Industry News
From The Cargo Letter

THE CARGO LETTER [292] Air & Ocean FF News For 14 Dec '95

Good Thursday Morning From World Port L.A. ! Transit chaos continues in France with FedEx this week making the first evacuation from Paris to London since World War II. Fritz Co.s tops our Cargo Letter 10 stock portfolio. ........also we received curious mail this week asking what "FF" stands for in our articles............the meaning is obviously "Freight Forwarder".......which is what we stand for. McD

INDEX to The Cargo Letter

  1. OUR Top Story
  2. Delta Says NO To Grinch, But Maybe For FedEx OUR "A" Section: FF World Trade, Financial & Inland News
  3. Cargo Letter's Freight Forwarder STOCK WATCH
  4. Order to Streamline U.S. Export License Process
  5. Freight Forwarder Trade Briefs
    OUR "B" Section: FF World Air News
  6. A New S. Calif Air Cargo Port?
  7. FF World Air Briefs
    Our "C" Section: FF World Ocean News
  8. COSCO Believes Containers Can Float
  9. Safmarine Ventures to "New League"
  10. FF World Ocean Briefs
    OUR "D" Section: FF Legal Information & Tips

OUR Top Story

1. Delta Says NO To Grinch, But Maybe For FedEx

Just in time for Christmas, Delta Air Lines has a tentative agreement with its pilots' union to provide lower-cost service to smaller markets. Delta said the agreement would enable the airline to expand in smaller markets from which it had been retreating because it could not serve them profitably. A low-cost operation would help solve problems facing both the airline and its pilots, who are represented by the Air Line Pilots Association (ALPA). But the 6 Dec '95 agreement, reached by negotiating teams from the airline and the pilots' union, faces considerable hurdles. If the pilots were to agree to concessions that would lower the costs for such service, Delta said, the airline could not only re-enter air cargo markets it has left, but also start flights to new cities and thereby increase cargo volume. The ALPA is expected to make a decision on the tentative agreement shortly.

Holiday news is less bright for FedEx which remains on shaky ground with the ALPA as the continued failure of negotiations threatens on-time/peak-time Christmas cargo delivery. However, despite the 25 Nov. 1995 ALPA order for a job action "slow-down", the Grinch may not be able to steal Christmas in Memphis after all! Blunting the "slow-down" order are members of the FedEx Pilots Assn (FPA) who oppose the labor action and wish to take over union representation for their company aligned group. The split is largely generic, with most of the ALPA flight officers having come from Flying Tigers in the 1989 merger, and the FPA types being FedEx vets. This story certainly has no end in sight.

To hedge its bets of a holiday disaster, FedEx has quietly made contingency plans, including arrangements with Express One Int'l for seven 727's to uplift if ALPA should take more drastic action. With the spike of the "package peak season" approaching this week........shippers remain nervous. Catalog houses seem most vulnerable. A spokesman for computer catalog retailer Mac Mall told Cargo Letter, "UPS is a phone call away."

AND........just to show that Mr. Grinch favors no country over another, the widening French national strike has forced FedEx to temporarily switch its EU hub from Charles de Gaulle Int'l at Paris to Stansted Airport, near London, with consequent personnel moves expenses & delays. A FedEx spokesman for Europe, the Middle East and Africa said, "The situation is totally out of our control." Air cargo for destination France...attempts to....move by road or water. Its the first evacuation of Paris since World War II !

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

2. Cargo Letter's Freight Forwarder STOCK WATCH

The Cargo Letter 10

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 of the week is Fritz Companies with a 12% gain in two months, but leap frogging continues.......with none of our "Cargo Letter 10" being a clear break-out stock. Intercargo Insurance Company is once again behind the pack..........BUT we stick by the prediction for an upsurge in the next 60 days.

