Industry News
From The Cargo Letter

THE CARGO LETTER [295] Air & Ocean FF News For 5 Feb '96

Good Monday Morning From World Port L.A. ! Travel schedules and court trials have delayed this issue......but our next edition is already on the drawing boards. Please take a moment and send us some information from your part of the world! McD

INDEX to The Cargo Letter:

  1. OUR "A" Section: FF World Trade, Financial & Inland News
  2. South African Customs Continues Crisis
  3. Cargo Letter's Freight Forwarder STOCK WATCH
  4. Freight Forwarder Trade Briefs
    OUR "B" Section: FF World Air News
  5. FedEx Wins China Route
  6. FF World Air Briefs
    OUR "C" Section: FF World Ocean News
  7. FF World Ocean Briefs
    OUR "D" Section: Forwarders in Cyberspace

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

1. South African Customs Continues Crisis

by Pete Bower, The Cargo Letter, S. Africa

The South African Customs & Excise services at Durban harbour are in chaos. It is a crisis of which the shipping public should be aware. Durban, SA's largest general cargo port, has been the focus of concern for its Customs facilities in recent months, with shippers becoming increasingly anxious at the alleged level of smuggling, underdeclaration and general maladministration in the import system. Importer/FF concerns include:

  1. Customs stops and examinations have crossed the line to non-existance. One report puts the number of Customs stops for examination at 2.5%, of some 80,000 boxes per month.
  2. Prosecutions for those caught underdeclaring are a rarety. Because of the lack of staff, agents and merchants caught in skulduggery essentially are given a free ride and told to continue illegal practces.
  3. The number of officers of any ability employed at Durban is too few. Officers are notoriously underpaid, and a recent "affirmative action" replacement policy has seen a number of senior posts being vacated by their experienced occupants. The Customs & Excise service is thus left with seriously underexperienced staff. Unfortunately, Customs is one area of business in which the state cannot easily obtain personell with requiste ability.
  4. The equipment at Customs' disposal is inadequate and outdated. Confusion is the order of the day, like a mad house from Dickens. To sort out the state warehouse in Durban, the depository for all that is smuggled, misdeclared and skulduggered, Customs has now - for the first time in years - been able to employ a forklift truck to move cargo. As for computer systems ... SA Customs has only an ancient Burroughs system, with no true electronic links to agents (although these are planned). There is no EDI in SA Customs and clearances are passed manually (although computers are used to process the documents in-house).

Evidence of Customs' frustration with its totally inadequate operating conditions was shown when the Commissioner canceled the Road Transit Bond concession for cargo moving to Africa, and now, merchants themselves and an unidentified trade-related group are reported willing to pull the situation right at Customs & Exicise by contrubuting priivate funds. >>>>>An "all Port" problem as world volume increases.

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 Air Express Int'l!.......but the entire group is continuing to suffer. We are suprised that Intercargo Insurance is back in the dumps, contrary to our prediction. What about that FedEx?

Cargo Letter 10

Name Sym Price Change P/L Value
Airborne Express ABF 26 5/8 -3/8 -69.82 929.47
Air Express Int'l AEI 22 1/2 3/4 +46.51 1,005.77
Am. Pres. Lines APS 21 3/4 -5/8 -112.22 887.61
Delta Air DALpC 59 1 5/16 28.2 1026.6
FedEx FDX 75 1/2 --- -110.43 889.39
Fritz Companies FRTZ 33 1/4 1 1/4 -130.70 869.15
Circle Int'l/Harper HARG 17 1/4 -1/4 -34.93 964.27
Intercargo Ins. ICAR 8 7/8 -1/8 -211.09 788.81
Interpool IPX 16 1/2 --- -14.92 985.05
Mercury Air Cargo MAX 8 9/16 --- -121.79 878.17

3. Freight Forwarder Trade Briefs

China Reflects......Further to our report from correspondent Warren Levine in the last edition of The Cargo Letter that China would eliminate "duty free" for imported equipment after 1 April '96, Liu Zhiben of the Foreign Trade Ministry's Foreign Investment Department has announced that firms gaining approval before that date might continue to enjoy tariff-free imports, as long as the cargo reaches China by the end of the year. "Big contracts involving more than US$30M worth of equipment could enjoy a grace period of two years", he added.

