Industry News
From The Cargo Letter

Air & Ocean Freight Forwarder - Customs Broker News
5 November 1997

Good Wednesday Morning from our Observation Deck...... overlooking the officially designated "Cargo City" area and....... Runway 25-Right at Los Angeles International Airport. What do we see from our lofty perch? At our 3,500 acre LAX we watch over 2,000 take offs & landings per day bringing 60,000,000 passengers per year to be greeted by 50,000 service personnel. Our Tom Bradley Int'l Terminal welcomes 14,000,000 foreign visitors a year, MORE THAN ANY CITY ON EARTH and more people in one day than for the entire U.S. in the year 1936. It is no wonder that our Tom Bradely Int'l Terminal is called the "Ellis Island Of The Air" Quite Amazing! L.A. is THE Place !

Today: We have much PIRATE news - In Part 2. Indeed, pirates who attack with scuba gear ! A violent mutiny at sea, but the mutineers drive BMWs & Mercedes ?? Read all about new French Transport strike in our Cyberspace section. Read both our articles about the historic CTNR glut at L.A. .......... courtesy of the UPRR.

Contribute your knowledge & information ........ by e-mail to The Cargo Letter. We strive to bring you useful information which is timely & topical.

Michael S. McDaniel, Editor & Publisher

INDEX to The Cargo Letter:

OUR "A" Section: Trade, Financial & Inland News
1. Chinese President Concludes 1st Visit to States
     *  Business & Cooperation to Continue
     *  Despite Misunderstandings
2. Asia Pacific Transport & Logistics Congress
3. Freight Forwarder Trade Briefs
4. The Cargo Letter Financial Page
OUR "B" Section: FF World Air News
5. Freight Forwarder World Air Briefs
OUR "C" Section: FF World Ocean News
6. FF World Ocean Briefs
7. The Cargo Letter Cargo Damage Dispatches
     *  Pirate Cargo Attacks!
OUR "D" Section: FF in Cyberspace
8. The Cargo Letter "Cyber Ports Of Call"
OUR "E" Section: The Forwarder/Broker World
9. Over Reliance On Cargo Insurance
10. Union Pacific Railroad: America Constipated
     *  Untying Gordian's Knot

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

1. Chinese President Concludes 1st Visit to States

-- by Warren S. Levine for The Cargo Letter

SEATTLE (Nov. 2) -- Chinese President Jiang Zemin extended his historic visit to the United States to attend a banquet at the Beverly Hilton hotel with political and business leaders, and members of the Los Angeles Chinese community. After a private meeting with California Governor Pete Wilson, Jiang met with heads of General Motors and its Hughes Electronics subsidiary, brothers John and Michael Smith. Some of GM's Buick Regals will be built in China next year. Jiang is the first Chinese leader to visit the United States since the 1989 Tiananmen Square protests. His mentor and predecessor, Deng Xiaoping, visited the United States in 1979.

In 1979, then-President Jimmy Carter established full diplomatic relations with Beijing. When Deng made his momentous visit, the diminutive Chinese leader put on a cowboy hat and munched on hot dogs at a Texas rodeo, which endeared him to the American public. Ten years later he ordered tanks and troops to march on his own countrymen in Tiananmen Square. Deng died early this year, months before realizing his oft-stated lifelong goal -- to see Hong Kong return to Mainland rule.

During his seven-city visit, Jiang was dogged by protesters at every venue, some of the greatest crowds amassing in Cambridge, Massachusetts, where Jiang addressed students at Harvard University, the unofficial seat of anti-Beijing protests in America. However, in answer to a question posed to him by a Harvard protest committee, regarding why the Chinese government ordered the tanks into Tiananmen Square in 1989, the Chinese President may have hinted at revised Chinese policy on their actions when he said, "It goes without saying that, naturally, we (the Chinese government) may have shortcomings and even make some mistakes in our work."

