Law Offices of Countryman & McDaniel


Air & Ocean Logistics - Customs Broker News

31 May 2006


Good Wednesday Morning 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." Here is our industry review for May 2006.

We are often asked whether Countryman & McDaniel, conducts training seminars. Yes, from multiple Fortune 100 companies, to smaller forwarders, to the U.S. government, to insurance companies -- for years we have conducted inovative programs for domestic & Int'l claims, Customs, security, trade compliance & post 9/11 industry business practice. McD

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/trade consultant 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 _____________ 

***U.S. A Bit Higher ....... as the economy grew at a revised 5.3% annual rate in the 1st quarter, .5% higher than previously reported, the U.S. Commerce Dept. said May 25. The gross domestic product growth was less than the 5.8% forecast by economists but topped the preliminary 4.8% increase reported last month, Bloomberg reported. GDP is the value of all the goods & services produced in the country. The government report showed that wages and salaries rose at a 5.8% annual rate in the 1st quarter, up from a 1.6% rate in the previous 3 months.

***Ready For Avian Flu? ...... as the pharmaceutical industry wants the U.S. government to take several steps to prepare for a potential outbreak of avian flu in humans.  Industry lobbyists are drafting model legislation to present to Congress that would create a new Harmonized Tariff Schedule category for drugs under development to respond quickly to the spread of disease.  Pharmaceutical companies are also worried that if bird flu virus spreads to humans, Customs and Border Protection and other agencies that determine the admissibility of people & cargo at ports of entry will quickly experience personnel shortages at the border.  The Bush administration earlier this month released its national response plan for an outbreak of avian flu. The Dept. of Health & Human Service is responsible for the medical response to an outbreak, including building stockpiles of vaccines, while DHS is in charge of the overall response.  Experts conservatively estimate that a worldwide outbreak could kill well above 50 million people worldwide. More

***U.S. & Vietnam For WTO ...... as they have reached an agreement on May 14 "in principle" on the Southeast Asian nation's terms of accession to the WTO, clearing one of the last major hurdles for it to join the global trade body. Pending U.S. Congressional approval, the agreement wraps up Vietnam's bilateral market access negotiations with individual WTO Members, a mandatory part of the accession process. Vietnam will extend to all Members equally the deepest liberalization commitments it agreed to under the different bilateral deals. Since the WTO requires consensus to take decisions, each Member effectively has a veto over an applicant's accession. The agreement will reduce Vietnam's tariffs on several industrial & agricultural products, as well as open services sectors such as telecommunications, energy, & banking to increased foreign competition. In return, Vietnam's trade will be subject to WTO rules, which should, for example, lock in access for its garment exports to the U.S. market, where they have thus far been subject to quotas.

***ACE On The Border ........U.S. Customs and Border Protection (CBP) has installed the Automated Commercial Environment (ACE) trade processing system in 2 border states -- Texas & New Mexico. All 13 land border ports in Texas as well as 2 ports in New Mexico &endash; at Santa Teresa & Columbus &endash; are now processing cargo using the ACE system to facilitate faster border crossings. One port remains to be completed in New Mexico. CBP's goal is to ultimately deploy ACE at all land border ports. CBP's next step is to complete its coverage of the southern border by extending ACE to California; it will then begin installation in the northeast. While ACE is currently focused on the trucking industry, it will eventually be implemented for air, rail & sea cargo as well. For now, CBP is encouraging truckers to establish ACE accounts for using electronic manifests (e-Manifests) which will eventually be required at all land ports. In operation, truck carriers file an e-Manifest through a web-based data portal or CBP-approved EDI (electronic data interchange) procedure. When a truck nears a border booth, a transponder signals its arrival & the e-Manifest for the cargo is retrieved. Currently there is a total of 41 ACE ports in Arizona, Michigan, Minnesota, North Dakota, Washington, Texas & New Mexico.

***Auto-Withdrawal Is The ACES ....... as U.S. importers & their brokers paid a record US$510.6M in customs duties & fees in April through the new automated, monthly payment process, Customs and Border Protection said. Last year CBP opened up the periodic payment feature in the Automated Commercial Environment (ACE). CBP said April's ACE receipts represent 25% of all duties & fees collected by the agency. CBP has collected more than US$4Bn through ACE since the program started in July 2004, when traders made US$84,000 in payments. By Aug. 2005, ACE payments had reached US$232M.  CPB will eventually move to require all traders pay their duties & fees through ACE.

***More Containers & Bigger ...... as the most growth last year in U.S. domestic intermodal increases came through movement of containers, which were up 8.4% over last year. Although there was a decline in the number of 48-foot containers, the use of 53-foot containers continues to grow. Volumes of 53-foot containers were up 31% during the quarter. Movement of Int'l freight continued to grow although not at as vigorous pace as had been experienced during the same period last year. Rail intermodal activity has shown gains for the past 5 years and is continuing into 2006. In 2005, the Intermodal Assn. of North America (IANA) reported a total of 13,641,872 moves, 11,057610 of which were containers and 2,584,262 trailers.

***China Has Major Steak In Deal ..... as after 2 days of talks in Beijing this month, the U.S. government said it's close to resuming beef exports to China. China, like many countries, closed its borders to U.S. beef imports in Dec. 2003 after the U.S. Dept. of Agriculture confirmed a case of bovine spongiform encephalopathy, or "mad cow" disease, in a Washington State cow.

***It Hass Started ...... as shipments of California Hass avocados have started to enter Mexico, the result of an agreement reached between the U.S. & Mexican government in Sept. 2005. The USDA has been negotiating with Mexico to open its borders to California Hass avocados since 1999. The agreement is expected to generate US$6M to US$24M for the California avocado industry.

***Korea On The Hot Spot ...... as the U.S. Dept. of Agriculture's Animal and Plant Health Inspection Service will start allowing imports of South Korea grown peppers, effective June 21. South Korea expects to export about 250 metric tons of peppers per month, or about 600 40-foot containers a year. Mexico, Canada, the Netherlands, & Israel have been the major exporting countries for peppers.

