Law Offices of Countryman & McDaniel


Air & Ocean Logistics - Customs Broker News

31 December 2004


Good Friday Evening from our Observation Deck......overlooking the officially designated "Cargo City" area and...... Runway 25-Right, at Los Angeles International Airport, voted "Best Cargo Airport in North America." After the great tragedy of the Dec. 26 tsunami, there isn't much cheer this holiday, so we wish you a Hopeful New Year. The limit of humor in our edition this month is by design.

To help you find what you need -- FAST -- there's now a transport search engine installed at our Cargo Law.com website!

Contribute your knowledge, stories & company information.......by e-mail to The Cargo Letter.  We strive to bring you useful information which is timely & topical.  Be sure to visit our website.

Our corporate sponsor &endash;- Interpool, Inc. -- named again to Forbes "Best 200 Small Companies" List -- for the 2nd consecutive year! -- http://www.interpool.com/

Michael S. McDaniel, Editor, Countryman & McDaniel, forwarder/broker attorneys at LAX.

INDEX to The Cargo Letter:

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

1. Freight Forwarder Trade Briefs ______________                            

2. The Cargo Letter Financial Page ______________                               

OUR "B" Section:  FF World Ocean News***

3. Freight Forwarder World Air Briefs ____________                         

OUR "C" Section:  FF World Ocean News***

4. FF World Ocean Briefs _____________________                                            

5. The Cargo Letter Cargo Damage Dispatches _____        

**Back By Popular Demand**

OUR "D" Section:  FF in Cyberspace***

6. The Cargo Letter "Cyber Ports of Call" _________             

OUR "E" Section:  The Forwarder/Broker World***

7. New Transport Related Legal Cases ___________            


 Back To Main Page


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

  1. Freight Forwarder Trade Briefs _____________

***Ed. Note: Around the world today hundreds of logistics companies, including UPS & FedEx have tasked the hearts of their employees to continue historic relief missions for the tragic tsunami of Dec. 26 2004 in which 150,000 or more have lost their lives. While this edition of The Cargo Letter mentions some of the reports we have received, many other such efforts go forward as our Int'l transport industry responds. There are more stories to be told.

***DHL Lends A Hand ........ as it is working with various governments, authorities and civil partners in Asia to provide deliveries of relief supplies and humanitarian assistance to the countries left devastated by the massive tsunami waves of Dec. 26. In Asia Pacific, DHL has mobilized its Global Disaster Relief Network team to render immediate assistance to countries affected by the calamity.

>>>In Thailand recently, DHL used 3 Boeing 737-200 flights to deliver approximately 50 tons of relief supplies from Bangkok to Phuket. This included food, water, clothes & medicines.

>>>In India, DHL is working closely with the government & police in Tamil Nadu with relief work. Apart from releasing four of its vehicles to transport relief materials, the company has also purchased and donated 1,000 blankets & 1,000 stoves for the victims.

>>>In Sri Lanka, DHL reported that it is actively working with the government, and as well with Sarvodaya, a local nonprofit organization on the transportation of relief supplies such as purified water & dry rations to affected areas.

>>>In the Maldives, DHL has responded to the government's request to provide assistance in the delivery & distribution of emergency relief supplies.

>>>In Indonesia, DHL is providing 1,000 blankets & 1,000 tee-shirts through the Red Crescent to victims of the disaster.

DHL's Global Human Resources has also set up a "Tide Relief Initiative Program" (TRIP) to coordinate employee contributions & donations. All contributions will be pooled & donated to an appropriate relief agency. 

***Qantas Aids With Free Transport ......... as it will continue to operate its daily 747 services to Bangkok and its regular flights to Indonesia & India following the earthquake & tsunamis that have devastated South East Asia on Dec. 26. The airline has also sent Qantas staff to Phuket to assist with relief efforts, and is offering a special 767 flight to the resort island to bring travelers home to Australia. Special relief flights were also arranged to Male in The Maldives and Sri Lanka's capital Colombo, carrying medical teams & equipment to both destinations & carrying passengers back to Australia from Colombo. Apart from flying medical & charitable supplies free of charge, the airline has also announced that it would donate a total US$779,462 to UNICEF, CARE Australia, Oxfam and World Vision to assist with their disaster relief efforts.

***Korean Air Helps Out ....... as it responded to the disaster caused by the recent tsunamis that devastated Southeast Asia on Dec. 26, 2004, by taking the initiative to transport relief goods to Indonesia. The relief supplies have been collected by the National Assn. for Disaster Relief & the Korean National Red Cross, and include 2,000 emergency kits, 1,900 quilts and 6,300 blankets. Together, these items are worth US$69,471.23, & weigh over 26,700 kilos. These emergency supplies were airlifted to Jakarta, Indonesia on flight KE373 leaving Incheon, Korea on Dec. 31.

***China's Historic Score ........ as total foreign trade volume reached a historic milestone in the first 11 months of this year, by passing the US$1 trillion mark. The General Administration of Customs reported that in the Jan. to Nov. period, the total value of China's imports & exports reached US$1.038 trillion, an on-year jump of 36.5%. Imports & exports both surpassed US$500Bn, with a trade surplus of US$20.84Bn. The surge in China's foreign trade volume has fueled the country's rapid economic growth, creating employment & helping the country achieve foreign exchange reserves of US$540Bn.

***Farewell Quota ........ as the Committee for the Implementation of Textile Agreements (CITA) published a Federal Register notice on Dec. 21 containing a directive to the Commissioner of the Bureau of Customs & Border Protection (Customs) instructing the agency on the cancellation of visa, Electronic Visa Information System (ELVIS), Guaranteed Access Level (GAL) Certification and exempt certification requirements for member countries of the World Trade Organization (WTO). Under the Uruguay Round Agreement on Textiles & Clothing, the 4th and final phase of the integration of textiles & textile apparel manufactured in countries that are members of the WTO will take effect on Jan. 1, 2005. As a result, textiles & textile apparel manufactured in a WTO country & exported on or after Jan. 1, 2005 will no longer be subject to WTO-based quota restrictions. The European Commission will implement similar rules starting Jan. 2005.