Name				Price	Change	    P/L		Value
Airborne Express(ABF)		29      +1 1/4     +13.09    $ 1,012.39
Air Express Int'l(AEI)        	24        ----    +116.27      1,116.24
Am. Pres. Lines(APS)        	24 5/8    -7/8      +5.10      1,004.94
Delta Air(DALpC)              	60 5/8    +3/8     +56.55      1,054.87
FedEx(FDX)			60 5/8    +3/8     +56.55      1,054.87
Fritz Companies(FRTZ)     	42 3/4    +3/4    +117.63      1,117.48
Circle Int'l/Harper(HARG)	18 1/4    ----    +20.96      1,020.17
INTERCARGO Ins. (ICAR)   	 9 3/4    +1/4    -133.32        866.58
Interpool -IPX(IPX)		17 7/8    +1/8     +67.16      1,067.13
Mercury Air Cargo(MAX)    	 8 3/4    -1/4    -102.56        897.40

3. Order to Streamline U.S. Export License Process

President Clinton has now signed Executive Order No. 12981 which he states streamlines the export licensing process by:

Ordering all license applications to be resolved or referred to the President no later than 90 calendar days after registration of the completed license application (with certain exceptions)

Ordering the Secretary of Commerce, within 9 days of registration of any license application, to request additional information; refer the application to other agencies; return the application if license is not required; grant the application, or notify of the intent to deny the application, if no further agency review is required, etc.

Ordering all departments/agencies, within 30 days after receipt of a license referral (with all required information), to recommend approval or denial of the application.

This Executive Order also provides that all relevant government agencies, such as Defense Department, will have the opportunity to review any export license application submitted to the Department of Commerce, thereby ensuring that national security, foreign policy, nonproliferation and economic interests are fully considered. According to a U.S. Export Administration spokesman, the Executive Order ensures that U.S. exporters will have a "timely and transparent process" and that the maximum time to review export license applications will be shortened by 25%. Executive Order No. 12981 was published in the December 8, 1995 Federal Register and takes effect on February 4, 1996.

4. Freight Forwarder Trade Briefs

Carriers Continue March To Forwarder Markets__ ___Its a continuing Cargo Letter theme, but the carriers want your business. This week Nedlloyd moved to establish a "central unit" for control of its inland carriage in service to customers such as Phillips. Meanwhile, the APL line entered a multi-year contract on 11 Dec '95 for its APL Distribution Group with Ingram Micro (world's largest wholesale microcomputer product distributor) for inland intermodal container service to six Ingram disribution centers in the U.S. We congratulate Nedlloyd, APL and other carriers for their foresight and business sense. We remind our FF members that in air & ocean alike, carriers continue to eye your business & customers.

FDA NOW IN CYBERSPACE:________The U.S. Food and Drug Administration (FDA) is making available information on its operations, including various details on animal drugs, biologies, cosmetics, human drugs, foods, toxicology, medical devices....and access to Import Alerts and Import Detention Reports. The Internet home page address is>>>>>>

OUR "B" Section: FF World Air News

5. A New S. Calif Air Cargo Port?

by Michael S. McDaniel, The Cargo Letter

Los Angeles - 12 Dec - With trans-Pacific/South American air cargo volume continuing to stretch local facilities, Los Angeles could soon boast the new SOUTHERN CALIFORNIA INTERNATIONAL AIRPORT (SCIA). Once home to U.S. F-15 fighters, recently closed George Air Force Base is the subject of an intense gear up for civilian use. If successful, your route guides may soon contain info for the City of Victorville, CA. The goal is for SCIA to become an "International Air Cargo Center"

Located about 90 Km east of LAX, Victorville backers claim the newly available facility has a "strategic" cargo advantage over LAX by featuring faster and more economic access to road/rail routes...... east for Las Vegas, north toward SFO and south to cross-border Mexico "hot shot" moves.

Sponsor, Victor Valley Econ Development Authority has announced a U.S. Foreign Trade Zone at the site and stresses the degree to which former U.S. Air Force facilities offer state-of-the-art warehouse, manufacturing and repacking opportunities for both FFs & Cgnee's who could use the site as an all weather base of operations supported by an ample labor supply. The VVEDA may be reached at (818) 440-2284.