***UPS Asia & Latin America Business Monitors ...... as it is launching a study to better understand the business climate for small & medium-sized companies involved in the Latin America market. Atlanta-based UPS said the Latin America Business Monitor is the 1st pan-regional study of Latin American "small and medium-sized enterprises," or SMEs. The ongoing study will be issued annually, and is expected to identify emerging trends and examine topics specific to Latin America, such as political shifts and the projected impacts from trade with China and the rest of Asia, the integrated carrier said. "With this study, UPS hopes to provide another tool for executives in this sector to identify growth opportunities in a region that is without a doubt becoming one of the fastest growing & most active markets in the world," said Stephen Flower, president of UPS Americas. The 2006 UPS Asia Business Monitor is now published & expects trade this year between Asian nations to outpace even the robust trade still growing between Asia & the West -- read the results:

***UPS Taking On TNT? ..... as Scott Davis, CFO for UPS, commented during a conference call this month that UPS could be about to embark on a more aggressive acquisition strategy. Transport Intelligence reports that at the top of the UPS shopping list are Int'l freight forwarding & package delivery companies. This sparked additional speculation that TNT, the Amsterdam-based express and mail carrier, could be a possible target. Last year, UPS and FedEx were rumored to be considering U.K.-based 3rd party logistics provider (3PL) Exel for acquisition, but if that was true, Deutsche Post beat them to the punch. TNT Express had revenues of US$6.57Bn in 2005 and profits of US$588M. More

***FedEx Rolls With Watkins ....... as it acquired the less-than-truckload (LTL) operations of Watkins Motor Lines & certain affiliates for US$780M, payable in cash. Watkins Motor Lines, a privately held company headquartered in Lakeland, Fla., is a leading provider of long-haul LTL services. With over US$1Bn in annual revenue, Watkins will be rebranded FedEx National LTL & operate as a separate network within the FedEx Freight segment starting in 1st quarter of fiscal 2007.

***Clipper Cast Off ..... as Arkansas Best Corp., parent company of top 3 less-than-truckload carrier ABF Freight System, has reached an agreement to sell its Clipper intermodal subsidiary to Canadian firm Bluenose Holdings Inc. for US$20M. Clipper, which Arkansas Best acquired more than 10 years ago, had revenue of US$108M in 2005. First quarter revenue was US$25.7M, up 9.5%.

***Germany Marches On Russia ...... as Deutsche Post World Net, parent company of DHL, said it will invest US$250M over the next 4 years to develop its express & logistics unit's presence in Russia. For the 1st quarter of 2006, Deutsche Post World Net said DHL Russia's volumes jumped 30% compared to the same period in 2005, with particularly strong growth to express, air freight & supply chain shipments.

***Wal-Mart Outsources Major Centers ...... as it has hired American Port Services, a division of Schneider Logistics, to operate its new 3.4-million-square-foot import distribution center in Elwood, Ill. The Wal-Mart facility is located near Chicago, adjacent to the BNSF Logistics rail transloading yard, and will serve as a deconsolidation center for import shipments arriving via rail from the West Coast en route to Wal-Mart distribution centers & stores throughout the Midwest. Schneider Logistics, which did not provide terms of the contract, acquired American Port Services last Aug. Earlier this year, American Port Services signed a contract to provide warehousing and transloading services for Wal-Mart in Mira Loma, Calif.

***Eurinpro Does DHL Fashion ...... as it has opened a warehouse for DHL Exel Supply Chain in Tiel, the Netherlands, to be used mainly for DHL's fashion & apparel customers. The 200,000-square-foot-plus warehouse has 13,500 square feet of office space and a 10,000 sq. ft. mezzanine. The site offers expansion possibilities of up to 645,800 square feet. The facility has 40 loading docks, a free height of 35 feet & extra flat floors. Tiel is located close to the A15 highway linking Rotterdam & Nijmegen.

***Transport Biology ..... as gas really does cost an arm & a leg in places these days. Last weekend, a Manhattan Beach, California gas station posted signs saying the price of regular gasoline was -- an arm. The price of mid-grade -- a leg. The price of premium -- your first born. Steve Grossi's lease on his Shell station was expiring on May 29, so when he ran out of gasoline to sell on May 28, he put up the tongue-in-cheek sign. "It started as a joke," said Grossi, 51, who operated the station for 11 years before Shell decided to sell the property. "It's a neighborhood station and it was a joke for the neighborhood." Before he ran out of gas, Grossi was selling regular at US$3.499 per gallon, then up to US$3.699 for premium. When he was out of gas, Grossi, who had been an independent Shell station owner for 28 years, was out of a job. It was gas that got Steve Grossi in the end, a different part of his biology.

***In A Pickle ...... as Australian Customs officers thought something was fishy when they inspected a man's luggage and found jars of pickled fish on May 24. Closer inspection found 39 condoms of heroin inside the fish. Officers at Adelaide airport in S. Australia "became suspicious about pickled fish fillets inside jars found in the passenger's luggage," a Customs statement said. "Closer inspection revealed a number of condoms sewn inside the fish pieces," said the statement of May 25. A 32-year-old Australian man returning from Cambodia was arrested and will be charged with importing more than 2 kg (4.4 pounds) of heroin. The charge of importing a commercial quantity of drugs carries a penalty of life imprisonment and/or a fine of up to US$620,000. He almost got away, but for the shrewd Australian Customs inspectors knowing an obscure fact that Cambodian fish seldom use condoms!  Bravo!


  2. The Cargo Letter Financial Page ___

**APL. DOWN as 1st quarter core earnings before interest, tax & non-recurring items (Core EBIT) dropped 39% to US$123M.

**Atlas Air Worldwide Holdings Inc. (parent of Atlas Air & Polar Air Cargo). DOWN with a 1st quarter net loss of US$3.7M, compared to a net income of US$700,000 in same quarter 2005.

**A/S Dampskibsselskabet Torm. DOWN with1st quarter net profit of US$57.7M, down 25% compared to US$76.9M a year ago.

**British Airways World Cargo. UP with revenues of US$934M for its financial year ended March 31, up 3.3% compared to previous fiscal year.

**Delta Airlines. DOWN with a 1st quarter net loss of US$2.1Bn, compared to a net deficit of US$1.1Bn in prior year quarter.

**EGL Inc. UP with Q1 net income of US$11.1M or 27 cents a share, up from US$7.2M or 14 cents a year ago.

**Expeditors Int'l of Washington. UP with a 1st quarter profit of US$52.4M or 47 cents a share, up from US$30.9M or 28 cents in the previous 4th quarter. The company will undertake a 2-for-1 stock split.

