Industry News
From The Cargo Letter

THE CARGO LETTER [294] Air & Ocean FF News For 12 Jan '96

Good Friday Morning From World Port L.A. ! The CALYPSO has sunk! Please take a moment today and contribute a bit of news by return e-mail to The Cargo Letter....... McD

INDEX to The Cargo Letter:

  1. OUR Top Story: China To Eliminate Duty Free Treatment
  2. WORLD EXCLUSIVE to The Cargo Letter OUR "A" Section: FF World Trade, Financial & Inland News
  3. Cargo Letter's Freight Forwarder STOCK WATCH
  4. New Harmonized Tariff Schedule On Line
  5. Roadway Announces Innovative Customer Software Program
  6. Freight Forwarder/CHB Trade Briefs
    OUR "B" Section: FF World Air News
  7. Freight Forwarder Air Briefs
    OUR "C" Section: FF World Ocean News
  8. Box-Match Aims To Lower Repositioning Costs
  9. FF World Ocean Briefs
    OUR "D" Section: Freight Forwarding In Cyberspace
  10. Maritime Conference To Feature Electronic Shipping
  11. FF Internet Web Resources

OUR Top Story: China To Eliminate Duty Free Treatment

1. WORLD EXCLUSIVE to The Cargo Letter

by Warren Levine, The Cargo Letter

Denver, Colorado -11 Jan '96 - The State Council of The People's Republic of China has issued a circular stating that they will eliminate preferential duty-free treatment of machinery and equipment imports into China, regardless of the status of the importer. This provision was included in an announcement made December 28, which will reportedly lower most tariff rates on as many as 4000 line items.

Curiously, though specific details of the duty imposition have been made public, no specific details on the promised tariff reductions have been made available, according to a cable issued by the U.S. State Department. The reductions were promised by Chinese President Jiang Zemin in a statement made in Osaka on November 28. It is not known when that list will be made public.

These actions are in response to a current irregularity with GATT provisions that prohibits preferential treatment of different classes of importers. China is taking this action in order to bring itself into compliance with GATT on that issue, even though it is not currently a member of that organization. According to a U.S. Government spokesperson, this could result in China getting points when they are again considered for WTO membership.

Previously, imports of machinery and equipment by foreign-funded companies, joint ventures and Chinese state-run enterprises have been granted duty-free status, while other importers have been subject to duty and VAT of up to 37 percent. Chinese duty rates are currently as high as 200% on some commodities.

According to statements made in Osaka, the expected reductions will bring duty rates to an average of 23%. The circular states that China will gradually lower its tariff rates to the level of "an ordinary developing country", in addition to stating that in reducing tariffs, China must abolish unequal exemptions and reductions of tariffs in order to create a policy which is "integrated, standardized, equal and reasonable".

Equipment and raw materials imported by foreign-funded enterprises approved after April 1, 1996, will be assessed tariffs based on the new rates, effectively ending the exemption on tariffs and taxes for those entities on that date. Foreign-funded enterprises approved before April 1 will continue to enjoy tariff and import tax exemptions based on the following schedule:

If imports cannot be completed during this period, the affected firm may apply to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) for an extension, which must be approved by the State Council. The circular also states that preferential tariff treatment in special economic regions and development areas will be ended as of April 1, 1996. This includes special economic and technological development zones, new and high-tech development zones, coastal economic development zones, coastal open zones, open cities along border areas, economic cooperative zones along border areas, all inland cities, and cities along the Yangtze River enjoying policies implemented in the coastal open cities, national tourism zones, and Shanghai's new Pudong area. However, it adds that appropriate transitional measures will be implemented for imports into special economic zones and Pudong.

China states that if projects have been included in national and provincial plans as first-class technical reform projects before April 1, their imports will enjoy preferential policies for an extended period of time.

The new regulations also eliminate provisions for reducing or exempting tariffs and import taxes when Chinese enterprises import commodities under barter agreements or under economic and technical cooperation agreements.

To this date, however, many state-level International Trade offices are still unaware of this move by China, which could adversely affect the exports of their states' manufacturing industries. One prominent U.S. governor was totally unaware of this news when he was approached with the question last week. Even more troubling was that neither his administrative aide nor the director of his state's Office of International Trade knew anything about this action by China.

