know how many people would have done that." Fisherman Antonino Randazzo hauled in the catch in June roughly 25 miles from where Lubeck lost the wallet. The sheath was caked in mud, but the 10 to 12 credit & identification cards were in pristine condition. "It is incredible," he said. "Life is full of mysteries." Randazzo, 44, initially feared the wallet belonged to someone who was lost at sea, but he noticed that the card expiration dates were from the late 1960s. The only Lubeck listed in the Marblehead phone book was a Jonathan. Randazzo called & nervously inquired whether James Lubeck was home. He was relieved to learn from James Lubeck's daughter-in-law that he was alive & living in Connecticut. Later, when Lubeck got the call about this recovered wallet, he initially had no idea what it was about. He eventually recalled the details &emdash; and the US$300 in expense checks that had been lost with the wallet. "US$300 was a lot of money, 39 years ago" he said. The checks, cash & leather of the wallet are gone, but the value of the find isn't in what was recovered, but what happened afterward, Lubeck said. "It's the idea that somebody reached out," Lubeck said. "And the puzzlement of that moving so many miles."
***Throughput >> APL's container traffic increased 10% to 149,800 FEUs during week ended July 29, compared to same period 2004. >> Mexican port of Altamira said it handled a record 30,635 TEUs in July, a 25% increase over July 2004. >> Johor Port Berhad (JPB), Malaysia's 3rd largest port, registered 5% increase as container throughput rose to 413,303 TEU, compared to 393,717 TEU in 1st quarter of 2004. >> Panama Canal Authority (ACP) reported tonnage of ships that transited the canal during its fiscal 3rd quarter increased 5.4 % to 71.9 million Panama Canal/universal measurement system tons. >> Port of Portland's container volumes were down 52% for the first 6 months of the year at 72,380 TEUs, compared to 150,848 TEUs handled in the 1st half 2004 >> Port of Rotterdam recorded 15.6% increase in number of boxes handled in 1st half of 2005, which amounted to 4.5 million TEU. >> Port of Shanghai, largest in China in terms of volume handled, reached 243 million tons in 1st half of 2005, up 11.3% compared to the same period 2004.
***This Month In U.S. Navy History --
1775 - Rhode Island Resolve: Rhode Island delegates to Continental Congress press for creation of Continental Navy to protect the colonies.
1812 - USS Constitution captures HMS Guerriere.
1814 - British invasion of Maryland & Washington, D.C.; Washington Navy Yard & ships burned to prevent capture by the British.
1818 - Capt. James Biddle takes possession of Oregon Territory for the U.S.
1839 - Brig Washington seizes Spanish slaver, Amistad, near Montauk Point, N.Y.
1843 - Steam frigate Missouri arrives at Gibralter completing 1st trans-Atlantic crossing by a U.S. steam-powered ship.
1864 - Rear Adm. David Farragut's squadron captures Fort Morgan at Mobile Bay, winning control of Mobile Bay.
1865 - Civil War ends with naval strength of more than 58,500 men & 600 ships.
1865 - Return of Naval Academy to Annapolis after 4 years at Newport, R.I.
1912 - Launching of USS Jupiter (AC 3), 1st electrically-propelled Navy ship.
1942 - U.S. carrier aircraft begin 2 day Battle of Eastern Solomons where a Japanese task force is defeated & 1 Japanese carrier sunk. Japanese recall expedition to recapture Guadalcanal.
1942 - Submarines USS Nautilus (SS 168) & USS Argonaut (SS 166) land 222 Marines on Makin Island, 1st amphibious attack made from submarines.
1945 - Japan agrees to surrender; last Japanese ships sunk during World War II, Aug. 15.
1958 - Massive concentration of Pacific Fleet in Quemoy-Matsu area prevents invasion of islands by China.
1958 - USS Nautilus (SSN 571) arrives at Portland, England, completing 1st submerged under ice cruise from Pacific to Atlantic oceans.
1974 - After flooding in Philippines, Navy helicopters begin 6 days of operations to rescue people & bring supplies (244 flights).
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. You will be amazed.
SPECIAL NOTE: Please view the dramatic new pictures at our special "Gallery of Cargo Loss" website feature.