**International Container Terminal Services Inc. (Philippines-based Int'l port operator) UP 41% in 1st quarter net income to US$7.1M. 

**Hapag-Lloyd. DOWN with a 1st quarter net loss of US$31.8M, said due to integration costs relating to its US$2.3Bn purchase of CP Ships last Oct.

**"K" Line. UP as net income increased 4 % to US$531.4M.

**Kuehne + Nagel. UP for 1st quarter with a 41.7% increase in revenues.

**Korean Air. UP -- more than doubled its 1st-quarter profit based on increased passenger & cargo demand and a stronger Korean Won. Its net profit was US$136M.

**Lufthansa Group. DOWN with last quarter net loss of US$126.5M (98 million euros) an improvement over a net loss of 116 million euros in the same quarter 2005.

**MOL. UP as net income jumped 16% in Q1 to US$1.06Bn.

**Nippon Yusen Kabushiki Kaisha. UP as net income jump 29% to a record US$783.7M in its 2005 fiscal year ended March 31.

**Panalpina. UP as 1st quarter net income jumped by 120% to US$20.6M from a year ago.

**RailAmerica Inc. UP with 1st quarter net income of US$15%, up a massive 142% compared to same quarter 2005.

**Regional Container Lines. DOWN as 1st quarter net income slipped 47% to US$17.8M, from US$33.5M in same period last year.

**Senator Lines. DOWN as operating income slumped 22% in 2005 to US$60.8M.

**Target Logistics. UP 130% as it earned US$610,000 or 3 cents a share for its 3rd quarter ended March 31, up from US$265,000 or 1 cent a year earlier.

**Trailer Bridge. DOWN with a 1st quarter net loss of US$1.8M, due in part to US$3.1M expense related to the dry-docking of one of its roll-on/roll-off vessels.

**UAL Corp. (parent of United Airlines) "UP" with 1st quarter net profit of US$23Bn, thanks entirely to non-cash reorganization gain related to its exit from Chapter 11 Bankruptcy protection in Feb.  Excluding the reorganization and special items, UAL actually posted a US$306M net loss for 1st quarter, compared to a net loss of US$302M in the 1st quarter 2005. The company ended the quarter with an unrestricted cash balance of US$3.6Bn.

**UPS International Package. UP as profits grew 13.5% to US$395M with an operating margin of 18.3%. Int'l volume grew to 1.7 million packages per day, an increase of 29.1%.

**Yang Ming Marine Transport. UP with net income of US$293M in 2005, down 5%.

***World Dumped ...... as the Nasdaq Stock Exchange will delist World Air Holdings following a series of delayed financial reports, effective May 22.  In April, World Air asked for a listing extension as it is yet to file its 2005 annual report with the Securities and Exchange Commission. The Peachtree, Ga.-based company has already been given three extensions by Nasdaq following similar delays to quarterly results. The company operates charter cargo & passenger airline World Airways. World Air said delays were related to acquisition of passenger carrier North American Airlines in April.

***Interpool, Inc. Pays Off ...... as the company (NYSE: IPX) will pay a cash dividend of US$.08 cents per share for the 2nd quarter of 2006. The dividend will be payable on July 17, 2006 to shareholders of record on July 3, 2006. The aggregate amount of the dividend is expected to be about US$2,280,000. The amount of the quarterly dividend is based on an indicated annualized dividend rate of 32 cents per share. It is the world's largest lessor of intermodal container chassis and a world-leading lessor of cargo containers used in Int'l trade. Interpool is corporate sponsor of The Cargo Letter Archive.

***New Horizons ....... as Horizon Lines said it intends to offer 5.75 million shares of its common stock -- 5.72 million shares to be sold by its equity sponsor, Castle Harlan Partners IV, L.P. & affiliates, and 30,730 shares to be sold by certain members of the company's directors & management. Horizon, a Jones Act ocean carrier & logistics provider, is not expected to issue any primary shares in the offering. The company said the offering is being made through an underwriting syndicate led by Deutsche Bank Securities Inc. & J.P. Morgan Securities Inc., who will act as its joint book-running managers.

***Hub Group Splits ....... as the 3PL has approved a 2-for-1 stock split, effective June 6. The split will be for shareholders of record as of May 22, Hub Group said in a statement.     

***Airline Profit & Loss For 1st Quarter          



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

  3. Freight Forwarder World Air Briefs ___ 

***U.S. Transportation Security Administration Tightens ...... as the TSA has announced new requirements to its air cargo rules, which are geared to protect the more than 50,000 tons of cargo moved daily on all-cargo & passenger airplanes. The new security requirements represent the 1st major changes to air cargo regulations in 7 years. Draft security programs will be made available to carriers and consolidators for comment concurrent with release of the final rule. Some of the air cargo rule's new requirements include:

* Consolidating roughly 4,000 private industry "Known Shipper" lists into one central database managed by TSA, which will let TSA have more visibility into the activities of companies shipping on passenger aircraft & permit more in-depth vetting of "Known Shippers"

* Requiring background checks of approximately 51,000 off-airport freight forwarder employees

* Extending secure areas of airports to include ramps & cargo facilities

* Unannounced inspection blitzes to add unpredictability to the inspection process.

* Using TSA screeners & equipment at airports to take radiographic images of cargo that is delivered directly to airport ticket counters.

* Expanded use of canine explosive detection teams in air cargo facilities.

Tighter air cargo security rules will require background checks for more than 100,000 employees of air cargo carriers and freight forwarders, & consolidate the "Known Shipper" list into a central database. There are an estimated 51,000 employees who work for freight forwarders outside the airport environment who will now be required to undergo criminal history background checks. TSA said in a statement that these new security requirements must be integrated into air cargo security programs over the next 6 months. The Airforwarders Assn. worked closely with the TSA & was part of the working group that delivered more than 40 recommendations for provisions of the air cargo rule. In related news, TSA has revoked the air carrier certification of forwarders J.H. World Express in Los Angeles and Inter-Shipping Chartering Corp. in Miami, and denied the renewal of the cargo security program for Aramex Int'l Courier in Washington, D.C.