Exporters take heed -- This action could seriously affect your contract negotiations with Chinese buyers, and you are not likely at this time to get any assistance or information from your local governments or chambers of commerce.

OUR "A" Section: World Trade,CHB, Financial & Inland News

2. Cargo Letter's Freight Forwarder STOCK WATCH

Here are today's Stock Watch Report AND progress on our "Cargo Letter 10" portfolio. [portfolio represents $l000 purchase of each stock at close on 3 Nov 1995]

[INDEX: 1st & 2nd Number are last price & daily change............3rd & 4th Number represent how our $1000 investment in each stock is doing and our win/loss to date.]

Our "Cargo Letter 10" winner this week is Interpool-IPX! It's safe to say that our "10" have sufferd in recent days. As we predicted, Intercargo continues to rebound from a low of $8 some weeks ago.

Cargo Letter 10

Name Sym Price Change P/L Value
Airborne Express ABF 27 --- -56.72 942.57
Air Express Int'l AEI 21 5/8 --- +5.81 1,005.77
Am. Pres. Lines APS 21 1/8 -3/8 -137.73 862.11
Delta Air DALpC 57 7/8 +1/8 8.70 1007.02
FedEx FDX 73 1/8 +3/8 -138.41 861.41
Fritz Companies FRTZ 35 1/2 -2 1/2 -71.88 927.97
Circle Int'l/Harper HARG 16 1/2 -1/4 -76.86 922.35
Intercargo Ins. ICAR 10 51/64 -5/64 -40.28 959.61
Interpool IPX 17 5/8 +1/8 52.23 1052.21
Mercury Air Cargo MAX 8 1/8 +1/2 -166.66 833.30

And in other important financial news.................

Expeditors International of Washington Inc. (EXPD) had the honor of being named by Standard & Poor's as an indexed rating component of its S&P SmallCap 600 Index as of the close of trading on Jan. 2, 1996. The S&P Equity Services Group calculates and maintains the S&P 500, S&P MidCap 400, S&P SmallCap 600 and the S&P Super Composite 1500 stock price indexes, which are widely considered key barometers of stock market activity and performance benchmarks for professional money managers. ........................ In another announcement, the company has added two regional managers for its "Expeditors Cargo Management Systems" (ECMS) division (an ocean consolidation and purchase order management network) being Tony McKnight as West Coast Regional Manager, ECMS-LAX and Andrew Edelson as Midwest Regional Manager, ECMS-Chicago. A good week for Expeditors.

3. New Harmonized Tariff Schedule On Line

by Eric Steinbock, The Cargo Letter

Recently, U.S. Customs advised brokers that the U.S. Government Printing Office could not forecast when the printed version of the 1996 Harmonized Tariff Schedule will be available due to the Federal budget crisis. It was indicated that the tariff can be downloaded from the ITC website (mentioned in the 12/29 The Cargo Letter) in WordPerfect 5.0 format. There are two large self-extracting files that open to numerous section and chapter files. The URL is: By the way, the "Schedule B" is also available at this site.

Customs also indicated that these files would be available on their BBS, but was not yet posted as of 12/27/95. The Customs BBS is at 703-440-6155. Set up an ANSI terminal type, Databits=8, Stopbits=1, Parity=None.

4. Roadway Announces Innovative Customer Software Program

Roadway Express has announced "ExpressWORKS", the company's new transportation management software for the less-than-truckload (LTL) industry. It features six separate modules in an EDI-driven program that integrates multi-carrier shipment information and tracking technology of customers. The modules include:

  1. "E-Z PACK Advance Shipment Notification" (ASN) and bar coding system to ease and expedite delivery of merchandise;


  2. "BILLS of LADING" a wholly automated system for the creation of bills of lading;


  3. "SHIPMENT STATUS" tracking information for every shipment -- regardless of carrier;


  4. "INVOICE MAKER" produces a remittance manifest for each carrier through E-Z BILL and increases the efficiency of freight payment;


  5. "CLAIMS MANAGER" enables customers to electronically file claims,quickly;


  6. "RATE QUOTES PLUS" allows customers to receive freight rates for Roadway Express, with one rating system for all interstate and intrastate motor freight rates -- eliminating the need for maintaining multiple rate systems.

