Law Offices of Countryman & McDaniel
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
30 July 2008
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 what happened in our industry during July 2008!
We Survived The L.A. Earthquake Today. Our LAX Highrise Building Was Swinging Several Feet From Side To Side -- A White Knuckle Ride! LAX Shut Down For 3 Minutes! Then We All Sang "San Francisco." We Get Used To This.
To help you find what you need -- FAST -- there's now a transport search engine installed at our Cargo Law.com website!
Contribute your knowledge, stories & company information.......by e-mail to The Cargo Letter. We strive to bring you useful information which is timely & topical. Be sure to visit our website.The Cargo Letter Archives of Past IssuesMichael 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 _______________
***ACE Delayed Another 9 Months ...... as U.S. Customs and Border Protection plans to delay by at least 6 months deployment of a new cargo manifest processing system expected to help improve cargo flows. The agency was scheduled to roll out in mid-to-late Oct. the electronic manifest function for ocean & rail carriers as part of the US$3.3Bn build-out of its Automated Commercial Environment (ACE), the information technology system being developed to replace existing programs that monitor, control & expedite commercial imports & exports. Industry experts familiar with ACE say the new ocean & rail manifest functions will help ease some cargo congestion by allowing CBP to indicate a hold on a single container rather than an entire group of containers that are listed under the same bill of lading as one targeted for inspection. The timetable has now been pushed to April 2009 at the earliest.
***10+2+Test? ...... as 40 trade associations have banded together asking Congress to step in and require the Dept. of Homeland Security to first conduct a pilot program before implementing its proposed "10+2" rule for cargo security. U.S. Customs & Border Protection is developing the final rule that would require importers to submit 10 pieces of advance shipping data 24 hours prior to loading at a foreign port & ocean carriers two streams of information about the status of containers under their control. Industry groups are worried that the controversial rule, expected later this year, may add huge data collection & information technology costs to doing business. Many organizations have repeatedly asked CBP to step back and conduct a demonstration program on a limited scale so that importers can be given best practices for compliance and the agency's systems and personnel aren't overwhelmed by the crush of thousands of daily data transmissions. The groups questioned the security benefit of the rule because many companies have already followed CBP's lead to tighten internal controls over suppliers & shipments and because the rule would force cargo to sit in cases when advance data is not readily available, creating the potential for tampering.
***Trading With the Enemy Act For North Korea Ends ...... as on June 26, 2008, President Bush issued a proclamation ending the exercise of authorities under the Trading With the Enemy Act with regard to North Korea. According to a Dept. of State (DOS) factsheet, this action removes the current requirement for license on all imports from North Korea, but certain imports continue to be banned under other legal authorities. The full text:
***LETs Take 1st In The World Lead ...... as the management & distribution of food and other critical relief supplies into Myanmar is being facilitated with support & expertise from some of the world's leading logistics and transport companies, due to the 1st-ever deployment of a unique United Nations partnership initiative. Agility, TNT & UPS comprise the joint Logistics Emergency Teams (LETs) unit that has been supporting the World Food Program (WFP) led "Global Logistics Cluster" supply chain efforts both on the ground in Yangon and in the critical staging area at Bangkok's Don Muang airport. In the immediate aftermath of Cyclone Nargis, the deadliest natural disaster in the recorded history of Myanmar, the local airstrips, roads & other infrastructure were devastated. Therefore, the Int'l flow of food and other donated relief supplies were directed to nearby Bangkok, where representatives of the LETs program first convened in early May with the WFP and dozens of relief organizations assembled there. The idea of Logistics Emergency Teams dates back from the World Economic Forum's 2005 Davos meeting. In the wake of the Dec. 2004 Indian Ocean tsunami, 3 companies, Agility, TNT & UPS, decided to look into a coordinated, industry-wide emergency support to humanitarian organizations. Under auspices of the World Economic Forum, & initiated by TNT CEO Peter Bakker, they started sharing best practices from their bilateral humanitarian partnerships and they developed a joint operating structure -- today's LETs -- to lend a collective hand to humanitarian organizations. Thanks Agility, TNT & UPS!
***Vietnam For GSP? ...... as the Office of the U.S. Trade Representative (USTR) issued a notice announcing that it will initiate a review to consider designating Vietnam as a beneficiary developing country under the Generalized System of Preferences (GSP) program. The USTR also solicited comments, which are due Aug. 4, 2008, stating, "interested persons are invited to submit comments on whether Vietnam meets the eligibility criteria." In related news, Vietnam imported US$5.8Bn worth of Chinese goods through the first 4 months of 2008, according to China's trade ministry. Two-way trade between Vietnam & China rose to US$15.9Bn in 2007 from US$10.4Bn in 2006, according to Vietnamese trade statistics. For Comments:
***False Declarations? ...... as U.S. Customs & Border Protection said more than 1,000 cargo containers of Chinese apparel were illegally transshipped in 2006 & 2007. In an announcement this month, CBP said more than 900 individual importations containing more than 4 million dozens of apparel were falsely declared as products of other countries, but were actually Chinese. CBP said it had charged the merchandise to U.S.-China agreed upon quota levels. Commissioner Ralph Basham said his agency is "committed to strongly enforcing our trade agreements," and "we will continue to work with members of the trade community & other federal agencies to pursue importers who make false declarations in order to circumvent import quotas." The U.S. Assn. of Importers of Textiles and Apparel (USA-ITA), a trade organization for the apparel industry, said the move was "politically motivated" and "irrelevant to current business." "This is politics. Pure and simple. With the quotas set to end in less than 6 months, CBP has to justify the resources it has dedicated to rummaging through foreign factories and then detaining and seizing apparel shipments since 2006," said USA-ITA.