***Istanbul Airport Suffers Cargo Destruction ....... as a huge fire destroyed most of the cargo terminal & delayed flights at Istanbul's Ataturk Int'l Airport on May 26 before firefighters brought it under control. Turkish officials speculated that the fire was started by an electrical short circuit or a spark from a welder's torch. They ruled out terrorism as a cause, but a Kurdish opposition group claimed responsibility for the fire. Most of the goods stored in the cargo facility, primarily textile products & gold shipments, were destroyed. Lufthansa Cargo said all of its warehouses at the airport were destroyed -- it has relocated its cargo handling office to the sales office at the airport. Lufthansa said all passenger & freighter services will operate as scheduled. The fire forced the closure of one runway, delayed flights & removal of parked cargo planes away from the burning building. Huge plumes of black smoke covered the area. Hundreds of firefighters responded to the blaze, which was brought under control after 4 hours with the help of firefighting planes that dropped water from the nearby Marmara Sea.

***China Flies To Sixth ....... as it will replace Canada as the world's 6th-largest Express market by 2010 if it continues growing at an average 20% per year, according to a report from Datamonitor. Datamonitor's "Express and Parcels Global Outlook 2006" rates China's express delivery market value at US$3.5Bn annually with growth attributable to increasing export activity with Europe & the U.S. Datamonitor said the overall U.S. market, dominated chiefly by UPS, FedEx & DHL and the largest worldwide, was worth US$65Bn in 2005.

***UPS WorldPort Grows ...... as the giant will begin a major expansion of its Kentucky-based advanced air package sorting hub, dubbed UPS WorldPort, which will increase sorting capacity by 60% to 487,000 packages per hour from the current rate of 304,000 packages per hour. The hub expansion, which will break ground later this year, is expected to cost UPS roughly US$1Bn and will be completed by Nov. 2010. UPS expects the expansion to create 5,000 additional jobs. The expanded hub will include three aircraft load/unload docking "wings" to the hub's building, along with high speed conveyor computer and control systems. These new docking bays will add another 40 airplanes to be unloaded, bringing the total to 84. The facility's square footage will increase from 1.1 milliion sq. ft. to 5.1 million sq. ft. At the facility UPS now relies on what it calls "smart label" technology that can send packages through WorldPort's 197 miles of conveyors in 8 minutes. The company says that UPS' WorldPort hub, previously known as Hub 2000, is the most technologically-advanced package sorting center in the world.  UPS Inc. also has begun a US$25M expansion of its air package hub near Chicago that will increase sorting capacity there by about 50%.

***FedEx Grows In U.S. Midwest ...... as it will spend US$164M to boost its parcel-processing capacity at Indianapolis Int'l Airport to handle growth in Int'l shipments. The expansion will increase capacity by 33% to 99,000 packages an hour from 75,000, FedEx said. Construction is scheduled be completed by Dec. 2008, a FedEx spokesman said. Plans call for a 400,000-sq. ft. expansion to the hub's existing sorting facility, and construction of a 175,000-sq. ft. secondary sort building & 2 maintenance buildings. The expansion will add as many as 800 jobs, bringing employment to nearly 5,000, FedEx said.

***Japan Airlines Wants More Freighters ..... as it has received its 1st 747-400 converted freighter from Boeing with redelivery in Xiamen, China. The modification of the former passenger plane to freighter started in Dec. The aircraft will now be used by JAL's cargo unit Japan Airlines Cargo. JAL has 8 firm orders of the passenger to freighter conversions with options for another 4.   

***Korean Air Orders More Freighters ...... as it has exercised options for 2 freighter conversion kits from its 2004 order to convert up to twenty 747 400-passenger planes into freighters, Boeing Co. said. A Chinese aerospace company is doing some of the conversion work, which will be completed by Korean Air's Aerospace Div. under license from Boeing.   

***Airbus Will Build More Freighters ...... as it has signed a preliminary cooperation agreement with Russian aerospace companies Irkut and MiG to convert A320 & A321 passenger planes into freighters beginning in 2011. MiGs?

***BA Bucks Freighter Trend ...... as following a strategic review of its services designed to address the eastern trade imbalance, British Airways World Cargo has decided to operate 3 freighters instead of 4 freighters.  

***United Airlines Pulls Together ....... as parent company UAL Corp. is consolidating its airport operations and cargo divisions into one organization.

***Kitty Hawk Buys Air ...... as it has reached agreement to buy LTL airport-to-airport carrier Air Container Transport for US$5K. The deal, through newly created subsidiary Kitty Hawk Ground, will fold in ACT's ground freight network that operates in California, Oregon, Washington, British Columbia, Colorado, Utah, Illinois & Texas. Last year, ACT had revenue of US$44.5M. It operates in 26 cities, offering air & ground freight delivery and local pickup & delivery services.

***Volumes >>> British Airways carried 404 million cargo ton-kilometers in April, up 1.3% from 398 million cargo ton-kilometers transported in same month last year. >>> Hong Kong-based airline Cathay Pacific transported 96,663 tons of cargo in April, an increase of 3.8% over last year. >>> Rickenbacker Int'l Airport in Columbus, Ohio, handled more than 19.7 million pounds of cargo in April, a 12.5% increase compared to April 2005. >>> United Airlines reported a 10.9% increase in cargo volume for April at 178.5 million system cargo ton-miles.

***Drop Trou ! ....... as Polish national airline LOT said this month that managers at cut-price competitor Ryanair would "drop their trousers" for extra publicity. It turns out LOT spokesman Leszek Chorzewski was right. Ryanair boss Michael O'Leary says he'll walk naked through Warsaw if LOT removes the fuel surcharge on its tickets by the end of this month. "I will walk down Marszalkowska Street naked," said O'Leary, known for his PR stunts and straight-talk with the media. He laid down the challenge on Ryanair's Web site. LOT, part of the Lufthansa-led Star Alliance, has used fuel surcharges to offset rising fuel costs. A year into operations in Poland, Ryanair aims to carry 1.6 million passengers this year and could expand its operations to carry 10 million by 2011 -- if the government loosens competition in the sector.           