The easy-to-use software communicates with any carrier or related transportation provider with EDI capabilities and follows ANSI standard protocols. It can be operated in Windows, DOS or in a network environment.

5. Freight Forwarder/CHB Trade Briefs

Following similar findings where the U.S. Harbor Maintenance Fee is concerned, the California Supreme Court ruled this week that a state inspection fee for produce imported by ocean is discriminatory because there is no such fee for trucked cargo from Mexico/Canada. The L.A. Daily Journal legal newspaper reports that this decision may apply to airfreight based on outcome of pending cases. California agriculture is a US$20 billion business.

The U.S. is once again a net exporter of beef, a position not held since World War II.

U.S. Customs Inspectors at MIA will adopt an "English only" policy starting 17 Jan '96 if they are not paid a 5% bonus for being bilingual. The job action is expected to spread to other ports.

On 29 December 1995, President Clinton signed the Interstate Commerce Commission Termination Act of 1995 which will eliminate most existing ICC motor carrier rate regulations, require registration of motor carrier freight forwarders & brokers and repeal the Intercoastal Shipping Act of 1933. President Clinton additionally issued Presidential Determination No. 96-7 which will suspend most, but not all, of the sanctions currently imposed on Yugoslavia (Serbia and Montenegro). RailAmerica,Inc. announced that it has entered into agreements to acquire rail lines in Michigan from CSX Transportation Inc. (NYSE:CSX).

OUR "B" Section: FF World Air News

6. Freight Forwarder Air Briefs

WARNING: A campaign is afoot by subrogating cargo insurance companies to claim that the damage release rates in HAWBs of domestic airfreight forwarders are INVALID if the cargo moves by motor common carrier, without the FF possessing ICC authority. We believe this theory is WRONG and is currently being fought by FF attorneys Countryman & McDaniel in pending court actions.

Domestic U.S. freight rate increases should be expected given that wholesale jet fuel prices rose a full 14% to US$0.57 cents/gallon on the U.S. Gulf Coast, and 15% to US$0.62 in New York since early October. This translates to a rise for carriers of US$0.07 to US$0.63/gallon from Nov. 15. The rise is blamed on the weather given that jet fuel prices follow the cost of heating oil......and don't forget the Blizzard of '96. South American and European rates are not thought affected.

Airborne Express has become the first foreign-owned and operated company to forge a partnership with Vietnam Post and Telecommunications to provide both express and freight delivery throughout Vietnam. The license includes both air & ocean with Airborne counting on the advantage of "one stop shopping".

FedEx made it through the holidays, but there still have been no new talks with the union pilots since 25 Nov. With ALPA still threatening consequences, a date for new talks is said to be set soon. In furtherance of its plan for a "round-the-world" network linking its hubs worldwide at Memphis, Paris and Subic Bay in the Philippines, with stopovers in Dubai, FedEx has now made formal application to French transportation authorities for increased air traffic rights.

Mexico will raise its airport service fee/tax at a rate of 1.01591% per month throughout 1996 (12.5%) in order to offset the economic reversals of the country.

UPS has been granted authority, effective 1 Jan '96, from the U.S. Dept. of Commerce to file Shipper's Export Declarations (SED) electronically. [U.S. law requires SEDs for shipments over US$2500]

UPS will no longer accept per package weights in excess of 20 kgs for Saudi Arabian moves.

Vancouver, British Columbia will be served by six additional U.S. airlines beginning 24 February 1996 on a grant of permission from the U.S. Department of Transportation.

NBC News has reported that U.S. agencies are directing Peru and Columbia in a campaign to shoot down drug smuggler aircraft. We certainly recommend your SED forms be in good order to Peru........they sound very serious there!