***National Cargo Security Council Goes Global ......... as this association of cargo transportation & security professionals transitions into an Int'l organization it is changing its name to the Int'l Cargo Security Council to reflect the Int'l nature of supply chain security and its growing membership from outside the U.S. Membership has quintupled to more than 1,000 members since the terrorist attacks of Sept. 11, 2001, according to the group. The name change will become official early next year. The Council, founded in 1971 to help companies reduce theft, also announced the formation of a European chapter based in Brussels, Belgium. Michael McIvor, London-based European security manager for Estee Lauder Companies, will serve as chairman of the first ICSC-Europe Steering Committee. "European cargo security managers have long wanted to be part of an experienced, broader-based organization to improve security of international shipments," the group said in a statement. Several European companies have committed to join the European chapter, including KLM Cargo, Encrypta Products, MRC Investigations, Lucent Technologies & DHL Danzas. The ICSC expects to soon expand its reach with chapters in Canada, Mexico, Central & South America, Australia & East Asia. National Cargo Security Council

***Pushing The River ....... as China's Ministry of Communications (MOC) aims to encourage Chinese carriers engaged in the Int'l shipping trade to provide services for the domestic river trade. The plan is part of a recently unveiled policy to promote China's river trade by improving the utilization capacity of vessels that ply the river trade, reducing transportation costs, and increasing the efficiency & development of ports that handle containerized goods for shipment & transshipment by river. To facilitate access for Chinese carriers to enter the river trade market, the MOC plans to relax regulations regarding the leasing of vessels and the minimum capacity of vessels. The MOC will also adjust standard loading & discharge rates, & encourage vessels to carry containers destined for both the domestic & overseas markets. There will be no restrictions imposed on the number of river trade routes operated by carriers.  

***China Opens Wider ........ as Customs clearance in Shenzhen has improved after changes were introduced by local authorities, according to Xinhua news agency. The report said companies in Shenzhen have expressed satisfaction at the speed in which clearances are completed, pointing out that it takes 10 minutes to make an on-line customs application, while it takes only 5 seconds to complete an inspection at a checkpoint where electronic gates have been installed. The authorities have introduced changes to customs procedures at Yantian Port this year by accepting customs applications on its web site 24 hours before a shipment's arrival, and allowing those from well-established companies to be released as soon as they arrive, thus expediting procedures. Meanwhile, the implementation of electronic inspection at 3 check points: Huanggang, Wenjindu and Shatoujiao, and Shenzhen bonded & export processing zones, has greatly reduced the time required for customs inspections.

***Big Truck Month ........ as the American Trucking Associations' (ATA) advanced seasonally adjusted Truck Tonnage Index increased 1.6% to 160.0 (1993=100) in Nov. This increase followed a revised 0.1% decrease in Oct.  Compared to Nov. 2003, the unadjusted index surged 12.1%.  Year-to-date, compared to the same eleven-month period in 2003, truck tonnage was up a solid 6.5 %. This increase placed the truck tonnage index at its 3rd highest level ever, behind April & June of this year, and was the best Nov. increase since 1994. Trucks hauled 9.1 billion tons of freight in 2003, or 68.9% of tonnage carried by all modes of U.S. domestic freight transportation. Motor carriers collected US$610Bn dollars, or 86.9% of total revenue earned by all transport modes.

***Big Surface Year ........ as the U.S. Census Bureau reported that combined revenues for the trucking, warehousing & courier industries rose a combined 2.8% to US$242Bn in 2003, from US$235Bn a year earlier. Truck transportation rose 2.5% to US$172Bn, the Census Bureau said in a statement. Courier & messenger revenues grew 2.8% to US$54Bn, and warehousing & storage revenues jumped 5.8% to US$16Bn.

***Biggest Is Bigger ........ as UPS has completed the takeover of Menlo Worldwide Forwarding Inc. from CNF Inc. that was originally announced in early Oct. The giant Atlanta-based express & logistics group said will drop the name Menlo Worldwide Forwarding "soon" to offer its services under the UPS name. Menlo Worldwide Forwarding previously operated under the name Emery Worldwide. UPS paid CNF US$150M in cash & took on US$110M in long-term debt for the Palo Alto-based forwarding & customs broker. Menlo Worldwide Forwarding had 2003 revenues of US$1.9Bn, generated from forwarding services for heavy air freight shipments, ocean services & Int'l trade management.

***Phoenix Int'l Freight Services, Ltd. Hits 51 At 25 ....... as company owned office count is now 51, in addition to it's worldwide agent network of 250 locations in 80 countries. "In 2004, our 25th anniversary year, we have expanded our wholly owned office network with openings in Charleston, South Carolina, Birmingham, England & 3 additional offices in China; Dalian, Tianjin & Qingdao", said founder & CEO Bill McInerney. Phoenix Int'l, founded in Chicago in 1979, has grown to become the largest American privately owned full-service Int'l freight forwarder/NVOCC & Customs broker based in North America. Last years sales were US$450M.

***U.S. Xpress Enterprises Buys ........ as it has completed the acquisition of a 49% interest in Arnold Transportation Services, Inc. for US$6.2M in cash. Arnold Transportation Services, Inc. is a privately held dry van truckload carrier headquartered in Jacksonville, Florida, and offers regional, dedicated & medium length of haul service primarily in the Northeast, Southeast, & Southwest U.S.

***Exel Pops Portuguese Pill ......... as the supply chain management provider has acquired Sociedade de Distribuição e Logística, Lda (SODILOG), a Portuguese pharmaceutical logistics provider. Terms of the deal were not disclosed. Based in Lisbon, SODILOG enables Exel to extend its health care logistics services in the Portuguese market & provide Iberian health care logistics services.