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

  4. FF World Ocean Briefs _____________

***Ocean Not On Time ...... as only 57% of all liner vessels arrived on schedule between Dec. &  April, according to an ongoing survey conducted by Drewry Shipping Consultants, a maritime consulting firm based in London. Drewry's survey, which tracks 3,300 vessel arrivals on 23 different east/west and north/south trade routes, found the current percentage of liner vessel calls arriving on time during the period was 57%, with 22%  of all vessels arriving the day after the scheduled day, 7% making it two days late and 12 percent of vessels calling at the port of arrival three or more days late. According to Drewry's survey, the following routes experience some of the highest vessel schedule reliability: Transpacific, Asia/Indian Subcontinent/Middle East, North America mainland/Hawaii/Guam and the South American East & West Coasts trades to and from both Europe and North America. The routes with the lowest percentage of on-time vessel arrivals (less than 40%) include: Europe/Africa, North America/Africa and Europe/Caribbean/Central America with transit time delays of up to four days typical. To protect the integrity of their supply chains, Drewry is urging shippers, before they use additional carriers or import from new sourcing areas, to consider the schedule reliability levels of different carriers and the varying levels of delays of the trade route concerned.

***So You Think You Know Gridlock ....... as container volumes at ports in the Far East could jump as much as 157% to 487 million TEUs by 2020, according to a report by UK-based Ocean Shipping Consultants Ltd.  "Whilst the U.S. trade deficit continues to grow, the risk of a sudden, rather than managed, adjustment of exchange rates and trade flows will also increase. A sudden collapse in the dollar would strain the ability of the U.S. to continue financing its import boom & could place a sharp check on transpacific trade growth," OSG said. Even using a lower-growth scenario, OSG still expects a healthy increase to Asian container volumes, predicting an increase of 119% to 415 million TEUs by 2020. An even more extreme "increased-risk scenario" puts growth at 104% to 386 million TEUs.

***Pirate Attacks Up ..... as worldwide during the 1st quarter of 2006 attacks increased 8.9% to 61 incidents, compared with 56 in the same period of 2005, the Int'l Maritime Bureau (IMB) reported. The Bureau said 63 crew were taken hostage in the 1st quarter, more than double the number for the same period last year, with 13 crew kidnapped for ransom. The IMB reported no incidents in either the Malacca Straits or India.

***Watching The Fleet ........ as the Int'l Maritime Organization said it is studying proposals to track ships by satellite to fight terrorism. IMO's Maritime Safety Committee is considering the proposed adoption of new regulations on long-range identification & tracking (LRIT) of ships. IMO said the key to the system would be that data "derived through LRIT will be available only to the recipients who are entitled to receive such information and safeguards concerning the confidentiality of those data have been built into the regulatory provisions."

***Cargo Arrival Tip Off? ...... as the U.S. Coast Guard and maritime industry officials dismissed a recent New York Times report that the agency sometimes tips off cargo vessels about offshore security searches, saying there was no evidence the practice has compromised security and that cooperation is beneficial when surprise visits aren't necessary. According to the Times report, the Coast Guard frequently provides up to 24-hour notice of inspections in response to complaints from vessel operators that unannounced boardings at sea disrupt shipping schedules and cost the companies money. The paper said advance notices are given in some ports and not others at the discretion of the port captain. Critics said the notices could give terrorists time to escape, clean up discrepancies or hide evidence. The Coast Guard has boarded more than 16,000 foreign vessels & expelled or denied entry to 144 of them for not complying with provisions of the Int'l maritime security code that went into effect in mid-2004.

***U.S. Transport Employee ID ...... as the Transportation Security Administration (TSA) is considering requiring truck drivers to have a Transportation Worker Identification Credential (TWIC) in order to enter maritime facilities, according to information published in the Federal Register May 22. Drivers that currently hold a hazardous materials endorsement and have completed TSA's security threat assessment under 49 CFR part 1572 (background checks, etc) would not be required to undergo a new threat assessment for TWIC until their hazmat endorsement expires. These drivers would be required to provide a biometric for use on the TWIC and pay for enrollment services, credential costs, and appropriate program support costs. TSA is considering whether to incorporate the TWIC system into all modes of transportation, and is requesting comments from the industry. TSA also proposes to establish new user fees estimated to range from US$95 to US$149, depending on category. The TSA proposal is part of efforts by TSA, DHS, and the U.S. Coast Guard to secure port activity. To see the proposals: First -- Second

***Technology Is Ready -- But Not The Government ...... as the U.S. Dept. of Homeland Security is sitting on regulations to require seals on sea containers entering the U.S. because it doesn't want to conflict with new legislation spelling out how Congress expects the security measure to be implemented, a lawyer for the Customs and Border Protection division said. Two years after DHS made its initial request for a seal recommendation, the department is still in a holding pattern over issuing the regulation because 2 major pieces of cargo & port security legislation pending in Congress -- the Senate's GreenLane Maritime Security Act and the House's SAFE Port Act -- contain provisions with standards for container seals. Nero fiddled.

***China Says Pay THC In Advance ..... as a 3 year investigation into the collection of terminal handling charges (THC) at China's ports has ruled that liner conferences & freight discussion agreements must file such charges with China's Ministry of Communications from now on. At the end of 2002, the China Shippers' Assn. requested the investigation by the Ministry of Communication, the National Development and Reform Commission, and the State Administration for Industry & Commerce of China. THCs are common worldwide but were only introduced in China in Jan. 2002. Chinese shippers who export Free On Board have to pay the THC in their country, even though ocean transportation is arranged by the overseas consignees.

***Automated Cargo Inspection Debate ....... as the Dept. of Homeland Security officials say they have embraced an automated cargo inspection system being used by private sector terminal operators in Hong Kong, but caution that the concept still requires extensive testing before the government can consider using the system to scan every container. The Integrated Container Inspection System (ICIS) in use in Hong Kong has the ability to take radiographic images of containers, radiation readings, video, and optical scans of equipment identification numbers as trucks enter the terminal gate at normal speeds of 10 to 15 miles per hour, offering the potential advantage of conducting inspections without slowing down cargo operations. The system has captured data on hundreds of thousands of containers at the Hutchison International and Modern terminals in the port during the past 18 months, and was seized on by lawmakers during the Dubai Ports World controversy over lax port security as a way to protect from a terrorist attack. San Diego-based defense contractor SAIC combined several off-the-shelf technologies to develop the system. Officials are reviewing 21,000 data files supplied by SAIC to determine an acceptable alarm rate & threshold settings for warning signals. CBP has had to resolve 318,000 nuisance alarms since the agency began installing radiation portal monitors at U.S. ports of entry in the past 3 years, but hopes that advance spectroscopic technology that can differentiate highly enriched uranium & plutonium isotopes from bananas and ceramic tiles that contain radioactive elements, will reduce the alarm rate. CBP continues to deploy radiation portal monitors at U.S. seaports & land border crossings as a last line of defense against terrorist attack and has screened 80 million conveyances. So far the agency has installed 225 large-scale detection machines at seaports, through which 57% of all containers now pass. The recent completion of more monitors at the Port of Los Angles-Long Beach increased throughput through the machines from 41% in early March. By the end of the year, 80% of all sea containers will get radiation checks and by the end of 2007, when 621 devices are scheduled to be in place, that figure will rise to 98%. The 1st two mobile radiation portal monitors were recently deployed at the Port of Newark and 58 more will be available by the end of the year. DHS now physically inspects about 6% of the 11 million cargo containers that enter U.S. ports annually.