OUR "C" Section: FF World Ocean News

7. Box-Match Aims To Lower Repositioning Costs

Driven by estimates that up to 20% of all containers move empty for repositioning, Box-Match, Inc. opened its Brooklyn, New York doors this fall. "It's no secret that shipping lines spend millions of dollars transporting empties accumulated where they are not needed", says Box-Match founder Joe Leo. "With our unique matching service, we can turn one company's profit-draining oversupply problem into the perfect solution for another shipper or carrier." Leo points to "neutrality" as the key, because Box-Match favors only the customer, not one carrier over another. In exchange for a fee, Box-Match estimates savings between US$500 to US$1000 per ctnr for customers. Current service is U.S. & Canada only. Box-Match may be reached by e-mail at

8. Freight Forwarder World Ocean Briefs

Lykes Bros Shipping is counted out by Lloyd's List as perhaps unlikely to emerge from its reorganization bankruptcy based on alleged failure to secure a critical $10 million credit arrangement with Forum Marine. U.S. sources contacted by The Cargo Letter suggest the funeral announcement is premature.

The U.S. Federal Trade Commission reported a study on 4 Dec. concerning our international ocean shipping conference system which concluded:... "These results suggest that some conference rules, perhaps when combined with relatively high conference market share, may allow carriers to maintain rates at levels higher than they would otherwise." The sleuths will next attempt to determine whether gravity causes weighted objects to fall up or down.

Port of Long Beach broke its own container record once again in October with 271,587 TEUs for the month, an increase of 9.1%

Port of San Diego continues its commercial freight quest with the announcement of monthly calls by South Pacific Container Line which should account for approximately 700 ctns on a rotation including Long Beach, Oakland, Papeete, Tahiti and Pago Pago.

Hyundai has begun weekly service ex-Port of Baltimore to Europe on a slot charter agreement.

Ocean Partnerships this week include.... A.) APL & Crowley with a new weekly Carib service loop for Manzanillo, Panama, ....Cartagena, Colombia,......San Juan, Puerto Rico, and B.) Maersk & Sea-Land with Asia/Europe service.....five circuits eastbound and four westbound.

M/V Sealand Freedom & the Japanese freight Daiki Maru are believed to have collided off Wakayama, Japan within the last several days. Your containers may be late.

PRC Customs at Guangzhou claimed its biggest car smuggling seizure to date of 51 vehicles in 14 ctnrs aboard M/V Ocean River, including luxury cars, worth US$2 million plus an additional 10 ctnrs of parts. With tariffs continuing to increase (see our Top Story) there is big money in China smuggling.

R/V Calypso.......we are sorry to report that the famed research vessel of Capt. Jacques Cousteau sunk at Singapore on 11 Jan after collision with a barge....she'll be back.

OUR "D" Section: Freight Forwarding In Cyberspace

9. Maritime Conference To Feature Electronic Shipping

This year's Connecticut Maritime Association Conference will feature a session focusing on using Web pages for marketing in the shipping business. The CMA Conference "NEW ERA...NEW REALITIES" will be held at the Stamford (Ct. USA) Sheraton Hotel March 18 - 20. This Conference has been growing in stature since the mid 1980's and now attracts leading international shipping representatives who meet in Connecticut, USA during March.

The Conference will concentrate on the Pacific Rim, acknowledging its importance for world trade. There will be speakers from Asia, Europe, and leading American companies to discuss the container trade and its 30% growth.

An electronic brochure about the Conference is on the Web at:

Abstracts of conference papers at the Web site for discussion make this perhaps the first virtual conference in maritime history. E-mail inquiries to Mr. Jim Lawrence

10. FF Internet Web Resources

The many letters we have received from around the world make clear that our 29 December issue was the most popular edition of The Cargo Letter.............ever! We plan to serve your obvious interest in the electronic future of freight with new articles, reviews of new Web sites and updates on the technology. Send us your suggestions and discovered WWW sites.

Our faces are RED that we mistakenly told you that the WWW pages of FRITZ COMPANIES, INC were still building. Not so! The leader is certainly in cyberspace and tells The Cargo Letter that very soon we will see it's second generation home page.......some surprises are in store.

Fritz Companies, Inc

Here are new offerings from The Cargo Letter.....

Astradyne Aviation Supersite (Includes comm'l/weather etc)

British International Freight Association Web Pages

Karl Schroff & Associates, Inc.

Port of Thessaloniki Authority (......It's in Greece!)

Roadway Express, Inc

U.S. Federal Transit Administration

Information provided by The Cargo Letter
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