The use of the word "mistakes" was the first time such a hint had been given that maybe the Chinese government had mishandled the dissenting student demonstrators. As recently as last Wednesday, Jiang and President Clinton sparred over Jiang's statement that China had taken "necessary measures" against the student protesters in 1989.

In New York, former State Department official Winston Lord said that Jiang had made some "absurd and insulting comments which complicated Clinton's task in building a domestic consensus to engage with China further." Republican Governor George Pataki refused to meet with the Chinese President. In an interview on CNN's Larry King Live, Secretary of State Madeleine Albright said, "We will never have a completely normal relationship with China until they sort out their human rights policy ... human rights is so important. I don't think the American people want us not to engage with China...engagement is not endorsement."

But business with China will go on. Albright summed up the Jiang-Clinton meetings by saying, "I think it turned out to be a pretty good visit. We did a lot of business with the Chinese."

On another important sticking point with Beijing, State Department spokesman James Rubin stated that the United States "made clear that we have a one-China policy; that we don't support a one-China, one-Taiwan policy. We don't support a two-China policy. We don't support Taiwan independence, and we don't support Taiwanese membership in organizations that require you to be a member state."

2. Asia Pacific Transport & Logistics Congress

Welcome the 1997 theme of "Into the Millennium - Exploring New Frontiers in Asia Pacific" and will be held from 11 to 13 November 1997 at the Mandarin Hotel, Singapore. The event will identify the latest developments, trends &technologies in logistics into the next century, and will also highlight the importance of logistics in the region's growth, and the Government's aim to establish Singapore as the regional logistics hub. Registration is now open for the Congress organized by the Chartered Institute of Transport (CIT), a professional body for those engaged in transport and logistics, covering all sectors of the industry. Highlights will include the findings of a study done by the "American Shipper" on international shipping & logistics costs; trends in cargo security & asset protection - a growing concern among logistics operators and the role of Internet & Electronic Commerce in logistics. Prominent int'l organizations such as Airbus, Boeing, DHL, Federal Express, Hutchison Delta Ports, IBM, TNT Express & UPS will share their experiences. IBM is the main sponsor as supported by the EconomicDevelopment Board of Singapore (EDB), Singapore Trade Development Board (TDB), and major industry associations such as the Singapore Freight Forwarders Assn., Singapore Institute of Purchasing & Materials Management, Singapore Shipping Assn., and Singapore Air Cargo Agents Assn. For information, call the Congress Secretariat at (65) 278 2538, or e-mail at . You may obtain information & updates online .........

3. Freight Forwarder Trade Briefs

4. The Cargo Letter Financial Page

OUR "B" Section: FF World Air News

5. Freight Forwarder World Air Briefs

OUR "C" Section: FF World Ocean News

6. Freight Forwarder World Ocean Briefs

7. The Cargo Letter Cargo Damage Dispatches

Violent Pirate Cargo Attacks ............

17 October. Pirates attacked the containership M/V Yi He (Chinese-registry 25,078-dwt containership operated by COSCO Container Lines) shortly after it arrived at Manila, the Philippines. The engineer was killed when he fought back. The ship, with 30 crew, had arrived from Hong Kong before dawn and anchored off the main harbor when pirates boarded from a motorboat.

21 October. Pirates with scuba gear & submachine guns boarded the container ship M/V Zim Montevideo (Antigua-registry) on early 21 Oct. at Rio de Janeiro, Brazil. As many as 15 pirates in small craft used ropes to scale the hull of the ship as it was docked in Guanabara Bay. The pirates reportedly broke into one or more containers and stole electronic goods.

27 October. The Royal Thai Navy seized a tanker early that had been hijacked and arrested the 11 pirates on board. The M/T Oriental City (Honduran-registry) was boarded by the pirates about 230 miles S.E. of Songkhla, Thailand, the day before. It was carrying one 260,000 gallons of diesel fuel. The pirates included 8 Thai citizens and 3 Indonesian citizens and were taken into custody after a 7 hour search.