***Dubai Ports World Absorbs P&O ..... as it said May 24 it has reorganized its management structure to integrate the Peninsular & Oriental Steam Navigation (P&O) port terminal business it acquired for US$6.8Bn in March. P&O operated 29 container terminals in Europe, Asia, Australia & the U.S.  DP World is now the world's 3rd largest container terminal operator, with a combined capacity of 50 million TEUs. DP World said its terminal business will comprise 7 regions.  P&O's ferry, property & maritime services divisions will be managed by DP World's parent company, P&F World FZE.  DP World promised to sell the U.S. operation after Congress threatened to block the transaction because of security concerns about a foreign government from the Middle East controlling sensitive port operations.

***PierPASS Clears The Dock ....... as the nonprofit organization that administers the extended hours gate fee program in the Ports of Los Angeles & Long Beach, said last week that more than 2 million truck trips have been diverted from peak daytime traffic since the start of the OffPeak program in July 2005. OffPeak achieved its 1-million-truck-trips milestone in December 2005. Since the start of the program, from 30% to 35% of container cargo at the ports has moved during the new OffPeak shifts on a typical day. In recent weeks that percentage has surpassed 35%, far exceeding initial expectations for the program, PierPass officials said.

***Russia Sets To Sea ...... as the ice-free Port of Novorossiysk, Russia's only deep water, general-purpose port in the south, has embarked on a US$66M investment program to build a new 350,000 TEU container terminal, centered on the existing NLE facilities.  Phase 1 of the modernization and expansion program at NLE should be ready by the end of 2007 and the project is slated for completion by May 2008.

***Sinotrans Will Wait ...... as the State-owned China National Foreign Trade Transportation (Group) - also known as Sinotrans - has indefinitely delayed plans to spin off its cargo shipping subsidiary in Hong Kong due to a weak valuation. Sinotrans had initially planned to seek a listing for its dry-bulk cargo business to raise as much as US$500M through an initial public offering as early as the end of last year. The parent had already spun off its logistics subsidiary Sinotrans Ltd for Hong Kong listing in 2003. But the tough operating environment and deteriorating profit margins for the dry bulk sector has made listing less attractive.

***China Shipping Development Will Wait ..... as the Hong Kong-listed shipping company had decided not to spin off its dry bulk cargo business because of unfavorable market conditions. "Investors remain cautious about the China transportation industry. It is difficult to market the shares with a relatively higher pricing, as its domestic peers are all trading with low valuations," a fund manager said. China Shipping Container Lines, the world's 10th largest container shipper by operating capacity, is trading at 4.33 times 2005 earnings. "Profit decline in CSCL reinforces our conviction that a multi-year industry downturn has begun, represented by declining freight rates amid inflating operating costs," Morgan Stanley said in a research report. "We expect this downcycle to last until 2007 before any early tangible signs of turnaround may be seen in 2008." CSCL reported an 11% decline in 2005 profit to HK$3.47Bn, down from a year earlier.

***Kursiu Linija Line Acquired ....... as Iceland's Eimskip, a subsidiary of Avion Group, has acquired a 50% equity stake in Lithuania-based European short-sea container shipping line Kursiu Linija. In April, MacAndrews, a UK based short-sea carrier owned by French carrier CMA CGM, confirmed that it was discussing possible linkups with Kursiu Linija. Under terms of the deal with Eimskip, Kursiu Linija will retain its existing management. Established in 1995, Kursiu Linija operates 6 vessels ranging from 300 to 650 TEUs calling on 3 services: between the Baltic States and Poland and the UK and Benelux; between Germany and Kaliningrad; and between Germany and Lithuania and Sweden. Kursiu Linija moved 140,000 TEUs last year and posted revenue of US$59.2M, a figure expected to rise to about US$77.2M for 2006.

***FMC Investigates ...... as the U.S. Federal Maritime Commission (FMC) has instituted an investigation into possible Shipping Act violations by 3 NVOCC's suspected of accepting shipments from ocean transportation intermediaries that did not have required FMC tariffs or bonds. The FMC issued an order of investigation and hearing May 11 to look into accusations against Euroamerica Group Inc., based in Jessup, Md.; Tober Group Inc., based in Brooklyn, N.Y.; and Container Innovations Inc., based in Kearny, N.J. The FMC ordered public hearings.

***License Revocation ..... as the FMC has revoked 23 OTI licenses for failure to maintain valid bonds. The firms are ACME International, Chicago; American Freight Liners, North Brunswick, N.J.; Asiana Transport, Atlanta; Carjam Shipping, Miami; Dietrich-Exccel, Miami; eKKa Forwarding, Ridgefield Park, N.J.; First Unicorn International, El Monte, Calif.; Frederic Int'l Co., City of Industry, Calif.; Global Tassili Transport Services, Houston; J&S Universal Services, Miami; James Worldwide, Carson, Calif.; Johnny Air Cargo, Woodside, N.Y.; MLR Exports, Miami; Novocargo USA, Barnegat Light, N.J.; One Stop Cargo Services, Miami; Pacheco Express Shipping, Bronx, N.Y.; Pacmil Logistics, San Diego, Calif.; Sage Freight Systems, Jamaica, N.Y.; Surf Carriers, Miami; Thomas E. Flynn & Co., Miami; Unified Parcel Express, Jamaica, N.Y.; Venture Logistics, Miami; and Vertex Freight Systems, Miami.