6. FF World Air Briefs

Crowded China Cargo Skies_____Will every city demand a major airport to boost its "great name"? Macau's US$ 8.9 billion int'l airport was officially opened this week, two years late and about three times the original budget, adding yet another runway to the Pearl River delta region, which includes Hongkong and southern China. Within a 200-km radius of the Portuguese enclave, in southern China and Hongkong, there are another six cargo airports planned or up-and-running. That there may be cargo over capacity in the region for some time to come is underscored by Hong Kong Air Cargo Terminals (HACTL) which reported an October volume decline of 6%. The area volume continues to grow at 7.8% for Asia (China l2%), but perhaps not enough to keep pace with US$150 billion in area airport investment over the next 20 years.

Cathay Pacific Not Welcoming Macau____The carrier is due for tough competition on its most lucrative cargo route as start-up carrier Air Macau (new airport and all) begins the first 'semi-direct' flights between Taiwan and China this week.

Hong Kong Tries To Keep The Freight______The Hong Kong Association of Freight Forwarding Agents has announced possible construction of five off-airport facilities to provide cheaper storage than the new Chek Lap Kok airport & freight center. The Assn president said last week that off-airport facilities were needed because operational constraints would prevent his members from moving all operations to Chek Lap Kok.

Nippon Cargo Airlines Started It_______with a dramatic rate increase as matched by JAL last week. Now Northwest Airlines will follow the 10% cargo rate increase for ex-U.S west-bound moves as of February 1996. Air Canada is expected to join, but its percentage increase is unknown. North Pacific traffic remains strong.

UPS Goes Whaling_____ Keiko the killer whale will fly ex-Mexico City to his new home at the Oregon Coast Aquarium via UPS for free. The 21-foot-long, 7,000-pound star of the "Free Willy" movies will travel in a fiberglass, steel and plywood box shipped in a C-130 Hercules transport plane, accompanied by veterinarians and trainers on the 8-1/4 hour flight and then via inland carriage for arrival 7 Jan. UPS has yet to announce when this size mailing pouch will be available to the public.

Our "C" Section: FF World Ocean News

7. COSCO Believes Containers Can Float

The Cargo Letter

Los Angeles - COSCO Line has announced plans for a new barge service to connect to San Diego's National City terminal with its own facility at Long Beach. The "float" will be designed to eliminate freeway and terminal gate delays for as many as 1000 TEUs which make the San Diego/Long Beach road run monthly.

Barge operator, Coast Enterprises, will make the water move twice a month, perhaps weekly, based on FF bookings for ctnr's originating cross-border from Mexico, in Arizona and in San Diego. A long term view sees the prospect that increased ctnr traffic at San Diego could result in increasing scheduled port calls by the major lines. The Cargo Letter sees the potential for Port of San Diego.

8. Safmarine Ventures to "New League"

By Pete Bower, South Africa

A new venture has been announced for Safmarine & CMBT which the sponsors hope will create the largest north/south trade line for FF use. To begin on 1 Jan '96, the service purports the largest in Africa at 50,000 owned TEUs and 40,000 FCL moves to Africa per year. This venture "puts us in a new league", says the managing director of Safmarine. The carrier seeks to dominate the African trade and obvious link routes which are suggested.

9. FF World Ocean Briefs

Lykes Bankruptcy Update______We are advising Members to please warn customers that 29 February 1996 has been set by the U.S. Court as the LAST DAY for filing claims against Lykes, which includes both its unpaid bills as well as cargo damage issues from FFs & shippers. Because this is a technical issue, we recommend you consult company legal counsel with regard to ALL YOUR RIGHTS against Lykes which may shortly be lost. The Maritime Administration is also assisting the troubled carrier by extending the U.S. subsidy for M/V Adabelle Lykes and M/V Sheldon Lykes by a full six months to 1 June 1996.

Cargo Disaster File_______This week the sad news is led of a confession by the steward and another in the freighter M/V MC Ruby that in 1992 they killed eight African stowaways and then threw them overboard off Portugal....... .....murder charges are pending. On 30 Nov five crew died, including the master, when M/V Beta Luck (Greek-registry) caught fire at Rijeka, Croatia.