***New Importer Tool ..... as the Food & Drug Administration (FDA) provides an online system to help importers identify the FDA product code that applies to any commodity entered into the U.S., which is subject to FDA screening. The product code is used by FDA to classify commodities & is required on entries submitted to FDA for review prior to release from U.S. Customs & Border Protection (Customs, CBP) custody. The online system, known as the FDA Product Code Builder, allows users to select from given categories of goods, narrowing the choices, before ultimately arriving at a final, 7-digit product code. Other search options allow users to search using a partial product code or by entering a product name. Users can also enter a complete product code to validate the commodities it describes. The FDA Product Code Builder application itself & a tutorial:
***In The Chips - Big Time ...... as the High Court in London ruled on July 4 that Pringles are not potato chips, or "crisps," and should not be subject to Britain's 17.5% value added tax. Procter & Gamble, the maker of the snack, filed a claim with the VAT tribunal in May pointing out that Pringles are made up of only 42% potato flour. Other key ingredients include corn flour, wheat starch & rice flour. "After an exhaustive inquiry into the ingredients, manufacturing & packaging, the judge said Pringles were not 'made from potato' within the definition laid down by the 1994 VAT Act," said a July 5 article in The Scotsman. Justice Nicholas Warren said "that to fall within the exception, a product 'must be wholly, or substantially wholly, made from the potato." Procter & Gamble sells an estimated US$984M of Pringles in the UK each year, the newspaper said. U.K. Revenue & Customs said it will review the court's decision & consider whether to file an appeal.
***Subcompacts On The Subcontinent ..... as auto components manufacturers in India are worried that Indian carmakers will overlook them in favor of cheaper parts from China, according to a report July 22, in the Business Standard. The amount of auto components imported from China rose from roughly US$190M in the 2005-2006 fiscal year to US$429M this past year. Meanwhile, exports of auto components to China have remained almost exactly the same during the same period, at US$40M per year. The report said, that on average, auto components can be made 30% cheaper in China. Components manufacturers in India attribute the lower costs to better access to steel & low government barriers, in terms of export tariffs. Some Indian carmakers have indicated they will cap the percentage of imports from China at a certain percentage (for example, no more than 50% of a certain model with Chinese imports) in order to keep the local supplier base supported.
***England's Big Dig ...... as a £16 billion rail project designed to boost London's transport capacity by 10% has completed its Parliamentary process after receiving Royal Assent. The Crossrail project will become the largest civil engineering project in Europe. Construction will start in 2010 with the first trains expected to run in 2017. When complete, a 118.5-km (73.6 mile) line will run from Maidenhead & Heathrow in the west through tunnels under central London -- with new stations at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel, Isle of Dogs (Canary Wharf) -- then out to Shenfield & Abbey Wood in the east. There will be 24 trains per hour, in each direction, through central London during peak times. The U.K. government estimates Crossrail will add at least £20 billion to the country's wider economy & support an expected 30,000 new jobs by 2026, 14,000 of which will be involved in the line's construction.
***Used Trailer Prices Plummet as U.S. Fleets Delay Replacements ...... as thousands of used trailers are sitting unsold & gathering dust, as freight demand remains sluggish & carriers that would typically up-grade their fleets are postponing purchases, spending their money on fuel instead, according to industry experts.
***Con-Freight Reports For Dutyway ..... as it has entered a partnership with the U.S. Army Reserve to offer trucking industry employment opportunities to soldiers who are leaving active duty, but will remain in reserve status. Way The less-than-truckload carrier said it would work with the Army Reserve to recruit, license & offer training reciprocity to qualified soldier candidates who are entering the freight transportation field. Nearly 3 months ago, the American Trucking Assn. & the Army Reserve entered a partnership to promote trucking jobs to new reservists with active duty experience. "We consider it a competitive advantage to be a recommended employer of choice for such a highly skilled & dedicated group of individuals as they take the next step in their careers," said John G. Labrie, president of Con-way Freight.
***Yellow Turns Green ...... as YRC Worldwide will begin testing hybrid trucks this year as part of a corporate commitment to sustainability and said it will save as much as US$40M annually by streamlining its service network to speed up transit times. YRC will acquire as many as 6 hybrid straight trucks for city deliveries in the Los Angeles, Chicago, New York & Atlanta areas to evaluate their performance. The company is still evaluating engine & transmission options in proposals from manufacturers and hasn't yet purchased any equipment.
***Trade Software Boom Told ...... as driven by changing trade regulations & globalization, the worldwide market for global trade management applications is expected to rise at a compounded annual growth rate of 10.1% over the next 5 years, according to a study released this month. "The market was US$503M in 2007 & is forecasted to be US$814M in 2012," said the new study by the consulting company ARC Advisory Group. The report, Global Trade Management Worldwide Outlook: Market Analysis & Forecast Through 2012:
***Laufer Group Int'l Gets Trans-World ...... as the logistics company has acquired the customs house broker & freight forwarder Trans-World Shipping Corp. Both firms are based in New York. Mark Laufer, owner & president of Laufer Group, said about 11 employees from Trans-World, including principals -- our pals Gary & Corey Klestadt, will join Laufer, boosting it to about 103 employees. Laufer, founded in 1948, has annual revenue of US$120M, is a full service 3PL with offices in Los Angeles, Seattle & Kansas City in addition to its New York headquarters.
***Major Middle East Magnet ...... as already an established hub of commerce & development within the Middle East, the opening of the Bahrain Logistics Zone (BLZ) will cement the Kingdom's position as the region's most strategically important trading center & generate investments exceeding US$280M. Further plans to increase the size of the site by 150% could attract up to US$600M in direct investment. The 1st phase of Bahrain Logistics Zone is expected to attract over 50 local, regional & Int'l tenants creating over 2,400 logistics related jobs while generating investments exceeding US$280M.
***UPS Honor Guard Leads Final Tribute ..... as Jeff Hornagold loved being a UPS driver. So when the suburban Chicago man died last week of lung cancer, longtime co-worker Michael McGowan agreed to take him on one last delivery. McGowan transported Hornagold's body from Davenport Family Funeral Home to the 26 July funeral services in his UPS truck. McGowan says he plans to keep a picture of Hornagold in his truck until he retires so that they can keep riding together. Hornagold was a UPS driver for 20 years and his wife Judy Hornagold described him as "just the happiest UPS man alive." She says the special delivery was the perfect tribute.
2. The Cargo Letter Financial Page ____________
**Arkansas Best Corp. DOWN as 2nd-quarter profit fell 17% to US$16.2M, or 64 cents a share, from US$19.6M, or 78 cents, a year ago.
**Canadian Pacific Railway Ltd. DOWN with 2nd quarter net income US$155M, a decrease of 40% from US$257M in same 2007 period.
**C.H. Robinson. UP with a 9.9% increase in 2nd-quarter net income to US$90.4M, compared to US$82.3M a year ago.
**Con-way Inc. UP as 2nd-quarter net income increased to US$48.7M, or $1.02 per share, from US$46.4M, or 96 cents, a year earlier.
