Industry News
From The Cargo Letter

THE CARGO LETTER [299] Air & Ocean FF News For 9 May '96

Good Thursday Morning From World Port L.A.! Some may find our second article interviewing Mr. Harry Wu to be controversial, but we believe that any failure on our part to publish this article could itself result in controversy during years to come. The Cargo Letter does not take ANY political point of view, but is open to reasonable reports of our world.

Today we are proud to WELCOME.......Intercargo Insurance Company, the world's primary underwriter for FFs/CHBs/Shippers in B/L, E&O, FMC Bonds and Marine Cargo Ins. coverages.


INDEX to The Cargo Letter:

  1. OUR Top Story
  2. Hellish Dispute for Port of the Angels "A" Section: FF World Trade, Financial & Inland News
  3. China Cuts Tariffs in Move to Join WTO, Requests Special Treatment as as "Developing Country", Human Rights Activist Says, "No Free Lunch!"
  4. Cargo Letter's Freight Forwarder STOCK WATCH
  5. Freight Forwarder Trade Briefs
    OUR "B" Section: FF World Air News
  6. Lufthansa Cargo Named Year's Quality Carrier
  7. FF World Air Brief
    OUR "C" Section: FF World Ocean News
  8. TT Club Marine Cargo Insurance Reminder
  9. House Passes Shipping Reform Bill
  10. FF World Ocean Briefs
    OUR "D" Section: FFs in Cyberspace


OUR Top Story


by Libby Thompson for The Cargo Letter

Los Angeles - 8 May - Ocean containers are stacking up at the Ports of Long Beach and Los Angeles, the nation's largest, as a labor dispute between truckers and shipping companies continues its second week. Some sources report that operations have been slowed to as little as 20% of the usual pace, while the Foreign Trade Assn. of Southern California today estimates that as much as 60-80% of freight is continuing to move.

The labor dispute began when an estimated 5300 independent truckers joined a new, start-up "labor leasing firm", Transport Maritime Assn., and began the process of joining Local 9400 of the Communications Workers of America. The truckers [TMA] charge unfair wages and working conditions, such as long container yard gate delays which erode the profitability of flat rate drayage charges. TMA, which is for profit and said to be backed by a London investment group, seeks to "remedy" the situation by (1) buying the owner-operators' trucks, and then (2) leasing these new union drivers to trucking companies in the port for $65.00/hr (2 or 3 times the current rate). Local trucking companies warn the logical result of this action will be control of all port transport operations by TMA and perhaps the demise of the port trucking companies themselves.

Additionally, hundreds more drivers who work directly for trucking companies and are also part of the Union have stayed off the job in support of the other drivers. Still other independent truck drivers not associated with the labor leasing firm or the union describe being scared off the job, claiming that intimidation tactics such as picketing Union members and videotaping their trucks prevent them from crossing the picket lines.

Security at both ports has been beefed up in anticipation of violence, but so far there have been no reports of any trouble. At least 10 TMA former owner-operators claim to have begun a hunger strike on Monday.

The Ports of Long Beach and Los Angeles account for 25% of container traffic in the United States. Cargo is trucked out of the ports in most cases, even when on-carriage is by rail. Presently, the containers are being unloaded from vessels but are not getting out of the terminals, and local exporters are unable to get warehoused goods to the harbor for shipping.

Many ocean carriers have instructed their vessels to unload only cargo that will be consumed locally, while diverting the rest of the cargo to other North American ports for transloading onto rail cars or trucks, resulting in expensive 2-day delays to the Midwest and East Coast. SEA is more active today.

Late word is that some drivers are now returning to work because TMA has failed to follow through on promises to purchase their trucks and pay the agreed wage. The driver reality is perhaps as low as US$18 of the US$65 charged by TMA. >>>>>>While drivers seem clearly entitled to higher wages: 1) Port competition is stiff with an over-supply of drayman and 2) this TMA London money group is NOT the answer.

There is no end in sight to the controversy, but it seems very clear that the cost of West Coast freight may be headed up. Could all this be............Coming to a port near you?


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


-- by Juan Medina for The Cargo Letter

The People's Republic of China cut import tariffs April 1 on almost 5000 commodities in an attempt to qualify for membership in the World Trade Organization (WTO). The cuts reduced China's average tariff rate to 23%.

China, the world's third largest economy, behind the United States and Japan, had an estimated 1994 GDP of between US$0.5 and US$3.0 trillion. Unreliable statistics and China's soft currency make accuracy virtually impossible. But China's growth rate over the past 10 years has been close to double figures. Still, China has appealed to the WTO for special consideration in its application for membership, by requesting treatment as a "developing country" based on its low per-capita income.