Last, we are all aware that only a badly injured Mrs. Sleavin survived [her young son, daughter & husband killed] when their family yacht, S/V Melinda Lee was "run down" off New Zealand earlier this month. Authorities now suspect the hit-and-run vessel to have been a freighter, M/VPan Grace, moving ex-NZ and bound for Inchon. Still, given a 50 knot gale at night, it is possible that this 19,000 ton vessel (and certainly a larger one) might not have known the collision had even happened. Indeed, the RMS Queen Mary cut a British cruiser in half during a nite in WWII, but was unaware of the event until receiving distress calls by radio. ITS DANGEROUS OUT THERE! Insist you customers buy marine cargo insurance.

Brazil Pirate Protest____Given recent U.S. protests as reported here that the gov't should take direct steps to control pirate attacks, Sao Paulo-based Pamcary Corretagens de Seguros Ltda., Brazil's biggest cargo insurance and risk management company has announced intention to use GPS sattelite technology to track cargo moves. Cargo Letter has learned that use of similar gear will soon be unveiled for U.S. ocean use.

OUR "D" Section: FF Legal Information & Tips

by Countryman & McDaniel

The Cargo Letter has been asked to supply an explanation of "General Average". There seems to be some forwarder confusion out there!

First, some historical context is necessary because maritime law covering loss or damage to goods has always been the subject of very special considerations developed at a time when the risks of ocean transportation were substantially greater than they are today. Voyages were chanced by small vessels which relied on primitive equipment and celestial navigation. Certainly, there was no radar, radio, electric pump, or other modern devices. Shipping was a VERY RISKY business. Accordingly, special rules were formulated to handle the special ocean risks. The rules followed the concept of "joint venture" for unavoidable risks to cargo.

Under early maritime law, the vessel interests and the cargo interests (shippers) were considered joint venturers who shared the risks and perils as small ships battled both the forces of nature and the unknown. Indeed, the rules of "General Average" developed from this concept. Sometimes it would be necessary to throw certain cargo overboard to keep the small ship(s) from sinking or stranding in a bad storm. A voluntary sacrifice made for the benefit of the cargo and ship, such as the "jettison" of cargo in an emergency to lighten the ship, was one which the parties to the voyage (cargo interests included) were required to share in proportion to the value of each party's interest as compared to the value of the whole. Such is the concept of "General Average"

In order for a loss to be a "General Average" loss, three elements must generally exist concurrently, being: (1) a common danger to the ship, cargo and crew which is imminent and apparently inevitable unless there is a voluntary loss of a smaller amount of cargo in order to save the remaining cargo; (2) a voluntary jettison, or casting away of some part of the whole to avoid the imminent peril to the vessel; and (3) the attempt to avoid the imminent peril must be successful. The act of "General Average" may be an expenditure to preserve the property from damage done, for example, in suppressing a shipboard fire or in navigating the vessel to a port of refuge.

Nowadays, vessel owners normally contract in their bills of lading for "General Average" contribution from cargo interests for cases in which the carrier, pursuant to statute, would not be responsible for cargo damage resulting from an accident. After the Carriage of Goods by Sea Act became law in 1936 (Title 46, U.S. Code), these provisions were generally called a "New Jason Clause", and state that the vessel owner is entitled to a "General Average" contribution from the shippers unless the vessel would be liable for cargo loss and damage under COGSA itself. For "General Average" contribution from shippers (cargo interests), the carrier must have exercised due diligence to make the vessel seaworthy at commencement of the voyage.

When "General Average" is declared, it is the responsibility of the vessel operator to see that the cargo interests contribute to the "General Average" fund or furnish security for such contribution. The necessary computations are so complex that a professional known as a "G.A. Adjuster" is normally retained with expenses billed to the cargo interests (shippers) on a shared basis. ALWAYS expect more expenses. The vessel has a lien on the cargo for the cargo owners share of the "General Average" payment to be made. Such cargo is generally delivered free of lien when an undertaking or cash bond is put up by the cargo owner, or by its marine cargo insurer.

HOW DOES THIS AFFECT THE FREIGHT FORWARDER??? Remember, as an NVOCC/Consolidator issuing a HB/L (house bill), YOU become the shipper (the cargo interest) on the carrier's MB/L (master bill). YOU thus become liable to pay the General Average discussed in this article. Please have your FF/marine open cargo insurance reviewed to make sure there is coverage for General Average. This is a very complicated area of maritime law.....consult your advisor.

Information provided by The Cargo Letter
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