**COSCO Group (owners of COSCO Container Lines) DOWN as 1st half 2007 profit was US$128M, down 8% over corresponding period in 2006 due to higher operating costs.
**CSX Corp. UP as 2nd-quarter net income rose 19% to US$385M, or 93 cents a share, from US$324M, or 71 cents, a year ago.
**Forward Air Corp. UP as 2nd-quarter profit rose to US$12.1M, or 42 cents a share, from US$11.5M, or 38 cents, a year ago.
**Hub Group. UP as 2nd-quarter net income rose to US$15M, or 40 cents a share, from US$13.8M, or 35 cents, a year ago.
**"K" Line. DOWN with a 16.5% decline in 1st quarter net profit, to US$201.5M.
**Kuehne + Nagel International AG. UP with 1st half earnings of US$304M, up 14% over same period last year.
**Landstar System Inc. UP with record 2nd quarter net profit of US$29.8M compared to US$29.7M in the same 2007 period.
** Norfolk Southern Corp. (owners of Norfolk Southern Railway) UP with 2nd quarter net income of US$453M, up 15% compared to US$394M a year ago.
**Old Dominion Freight Line. UP as 2nd-quarter profit rose to US$23.9M, or 64 cents a share, from US$22.5M, or 60 cents, a year ago.
**Rand Logistics Inc. DOWN with a net loss of US$11.2M for the fiscal year ended March 31, compared to a US$3.1M loss in the prior fiscal year.
**Ryder System Inc. DOWN as 2nd quarter net income fell 3% to $62M from $65M.
**Saia Inc. DOWN with profit of US$5.4M, or 40 cents a share, in 2nd-quarter, down from US$10.4M, or 72 cents, a year ago.
**Southwest Airlines. UP as net income for 2nd-quarter 2008 was US$321M, or US$.44 per diluted share, compared to US$278M, or US$.36 per diluted share, for 2nd-quarter 2007.
**Union Pacific Corp. UP with record 2008 2nd-quarter net income of $531M, up 24%.
**YRC Worldwide. DOWN as 2nd-quarter net earnings were US$36.3M, or 62 cents a share, down from a profit of US$55.4M, or 95 cents, a year ago.
OUR "B" Section: FF World Air News***
3. Freight Forwarder World Air Briefs __________
***IATA Reports Volume Decline ...... as with the May 2008 data now available, there was a 6% growth in passenger traffic cargo figures showed a 1.3% decline, according the Int'l Air Transport Assn. (IATA). According to the Association, during the month costs for jet fuel were US$160 per barrel, some 87% higher than the same period last year. IATA is pointing to the impact of the earthquake in China and a weak Japanese economy for the overall slowdown since those 2 factors accounted for a 0.5% decline in Asian carrier freight traffic. Adding to the woes of Asian carriers was significant competition from U.S. carriers able to leverage the weakening American dollar. During all of 2007, overall cargo demand was up 4.3%, while through the 1st 5 months of 2008 air freight volumes were up just 2.8%. Here are IATA's regional statistics & insights:
North American cargo traffic grew 4.6% as U.S. carriers shifted capacity from domestic to Int'l routes. In addition to expanded transpacific opportunities, the U.S.-EU Open Skies agreement created new opportunities in Europe.
Europe recorded a sluggish 1.4% increase. The strong Euro is damaging competitiveness for both European exports & the European air cargo business.
Latin America freight volumes contracted 13.2%. Industry restructuring saw the replacement of retiring wide-body aircraft with narrow-bodies with limited cargo capacity.
Africa recorded its 11th month of air freight contraction out of the past 12 months with a fall of 6.5% during May as industry restructuring removes freight capacity.
Middle East is the only region to have recorded a significant growth of 10.7% in air freight volumes in the month of May 2008
Slowing is evident around the globe. As an example, figures from Hong Kong Int'l Airport (HKIA) indicate a slowing of air freight. While cargo throughput climbed 2.4% in June to 312,000 tons, that increase was driven by transshipments. Unloaded cargo was up just 0.9% in June to 115,000 tons, while loaded traffic rose 3.2% to 197,000 tons. The airport notes that such declines are consistent with declines in foreign commerce between China and its trading partners in the month.
***Small Forwarders Face Belly Threat ...... as representatives from the 2 largest U.S. freight forwarder associations told U.S. lawmakers this month that their members support the Transportation Security Administration's efforts to meet a mandate for 100% inspection of cargo placed in the bellies of passenger planes, but warned many small forwarders may be forced to leave the market. To participate directly in the TSA's Certified Cargo Screening Program, forwarders -- legally referred to by federal aviation security regulators as Indirect Air Carriers (IACs) -- must invest in scanning equipment that's substantially more robust than that used to scan passenger baggage. "Forwarders participating in CCSP must purchase technology for which the cost may range from US$150,000 to US$500,000 per facility -- a price tag that cannot be met by most small & medium-size forwarders," said Brandon Fried, executive director of the Airforwarders Assn., in testimony before the House Homeland Security Committee's subcommittee on transportation security & infrastructure protection. "As a result, they will face delays at the airport for cargo screening, causing them to miss flights & lose revenues," he added. There are more than 4,000 registered IACs involved in the air cargo industry, most considered small to medium-size enterprises. Both the Airforwarders Association and National Customs Brokers & Forwarders Assn. of America called on Congress to appropriate funding in fiscal 2010 to help offset the cost for small to mid-sized firms to self-examine cargo within the TSA's Certified Cargo Screening Program.
***Air America ..... as the U.S. Trade & Development Agency on July 22, awarded a grant to the Civil Aviation Administration of Vietnam to help the government agency enhancing aviation safety & assist Vietnam in meeting international aviation regulations. The US$740,413 grant is part of a 3-phase technical assistance program to encourage modern air safety regulation practices & to improve Vietnam's aviation technology infrastructure as the country's aviation sector continues to experience rapid growth, USTDA said.