***Oily Hands ..... as the U.S. Attorney in the E. District of Texas has indicted the chief engineer of foreign-flag tanker M/T Pacific Ruby for deliberately discharging oily waste & concealing the act in vessel's log books. Chief Engineer Kun Yun Jho of Korea allegedly tricked vessel's oil detection system by using a screwdriver to force open a valve that allowed fresh water to circumvent the system. He provided the U.S. Coast Guard with false records during inspection in Port Neches in the Gulf of Mexico. Activity occurred between Oct. 2004 & Sept. 2005. If convicted, Jho faces up to 5 years in prison on each count of the indictment.

    ***Singapore Still #1 ..... as container throughput at the Port of Hong Kong just beat Singapore in April after it handled 1.99 million TEUs, up 8.8% compared to same month 2005. Hong Kong's Kwai Chung container terminal posted volume growth of 10.8% to 1.3 million TEUs. The port's other terminals reported 4.3 % improvement to 700,000 TEUs in April. The Maritime & Port Authority of Singapore gave a figure of 1.95 million TEUs in April, up 3.6% compared to 1.89 million in same month 2005. For the year to date Singapore's container throughput is up 4% at 7.72 million TEUs while Hong Kong's has witnessed 5% growth to 7.32 million TEUs. In 2005, the port of Singapore handled 23.2 million TEUs, making it the most productive port in the world, while Hong Kong came in 2nd with 22.4 million TEUs.

***Throughput >>>  Jurong Port in Singapore handled 71,000 TEUs in April, down 10.1% compared to 79,000 TEUs in same month last year. >>> Ports of Los Angeles & Long Beach increased 10% in April to a combined 1.3 million TEUs, compared to 1.2 million TEUs in same month last year. >>> Port of Marseilles-Fos in South East France, increased 5% after the first 4 months of 2005 to 315,000 TEUs. >>> Port of Savannah handled 173,415 TEUs in April, up 12.7% from the same month last year.

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

1775 - Benedict Arnold captures British sloop and renames her Enterprise, 1st of many famous ships with that name.

1801 - Tripoli declares war against the U.S.

1850 - Navy sends USS Advance & USS Rescue to attempt rescue of Sir John Franklin's expedition, lost in Arctic.

1882 - Commodore Shufeldt signs commerce treaty opening Korea to U.S. trade.

1912 - U.S. Navy establishes North Atlantic Ice Patrol following RMS Titanic disaster.

1917 - 1st underway fueling in U.S. Navy, USS Maumee fuels 6 destroyers in North Atlantic. LCDR Chester W. Nimitz served as Maumee's executive officer & chief engineer.

1917 - 1st U.S. convoy to cross North Atlantic during World War I leaves Hampton Roads, Va.

1945 - Nine U.S. ships damaged by concentrated kamikaze attack off Okinawa.

1960 - USS Triton (SSRN 586) completes submerged circumnavigation of world in 84 days following many of the routes taken by Magellan & cruising 46,000 miles.

1973 - Launch of Skylab 2 mission, which was first U.S. manned orbiting space station. It had an all Navy crew of Capt. Charles Conrad Jr. (commanding), Cmdr. Joseph P. Kerwin, and Cmdr. Paul J. Weitz.

1980 - 55 women become 1st women graduates from the U.S. Naval Academy.                                 



   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!! Don't miss the pirate attack on  M/V Seabourn Spirit

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. You will be amazed.

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

See our new feature for May 2006: "Vine Ripened Tires"

See our newest photo feature "Singles Only" - Transportation Disasters Told In A Single Photo!

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..............

 About 419 "Advance Fee" Scams ....... named after section #419 of the Nigerian penal code which addresses fraud schemes.

  **419 Eater

  **419 Coalition

  **Operation Global Con ....... 556 arrested in 419 schemes, May 2006

  **U.S. Secret Service "419" Or "Advance Fee" Fraud Update

Broadband for Everyone&emdash;in Singapore

Does The Containerization of Cargo Actually Date To 1830?

Finding The RFID Tipping Point

Forklift Safety

High-tech Ideas For U.S. Border Security

How To Find The Right 3PL For The Job

Int'l Maritime Organzation Repot of Piracy & Armed Robbery Against Ships &endash; 1st Quarter 2006

Managing The Reverse Supply Chain

Maritime Administration (MARAD) 2006 Report: Competition in the Noncontiguous Domestic Maritime Trades

Outsourcing To A 3PL

3PL Solution Selector

Podcast: How to Motivate People

RFID Itmem Level Tagging

Time for U.S. Private Sector Investment in Transportation -- May 23, 2006 Remarks of Secretary of Transportation Norman Y. Mineta

U.S. DoD Offers Free Anti-Spyware for Personal Use

WMS: Fundamental To Order Picking



 AssistWare Technology, Inc. ......... a small video camera & machine vision technology to watch the road ahead & alert drivers if they unintentionally leave their lane, or if the driving pattern becomes erratic.

Seas In Risk ........  1st maritime risk map shows all piracy attacks since 2005.

Ship Shape .......wireless computing and data collection infrastructures for ports, intermodal, and container yard environments -- free kit.

World Freight & Logistics Directory CD-ROM 2006



Transport Events

World Trade Organization Events

Air Cargo India 2006 ........ Nov. 16-18, 2006, World Trade Center in Mumbai.

Council of Supply Chain Management Professionals .......... 15-18 Oct. 2006 Henry B. Gonzalez Convention Center, San Antonio, Texas

Freight Russia 2006 ......... 24 - 26 Oct. 2006, Expocentr, Moscow, Russia

G8 Summit ........... 15 July, St. Petersburg, Russia

Global Automotive Logistics 2006 ......... 17- 18 Oct. 2006, Hilton, Antwerp, Belgium

Intermodal Exhibition & Conference 2006 ........... 5 - 7 Dec. 2006, Hamburg Messe, Hamburg, Germany

The Next Generation of Lift Truck Productivity........ Video Webcast Available On-Demand

New Trends to NAVIGATE Transportation's Perfect Storm ........ Wed., June 14 at 2 pm EDT- Live.

Optimized Fleet: Driving Innovation in Asset Monitoring ......... June 26, 2006, 1-5:30pm, Intercontinental Hotel, Atlanta, GA.

Shipbuilding-Machinery & Marine Technology Int'l Trade Fair ..........Sept. 26-29, 2006 -- Hamburg, Germany.

