Industry News
From The Cargo Letter


Air & Ocean Freight Forwarder - Customs Broker News
23 August 1996

Good Friday Morning from our Observation Deck...... overlooking the LAX officially designated "Cargo City" area and....... Runway 25-Right at Los Angeles International Airport. We are proud to announce that the world is taking advantage of LAX's rapid access to global markets here...........where air cargo (freight and mail) has just grown 9.0% to 905,287 tons which sets a record cargo total for a six-month period........and where take offs & landings also rose 8.6% since January to an amazing level of 379,097 !

Please note that your next The Cargo Letter may be delayed as our editor departs for the Far East to address forwarder/broker issues in the area.

Sending freight to Australia?.........better first read the cautions in our (6) article this week from noted "Down Under" Forwarder Attorney Robert Conway, Esq.

Contribute your knowledge to The Cargo Letter.

INDEX to The Cargo Letter:

  1. OUR Top Stories
  3. Update To New Security Requirements
    OUR "A" Section: FF World Trade, Financial & Inland News
  4. Freight Forwarder Trade Briefs
    OUR "B" Section: FF World Air News
  5. FF World Air Briefs
    OUR "C" Section: FF World Ocean News
  6. FF World Ocean Briefs
    OUR "D" Section: The Forwarder/Broker World
  7. Carriage Of Goods To Australia


OUR Top Stories


-- by Warren S. Levine, for The Cargo Letter

DENVER, August 22 -- One week after Taiwan and China had reached a basic agreement to begin direct ship and air service across the Taiwan Strait, Beijing has unilaterally issued a new set of regulations which have again incensed Taipei.

Last week, the Taiwan Council for Economic Planning and Development adopted plans for creation of a special economic zone, to be located in the Port of Taichung. Multi-million dollar plans had been made for improvement of the port, the smallest of Taiwan's three major shipping centers, in preparation for the implementation of the program.

The only stumbling block at the time was the mutual stipulation that mandated each entity's ships would have to fly a neutral flag in the other's ports. Beijing had stated that after July 1, 1997, Taiwan-flag vessels may not call on Hong Kong if their nationalist red, white and blue flag is raised, and so Taiwan retaliated by mandating that Hong Kong vessels could not enter Taiwan ports if they fly the communist flag of the Mainland.

Now, however, Beijing has announced regulations stating that all vessels making direct calls across the Taiwan Strait must first have the approval of China's Ministry of Communications. Taiwanese shipping companies must submit their application to use this shipping lane through their Mainland Chinese agents. The Ministry will rule on their applications within 45 days, according to reports.

The unilateral decision of China to assume total authority over cross-strait shipping was met with great disapproval by Taiwan's Mainland Affairs Council, which threw a high fastball at Beijing in return: "...the Chinese communists' [action] involves political consideration."

In an address last Wednesday to Taiwan's National Assembly, a statement by Taiwan President Lee Teng-hui caused an initial 1.4% drop in the value of Taiwan stocks when he said that " is a must to review the view of encouraging development of the mainland market...[rather than spending on local projects]." This and other perceived ambiguous statements by Lee caused investors to react nervously.

"The president...has not ordered a revision of policy. Our current mainland policy still stands," Vice-Premier Hsu Li-teh had said, seeking to ease the concerns of the investment community.

However, in a curious twist, shipping company stocks in Taiwan actually rose after the latest verbal volley.

In that same session last Wednesday, the Central Standing Committee of the Kuomintang (KMT), passed a resolution calling for more high-level government visits between Taiwan and Beijing, and creation of a "friendly atmosphere" in creating an agreement for peace across the Strait.

The international shipping community only hopes that the two can come up with an amicable agreement in the interest of economic cooperation and the smoother flow of both cargo and dollars.

2. Update To New Security Requirements

-- by Edward D. Greenberg, Esq.