***Worldwide Trumps America ....... as logistics firm Team America Inc. has changed its name to TA Services Inc. as of Dec. 1, because of a legal dispute with another company that had "Team" in its title. The Mansfield, Texas, company agreed to change its name after it had been challenged by another logistics firm &emdash; Team Worldwide Inc. of Winnsboro, Texas &emdash; according to an attorney representing the latter company. Team Worldwide filed suit about 2 years ago to prevent Team America from using "Team" in its name & won.

***DFDS Transport Group ....... as the Danish company has gained a foothold in the Balkan Peninsula with the acquisition of the transport & logistics company, Eurospeed, for US$8.03M.

***Tomorrow The World ........ as Wal-Mart Korea, the South Korean subsidiary of U.S. retail giant Wal-Mart has sold over US$500M worth of South Korean products at its affiliated stores worldwide. The retailer said exports of South Korean products through its global procurement network came to US$580M so far this year, up 20% from a year ago. The figure excludes products supplied by the manufacturers directly to Wal-Mart stores. The total amount of South Korean products sold at Wal-Mart stores worldwide is much higher, the company said.

***TreePL .......... as a shortage of Christmas trees in Hawaii has raised prices to more than US$200 each, drawing complaints from cost-conscious shoppers who were eager to buy trees before the holiday. Tree buyers camped outside a shopping center hours before dawn on Dec. 18 to await a shipment of 130 noble firs flown in from Oregon. A crowd of more than 200 people had gathered by morning, when a salesman announced the trees would cost US$165 to US$200 each. One man, in desperation, gave up waiting in line & used his cell phone to order a tree from Colorado for US$80 plus US$145 for shipping. "I paid way too much," he said. Dah!

***No Future In Transport ....... as Dan L. Griggs, of Gary, Ind. stole 3 cartons of cigarettes about 1 a.m. Dec. 16, from a store across the street from the Lake Station Police Dept, and returned to his vehicle to find the doors locked. The robber told a clerk, who followed him out of the store, that it was just a joke & that he didn't intend to steal the cigarettes. The clerk then called police officers. Griggs returned to the store, ripped out the telephone cord & demanded money, opening the store's lottery machine to take about US$50 and fled again, according to court documents filed in Lake Superior Court. Griggs returned to the store again & grabbed a broom. Dispatchers then watched from the police station in the city just east of Gary as Griggs used the broom to smash out a vehicle window. An officer arrived as Griggs was driving away from the store. After a brief chase through snowy streets, Griggs struck an oncoming police cruiser & fled from the car. He was arrested when he became stuck in a ditch.


  2. The Cargo Letter Financial Page ______

**FedExCorp. UP as net income during its 2nd quarter ended on Nov. 30 was US$354M, which was up from US$91M during the same period a year earlier.

**Interpool Inc. UP with reported US$98.8M in 3rd-quarter revenue, up from restated revenues of US$95.8M for the same period of 2003 -- net income for the quarter ended Sept. 30 was US$15.8M, more than double its restated net income of US$6.5M for same quarter last year. Interpool is corporate sponsor of The Cargo Letter Archives.

**United Airlines. DOWN as it has reported an operating loss of US$188M for Nov. to the U.S. Bankruptcy Court. UAL also reported a net loss of US$87M, including a US$158M gain from the sale of Orbitz shares & US$20M of reorganization expenses.

**Zim Integrated Shipping Services. UP with a 71% increase in 3rd quarter net profit of US$39.4M compared to US$23.1M in same quarter in 2003.                             



OUR "B" Section: FF World Air News***

3. Freight Forwarder World Air Briefs ___

***No Significant Tsunami Delays ...... as several major air carriers operating in Asia & India have confirmed that there have not been significant delays or cancellations of scheduled cargo flights operating from areas affected by the giant tsunami that struck over last weekend. However, sources cautioned that the influx of relief supplies being shipped to the region could cause short-term delays as airports get congested with flights & cargo. 

***Global Volume Up ........ as air freight services in 2004 registered a healthy recovery surging 13% over the previous year, mainly due to continuing growth in the Middle East and the Asia/Pacific regions, according to statistics released by the United Nations' Int'l Civil Aviation Organization (ICAO). The ICAO figures showed that freight carried worldwide on scheduled services grew from 35 million tons in 2003 to 38 million tons in 2004. The UN agency report said the statistics, compiled from 188 contracting states, showed that the global aviation traffic increased by 14% carrying 1.8 billion passengers compared to 1.7 billion in 2003. The load factor for all air traffic was 73%, 2% higher than in 2003. "On a regional basis, strong growth was again shown by the airlines in the Middle East, followed by the airlines in Asia/Pacific which, in 2003, were negatively affected by the outbreak of the Severe Respiratory Syndrome (SARS)," the ICAO report said.

***More To Come ....... as Int'l Air Transport Assn. (IATA) has forecast a 6% annual growth in Int'l cargo & passenger traffic between 2004 & 2008. IATA said freight will see double-digit growth in 2004, increasing 10.1%. It explained that the 6% freight growth forecasted through 2008 relied heavily on Asia-Pacific with markets linked to China and India expected to growth most rapidly. Europe to Asia-Pacific will be the fastest growing market with 7% annual growth. Traffic within Asia Pacific and between the Middle East & Europe will also be above the global average at 6.1%.

***Profit Ahead In 2005? ........ as Int'l airlines are expected to lose about US$5Bn in 2004, but could finally move into the black in 2005 after years of losses, according to the Int'l Air Transport Association's latest estimates of results for the worldwide airline industry. "The bottom line numbers are terrible," Giovanni Bisignani, director general of IATA, told a news briefing. "Between 2001 & 2004 we lost US$35Bn. IATA estimates the fuel bill for airlines in 2004 was US$62Bn, US$15Bn more than in 2003. The global airline body expects airlines to earn a profit of US$1Bn to US$2Bn in 2005. "With revenues exceeding US$350Bn, that is a long way from making us a good investment," Bisignani added.