TOC2006 Americas ......24 - 26 Oct. 2006, Fairmont Princess, Acapulco, Mexico

Towing Vessel Inspection Working Group of the Towing Safety Advisory Committee (TSAC) ..........  July 19 & 20, Arlington, Virginia.

Transtec 2006................ 25-28 Sept. 2006,Int'l Euro-Asian conferences on transport, St Petersburg, Russia


FOR FUN>>>>>>>>>

17th Annual Championships of Sand Sculpture ....... Sept. 5-10, Vancouver, BC

Beautiful Earth

Bungy Zone

El Toro Marine Corps Air Station ......... 3 years to remove the runways!

Goodyear "Name The Blimp"

How Real Is Poseidon?


Poupon U

Railroad Radio Communications Network

SHOUTcast ........ live rebroadcast of railroad radio communications in Fostoria, Ohio.

Tornado Hits El Reno Airport in Oklahoma ......... amazing video

U.S. Navy Ex-Aircraft Carrier Sunk, 'Reefed' off Pensacola



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

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

Northern Ins. Co. of NY v. Chatham County

U.S. Supreme Court

April 25, 2006, No. 04-1618

County not entitled to sovereign immunity in admiralty law: The U.S. Supreme Court ruled that a county is not entitled to sovereign immunity in admiralty law when it is not acting as an arm of the state. In the instant case, plaintiff's insured incurred damages as a result of a collision between the insured's boat and the county's malfunctioning drawbridge. The event was a collision because the bridge malfunctioned & fell onto the boat. Plaintiff insurer paid the claim and then sought recovery from the county, which asserted the defense of sovereign immunity. The Supreme Court held that sovereign immunity is a fundamental aspect of the sovereignty which the states enjoyed before ratification of the Constitution, but such immunity was not extended to lower levels of government. Further, the Court held that, in general maritime law, there is no distinct sovereign immunity against in personam admiralty suits that bars cases arising from a county's exercise of core functions with regard to navigable waters. Read The Opinion


American Home Assurance Co. v. Hapag Lloyd Container Linie, GMBH

U.S. 2nd Circuit Court of Appeals

May 3, 2006, No. 04-5606-cv

Agency, the Himalaya Clause, & COGSA: The court ruled in an action to determine the applicability of the limitation of liability provision of the Carriage of Goods by Sea Act (COGSA), that an agent may extend the benefit of the Himalaya Clause to a subcontractor. In the instant case, the shipper (plaintiff's insured) contracted with defendant carrier for transport of cargo from Chicago to Singapore. The shipper hired an agent to arrange for the portion of the shipment from Chicago to Long Beach. The agent contracted with a railroad company for that portion of the shipment. The cargo was damaged when the railroad train derailed. Plaintiff paid the insurance claim and brought this action as subrogee. The bill of lading invoked the $500 per package limitation of liability from COGSA. The agreement also included a Himalaya Clause extending the application of the COGSA limitation of liability to subcontractors. Plaintiff contended that the Himalaya Clause did not apply because the railroad was a sub-subcontractor, not a subcontractor. The court held that, in this case, the railroad was a subcontractor because, while there was a middleman between the carrier and the railroad, the middleman acted solely as an agent and not as a party to the contract. Read The Opinion


Ferrostaal, Inc. v. M/V Sea Phoenix

U.S. 3rd Circuit Court of Appeals

May 3, 2006, No. 05-1837

COGSA does not incorporate "fair opportunity" doctrine: The court ruled that the Carriage of Goods by Sea Act (COGSA) does not incorporate the "fair opportunity" doctrine. In the instant case, plaintiff shipper arranged for the shipment of coils of steel from Tunisia to the United States on defendant ship. The cargo was allegedly damaged en route and plaintiff asserted that the carrier was liable for the full amount of the damages because it had not provided the shipper with a fair opportunity to declare a value higher than the US$500 per package limitation of liability provided for in COGSA. After a thorough examination of carrier liability law prior to enactment of COGSA; the goals of the legislation and the underlying Hague Convention; and the various decisions asserting the "fair opportunity" doctrine, the court concluded that COGSA provided for no such doctrine. Rather, the court held that under COGSA, the shipper has the burden of establishing that it has declared the nature and value of the cargo and inserted the declaration in the bill of lading. Read The Opinion 


Halliburton Energy Services, Inc. v. Denet Towing Services, Inc.

U.S. 5th Circuit Court of Appeals

May 5, 2006,  No. 05-30723

Pennsylvania Rule not insurmountable: In an unpublished decision, the court affirmed the ruling of the trial court that, under the facts of the case, violation of various Coast Guard regulations by the master of a tug did not result in the tug being liable for damage to a barge being towed by the tug. In the instant case, a barge loaded with barite was being towed on the Mississippi River Gulf Outlet (MRGO) when it suddenly listed to port, submerging the port bow and discharging a quantity of cargo into the waterway. The owner of the barge and the cargo brought suit against the tug owner for damage to the barge, loss of cargo, and removal costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Evidence indicated that the barge had cracks and wastage at and below the waterline. Evidence  also showed that the master had been on duty for eighteen and one-half hours in the 24 hours immediately prior to the incident and that he failed to have a second licensed operator on board, both in violation of USCG regulations. The appellate court concurred with the trial court's determination that the violations were unrelated to the cause of the incident and, thus, the burden-shifting rule of the Pennsylvania decision did not apply. Read The Opinion 


Crowley Marine Services Inc. v. Maritrans Inc.

U.S. 9th Circuit Court of Appeals

May 8, 2006, No. 04-35724

The tugboat Sea King, operated by Crowley Marine Services (Crowley), and the oil tanker Allegiance, operated by Maritrans Inc. (Maritrans), collided in the Puget Sound.  The district court ruled the ships were operating in concert, which qualified as a "special circumstance" under Rule 2 of the International Regulations for Preventing Collisions at Sea (COLREGS).  Therefore, the court did not apply COLREGS Rules 8 and 13 when assigning liability.  The 9th Circuit reversed, holding that the plain meaning of Rule 2 dictates that it be applied only to circumstances where it is "necessary to avoid immediate danger," a situation that was not alleged in this case.  The 9th Circuit remanded to the district court to reassign liability after taking into account violations of COLREGS Rule 8 & 13.  REVERSED AND REMANDED. Read The Opinion


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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