China Dumping.......There have now been over 200 anti-dumping cases against China, involving about 100 products, since the first investigation in 1979 .....with about 50% of these from the U.S. and EU countries.

Japan Export Continues Slide......Just as we reported to you that 1995 would see the last Sony T.V. manufactured in its native land, Japan's auto exports were down 15% in '95.......the 10th yearly decline in a row.

Vietnam/China Rail..........will connect this month for the first time since 1979 for service from Yunnan province to the Vietnamese port of Haiphong.

India Port Investment........Foreign companies can invest in the 48 ports in India's Maharashtra states which are to be privatized. An official spokesman said 7 ports will be included in phase one of the privatization scheme: Tarapur, Dighi, Dabhol, Jaigad, Ratnagiri, Vijaydurg and Redi. Given the expected rush of imports to India, this could be welcome news.

OUR "B" Section: FF World Air News

4. FedEx Wins China Route

This week FedEx finally took the next step it had hoped for when acquiring China routes from Evergreen Int'l Air last summer at a cost of some US$60M. The P.R.C. this week approved all-cargo FedEx service starting in roughly March '96.

The new FedEx service will uplift ex-JFK via Chicago and Anchorage for deliveries at Shanghai & Beijing. FedEx was certainly thinking ahead, as readers of The Cargo Letter will recall our report last summer of significant upgrades and investments to its Anchorage station. Similarly, FedEx plans to eventually tie the new China service to its Subic Hub............meanwhile FedEx and its pilots have recommenced labor discussions broken off back last 25 Nov '95........both sides report that they are "hopeful".

UPS has just opened a competing hub as the Changi International Logistics Center in Singapore in order to enhance area service.

5. FF World Air Briefs

Lufthansa Cargo Will Hold says this week, except for small consignments, CAO loads for the U.S. and ex-Alaska (about US$0.32/Lb.) in order to remain competitive and due to lower German volumes. Total carrier volume was up 10% on the year.

In The Hub Business.........UPS has just opened its new hub as the Changi International Logistics Center in Singapore in order to service customer IBM needs and compete with FedEx. Though the new facility is small at 10,000 sq ft, UPS claims determination.

Delta Air.........may soon find itself in the same situation as FedEx as labor talks with Air Line Pilots Association heat up. Strike ballots were distributed last week and "serious concern" was expressed by Ronald W. Allen, Delta's chairman. There is no risk of cargo interruption at this time.

A Single Indian Gate Announcement? is reported that Air India and Indian Airlines will soon merge.

Portland Int'l Smiling.......after a best ever 19% volume increase for '95 and announcement of weekly CAO service to Seoul. Go PDX ! [On the ocean side PDX hopes that the arrival of P&O Containers Ltd. this spring will offset the departure of Hanjin Line this April '96]

OUR "C" Section: FF World Ocean News

6. FF World Ocean Briefs

Maersk And The Giant.......It's the biggest in world history............a 6,000 TEU vessel is delivered! Denmark's Maersk Line has taken delivery of the M/V Regina Maersk, the 1st of twelve 6,000 TEU containerships being built by Odense Steel Shipyard........17 TEUs wide and 1,049 feet long!.....but with only 15 crew members! The ships were "ordered" at 5000 TEUs and the expansion plans were kept secret by Maersk which has taken the lead over ALL of its competition in individual vessel capacity, for as many as the next two years!. Our shipping future continues to change......but it is here once again! Of similar record interest would be reports of a suggested "Super CY" system to move CTNRs via high speed rail between Atlantic & Pacific across the Isthmus of future vessels can't fit the canal.

Neptune Orient ..........meanwhile has taken delivery of the smaller, yet still impressive M/V NOL Tourmaline and M/V NOL Turquois at 4,400 TEUs.

S. China Sea on the Trigger....Twice!.......It has been a bloody week for the PRC Navy. First, a Philippine Navy patrol vessel was in a gun fight with two other vessels, believed to be Chinese fast attack craft [perhaps "Hego class (or) Wang Fen class" fast attack boats], invading Philippine home waters, but the craft may have been converted to civilian use and then re-armed. In the 90 minute night fire fight there are said to have been several Chinese casualties before the PRC vessels withdrew. [Chinese authorities have denied involvement.] .....Second, it is reported by Diamond Light that the M/V Theng Jung, a Taiwan container ship of Panama registry was fired upon by PRC units 28 Jan '96 and that the vessels even collided after an aborted attempt by the Chinese to board the fleeing container carrier. We continue to await 1997 at Hong Kong......and tensions with approaching March '96 national elections in Taiwan......while we watch China exerting her "influence" in the South China Sea. Encourage your customers to buy marine cargo insurance.