***Fuel Burden Eases ........ as decreases in global oil prices & subsequent decreases in jet fuel prices have led many of the world's air carriers to announce that they will decrease their fuel surcharges to US$0.30/kg, or 0.30 EUR/kg. Many major American & European air carriers have announced that they will decrease their fuel surcharges, beginning the week of Jan. 4, 2005. However, many major Asian air carriers have not announced when they plan to join in the decrease. 

>>>The American Airlines Cargo fuel index dropped to 130.10 for the week ending Dec. 17 2004, falling below the reduction trigger point of 131.00 for the 2nd consecutive week. The American Airlines Cargo fuel index is based upon an average of the 5 U.S. jet fuel spot markets, & was established as a method to monitor & respond to changes in jet fuel prices.

>>>The Lufthansa fuel index has also fallen this month.

***More Must Go ........ as UAL Corp., parent of United Airlines, says it will lay off up to 825 ramp & customer service workers as the airline continues its fight to emerge from bankruptcy. The airline said the cuts will affect 18 hubs & airports as of Jan. 6. 

***United Again ........ as with fanfare & an appearance by actor David Hasselhoff, a United Airlines flight headed for Ho Chi Minh City on Dec. 9 - the 1st direct flight from the United States to Vietnam in almost 3 decades. The flight, carrying 347 people, arrived in Ho Chi Minh City, formerly known as Saigon, garnering a coup for United as the only American carrier allowed to land in Vietnam since the end of the war in 1975.

***Polish Air Crash ....... as low-cost carrier Air Polonia filed a complaint in Warsaw against an Irish investor whose unexpected pullout from a deal led the company to suspend all flights & start bankruptcy proceedings, the company said. Air Polonia is asking prosecutors to investigate whether Conor McCarthy, a former operations director for Irish budget airline Ryanair, and his company misled Air Polonia by promising to invest US$10M in the airline before canceling the deal at the last moment, it said.

***French Have Less of France ....... as the government has sold an 18.4% stake in Air France-KLM. A statement from the airline said the reduction in the state's holdings is in line with the arrangements agreed between France and the Netherlands under the agreement to merge Air France & KLM. The sale legally entitles present & former employees of Air France and its subsidiaries to purchase Air France-KLM shares at a discount under a rights issue reserved for employees. This is a system that was previously used in 1999 at the time of the partial privatization of Air France. The law also allows employees who voluntarily agreed to a temporary reduction in remuneration to purchase Air France-KLM shares under the "wages for shares" program. Following these transactions, France will own just under 20% of the Air France-KLM Group equity, down from the previous 44.2%. With current performance, the sale is a stop loss.

***Air Bus Misses Another ..... as Japan Airlines (JAL) has placed an order with Boeing for 50 of its mid-sized twin aisle 7E7 Dreamliner aircraft in a deal reportedly worth US$6Bn. The airplane uses 20% less fuel than today's airplanes of comparable size & provides customers with up to 45% more cargo revenue capacity. Production begins in 2006. The 1st flight is expected in 2007 with certification, delivery & entry into service in 2008. Continental Airlines has just ordered 10 of the new aircraft. The race continues.

***Austral-Thai Cargo Line ......... as Qantas Airways and CTI Holding of Thailand have signed a joint venture agreement paving the way for the establishment of Thai Air Cargo, a new Asian cargo airline to be based in Bangkok. Thai Air Cargo will be 51% owned by Thailand's CTI Holding and 49% owned by Australian airline Qantas.

***Air Hong Kong 1st To Order "General Freighter" ......... as it has ordered 2 additional Airbus A300-600F freighter aircraft with options for a further 2 of the aircraft type, adding to an existing order for 6 A300-600Fs signed in March 2003. The all-cargo carrier, in which Cathay Pacific & DHL Worldwide Express hold a 60% share & 40% share respectively, is the launch customer for the A300-600F "General Freighter" variant, which differs from A300F4-600R aircraft in that it has a loading system & side door capable of handling large items of general freight in addition to small packages.

***Qatar Airways To China ....... as it has become the 1st Middle East carrier to launch nonstop scheduled flights between Doha and Beijing. The Chinese capital has become the 2nd city on the mainland to be served by Qatar Airways following the successful launch in 2003 of nonstop scheduled flights between Doha & Shanghai. The Beijing flights use Airbus A330-200 aircraft.     

***DHL's California Hub ....... as it will develop a new center in Riverside, Calif., for its West Coast air & ground distribution operations. DHL will spend US$65M on the facility, which will provide "an expanded footprint for one-day ground delivery services across California and into Arizona & Nevada," DHL said. The Riverside hub "is the latest element of our US$1.2Bn investment program to expand DHL's North American service network," said DHL.                        



OUR "C" Section:  FF World Ocean News***

  4. FF World Ocean Briefs ___________  

***Tsunami Port Damage To Ports Reported .............

>>>Maersk Sealand reports the ports of Chennai in southern India & Colombo in Sri Lanka were damaged by the Indian Ocean tsunami on Dec. 26, but all South Asian ports affected by the waves or flooding have resumed operations, according to industry sources. Maersk Sealand reported that 4 of 6 gantry cranes at the port of Chennai are now back in operation, and that the terminal is able to handle vessels. "However, due to the reduced amount of operational cranes, only 2 vessels can be loaded/unloaded simultaneously," the carrier said. The Indian port closed operations on the morning of Dec. 26 amid flooding. "No major activity is taking place as the roads outside the port are blocked by traffic & road damages," Maersk Sealand added, commenting on landside port operations at Chennai. The port authorities of Chennai are reportedly carrying out a survey of the channel & berths. In the ports of Cochin and Tuticorin, also in southern India, and Colombo, in Sri Lanka, port operations are back to normal. Maersk Sealand reported that no other ports in West India, Pakistan, Aden, Hodeida, Djibouti and Muscat were affected by the tsunami. Ports are working normally in Malaysia & Thailand, according to shipping line sources.