See our new feature for June 2005: "Back Haul! - Trouble On The Way Home.".... a just updated feature for you from our past you will enjoy.
See our newest photo feature "Singles Only" - Transportation Disasters Told In A Single Photo!
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..............
2005 Transport Topics 100 Annual Industry Rankings ........ of for-hire & private U.S. truck fleets. Also
Employee E-mail & Web Use Monitoring
Grid Computing -- Next Big Thing?
Hidden Value In Reverse Logistics
IMO Evaluation of Hazards of Harmful Substances Carried by Ships.
Integrated Supply Chain Management Certification Program
Maritime Transportation Security Act ......... U.S. Coast Guard training videos for your free use.
North American Ports Get Ready -- As Cargo Moves From West Coast
Panama Canal Authority General Guidelines for Declaring Containers
PANAMAX 2005 ........naval training exercise in defense of Panama Canal involving 15 countries Aug. 4-17.
Real World Look At RFID
RFI Tags -- Disabled Accidentally
Shake Out Coming For RFID Industry?
Share The Road ......... living with trucks on the highway
U.S. Maritime Administration (MARAD) ....... July/Aug. edition of cargo preference newsletter, includes use of radio frequency identification (RFID) tags on container chassis.
Diploma in Port Management 2005-2006 ......... distance learning.
Guardrite Warehouse Barrier System
Insurance Course Self Study ......... Law Society of England & Wales.
Rhino Aluminum Pallets
U.S. Customs House Guide
World Trade Organization Events
15th annual Int'l All Cargo Conference IAAC .......... May 2006, Houston
2nd Advanced Forum on Global Customs Compliance ......Sept. 21 - 23, 2005, Four Seasons Hotel, Washington, D.C.
Achieving Profitable Growth and Operational Excellence in the Logistics Service Providers (LSP) Industry .........Webcast, Sept. 8, 2005- 12pm EST.
Containerization Int'l Liner Shipping & China Conference 2005 ........ 25-26 Oct., Nan Yuan Hotel, Ningbo, China.
Int'l Logistics Congress ......... Sept. 19& 20 Sept., Westin Hotel, Guatemala City
L.A. Harbor Transportation Club 18th Annual Harbor Cruise ........ Thurs, Sept. 15, 2005. Pre-Boarding check-in begins at 4:00 PM
Logistics Hong Kong ........ 14-16 Sept. 2005, Hong Kong Exhibition & Conference Center, Hong Kong
Central and Eastern European Transport, Logistics & Supply Chain Congress.........29-30 Sept. 2005, Veletrzni Palace, Prague.
Real Time Plant & Warehouse Virtual Conference -- The Changing Face of Real Time ......... Webcast, Sept. 8 2005 1:30 pm ET
Supply Chain Excellence 2005 Symposium .......... Sept. 22, 410 Club in Chicago's Wrigley Building -- theme "Supply Chain Innovation Through Process & Technology."
TLS CEE Congress ..... Sept. 29-30 2005, Veletrzni Palace, Prague.
Track & Trace Summit ....... Oct. 17-19, Fairmont Turnberry Isle Resort & Club, Miami, FL.
Transport & Logistics & Int'l Trade .... Dec. 8-9. Tallinn, Estonia
U.S. General Services Admin. 3rd Annual Household Goods & Freight Forum ........Feb. 22-23, 2006, Anaheim, Calif. Co-sponsored by American Moving & Storage Assn.
Big Boys Toys
Service Dispatcher ....... free Online game
Visit Friendly North Korea
OUR "E" Section: The Forwarder/Broker World***
7. New U.S. Transport Related Legal Cases _______
***It's A Case of Political Correctness, Mate ...... as a ban by Australia's Parliament House on the term "mate," a popular colloquialism & symbol of egalitarianism, has been overturned following a barrage of protest. Security guards at Parliament House in Canberra had been directed to refer to people as sir & ma'am. The ban on "mate" was imposed after the head of a government department complained about being called mate. But a parliamentary circular issued Aug. 19, removed the directive warning staff not to use "mate" when dealing with the public or members of parliament, instead suggesting they use their judgment on when a more formal approach is required. Former Prime Minister Bob Hawke said the attempted ban was "pomposity gone mad," while current Prime Minister John Howard described the ban as "absurd & impractical." "There are circumstances where a more formal address is appropriate," Howard told Australian radio. "But in the same conversation you might start off calling somebody you have just met sir or madam but as you become more familiar ... you might end up saying mate." The move also prompted a flood of calls to talk radio around the country & was slammed by Sydney's Daily Telegraph newspaper as "ludicrous" because it took Australia back to the days of the class system.