***Heavy Thoughts For The Aviation Industry ..... as in the 1st half of last year, jet fuel averaged approximately US$80 per 42-gallon barrel but for the same period in 2008, that barrel averaged over US$132. If these trends continue, the nation's airlines will collectively spend over US$60Bn this year on fuel, more than 5 times what they spent in 2002. It should come as no surprise, therefore, to learn that 8 airlines have gone out of business since Nov. 2007. Each and every pound shed from a plane weight saves airlines 14,000 gallons of fuel each year. So it is no wonder, then, that in order to stay competitive the airline industry needs to find ways to lighten up. Recent measures & proposals made to lighten the load of the friendly skies have included:
* Charging for each piece of checked luggage as a way of discouraging passengers from over-burdening flights
* Replacing seats & food carts with new, lighter-weight models
* Instructing load planning, baggage handling, & ramp personnel to better distribute cargo to ensure that aircraft have the most fuel-efficient center of gravity
* Carrying less water in airplane bathroom faucets & toilets
* Eliminating printed pilot manuals in favor of onscreen computer displays
* More frequent power-washing of jet engines & hulls to reduce the drag caused by dirt & debris
* Use of plastic or fiber board pallets instead of wood
* Leave mother-in-law home.
***Boeing Sees Bright Future ...... as it forecasts a US$3.2 trillion market for new commercial airplanes over the next 2 decades, driven by an increasing demand for airplanes to replace older, less efficient aircraft. Boeing expects a world fleet of 35,800 aircraft commercial aircraft in 20 years compared to 19,000 today. The new airplanes will accommodate a forecasted 5% annual increase in global air travel, & a 5.8% annual increase in air cargo traffic. The airplane maker's 2008 outlook calls for demand for 29,400 new commercial airplanes (passenger & freighter) by 2027. The company released its 2008 Current Market Outlook in London:
***The New Boeing F ...... as on July 14 tested its twin-engine 777 Freighter aircraft with a maiden flight lasting over 3.5 hours. The freighter performed well but did report a data-communication problem between the airplane & the telemetry room at Boeing Field. Due to the data-transmission issue, the 777F was unable to complete all of the 1st-flight tests and was returned to Paine Field in Everett, Wash., per Federal Aviation Administration procedure. The original 1st-flight plan called for a landing at Boeing Field. The new cargo plane will have a range of 4,885 nautical miles (9,047 km) with a full payload. So far, Boeing has secured 78 firm orders from 11 customers for the 777F, the 1st of which is to be delivered to launch customer Air France in the 4th quarter.
***New Airbus A330-200F Customer ..... as Italian start-up air cargo airline Alis Aerolinee Italiane has signed a memorandum of understanding for the acquisition of five A330-200 Freighter aircraft, plus options for a further 3. Financial details were not disclosed. The fledgling airline plans to establish direct cargo links between Northern Italy and long haul markets, such as North America, India, China, Japan & Southeast Asia. Airbus launched the A330-200F in 2007 and now has 77 total firm orders for the aircraft from 9 customers. The European plane maker said the aircraft has the interior flexibility to carry a wide variety of pallet & container sizes for maximum interlining capability, offering 30% more volume than any freighter in its class. In standard "range mode" the A330-200F can carry 64 tons of cargo up to 4,000 nautical miles (7,400 km), rising to 69 tons up to 3,200 nautical miles (5,930 kilometers) in "payload mode."
***UPS Changing Asia Neighborhoods ...... says the growing manufacturing center north of Shenzhen, China & increased intra-Asian shipping activity have led the logistics giant to spend US$180M to relocate its intra-Asian logistics hub to Shenzhen. The company's current intra-Asian hub is in the Philippines at the former Clark Air Force Base. UPS said Southeast Asian markets in China, Hong Kong, Japan, Korea & Taiwan account for more than half of UPS's total intra-Asia volume. The new 92,903 hub will open in 2010.
***New DHL Hub ...... as it has launched its new US$300M facility in the German city of Leipzig. The 2 million square metre facility, which comprises a distribution center & an aircraft hangar, will see around 2000 tons of freight transshipped every day by 2012. Its sorting line is the largest of its type in Germany and is capable of sorting around 60,000 parcels & 36,000 documents every hour. Leipzig's strategic location will enable DHL to provide direct north-south & east-west access to Europe and leverages existing and emerging routes in central and eastern Europe & Asia.
***New Cargo Blimp ...... but the word "blimp" doesn't appear in any material from Boeing Co. who is teaming with Calgary, Alberta Canada's privately-owned SkyHook Int'l Inc. to develop the JHL-40 (Jess Heavy Lifter) rotorcraft. However, the neutrally buoyant aircraft has a helium-filled envelope size that will support the vehicle's weight and fuel without a payload. As Boeing explains, "With the empty weight of the aircraft supported by the envelope, the lift generated by four rotors is dedicated solely to lifting the payload, leaving the aircraft neutrally buoyant." The aircraft will be able to lift a 40-ton sling load & transport it as far as 200 miles without refueling. The JHL-40's initial use will be for industries such as energy, mining & logging, and, particularly, for environments like those found in Arctic Canada & Alaska. Boeing is designing the JHL-40 & will manufacture 2 production prototypes of the aircraft at its Rotorcraft Systems facility in Ridley Park, PA. Skyhook will own, operate & service all JHL-40 aircraft worldwide. The JHL-40 will begin commercial service as soon as Transport Canada & the U.S. FAA certify it. Cargo Airships
***Hello Grandstar Cargo Int'l Airlines ! .... as it began operations this month with an inauguration flight from Tianjin to Frankfurt using a Boeing 747-400 freighter. This despite the fact the cargo market is currently in a state of considerable turbulence. This all-cargo carrier has started services when the price of oil is continuously on the rise & operating costs are at difficult-to-sustain levels. Grandstar was established in Dec. as a joint venture cargo airline. It is jointly owned by: Sinotrans Air Transportation Development (51%); Korean Airlines (25%); Hana Capital (13%); & Shinhan Capital (11%). Grandstar will handle both domestic & Int'l cargo and mail air transportation. This is probably the worst time it could enter this competitve market but, presumably plans were set before the price of oil started to go stratospheric.
***K+N = Gold ...... as Airbus has contracted with Int'l forwarder Kuehne + Nagel to act as its lead logistics provider and DHL as lead transport provider, starting Sept. 1. Under terms of the 6-year contract with Kuehne + Nagel, the Swiss logistics firm will exclusively manage and operate all of Airbus' regional logistics hubs located in France, Germany, Spain & the UK, altogether comprising more than 150,000 square meters of warehousing space. The agreement with DHL will see the transportation company move materials from the supplier to the Airbus manufacturing plants.