However, to even qualify for WTO membership in the first place, China must cease the continued and common practice of exporting products produced in "LAOGAI," or labor-reform camps. A "laogai" is the Chinese equivalent of a Russian Gulag -- a prison labor camp. Laogai are common in China -- there are said to be over 1100 operating at this time, many disguised as state-run factories. Many laogai export through third parties, such as Hong Kong trading companies or other entities, in order to avoid detection by foreign Customs officials.

It is against United States Customs Regulations to import goods made by prison labor. Goods produced in laogai may be confiscated by Customs, and fines and penalties may be imposed on the importers, even if they are ignorant of the laogai's existence. If an importer has knowledge that goods are produced in laogai, it may be liable to criminal prosecution.

Human rights activist and former political prisoner Harry Wu, on a speaking tour of the United States, said, "There should be no free lunch for China," but stopped short of endorsing a flat-out U.S. embargo of Chinese products. "(Trade) sanctions would hurt the common people, but they must make sacrifices," Wu continued.

Wu, whose full Chinese name is Wu Hongda, compared China to "a spiritual gas chamber" and said that "the events . . . in the movie 'Schindler's List' are happening every day in China. Deng Xiaoping has organized an economic revolution by slavery."

Wu is the author of "Bitter Winds: a memoir of my years in China's Gulag," and another book to be entitled "Trouble Maker," which is scheduled for publication later this year. He is also the Executive Director of The Laogai Research Foundation, in Northern California. Their Website address is

3. 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 number is the last price............2nd & 3rd Numbers represent how our $1000 investment in each stock is doing and our win/loss to date.]

Our "Cargo Letter 10" winner again this week is Air Express Int'l!.......with Circle & Interpool close behind. Intercargo continues in the rear.

Cargo Letter 10

Name Sym Price P/L Value
Airborne Express ABF 25 1/2 -109.09 890.20
Air Express Int'l AEI 28 5/16 316.83 1316.79
Am. Pres. Lines APS 24 1/4 -10.20 989.64
Delta Air DALpC 62 1/4 84.83 1,083.15
FedEx FDX 77 3/8 -88.35 911.47
Fritz Companies FRTZ 36 1/2 -45.75 954.11
Circle Int'l/Harper HARG 20 118.79 1,118.00
Intercargo Ins. ICAR 9 1/8 -188.87 811.03
Interpool IPX 18 1/2 104.48 1,104.45
Mercury Air Cargo MAX 9 -76.92 923.04

...And in other financial news:

4. Freight Forwarder Trade Briefs


OUR "B" Section: FF World Air News

5. Lufthansa Cargo Named Year's Quality Carrier

SEATTLE, May 3, 1996 -- After three rounds of evaluations by its 30 North American offices, Expeditors International of Washington, Inc. named Lufthansa Cargo its North America Quality Carrier of the Year for 1995.

Three times a year, Expeditor's district offices evaluate the performance of vendors who handle customer shipments. Local truckers, airand ocean carriers and container freight stations are rated on criteria such as on-time performance, accuracy and fair pricing. Qualitative factors are also considered: attitude, communication and integrity.

6. FF World Air Briefs


OUR "C" Section: FF World Ocean News

7. TT Club Marine Cargo Insurance Reminder

Hong Kong--4 May '96--Forwarders are being warned to take care when offering Marine Open Cargo for shipper customers. The warning comes from Through Transport Mutual Services Ltd, [The T.T. Club] a leading marine cargo underwriter based in Hong Kong. While the selling of marine cargo insurance is both necessary for the protection of shippers and profitable for forwarders, there can be unforeseen liabilities.

In one instance, a shipper asked his forwarder to insure a consignment of used machines for US$100,000. When the shipment was damaged, the insurers refused to pay the claim on the grounds that the actual value of the equipment was US$25,000. As the shipper failed to disclose the true value of the goods, the insurer was within his rights to reject his claim. Second, marine insurance covers the actual value of goods, and not the replacement value. The shipper blamed the forwarder for failing to point out that although the machines were used, shipper's declared value was for their replacement as new. [Note: Most cargo policies will decline coverage for partial damage to used equipment unless there has been a pre-shipment survey or special arrangements with the underwriter.]

TT Club gave the second example of a forwarder who arranged for a shipment to be covered by his Marine Open Cargo policy without checking on the detail. The shipping line went bankrupt and the goods were discharged at an intermediate port. Heavy costs were involved in retrieving the goods. But the insurers refused these claims because Institute Cargo Clauses (A), under which the goods were insured, exclude claims involving loss arising from a carrier's bankruptcy.