The International Maritime Bureaus Piracy Reporting Center indicates that there were 142 reported acts of piracy from Jan. to Sept. compared to 169 in the same period last year. Indonesia has the most attacks at 34 followed by the Philippines at 13. Forty-five crew members have been killed compared with 26 last year while injuries increased from 7 last year to 28 this year. There have been 11 hijackings and 12 vessels have been fired on, compared to 4 and 4 last year, respectively.

Other sad news of the month included (WHAT A MONTH!) .................. ..

1.] 29 Sept. M/V Madranil Vael Kut (Maltese) hit a newly created embankment in the Suez Canal while sailing from Ecuador to Jeddah, Saudi Arabia, with 50,000 tons of bananas and is being held at Port Said, Egypt, until the owners guarantee to pay U.S.$2M in damages. The ship hit the bank after its engine seized;
2.] 6 Oct. M/T Permaisuri (Indonesian) had a fire off Indonesia and has been abandoned;
3.] 7 Oct. M/T Chang Yun (Yangming) exploded off Kaohsiung, Taiwan. Two crew members are missing. The explosion blew a 33-foot hole in the starboard hull. A fire was quickly extinguished but some oil spilled. The tanker was empty;
4.] 8 Oct. M/T Tomislav Grad (Croatian) suffered an explosion at Solin, Croatia. The first mate was killed and another crew member was injured. The ship had just begun unloading 1,500 tons of benzene and diesel fuel and the blast shattered glass 650 feet away. The prow of the ship is seriously damaged;
5.] 12 Oct. M/V Capetan Tzannis (Panamanian-registry motor dry cargo) dragged anchor and ran aground 65 feet off a beach in Anglet, France. The grounding was caused by an electrical fault that occurred during a storm. The ship was empty but had 350 tons of fuel and diesel, 120 tons of which spilled when the ship's bow was holed. She took on water in No. 2 cargo hold and also has a damaged rudder;
6.] 13 Oct. M/V Fidele Express (Belize-registry general cargo ship built in 1962) ran aground on South Beach in Miami Beach just after breaking its anchor. The vessel grounded directly across from the 21st Street lifeguard stand;
7 .] 14 Oct. M/T Stavanger Prince (Norwegian tanker) drifted 50 miles south of the Southwest Pass of the Mississippi River. As the ship drifted towards a MARS oil platform, the 116 crew members shut the oil well and evacuated the structure using 5 helicopters. A tug, responding to an Urgent Marine Information Broadcast by the U.S. Coast Guard, took the tanker in tow by the stern and held the ship on station 5 miles south of the platform until crankshaft repairs were completed;
8.] 19 Oct. Seven vessels were sunk when Sri Lanka Navy vessels attacked boats of the Liberation Tigers of Tamil Eelam off northeastern Sri Lanka, killing more than 100 people;
9.] 15 Oct. M/V Zam Ravenna (containership), sailing from Shanghai, China, to Hong Kong ran aground on rocks. The ship refloated itself but has flooding in the engine room and No. 5 cargo hold;
10.] 15 Oct. M/V Contship France (operated by Contship Containerlines Ltd.) exploded & caught fire at Papeete. There is cargo damage. Firefighters contained the blaze after three hours but 3 were injured. Aerosol cans fueled the fire;