Washington, D.C., 22 August - As General Counsel to the National Customs Brokers and Forwarders Association Of America, noted Washington, D.C. transportation attorney Edward D. Greenberg updates his last report with details of rules YOU will be required to follow......NEXT WEEK.

Mr. Greenberg reports.............

The FAA has now issued expected modifications to the Indirect Air Carrier Cargo Security Programs and began issuing what is referred to as "Change 2" to the various security programs on August 19. Essentially, the modifications, to become effective on August 28, 1996, are as follows:

[Edward D. Greenberg is a partner in the Washington, D.C. firm of Galland, Kharasch, Morse & Garfinkle, P.C.]

Note: The Air Forwarders Association also leads the charge in Washinton to present your views on this important forwarding issue and forced an FAA commitment to delay rule implementation from Aug.16 to Aug. 28.


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

3. Freight Forwarder Trade Briefs


OUR "B" Section: FF World Air News

4. FF World Air Briefs


OUR "C" Section: FF World Ocean News

5. FF World Ocean Briefs


OUR "D" Section: The Forwarder/Broker World

6. Carriage of Goods To Australia

-- by Robert Conway, Esq. for The Cargo Letter

Sydney, 22 August - Freight forwarders and NVOCCs should be aware of the current state of the law in Australia when shipping goods to Australian destinations.

Under Australian common law, domestic road and air carriers are free to exclude all liability, including liability for their own negligence or recklessness. The law at present is based on a single case which has not yet been challenged in the Australian High Court. The judge's rationale behind the decision is based on the presumption that both parties are able to procure insurance. If the inland carrier is forced to insure against his liability, the cost of insurance would simply be passed on to the owner of the goods in the form of higher freight rates. Although this decision is based on dubious commercial logic, the Australian courts have followed the decision on numerous occasions.

This case can pose potentially disastrous problems for overseas freight forwarders who issue combined transport bills of lading to a final destination in Australia. Although the sea or air portions of the carriage will be subject to the applicable international conventions (eg, Warsaw, Hague, Hague/Visby), with their provisions for limitation of liability, the domestic portion of the carriage within Australia will not. Should the goods become damaged by the inland carrier, the issuer of the bill of lading will face unlimited liability in respect of the damage with no recourse against the inland carrier who has limited his liability in his contract with the issuer of the bill. As more and more forwarders begin to issue their own combined transport bills, the potential for losses grows by the day.

It should be noted that it is not possible to exclude liability in contracts with a consumer, which is defined as anyone not entering into the contract in the course of their business. In practical terms, this means that liability cannot be limited when transporting household possessions.

What can be done to protect overseas forwarders from the ramifications of Australian domestic law?

The First Option: Easiest and best means of protection is for the freight forwarder to ensure that it issues a combined transport bill incorporating a term which excludes liability, or limits liability to a nominal sum, for all those portions of the carriage where no mandatory law or convention applies.

The Second (albeit more expensive) Option: Obtain insurance coverage for the Australian domestic carriage, whether or not the forwarder's own client has requested it. It is this option that the judge had in mind when the original decision was made. Although there is a cost involved, as with most situations involving a decision on whether to take out insurance, the potential losses must be weighed up against the cost of the insurance.

The Third Option: This less than practical, and is to issue a bill of lading to the initial wharf or airport in Australia where the goods will land. The forwarder then should act only as the customer's agent in contracting with the inland carrier, noting the customer as the contracting shipper and forwarding the copy of this "consignment note" or "waybill" to the customer. In today's transportation market where customers demand a door to door inclusive service, this may not be practical in most situations.

In summary: Awareness of the domestic law relating to carriage within that country is essential for any forwarder with shipments into Australia so that appropriate measures can be taken to protect against liability. Otherwise, any damage which occurs can result in a potentially huge loss.

[Robert Conway, Esq. is a partner in the firm of Conway & O'Reilly, transportation attorneys at Sydney, Australia] [an error occurred while processing this directive]