***Dascher In Dutch JV ...... as the German logistics company has started a joint venture with Dutch cargo agent Seacon Logistics at the beginning of July. Dachser Netherlands Air & Sea Logistics B.V. will be based in Maastricht. Both companies have a 50% stake in the new entity, though no other financial details were released. General Manager Huub Leurs will head the Maastricht office. Dascher indicated that further offices would likely be set up at primary trade locations in the Netherlands. For now, the start-up joint venture will focus on intercontinental air freight business and will also develop sea freight traffic for the Dachser global network. Dachser has been active in the Netherlands since 1975.
***Full Speed Ahead ...... as a 3-plane ground crash at the Baton Rouge Metro Airport could have become an explosive disaster. It happened July 21, at the new regional maintenance hangar for Atlantic Southeast Airlines, or ASA. The total value of the 3 CRJ commuter jets is US$100M and it looks like the most expensive one is a total loss. The entire incident reportedly took 5 seconds. A young mechanic pressed a starter switch to slowly spin the compressor blades for cleaning. Instead, her action sent the engine to immediate takeoff power, hurling the fragile aircraft at 90 degree angles. Witnesses say it's a wonder the entire hangar wasn't sent up in flames, not to mention injury or death to the 14 ASA mechanics and cleaning crew members working inside.
***Jet For Sale: Cheap ..... as Vietnamese authorities say they are mystified as to who owns a Boeing 727 which has been abandoned at Hanoi's Noi Bai airport. The plane was flown in from Siem Reap in neighbouring Cambodia in late 2007 and has been unclaimed ever since. An airport official told the BBC that they believe the owners could be an airline based in Cambodia. The official said that if it remains unclaimed, the plane will be sent for scrap. The plane has a Cambodian flag on its fuselage & is emblazoned with the name "Air Dream,", but the authorities say they have no other information. Earlier, one security official at Noi Bai airport said that the plane belongs to bankrupt budget Cambodian airline Royal Khmer, but this is not certain. Permission was originally given for the plane to remain at the airport while maintenance was carried out but these repairs have not been done. Online newspaper VietnamNet reported that the owners could be unable to pay the required airport parking fees.
***Kit Kat Kontest ...... as a French air hostess will become one of Europe's pioneer space tourists after picking a chocolate wrapper out of the trash & finding a winning number in a competition to fly to the upper reaches of the earth's atmosphere. Mathilde Epron, 32, said she had bought a Kit Kat chocolate bar at her local supermarket but initially threw the wrapper in the bin, telling herself that "it's only others who win." Hours later, thinking back to the competition, she decided to try her luck & fished the wrapper out of the bin, only to find a code marked inside. "For someone who works in air travel it's really a dream come true," she told France Info radio. A spokeswoman for Nestle in France confirmed that Epron had won the prize to take a flight on a 4-seater, fighter-sized aircraft built by Rocketplane, a company that builds aircraft intended to provide cheap flights into space. She will receive four days of astronaut training in Oklahoma City in the U.S. before boarding the Rocketplane XP aircraft which will reach an altitude of 100 km (60 miles) & allow a 5-minute experience of weightlessness.
***Concorde Rhinoplasty ..... as an embarrassed museum official says a 2-week nose job should reverse the damage a Concorde supersonic jet suffered when a truck rammed it. The retired Concorde is normally on display at the Intrepid Sea, Air & Space Museum. It has been at a recreational facility in Brooklyn while the USS Intrepid and its home pier in Manhattan are repaired & renovated. Early July 1, a truck hauling equipment away from a Jamaican soccer & cricket festival bumped into the Concorde's distinctive nose & knocked it off. Museum President Bill White says the cone is salvageable and will be reattached & repaired to original standards. White is apologizing to British Airways, which owns the jet. He says the recreational facility should have provided better security for the plane.
***Volumes >>> Cathay Pacific Airways & sister airline Dragonair carried 137,680 tons of cargo and mail between them in June, up 4% on June 2007. >>> Lufthansa Cargo flew 869,000 tons of freight & mail in the 1st 6 months of 2008, a 0.9% drop compared to the 1st half of last year and the German airline's cargo load factor for the 1st half of this year fell by 0.3% year on year to 68.2%.
OUR "C" Section: FF World Ocean News***
4. FF World Ocean Briefs
***Retail Container Traffic Slowly Climbing, But Below 2007 ...... as traffic at major U.S. retail cargo ports is slowly climbing despite the continuing economic slowdown, but is expected to remain below last year's levels through most of 2008, according to the monthly Port Tracker report released by the National Retail Federation and Global Insight. Meanwhile, West Coast dockworkers' union contract expired July 1, but negotiations are continuing & no disruption to cargo movement is expected - yet. U.S. ports surveyed handled 1.31 million Twenty-Foot-Equivalent Units (TEU) of container traffic in May, the most recent month for which actual numbers are available. That's up 3.4% from April, but down 5% from May 2007. One TEU is one 20-foot container or its equivalent. June was estimated at 1.34 million TEU, down 7.8% from a year ago, and July is forecast at 1.4 million TEU, down 3.1%. Aug. is forecast at 1.45 million TEU, down 0.8%; Sept. at 1.42 million TEU, down 3.6%; and Oct. at 1.47 million TEU, up 1.7%. The Oct. figure would represent the 1st year-to-year rise since July 2007, when 1.44 million TEU were handled compared with 1.4 million in July 2006. Nov. 2008 is forecast to drop to 1.35 million TEU, down 2% from 2007, but traffic typically declines after peaking in Oct. each year. Year-to-year numbers are expected to deteriorate less during the 2nd half of this year than they did during the 1st half. Traffic for Jan.-June 2008 was down 6% from same period in 2007, but June-Nov. 2008 is expected to be down only 0.6% from June-Nov. 2007.