11.] 15 Oct. M/T Evoikos (Cypriot-registry) and M/T Oraphin Global (Thai-registry) collided near the Singapore port limits, about 3 miles south of Pulau Sebarok. Evoikos was sailing from Fujairah, UAE, to Singapore with 120,000 tons of marine fuel oil. Two cargo tanks ruptured spilling up to 25,000 tons of oil and the ship anchored three 2 miles from Pulau Sebarok. Damage includes a gash on the port side 164 feet long and 32 feet wide, from the deck to below the waterline;
12.] 19 Oct. M/V Bolivar (motor reefer ship.) suffered an engine room fire 575 miles off western Scotland. The fire was extinguished but the vessel drifted without power and communications failed shortly after a distress call was sent;
13.] 19 Oct. M/V Black Sea T (St. Vincent & the Grenadines) sank off Hios Island, Greece, with loss of 1 life;
14.] 21 Oct. M/V Marine Star M (Honduran general cargo) sank after colliding in dense fog with M/V Dong Bang No. 103 (motor dry cargo ship built in 1996, operated by Dong Bang Forwarding Co.). Of the Marine Star M's crew, 5 are missing;
15.] 23 Oct. Ten crewmembers of M/V Vanessa (Bahamian/Norwegian interests) were rescued after the ship sank in the North Atlantic, 419 miles east of St. John's, Newfoundland. Four crew have been killed and 1 is missing. The Vanessa sank after its cargo of ammonium nitrate and calcium nitrate shifted weather of Beaufort Force 8 or 9, roughly 20-foot seas & winds of about 40 knots. She sent a distress call at 1300 after developing a starboard list;
16.] 23 Oct. M/V Zakaria (Syrian general cargo) sunk 20 miles off Tantous while sailing from Greece to Lebanon. Five crew are missing;
17.] 23 Oct. M/V Gijon (Russian "fish factory" built in 1993) exploded & caught fire in Victoria, British Columbia while under repair. The dry dock was partly flooded to cool the vessel's fuel tanks but at last report the fire had not been extinguished. Five blocks in Victoria were evacuated. As of 26 Oct., firefighters were taking 20-minute shifts to fight the fire;
18.] 25 Oct. M/V Me Linh (Vietnamese-registry containership) collided with the F/V SMF 948 (Singaporean-registry wooden fishing vessel) 5.3 miles northeast of Horsburgh Lighthouse, Singapore. One of 3 Indonesian citizens on the fishing vessel is missing while 2 were rescued. M/V Me Linh, sailing for Ho Chi Minh City, Vietnam, was not damaged;
19.] 26 Oct. seven S. Korean fishermen are missing after M/V General Kezim Orbay (Turkish cargo ship) collided with a South Korean fishing vessel off southwestern South Korea. The vessel partially sank. The freighter fled and was stopped 40 miles away;
20.] 27 Oct. M/T Atlantic Blue (Panamanian-registry) had an explosion in its No. 2 cargo tank as the ship was being worked on by Hyundai at Ulsan, South Korea. Nine people were killed and 8 injured, one critically. An ensuing fire was extinguished two hours later. A preliminary investigation suggests that a welding torch ignited oil sludge in piping;
21.] 28 Oct. M/T Serifos ran aground on sand off Cape Pappas, Greece, near Patras, with 1,800 tons of gasoline. The ship's bow was damaged and some gasoline spilled. In addition, high winds since the grounding have caused the ship to be holed below the waterline. On 30 Oct., 3 were arrested, including the Master, for causing a shipwreck &polluting through negligence;
22.] 30 Oct. M/V Qingdao Express (operated by Hyundai Merchant Marine) was at anchor off Pusan, South Korea, when it was hit by M/V Hua Kun (Chinese). The Qingdao Express took on a 75 degree list and may have lost containers;
23.] 30 Oct. M/V Torm Eastern (bulk carrier) and M/V Chul Jin collided recently off Mokpo, South Korea with severe damage to both.