Ventura Packers, Inc. v. Ingman
9th Circuit U.S. Court of Appeals
Aug. 11 2005 - No. 03-56547
Before Chief Judge Schroeder and Circuit Judges Pregerson & Trott
Opinion (Pregerson): In 1996, Ventura Packers provided stevedoring services for 3 fishing vessels; the Jeanine Kathleen, the Rose Lee, and the Talia in accordance with its agreement with the Independent Fisherman's Cooperative (IFC). IFC failed to pay Ventura Packers US$170,000. Ventura Packers, in response, filed an in rem admiralty action against the 3 boats. During a restrcted appearance, both parties agreed that the owners of the 3 fishing vessels would leave surety bonds as securities in place of the vessels. The District Court ruled summary judgment in favor of the owners & Ventura Packers' attorney returned the surety bonds to the owners. The Court found that the district court retained in rem jurisdiction on remand although the securities had been already returned to the owners because a court maintains in rem jurisdiction so long as there was a valid seizure of the res at the start. A district court does not need to have actual & continued possession over the res to maintain in rem jurisdiction; therefore, the district court had the authority to reinstate the owners' securities to Ventura Packers since the parties agreed that the securities would take the place of the fishing vessels as res. On this 2nd appeal, the court held that when the vessels were seized by order of the court & brought within its control, jurisdiction was complete and the subsequent return of the bond did not divest the court of its continuing jurisdiction. REVERSED; AND REMANDED. Opinion
Bunch Vs. Canton Marine Towing Co. Inc.
8th Circuit U.S. Court of Appeals
Aug. 23 2005 - No. 04-1292
Over a vigorous dissent, the U.S. Court of Appeals ruled that a moored cleaning barge is a vessel for purposes of the Jones Act. In this case, plaintiff barge cleaner was injured while being ferried from shore to his work site on a moored cleaning barge. The barge was secured in position in the Missouri River by spud poles embedded in the river bottom. The barge was relocated on occasion by being towed. The trial court held, on a summary judgment motion, that the barge was not a vessel in navigation and, thus, plaintiff was not a seaman for purposes of the Jones Act. The appellate court, relying on a recent Supreme Court decision, ruled that "in navigation" was not a requirement for seaman status under the Jones Act. The relevant issue is whether the vessel is practically capable of maritime transportation. The dissent contended that the issue should be remanded to the trial court for a factual determination. Opinion
In Re Millenium Seacarriers, Inc.
2nd Circuit U.S. Court of Appeals
Aug. 11, 2005 - No. 04-0631
The U.S. Court of Appeals ruled that a bankruptcy court may extinguish maritime liens on vessels where the lienors are before the court, even though the ships are not within the jurisdiction of the court. A shipowner filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Defendant financial institutions, which held preferred ship mortgages, succeeded in getting the court to convert the action into an involuntary bankruptcy under Chapter 7. Plaintiff lienors filed maritime lien claims & contended that the bankruptcy court lacked authority to extinguish liens on ships that were not within the jurisdiction of the court. The bankruptcy court offered plaintiffs the opportunity to withdraw from the proceeding. After plaintiffs elected to remain, the court ruled that the priority of the preferred ship mortgages was superior to that of the various lien claims. Plaintiffs appealed. The appellate court held that the congressional grant of subject matter jurisdiction to district (& bankruptcy) courts to adjudicate in bankruptcy all property, wherever located, extends to ships that have not been arrested within the court's jurisdiction and, in the circumstances, the bankruptcy court had equitable jurisdiction to extinguish the lienors' maritime claims. 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
Libby Thompson (Countryman & McDaniel)
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