Forwarders must offer Marine Cargo Insurance, but they also must make sure they understand exactly what coverages are being offered if disastrous consequences are to be avoided.

[Note: Coming editions of The Cargo Letter will feature a series on Marine Cargo Insurance and the freight forwarder.]

8. U.S. House Passes Shipping Reform Bill

On May 1, 1996, the U.S. House amended and passed H.R. 2149, the Ocean Shipping Reform Act, by a vote of 239 to 182. Press reports state that H.R. 2149 will face a serious battle in the Senate and that even if H.R. 2149 were to pass in the Senate, U.S. Labor's late lobbying on H.R. 2149 has created a situation where the Clinton Administration would oppose and/or veto its passage into law.

9. FF World Ocean Briefs

  • Maritime Law Assn of the U.S..........has just voted to pass proposed changes to the Carriage of Goods By Sea Act (Tile 46 U.S. Code) and will now lobby the U.S. Congress to confirm these revisions into law. The liability damage limit will rise. A review in our next The Cargo Letter.
  • Where Is Your ABC Containerline Freight? bankruptcy woes continue it appears that box vessels: 1) M/V Brussels discharged CTNRs 29 April while under arrest at Halifax; 2) M/V Cornelius Verolme remains under arrest in Auckland w/ about 300 CTNRs aboard; 3) M/V Antwerpen remains under arrest at Singapore with no unloading scheduled for approx 3000 TEUs aboard. [Sea Containers Ltd. has obtained a court order preventing CTNR discharge]; 4) M/V Ellen Hudig remains arrested at Haifa; and 5) M/V Helen is waiting off Jamaica in fear of arrest. [Note: only CTNR vessels reported here] Legal maneuvers continue as ABC Containerline seeks application of Belgian bankruptcy law in order to free its operations and cancel arrests at the various local ports.
  • Hyundai On The Move (Again)..............closing its European center in Hamburg as a cost cutting move on 1 July '96 (after only three years) for transfer to London. This follows earlier announcement of North American OPNS moving from Port of Long Beach to New Jersey this June. Cargo claims personnel will reportedly not accompany the moves. Expect disruption while new hires are trained. We also see continued moves for direct shipper/CGNEE contact & service to the exclusion of FFs.
  • HONG KONG TERMINAL CHARGES TO the Lines intend pushing up THCs at Hong Kong terminals to HK$1,380 for a 1 x 20 ctnr and HK$2,070 for a 1 x 40 ctnr. This is an increase of 15% which will come into effect in June '96. HK rates are the highest in the world and the increase will be protested.
  • Hub International Container Line Is Born................ as a Singapore-based independent to serve S. & S.E. Asia, the Far East and Australasia with 9 to 12 ships of 200 to 700 TEU capacity. Agents to be announced.
  • M/V OOCL Britain Is South Hampton as the first vessel delivered by a shipyard in Kobe, Japan, since the January 1995 earthquake. The new OOCL carrier has a 4,960 TEU capacity, will serve the Atlantic trade and will be followed by new sisters M/V OOCL France and the M/V OOCL Germany later this year to finish an OOCL class of eight.
  • Direct Container Line Speaks Directly....announcing expanded service to Karachi & Turkey (Izmir & Istanbul) directly without feeder service, with Alexandria to follow. DCL/Chicago now offers service twice weekly into Hong Kong. "Our DIRECT service to previously isolated ports has been growing in leaps and bounds," says Mike Catanzaro, Traffic Coordinator of Direct Container Line.
  • Cargo Golf? India's Jawaharlal Nehru Port Trust wants to lease out 80 acres of its port land for use as a golf course.


    OUR "D" Section: FF in Cyberspace

    The Cargo Letter WWW Sites of The Week

    Australian Shipping Pages (world links/port news/arrivals)

    British Columbia Shipping Pages (arrivals/weather/FF site)

    Direct Container Line

    Great Lakes Vessel Passage web page

    INSURECom Marine Insurance Home Page

    Intermodal Association of North America

    Karl Schroff & Co, Inc.

    Lee Hardeman Customs Broker, Inc

    Los Angeles Customs and Freight Brokers Association

    Los Angeles Freight - Resource Page

    NASA Mega-Lift Intermodal Cargo Aircraft of The Future (Down Load This !)

    Princeton University Transport Resources (air/road/rail)

    Priority ONE International Air Cargo

    U.S. Naval History Center

    U.S. Dept Of Transportation WAISgate Search Form

    For Your Business.....

    Yahoo Map Index (provides street map for any U.S. address) [an error occurred while processing this directive]