Lykes Bankruptcy...........proceedings continue upbeat with the U.S. Court ordering continuation of Lykes credit practices and delaying decisions on sale of certain vessels of the line on lease to APL.

National Industrial Transportation League..........a shpr/cgnee association had 40 members sign a letter to U.S. Senate Majority Leader Trent Lott (R-Miss) this week demanding he move forward on reforms to The Shipping Act of 1984, including an end to FMC tariffs.

But Not Cargo Claims.......The Institute of London Underwriters reports that fewer ships, of over 500 tons gross, were lost last year than ever before in their 112-year history. According to the ILU's annual report, 95 ships totalling 693,000 gross tons were confirmed as total losses in 1995 compared with 119 ships of 1.4 million gross tons in 1994........a very bad year. Fewer lives were lost last year, 316 compared to 1,478 the previous year when the ferry M/V Estonia disaster claimed over 900 lives. But the ILU notes that many more people died in smaller vessels not included in the institute's figures. While the loss of ships was down, the "claimed" loss of cargo by all means was UP. INSIST that your customers purchase marine cargo insurance. Its very dangerous OUT THERE.

Pacific Rates.........the 10 lines that form the Asia-North America Eastbound Rate Agreement, the inbound Pacific rate-setting conference, are offering to slash rates well below current levels as an incentive to lure back customers who looked elsewhere last year in favor of independent lines.

Another Conference?...........Lloyd's List reports that talks may be underway between the National Shipping Company of Saudi Arabia and the United Arab Shipping Co to create a new non-conference alliance linking northern Europe, the Mediterranean, Middle East, and Far East.

ANL Tries Again.......and has fired its CEO Barry McGuiness this week as the state-owned Australia National Line continues to attempt its reconstruction.

Port of Le flexing its muscles after a projection that it will handle 1.5 million TEUs by 2000 and is the ONLY EU port which currently can handle the new generation of container vessels at any state of tide. Le Havre thus touts its ability to avoid delay for your future EU deliveries......indeed there has been a 35% TEU increase since '93.

Port of Long Beach.......Local truckers staged a noisy, horn honking protest 30 Jan '96 in a motorcade of solidarity from the berths to L.A. City Hall to complain about a system which requires the draymen to spend up to five hours waiting in line to fetch a single CTNR. At US$125 or so per load the truckers claim the inability to make a living if they can only dray one load per day. It is a sign of the times for all ports as cargo volume continues to grow and growing competition hits FF, CHB & trucker alike. The California Trucking Association is sponsoring a bill in Sacramento that would mandate that marine terminals in Los Angeles-Long Beach be open each day from 6 a.m. to 6 p.m.

The extended terminal hours "would be a godsend for us," said Vern Campion, operations manager at Atlas Marine (and The Cargo Letter member) because the drivers could make three round trips each day. QUESTION: Who will pay for the additional terminal hours at union rates? QUESTION: Won't late day pick ups require trucker yard storage and increase theft risk? PARTIAL ANSWER: On through bills the steamship lines could charge extra for the actual cost of local drayage, instead of simply including the cost on the through rate. This might float the prevailing rate upward to its actual cost in the community.

These are difficult issues facing almost every port, and all your customers. Even the Port of Seattle is now discontinuing it's inland truck program citing loss of revenue for several years. >>>>>>>>>>>>What do you think?

Sea-Land SEA......has relocated its Seattle office with 50 employees to Renton, One Renton Place, Suite 600, 555 S. Renton Village Drive, Renton, Wash., 98055-3221. The changed phone number is 206-204-6300.

Japan Warehouse Surprise........ starting1 Feb '96 members of Transpacific Westbound Rate Agreement are collecting a $5,000 security deposit from shippers with past due detention accounts. If the deposit is not posted, future container shipments may not be released. Remember, NVOs are the shipper! Also increased are handling charges for Singapore-bound cargo and documentation fees for Hong Kong cargo. The Japanese Shippers Council calls the moves "arrogant".