>>>APL said that it does not anticipate "any significant changes" to its operations over the coming weeks due to the tsunami. "The earthquake & resulting tsunami tidal waves did not result in an extended disruption in vessel or terminal services in the areas affected," APL said in a statement. "Vessel movements and loading/discharging of cargo are on schedule & APL's offices remain open across the region, including those in Indonesia, Thailand, Malaysia, India, Sri Lanka, Bangladesh & Myanmar."

>>>Zim Line said that one of its ships bypassed Colombo, but all its ships continued operations normally. A ship of the Grand Alliance also canceled a call at Colombo, while another was delayed in the Sri Lankan port.

>>>OOCL reported that a terminal in Colombo was damaged by the feeder M/V Jaami, pushed in by the tsunami. "Berth disruptions and delays/misconnections of transshipments are expected in the coming weeks," it warned.

>>>For more tsunami related ship damage & M/V Jaami, go to our Daily Vessel Casualties Reports:

***NVOCC Final Rule For Service Agreements ........ as the U.S. Federal Maritime Commission has published its final rule for non-vessel-operating common carriers to enter confidential service arrangements with shippers. The rule, which becomes effective Jan. 19, may be found on line in the Federal Register -- Here.

***Containers Not The Grim Consideration ....... as the Congressional Research Service (CRS) has released a report for Congress that says oil tankers could be potentially used by terrorists in a nuclear attack on a U.S. port. "While much attention has been focused on threats to maritime security posed by cargo container ships, terrorists could also attempt to use oil tankers to stage an attack," noted the report, which was written by Jonathan Medalia, a CRS specialist in national defense. "If they were able to place an atomic bomb in a tanker & detonate it in a U.S. port, they would cause massive destruction and might halt crude oil shipments worldwide for some time. Detecting a bomb in a tanker would be difficult. Congress may consider various options to address this threat," the report added. The report noted that crude oil from the Middle East is typically shipped to the U.S. in supertankers, which are divided into multiple storage tanks. "The simplest type of atomic bomb, and by far the easiest to fabricate, is a gun-assembly bomb, similar to the Hiroshima bomb. Excluding the bomb's outer casing, fins & fuses, that device was 6 feet long, about 6 inches in diameter, & weighed about 1,000 pounds," the report said. The CRS study went on to cite the Louisiana Offshore Oil Port (LOOP) & the Panama Canal as specific potential targets. The Congressional Research Service proposed that a Tanker Security Initiative (TSI), similar to the Container Security Initiative (CSI), be formed to improve tanker security.

***CSI Dubai ......... as it has become the 1st Middle Eastern port to join the U.S. Customs & Border Protection's (CBP) Container Security Initiative (CSI). Under the initiative, a small team of CBP officers will be stationed at the port of Dubai to work alongside Dubai Customs officials to screen any containers destined for the U.S. that are identified as a potential terrorist threat in a bid to protect the trade routes between CSI ports and the U.S. Twenty-one countries to date have joined CSI which was launched in the wake of the Sept. 11 terrorist attacks on New York & Washington to help secure maritime cargo shipments against the threat of terrorism. Earlier this month the Port of Livorno, Italy became the 33rd operational Container Security Initiative (CSI) port.

***Box Boom ......... as the increasing containerization of China's exports, the lifting of textile quotas & other factors, will propel the country's box volumes from an estimated 58.5 million TEUs in 2004 to 109.5 million TEUs in 2008, according to an investment report by Citigroup Smith Barney. Having expanded 35% in 2002, 31% in 2003 and an estimated 20% in 2004, box traffic of Chinese ports is predicted to increase another 20% in 2005, 18% in 2006 and 15% in each of 2007 & 2008. More berths, please!

***Pirates With Paper - An Alert ....... as the ICC Int'l Maritime Bureau (IMB) is warning banks & shipping operators of a rash of false bills of lading in the Arabian Gulf area & South East Asia. IMB says several recent cases involving fraudulent Bills of Lading point to a recurring problem with cargo aboard dhows & barges under tow in the Arabian Gulf area & South East Asia. The IMB has discovered a number of instances where high value cargo, such as electrical goods and other finished products, has gone missing. These wares were said to have been loaded aboard dhows & barges in small ports in the United Arab Emirates. IMB investigators have uncovered bills of lading supporting this, but remain suspicious that the bills themselves are false. Verifying the authenticity of the bills has proven difficult, with many of the agents in these small ports being hard to identify & contact. Through its wide reach of contacts in these regions, the IMB has been able to establish that in a number of cases, the goods failed to arrive at specific ports. In some cases, the goods were never unloaded, even though the cargo was clearly booked onto the dhow or barge. IMB investigators are acting under the assumption that freight forwarders in the area are being coerced into issuing false bills of lading at the behest of their clients. The IMB wishes to make banks in particular aware of this problem, as they are the most likely to bear losses in such cases. IMB is urging financial institutions to take special care when providing documents for payment that involve a combination of high value cargo and small or unfamiliar ports. Banks should take extra precautions, particularly if the freight is prepaid.

***More Australia ........ as it plans to enforce a maritime security zone more than 1,100 miles out to sea, far beyond its territorial waters, to boost defenses against possible terror attacks on its soil and offshore oil & gas facilities, the Prime Minister said this month.

***Hyundai Scandal? .......... as South Korea's financial watchdog, the Financial Supervisory Service says it has uncovered accounting irregularities amounting to US$1.1Bn at Hyundai Merchant Marine. If confirmed, the US$1.1Bn hole in Hyundai's accounts will dwarf the US$41M accounting errors found at CP Ships in the summer. Hello Enron.