NOTE: The historic dangers of carriage by sea continue to be quite real. Shippers must be encouraged to purchase high quality marine cargo insurance from their freight forwarder or customs broker.

OUR "D" Section: FF in Cyberspace

8. The Cargo Letter "Cyber Ports Of Call"

Here are our suggested world wide web sites of the week for your business, your information and your amusement ...............

OUR "E" Section: The Forwarder/Broker World

9. Over Reliance On Cargo Insurance

-- by Marcus Wiedemeier, DAMCO Maritime

There are times when the broker or forwarder is more prone to be sued when they insure the shipment, but deal with a client who fails to read his coverage and thereby appreciate of the limits of marine cargo coverage.

One classic example happened to me a few years ago. One of my export people was handling perishables and came to me with over $400,000 in claims for damaged goods - all the Ryan recorders showed temperature at start up was warm and eventually got to proper temperature. I advised the client he was not covered for such a loss under marine cargo insurance and would have to claim against the ocean carrier or the farmers who loaded the containers. He blew a cork. He threatened to sue and then really got upset when the ocean carrier told him to take a hike. It seems that he bought his produce loaded in container in the field and the farmers did not turn on the Gen. sets until after the container was loaded - temperature inside container was recorded around 85 degrees. The produce was wilted before the Gen. set pulled the temp down.

I had to call in the insurance company representative and alert the E &O carrier. Through the professional efforts of both there was no suit. The point, however, is that proper education for the client would likely have compelled him to take extra precautions instead of relying on insurance coverage which offered no protection for this rather common produce scenario. Encourage your customers to read and understand the nature, purpose and limits of their cargo coverages.

For related information see our story:
"NVOCC Wins Important Federal Case"
***The FF And The CY*** in The Cargo Letter [313] of 17 March 1997 at our web site.

10. Union Pacific Railroad: America Constipated

-- by Cameron Roberts, Esq. for The Cargo Letter

These days the lines in Los Angeles extend to the Pacific Ocean. Off the coast of Los Angeles & Long Beach tonight, 16 vessels wait to off load their cargo, wait for the LA harbor Pilot strike to end, and wait for the Union Pacific to untie the Gordian knot that has become the Southern Pacific &Union Pacific Railroads.

The delay stems from UP's 3.9B purchase of SP last year. UP is having difficulty integrating SP's computer, dispatching & equipment management system in time to accommodate this years Christmas. Despite a combined workforce of 52,000, UP is short of systems, crews & equipment needed to handle current capacity at the Ports of Los Angeles & Long Beach, the busiest ports in all the Americas.

The congestion first appeared in Houston and has spread across much of the UP network. The congestion has begun to snowball and points out the weak link in the logistics chain caused by consolidation and downsizing of personnel before UP was ready for the transition?

Several large shippers have already put in claims for losses caused by poor service. Entergy Corp., Air Liquide America & Chevron, have already announced plans to seek compensation from UP for delay. Moreover, the Surface Transportation Board (STB) is carefully monitoring the situation to insure that the UP/SP merger is in compliance with conditions. The merger was subject to STB approval and service criteria were a key issue in the negotiation. To combat criticism and to stay off potential claims for delay, UP implemented a broad based plan of action to improve service & speed up transit times. UP had considered chartering an APL vessel to re position 1,400 TEU's to Savanna, Georgia, however, has opted for diverting shipments to competing railroads and by hiring former SP executives to help resolve service problems. Optimistic forecasts predict that it will be Spring 1998, before service levels return to their pre-merger standard.

Further Woes For The Great Lady ........ as the famed S.S. United States currently is taking up space at pier 82 in Philadelphia. Owners keep touting ideas of either rehabbing her as a cruise ship or casino. The latest effort is to make some sort of unspecified deal with Kvearner Shipbuilding Co. as part of its bid to take over part of the Philadelphia Naval Shipyard. The City of Philadelphia had turned down requests to dock the ship at the idled navy yard because there was no guarantee the owners would have the cash to move it. Purchased at a 1992 auction by a Turkish combine for rehab as an Agean cruise ship, S.S. United States was towed to a Russian shipyard in Istanbul, where it was gutted (even to captain's bathtub) of asbestos, lifeboats & davits. Proposed rehab proved too costly and in 1996 ship was towed by a Russian tug back to U.S. Arrangements for berthing in Boston fell apart when the vessel structure was found too high for Logan Int'l Airport flight paths and her hull too deep for inexpensive dockage. The ship was next towed to Philadelphia. Hope for saving this treasure continues, but on Oct 27, The Journal of Commerce reported that there is a notice that the once proud S.S. United States has been arrested and will be auctioned by the United States Marshall on 6 November 1997.
The saga continues. Read more at ..........

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