***Free Enterprise Stand Off ...... as the Int'l Brotherhood of Teamsters has turned its political & financial pressure toward the Bay Area as part of a union goal to organize drayage drivers at the nation's ports. Los Angeles Mayor Antonio Villaraigosa is a key ally in the Teamsters' earlier successful efforts to get an identical plan approved at the Port of Los Angeles late last year. The US$2.4 Bn port re-regulation plan, which requires licensed motor carriers in Southern California to hire drayage drivers as per-hour employees, is to take affect Oct. 1. Like the Oakland port, independent owner-operators make up more than 80% of the Southern California drayage fleet. The American Trucking Assn., a vocal opponent of the labor restrictions in the Los Angeles truck plan, has said it will file a federal suit against the plan over the plan's alleged violations of federal interstate commerce laws. Los Angeles' neighbor port of Long Beach, while adopting a similar drayage re-regulation plan sans the Teamster labor restrictions, will also be named in the ATA suit. The Southern California re-regulation plan, like that being proposed at the Oakland port, ties the labor restrictions to environmental efforts by the ports to cut drayage truck pollution. Representing more than 37,000 motor carrier members, the ATA has opposed the ports' truck plan since shortly after the ports introduced it early last year. The ATA, the nation's largest trade association, believes the truck plan's licensing component violates federal interstate commerce laws. A major point of contention over the licensing component of the plan for the ATA has been a labor stipulation requiring motor carriers to hire only per-hour employees. Currently, more than 80% of the ports-servicing drayage fleet is made up of per-load independent owner-operators. A full-blown legal battle over the truck plan could last up to 3 years. However, California state air quality regulators are set to move forward with their own diesel truck replacement program by the start of 2010. If the ports' truck plan is delayed beyond the start of the state program, the state truck plan could essentially render the ports' efforts moot.
***PierPass Hits 9M Mark ...... as the OffPeak after-hours marine terminal gate program at the ports of Long Beach & Los Angeles has diverted more than 9 million truck trips from peak daytime traffic since the program's start in July 2005, according to a PierPass commissioned study. The OffPeak program, which offers financial incentives to shift container pickups and drop-offs to nighttime hours, is shifting 68,000 truck trips a week from the freeways during busy commuting hours. Program officials claim that the shifting reduces gridlock on area freeways and curtails air pollution from idling truck traffic. While 12 of 14 Southern California terminals had some type of off-peak gate hours before the PierPass program, the hours & days of operation varied widely. The program charges cargo owners US$50 per TEU (US$100 for containers longer than 20 feet) for daytime gate usage, which then is used to support 5 after-hours gate shifts at night and on weekends. Marine terminal operators in the two ports collectively developed the PierPass system in response to threatened state legislation to reduce cargo-handling highway congestion. The legislation was dropped following the start of the PierPass program. Prior to the program, 17% to 21% of total Los Angeles-Long Beach container traffic was moved during nighttime or off-peak gate hours. The program now handles 45% of the two ports' annual TEUs, or more than 7 million TEUs based on the two ports' 2007 calendar year volumes. Based on PierPass numbers, the program is now handling roughly 3 million more TEUs per year at the 2 ports than at the program's July 2005 inception.
***Misstep For NOL? ..... as ocean carrier consolidation warnings comes with news from Singapore that Neptune Orient Lines (NOL) is making an "indicative non-binding offer" for Hapag-Lloyd. Spokesmen for NOL stated that a completed transaction would result in the integration of NOL's container shipping business&emdash;APL&emdash;with Hapag-Lloyd, but that at this stage it is "premature" to say whether it will lead to a done deal. Up until recently, NOL had been battling German investors intent on keeping a grip on Hapag-Lloyd & a report issued last month by JP Morgan's Asia Pacific Equity Research division strongly suggested that this might not be the right move for NOL. Investment analysts also noted that NOL will be obligated to take on the German company's substantial freight forwarding customer base, which might further undermine its existing relationship with shippers. "We think NOL is better off not to acquire Hapag-Lloyd considering the hostility towards foreign ownership within Hapag-Lloyd and the potential high price that an acquirer may be required to pay," Johnson Man Leung, an analyst at JPMorgan, stated in the report.
***NOL Snapshot ... as Singapore-based Neptune Orient Lines today reported a 13% year on year increase in average revenue per FEU for its ocean carrier subsidiary APL in the 4-week period ended June 27. APL's average revenue per FEU for the period improved to US$3,080, up from US$2,726 a year ago. NOL said the revenue increase was due to higher bunker adjustment factor collections and improved backhaul freight rates on major trade lanes. During the same timeframe, APL transported 201,000 FEUs, up 8% compared to 185,700 FEUs. NOL said the volume increase came mainly from the Asia/Europe & intra-Asia trade lanes. For the year, APL's volume was up 13% to 1.27 million FEUs with average revenue per FEU up 15% to US$2,972.
***New Pirate Attacks ...... as a Japanese-owned bulk carrier has become the latest merchant vessel to be captured by Somali pirates, according to reports emanating in the region. M/V Stella Maris (52,454 dwt, built 2007) had been seized on July 20 morning near Calula, a port in Somalia's breakaway northern region of Puntland. The Panama-flag vessel, which is operated by a ship manager based in the Philippines, is laden with lead & zinc. According to some reports, M/V Stella Maris was seen alongside in Alula, also in Puntland, on July 21 & may have been heading for the town of Eyl in central Somalia. A private family yacht - with passengers including a child with malaria & a diabetic man without access to insulin - is also reportedly being held.
***M/V COSCO Busan Crime Wave ...... as the Hong Kong-based operator of the container vessel, which struck the San Francisco-Oakland Bay Bridge in Nov. 2007 & discharged more than 50,000 gallons of fuel oil into San Francisco Bay, now faces 6 new federal felony charges, according to a federal indictment released July 23. U.S. Justice Dept. officials said a federal grand jury in San Francisco returned the indictment charging Fleet Management Ltd. with negligently causing the oil spill, & then falsifying documents after the crash to cover up the firm's negligence. According to the indictment, Fleet Management, acting through senior ship officers and shore-based supervisory officials, concealed & covered up documents with an intent to impede, obstruct & influence the investigation of the spill. The falsified documents, according to the grand jury findings, include a fictitious passage plan for Nov. 7, 2007, the day of the collision, as well as 2 prior voyages made after Fleet assumed management of the vessel in Oct. 2007. U.S. laws require berth-to-berth passage plans for any voyage. However, the grand jury found that Fleet created falsified plans after the Busan collision in addition to concealing &covering up the real ship records. Fleet Management is charged as a co-defendant with Capt. John Cota, the Bay Area ship pilot on the bridge of M/V COSCO Busan at the time of the collision. Cota has also been charged with making false statements to the U.S. Coast Guard in 2006 & 2007 concerning his possible medical conditions, the medications he was taking, & possible side effects of the prescriptions, his medications and medical conditions. Fleet Management faces a maximum penalty under the obstruction & false statement charges of US$500,000 per count or twice the gross gain or loss caused by the offense. The firm also faces maximum penalties for the misdemeanor Clean Water Act violation of US$200,000 or twice the gross gain or loss caused by the offense, and a US$10,000 fine or twice the gross gain or loss caused by the offense, for the misdemeanor Migratory Bird Act violation.