***How Many TEU Have You?......... as Panama plans to change the way it charges container ships using its canal in an effort to increase revenues. The Panama Canal Authority has proposed charging ships according to their container-carrying capacity, which would lead to a projected increase of US$40M in annual turnover. Container ships that transit the Panama Canal currently pay a tariff based on the ship's volume measured by the Authority's own system. Under the new plan, vessels will be charged for the potential number of containers that can be carried, measured in TEU . The interoceanic waterway links the Caribbean & Pacific coasts of the narrow Panamanian isthmus & carries 4.8% of world trade.

***Other Ditch Up ........ as following Panama's example the Suez canal hikes it's transit fees by 3%. Total revenues for 2004 are estimated at nearly US$3Bn, up 15% over 2003.

***1 Billion Tons Served........ as recent arrival at the port of Singapore of the container M/V Cosco Shanghai, created maritime history when, for the 1st time, total vessel arrivals at the port crossed the one billion gross tons mark. To celebrate the milestone achievement, the Maritime & Port Authority of Singapore (MPA) held a ceremony to welcome the 65,531 ton vessel at PSA's Pasir Panjang Terminal (PPT), where the Cosco Shanghai was berthed. Heavy.

***Port of Los Angeles #1.......... as it became the top Int'l freight gateway in the U.S. in 2003, according to the U.S. Bureau of Transportation Statistics. An estimated US$105Bn in imports and US$17Bn in exports moved through the port last year, BTS said in a statement. The port handled US$10Bn more freight than New York's JFK Int'l Airport, which fell to the 2nd-ranked Int'l freight gateway. JFK held the top position since 1999, when the bureau began compiling the information. The Detroit/Wayne County Port Authority, which includes bridges and tunnels connecting the U.S. & Canada, was 3rd with US$102Bn in Int'l shipments, it said. The seaport of New York & New Jersey remained at No. 4. BTS said a total of US$2 trillion in U.S. exports & imports moved through the more than 400 Int'l freight gateways across the U.S. in 2003. About 43% of the freight was handled by the top 10 gateways. BTS said that at 8 of the top 10 hubs, the value of imports exceeded the value of exports.

***Big Winners ......... as the port congestion suffered at U.S. west coast facilities this year brought increased business their counterparts on the East & gulf coasts. The British newspaper Financial Times said increased cargo volumes were seen at the ports of New York & New Jersey, Savannah, Georgia, & Norfolk, Virginia. The report attributed their success at drawing overseas freight to their area to the regional distribution centers that are used by the large U.S. retailers to distribute goods throughout the East coast. Savannah in particular was singled out by the FT article to have attracted nearly every big U.S. retailer to distribution centers located within close proximity of the port.

***Please Pay No Attention ....... as Singapore based APL is asking the U.S. Federal Maritime Commission (FMC) not to consider it a government controled carrier under the 1984 Shipping Act. APL was recently deemed a government controled carrier under the legislation after the Singapore government agency Temasek increased its shareholding in APL's parent company Neptune Orient Lines, NOL, to more than 50%. Under the law, government controled carriers have to apply to the FMC for permission to reduce rates & wait 30 days before implementing them. The regulation was originally introduced to prevent Soviet shipping lines from taking part in unfair price competition.

***The Party's Over....... as NYK Line & Compania Sud Americana de Vapores will end their 9 year-old Asia Andes Express (Andex) vessel-sharing agreement in the next few weeks to provide competing services between the Far East and the West coasts of Mexico & South America.

***New Sisters ........ as officials for the Ports of Los Angeles & Puerto Valparaiso, Chile, signed a "Sister Port" agreement early this month, marking the Port of Los Angeles' 1st agreement with a South American port.

***Sino CFS ........ as China's Vice-minister for Railways, Wang Zhaocheng, has revealed that 18 major rail container stations are to be built throughout the nation. Mr. Wang was quoted saying that the stations will be located in main inland & coastal cities. Six of them will be in the western cities of Xian, Lanzhou, Urumuqi, Chengdu, Chongqing & Kunming.

***First It Was Menlo Worldwide ........ as CSX Corp. said it is selling its final Int'l port & maritime-related activity, CSX World Terminals, to Dubai Ports International for US$1.15Bn The sale is expected to be completed in the 1st quarter of 2005.

***Yankee Go Home ....... as CCNI, a South American shipping line, has modified the currency of all the rates & surcharges it levies on cargoes shipped to Ecuador, Peru & Chile from U.S. Dollars to Euros. The company said the move, which effects ancillaries and the bunker surcharge levels as well, came into effect on Dec. 4 & was taken due to the sharp fall in the value of the U.S. Dollar in recent months. As a result, the revised denomination for ocean freights rates has been converted 1 : 1 from U.S. Dollars into Euro. History suggests they'll be back.

****Arctic Industrial Port ....... as Forbes magazine, in its Dec. 13, 2004, edition, featured the Port of Churchill and its emerging potential as a "linchpin of transpolar trade." Port of Churchill, located on the Hudson Bay in Manitoba, Canada, is the continent's only arctic industrial port. It is quickly becoming an Int'l focal point for expansion of North American & world trade opportunities. For example, materials landing in Churchill from the Port of Murmansk, Russia, could then be transported/distributed along a several-thousand-mile North American trade route called the "Murmansk to Monterey Trade Corridor." Some US$5Bn has been invested in the Port of Murmansk to accommodate new export & import trade relationships. Russia may view the Port of Churchill as a potential partner.  http://www.broe.com/transportation.html    

***Biggest Screw Job ........ as Dalian Shipping Thrusters Factory has constructed the world's largest propeller, which has been approved by Britain's Lloyd's Register. The propeller was built for one of the largest shipbuilders in Europe. It weighs 98.4 tons, with a diameter of nearly 9 meters (27 feet). It took 3 months to build & is said to be the largest of its kind in the world.