The Port of Jingtang....... in north China (ctnrs ex-Beijing) will now connect for container service every 12 days with the Ports of Osaka and Yokohama. We believe this is a COSCO route, but will confirm. Containerized cargo moving between Japan and China during October was up 2.3 percent from a year before to 72,414 TEUs ........freight travelling from Japan to China jumped 21.8 percent to 18,996 TEUs.

Brazil..........has announced its signing of an MOU between the Confederation of Indian Industry (CII) and the National Federation of Brazilian Industry (CNI) for the development of ports & trade. The two next hot spots are connecting with one another.

TWRA Raises INDONESIAN Tariff.......Transpacific Westbound Rate Agreement (TWRA) is to raise its Indonesia terminal handling charge for refrigerated shipments. Effective March 1, TWRA will raise the THC from US$165 to US$175 per 40-foot and 45-foot refrigerated container and from US$112 to US$125 per 20-foot refrigerated container.

Venezuelan Navy To Take A Shot will start commercial cargo service from Venezuela to U.S. Gulf ports next month (What?). Associated Transport Line, Houston, will act as the general agent. The Venezuelan Navy's Oficina Coordinadora de Apoyo Maritimo de la Armada will handle breakbulk cargo between Maracibo, Puerto Cabello, Granta and Houston. The U.S. Navy is not expected to follow suit.

Matson Lines Continues Hawaii volume dropped another 9% for '95 and down a full 5% from five years ago. Sea-Land is seen to be making inroads.

YET Another Reason For Cargo Insurance...........let your customers know that the number of cargo vessels going to the breakers (the razor blade place) is down, way down, as much as 75% in China. What this means is that with increased cargo volumes........more old, sub-standard ships are carrying your customers goods. Buy marine cargo insurance. We like Trade Insurance Services at (800) 338-4904.

R/V Calypso...........sadly remains at the bottom of Singapore Harbor, with more attempts to raise the famous ship next other disaster news, the Saudi-flagged M/V Seal Manaval sunk in poor weather off Cypress with a load of sheet steel Wednesday with a loss of all 10 crew.

Expeditors International..........has announced Rick Ballantyne, an 18-year veteran of international logistics, as its Director - Global Distribution Services. (NASDAQ: EXPD).

OUR "D" Section: FFs in Cyberspace

MORE Transport Listings!

By popular demand, we offer a next listing of World Wide Web Sites for freight forwarders and transportation. For further information, visit The Cargo Letter Home Page at Interpool......... and see our edition of 29 December 1995.

Forget your own internet problems! Be glad you're not in China. Diamond Light reports word from Officials at the Ministry of Posts and Telecommunications suggesting that as many as 70,000 people are regularly trying to access the Internet through 7,000 accounts. No wonder China e-mail is a problem!

Here are our new finds of the week........

The Maritime Global Net

Air Carrier Regulatory Filings (All daily U.S. govt filings, incl DOT, FAA & SEC, plus links to carriers and "Information Skyway".)

Canadian Steamship Lines

Hong Kong Marine Dept (All levels of service & schedules)

Royal Nedlloyd (First European ocean carrier on web/time tables and equipment information.)

Singapore Ocean Shipping Schedules

U.S. Directory of Overseas Consulates (When you need help)

U.S. Library of Congress (Ship Photos)

U.S. NOAA Weather Warnings

The Page of M/V Edmund Fitzgerald (Famous lost ship)

The Transport Web


The Cargo Letter World Trade Links

Arab Net (All countries of the Arab world, incl transport and business.)

Cambodia Web

Hong Kong Trade Development Council

Hong Kong Government Information Web (Includes transport)
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Inside Wall Street

Manila Business World (Includes transport issues)

Messages To Members of the U.S. Congress

Russian Trade Contacts

United Kingdom Searchable Index

U.S. General Accounting Office (THE ENTIRE U.S. BUDGET, incl transport.)

U.S. National Archives (New master sites for all agency activities, including shipping records, etc.)

U.S. White House (Improved site for press releases and sending e-mail to the President of the U.S.--links to other agencies.)

Virtual Vietnam (Business Links)

Information provided by The Cargo Letter

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