***Floating Long Beach? ....... as port officials plan to move forward with a magnetic levitation pilot program that proposes to create an all-electric conveyor belt system to move million of containers a year out of the two adjacent ports quietly & with little direct pollution. Maglev technology utilizes the repulsive & attractive nature of magnets to float a vehicle above a stationary track, reducing friction and capable of very high levels of efficiency. While first patented in the early 1900s, maglev technology has undergone a renaissance in recent years with the development of high-tech magnetic materials & cutting edge research in the area of magnetic science. The strongest impediment in the past to building large scale passenger or cargo systems has been the high cost of construction. Several existing passenger maglev systems in Japan and Germany reportedly cost upwards of US$80M per mile to build & estimates for American systems have been even higher. There are hopes to have the maglev project underway within 12 months.
***India Up - Like Her Economy ...... as tIraffic at its12 biggest government-owned ports has increased nearly 9 % by tonnage in the 1st quarter of the 2008-09 fiscal year. Jawaharlal Nehru Port, near Mumbai, has seen the biggest rise, at almost 19%. JNP is the busiest container port in India, but only the 3rd-largest in terms of total tonnage, since about 30% of India's Int'l cargo is containerized.
***Mombasa Meltdown ..... as the key hub port for east Africa, is suffering from a huge container backlog after hardware & software problems with the implementation of a new port automation system left over 15,000 containers sitting in the port. The situation has been compounded by a strike of railway workers.
***Acrophobia ..... as U.S. Customs & Border Protection agriculture specialists reported a 1-day record of 21 pest interceptions on bananas, pineapples and other fruit originating in Central America and delivered aboard ships to Philadelphia, Wilmington, Del., and Camden, N.J., marine terminals on June 18. The 3 ports are part of CBP's Philadelphia port district. The inspections resulted in the fumigation or re-export of 150,000 cases of fruit from several countries. CBP officers found mites, weed seeds, beetles, ants & other pests in the perishable shipments. It was the largest 1-day detection of pests in the maritime cargo environment in memory, the agency said.
***Call Marco Polo ..... as Cargo News Asia reported on July 11, 2008 that South Korea & China have opened a new sea route for container ships, which was a condition stipulated in their port alliance, in an aim to meet the increasing trade volumes between the two countries. The new sea route links South Korea's Gwangyang port to Taicang port located on the east coast of China. Taicang port is known as a fast emerging logistical hub in China. The container throughput in this port has significantly increased from 230,000 TEU in 2005 to 1,000,000 TEU last year.
***Saluting Admiral Byrd ..... as the U.S. Navy's Military Sealift Command said the dry cargo-ammunition ship USNS Richard E. Byrd entered the waters of the U.S. Navy's 7th Fleet on July 25, marking the 1st Lewis and Clark-class multiproduct combat logistics support ship in service to the 52 million-square-mile region in the Western Pacific & Indian Ocean for which the U.S. 7th Fleet is responsible. The Byrd replaces MSC combat stores ship USNS Niagara Falls, which has been forward deployed supporting 7th Fleet since 1994. Byrd has a crew of 124 civil service mariners working for MSC as well as a military detachment of 11 sailors who provide operational support & supply coordination. MSC operates about 110 noncombatant, merchant marine-crewed ships that replenish U.S. Navy ships & conduct specialized missions. Watch!
***Man The Rail ! ..... as the U.S. Maritime Administration announced that the last World War II-era Liberty ship in the National Defense Reserve Fleet is destined for Greece to become a museum. The S.S. Arthur M. Huddell is scheduled to be towed from the James River Reserve Fleet site on July 8 to the W3 Marine facility in Norfolk, Va. for final preparations. My father-in-law lost a Liberty ship beneath his feet in 1943. McD
***This Month In U.S. Navy History .....
1747 - Birth of John Paul Jones at Arbigland, Scotland.
1898 - At Battle of Santiago, Cuba, Rear Adm. Sampson's squadron destroys Spanish fleet.
1976 - First women enter U.S. Naval Academy.
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 feature for June 2008: "Too Little Runway - Too Much Plane" - TACA Flight 390 - June 2008
You Tube feature: "Container Gantry Gone"
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..............
Cargo & Trade>>>>>>
Australia America Assn. .. business resources
LAX Final Master Plan
Flight Center .... any airline world schedule & more based on partnership with OAG (Official Airline Guide)
Rules of Navigation for Suez Canal
Singapore America Business Assn
Trade With Sweden
U.S. Customs Broker - Next Exam is Monday, Oct. 6, 2008
U.S. Customs: Every Member of the Trade Community Should Know About: Recordkeeping
U.S. Customs Rulings Online Search System (CROSS) ....... 150,000 Customs rulings based on simple or complex search characteristics.
U.S. Government Agency Information ..... local to federal
U.S. International Trade Commission .....direct access to data & customized reports
Warehouse Management Software: 5 Key Capabilities for Every Distribution Center
World Customs Organization
ImportGenius ..... search engine
PIERS Global Intelligence Solutions ... shipping data
Trade Shows, Exhibitions, Conferences & Business Events Worldwide
World Trade Organization Events
1st Journal of Commerce Container Transport Investment Conference ....... Jan. 14-15, 2008 in New York City
2nd Int'l Railway Symposium ...... 15-17 Oct., Istanbul, Turkey
4th China 3PL Summit ..... 16-18 June 2008, Shanghai
4th China Int'l Container & Intermodal Transportation Development Forum ......Sept. 5-6, 2008, Renaissance Tianjin TEDA Hotel & Convention Center,Tianjin, China
7th Annual Maritime Security Expo .........18-19 Nov. 2008, Long Beach Convention Center
17th Int'l Congress of Maritime Arbitrators ..... 4-9 Oct. 2008, Hamburg
2008 China Warehousing Annual Conference & Exposition ....... Sept. 23-24 in Beijing
2008 Value Chain and Logistics Outsourcing Exchange ...... May 28, 2008, Phoenician Resort, Scottsdale, Arizona
Annual U.S. Customs and Border Protection Trade Symposium ....... 29 &endash; 31 Oct., 2008, JW Marriott, Washington, D.C.