***Stranded Witnesses ........ as 13 Filipino sailors left stranded in California are sleeping on the floor of a charitable organization while they wait to testify against their ship's captain in federal court at Los Angeles. Coast Guard officials arrested Capt. Ioannis G. Kallikis, of the Greek cargo M/V Katerina, & the Filipino officers in Sept. They are accused of ordering crew members to dump oil, sewage and other trash at sea and not providing the crew with adequate food & water. They were arraigned Dec. 20. Prosecutors ordered the 13 crew members to remain in the U.S. to testify as material witnesses in the case, which is expected to go to trial some time in 2005. The U.S. Coast Guard impounded the 16,000-ton ship on Sept. 14 after discovering the vessel's oil sludge filter had been disconnected, its toilets were broken & the crew was being deprived of food & water. The U.S. Coast Guard had been tipped off by a longshoreman who passed on letters from crew members detailing the alleged illegal practices aboard the ship. The crew members were released from government custody to the charitable group Int'l Seafarers, which is working with the Int'l Longshore & Warehouse Union to help feed & house them.

***Bring A Note From Home ........ as Mediterranean Shipping Co. has announced that starting Jan. 2005, it will need an original letter of authority which permits your freight forwarder to act on your behalf when surrendering bills of lading to MSC on direct shipments.

***FMC Revokes 10 OTI Licenses ......... as for failure to maintain valid bonds the companies affected are: Express Lanes Int'l of New York; GPR Int'l in Miami; Haras & Co. in Middlesex, N.J.; Impex of Doral Logistics of Miami; Marina Int'l Forwarding in Fort Lauderdale, Fla.; Prince Int'l Trading in Miami; Scott Container Service of Detroit; Eagle Pacific Corp. of Jamaica, N.Y.; I.C.C. Products in Medley, Fla.; & Universe Freight Brokers of Miami.

***The Passengers Supersized ......... as U.S. safety investigators want the U.S. Coast Guard to revamp its regulations for calculating passenger weight on private water taxis to reflect heavier American tourists. When the weight standards were drawn up 44 years ago, the adults on board were estimated to weigh no more than 140 pounds. The National Transportation Safety Board recommendation stemmed from an accident involving a small passenger vessel, the Lady D, that capsized in Baltimore's Inner Harbor last March -- killing 5 & injuring 1 others. Investigators determined the fully loaded boat was dangerously overweight when it encountered high winds from an approaching storm. The boat rocked in the water before capsizing. Current regulations for that model taxi, a 26-foot enclosed pontoon boat, limits occupancy to 25 passengers & crew. Load calculations are based on 44-year-old assumptions that each passenger weighs no more than 140 pounds. But investigators found the average weight of the 25 men, women & children aboard the ill-fated Lady D was 168 pounds, more than 28 pounds per person above the acceptable standard. Most weighed more than 160 pounds and seven weighed 200 pounds or more. The higher calculation brought the actual weight of the vessel to more than 4,200 pounds, more than 700 pounds above its recommended travel weight. The safety board said U.S. government reports show Americans of all ages are much heavier today than when the weight regulations were calculated in 1960. Average adult weights have increased by nearly 25 pounds during that period, the safety board said. The Federal Aviation Administration recently updated its weight & balance guidelines to more accurately reflect a heavier public. That action followed a crash of a small passenger plane in 2003 that was overloaded. Next time, try a salad.

***Arming The Fleet ....... as some question the safety of Disneyland's venerable Jungle Cruise ride. Rest easy. The hippos are back under control. For more than 40 years, the mechanical hippos lunged threateningly out of the water at every boat that toured Disneyland's river, only to be repulsed by skippers firing their sidearms. Then, in 2001, political correctness appeared to accomplish what the hippos never could. The skippers were disarmed. Now Disneyland has rearmed the skippers, one of several actions officials say are aimed at "restoring the magic" as the park approaches its 50th birthday next year. "At least once a week somebody would get off the boat and say, 'Hey, what happened to the guns?' " said Sherri Ribber, one of the ride's operators. Now, she says, people burst into applause when she opens fire.

***This Month in U.S. Navy History _____

1798 - First annual report by Secretary of the Navy, sent by Benjamin Stoddert.

1812 - USS Constitution (Captain William Bainbridge) captures HMS Java off Brazil after a 3 hour battle.

1814 - The Treaty of Ghent ends the War of 1812.

1822 - Congress authorizes the 14-ship West Indies Squadron to suppress piracy in the Caribbean.

1864 - Naval forces, under the command of Rear Adm. David Dixon Porter, begin an unsuccessful 2 day attack against Fort Fisher, N.C.

1910 - Lt. Theodore G. Ellyson becomes the first Naval officer sent to flight training.

1941 - The gallant defenders of Wake Island (Sailors, Marines, volunteer civilian contractors, and Army/Air Force radio detachment) surrender.

1942 - Pharmacist's Mate 1st Class Thomas A. Moore performs an appendectomy on Fireman 2nd Class George M. Platter aboard USS Silversides (SS 236).

1943 - USS Silversides (SS-236) sinks 3 Japanese ships & damages a 4th off Palau.

1950 - Under the cover of Naval gunfire support, Task Force 90 completes a 14-day evacuation of 100,000 troops & equipment from Hungnam, North Korea. More than 91,000 refugees are also rescued. 


   5. The Cargo Letter Cargo Damage Dispatches                        

         **Back By Popular Demand**

We're sorry, but there were so many sinkings, explosions, pirate attacks, fires, cargo mishaps, battles on the water & other disasters at sea that we do not have room to print even the highlights this month. Many people lost their lives at sea this month!!

But you can read all this month's disaster news at our special Internet web feature which provides full details of each event -- our Vessel Casualties & Pirate Activity Database.  Bookmark the site and visit every day! Updated twice daily.

SPECIAL NOTE:  Please view the dramatic new pictures at our special "Gallery of Cargo Loss" website feature. 

See our new photo feature for Dec. 2004: "Unstacked With Dr. Beach"

See our newest photo feature "Singles Only" - Transportation Disasters Told In A Single Photo! Current through Oct. 2004 with a pitrate's booty of photos!

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.  It's dangerous out there.



OUR "D" Section: FF in Cyberspace***

  6. 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..............

2005 Harmonized Tariff Schedule of the U.S. (HTSUS) ........now available from the U.S. Int'l Trade Commission (ITC)

2005 Hong Kong Imports & Exports Classification List (Harmonized System) ........ changes effective Jan. 1 2005.

Best Practices In Enterprise Knowledge Management ...... free white paper.

Coalition for Secure Ports .......... consists of private sector stakeholders who, along with U.S. government, share responsibility for security of ports, vessels, & cargo, including cargo containers, as well as efficient flow of commerce.

Journal of Commerce Online Career Center

Los Angeles Port Police ............ now hiring.

Pilot Program For RFID Shipping Container

San Diego Aircraft Carrier Museum

Shippers Expect Freight Rates Continued Climb

U.S. Bureau of Customs and Border Protection ......... detailed instructions on procedures to allow the entry of textile & apparel goods that were shipped in excess of 2004 quota limits.   

U.S. Bureau of Industry & Security

U.S. Homeland Security Year End Review





Flight Explorer ........ real-time update on status of aircraft carrying cargo.

Marine Professionals

Ships For Sale



Transport Events

World Trade Organization Events

14th Annual Int'l Air Cargo Conference & Exhibit- Houston 2005........17 to 19 May, 2005 (National Transportation Week). At IACC- Houston 2005.


Best Practices In Automating Speech ........... Jan. 26 2005, 11am PT -- free Web event.

China Trade & Logistics ....... April 18 & 19, 2005 in Savannah, GA.

LA Harbor Transportation Club ..........Thurs. Jan. 13 2005, The Reef Restaurant, Port f Long Beach. Speakers are George Cunningham is Editor of The Cunningham Report & Bill Mongelluzzo, West Coast editor of The Journal of Commerce.

Next Generation Warehouse Management Systems & RFID Technology ........ Jan. 20th, 2005, 8.30 am-12.30 pm, Los Angeles Airport Marriott, LAX.

Outsourcing Logistics 2005 - Best Practices for Managing 3PL Relationships ...........25-26 April 2005, Chicago.

Project Day for the Saudi Landbridge ........... Jan. 31 2005, London.

Sea Cargo Americas ........ May 11 & 12 2005, Miami.

Simulating RFID

The 3rd eyefortransport 3PL Summit ....... 27-29 June 2005, Atlanta

Twin Cities Chapter of the Council of Logistics Management Annual Conference........ March 4, 2005 in Minneapolis, MN, Airport Marriott, Bloomington, MN

U.S.-Mexico Supply-Chain Security & Management Symposia .......... schedule for meetings; Jan. 25 at Guadalajara; & Jan. 27 in Tijuana. Sponsors are the U.S. Commercial Service & the Mexican Trade Council.


FOR FUN>>>>>>>>>

AOL 2004 Top Searches

Gift Idea

Ex-USS Oriskany (CVA 34) .........to become a reef.

NASA Sightings ......... see the Int'l Space Station

NASA Store



OUR "E" Section:  The Forwarder/Broker World***

  7. New U.S. Transport Related Legal Cases _______ 

Doe Vs. Celebrity Lines

Dec. 22, 2004 No. 03-15321

11th Circuit U.S. Court of Appeals

Ruled that a cruise line is strictly liable for crew member assaults on passengers during the cruise. A female passenger was sexually assaulted by a waiter on the cruise ship. After verdict & entry of judgment for the plaintiff, an issue arose as to who actually employed the waiter. The trial court dismissed the verdict. On appeal, the court reversed the decision below & reinstated the jury verdict. The court held that the cruise line was a common carrier and that a common carrier is strictly liable for the safety of its passengers, without regard for who actually employed the individual crew member that committed the assault. The Decision 

In Leonardo Vs. Nancy-Christine, Inc.

U.S. District Court, Massachusetts

Nov. 3, 2004 2004 WL 2711719

Survivor of crewman who drowned when fishing vessel sank sought to arrest the sunken vessel, based on an alleged maritime lien on the vessel. The court declined to issue a warrant to arrest the vessel, holding "[a]n individual cannot obtain a maritime lien on a sunken vessel."  The court also declined to recognize the survivor's claimed lien on the proceeds of the sunken vessel's hull insurance policy.  

In re Air Crash Near Peggy's Cove, Nova Scotia on September 2, 1998

U.S. District Court, Eastern District of Pennsylvania

Nov. 2, 2004 2004 WL 2486263

Following McDermott, Inc. v. AmClyde, 511 U.S. 202 (1994) and United States v. Reliable Transfer Co., 421 U.S. 397 (1975), the court dismissed claims for contribution & indemnity against the settling tortfeasor, even though the claimant tried to circumvent the settlement bar rule of McDermott and Reliable Transfer by arguing that a passive-active tort indemnification claim was not proscribed by these decisions. Nonsettling defendant may not bring contribution or indemnity claim against settling tortfeasor defendant, as those claims are cut off by the settlement with the plaintiff.  


Written from wire stories, the Associated Press, Reuters, Hong Kong Shipping News, Lloyds & other world sources.


The Cargo Letter Correspondents:

Michael S. McDaniel Esq, Editor (Countryman & McDaniel)

David Schuchman -- Interpool Corp. -- Webmaster of The Cargo Letter Archive

Libby Thompson (Countryman & McDaniel)


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