CargoFacts 2008 ...... 15 Sept. 2008, Loews Miami
Expo Logistica Panamá .... 15 & 16 Oct. 2008
FIATA 2008 World Congress .......... 23-26 Sept. 2008, Vancouver, Canada
Greening the Supply Chain Conference ....... June 9-10 in Sacramento, Calif.
Int'l Congress of Maritime Arbitrators ......5 - 9 Oct. 2009, Empire Riverside Hotel, Hamburg
Int'l Freight Week ...... 23-25 Nov. 2008, Abu Dhabi National Exhibition Centre
Logistics Expo Panama ........15-16 Oct. 2008, Panama
MARAD Approved Maritime Security Awareness Classes
MarineLog 2008 Global Greenship Conference & Expo ....... 16-17 Sept 2008, Washington, DC
Port & Shi[ Int'l India ....... Oct. 23-25 2008, Mumbai
Structured Trade & Export Finance Ib Africa Conf. .......17 & 18 Sept. 2008, 2008, Johannesburg, South Africa
Terminal Operations Conference Europe 2008 .........17-19 June 2008, Amsterdam
Transport & Infrastructure India 2008 .............27-29 November 2008, Mumbai, India
Transport Logistic China ........ 17-19 June 2008, Shanghai New Int'l Expo Centre
American Warriors: In Thier Own Words
Australians in Film
Clifornia High Speed Trains Movement .......videos
Find Low Air Fares
Learn How Everything Works!
MedJet Assist.... personal air medical transportation
Miller Brewing Co. - Milwaukee Brewery: Plant Tour
New Generation Cruise Ship
Riding With Robots On The High Frontire
Which Starbucks Are Closing?
Wright "B" Flyer Virtual Tour
OUR "E" Section: The Forwarder/Broker World***
7. New U.S. Transport Related Legal Cases _____
Crowley Marine Services Inc. v. Maritrans Inc.
U.S. 9th Circuit Court of Appeals
3 July 2008, No. 07-35237
Admiralty Law / Collision Regulations / Establishing Comparative Fault >> Maritrans, Inc. (Maritrans) hired Crowley Marine Services Inc. (Crowley) to accompany the Allegiance, an oil tanker through the Puget Sound. Crowley supplied two ships: M/V Sea King and M/V Chief. The M/V Sea King and the M/V Allegiance collided. Each side blamed the other at trial. Ultimately, the district court found Maritrans 30% at fault and Crowley 70% at fault. Crowley appealed and claimed that Maritrans was primarily at fault because M/V Allegiance violated COLREGS 13(a), which states that the overtaking vessel "shall keep out of the way of the vessel being overtaken." The 9th Circuit disagreed with Crowley's claim since adopting this rule in the current case would abandon the comparative fault rule, which considers many factors leading up to the collision and not just which vessel is being overtaken. In addition, by not taking action to avoid a collision, the Ninth Circuit found that M/V Sea King violated Rule 17(b). Therefore, the 9th Circuit affirmed the district court's apportionment of fault. AFFIRMED. READ THE DECISION
Evergreen International, S.A. v. Norfolk Dredging Company
U.S. 4th Circuit Court of Appeals
25 June 2008, 2008 WL 2514187
Court Allocates Fault Between Ship and Dredging Operator >> Norfolk Dredging Company was hired to perform dredging of the Daniel Island Bend and Clouter Creek Reach by the U.S. Army Corp of Engineers. Norfolk laid a dredge spoil pipeline across the bottom of the Cooper River, a federally-marked navigational channel. On Sept 30, 2002, the Dredge Charleston, a piece of equipment owned and operated by Norfolk, was performing dredging operations in Daniel Island Bend. On that morning, Charleston Branch Pilot Stephen Swan, Jr., intended to navigate the container ship M/V Ever Reach, owned & operated by Evergreen Int'l, S.A. ("Evergreen"), between the Dredge Charleston and its attached equipment, the "Didapper." A Leverman on the Dredge Charleston assured Pilot Swan that the Didapper was "out of the way" and that M/V Ever Reach should therefore proceed.
As M/V Ever Reach proceeded, Pilot Swan realized that the location of the Didapper was different than told to him by the Dredge Charleston. As a result, when Pilot Swan navigated through the opening, the ship veered outside of the federally-marked navigational channel, ultimately alliding with Norfolk's dredge spoil pipeline. M/V Ever Reach was damaged and leaked oil into the Cooper River.
Evergreen brought a negligence suit against Norfolk in District Court (D.S.C.). Norfolk counterclaimed that Pilot Swan caused the allision and sought to recover for damage to its dredge spoil pipeline. The District Court held that Norfolk's fault amounted to 10% and Evergreen was 90% at fault. Both Evergreen and Norfolk appealed. Evergreen argued that Norfolk was 100% liable for the allision because it did not lay its pipeline in a "manner as to obstruct navigation as little as possible," as required by the government contract. The Court of Appeals rejected this argument, holding that "a dredge lawfully engaged in digging will be regarded as free from fault in an allision if there is ample free water for passage." The District Court found that the space between the Didapper & the Dredge Charleston was sufficient to satisfy this standard.
Next, Evergreen argued that the District Court failed to apply the Pennsylvania Rule in its favor, which would have shifted the burden of proof onto Norfolk to show that it "could not have been the cause of the collision or allision." The Court held that the Pennsylvania Rule was not invoked in this situation because Norfolk had not violated a statute or Federal regulation. Finally, the Court of Appeals rejected Evergreen's argument that that the Oil Pollution Act of 1990, 33 U.S.C. 2704(a)(2), should not have limited Norfolk's damages to Evergreen. The Oil Pollution Act provides a cap on liability for damages due to oil spills, but does not cap damages if the spill was caused by a violation of Federal law. The cap applied to this case, however, because Evergreen failed to show that Norfolk had violated any statute or regulation. The Court of Appeals also held that the District Court properly found that Norfolk's failure to adequately describe the location of its equipment rendered it 10% liable. Accordingly, the Court of Appeals affirmed the judgment of the District Court in its entirety. Read 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)
Maria Payne (Countryman & McDaniel)
Christoph Whaner, Esq. (Countryman & McDaniel)
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