Law Offices of Countryman & McDaniel
THE CARGO LETTER 
Air & Ocean Logistics - Customs Broker News
30 November 2004
Good Tuesday 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." Here's what happened during Aug. 2004 in the supply chain. After years of controversy -- the "Kirby Case" in our Section 7 -- finally sets the forwarding industry at well earned ease.
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 _____________
***Miscellaneous Matters Matter...... as the U.S. Senate passed a tariff & trade adjustment bill Nov. 19 that includes measures to modernize Customs procedures, extends normal trade relations to Laos & Armenia & repeals a 1916 Antidumping Law that was ruled in violation of U.S. obligations by the World Trade Organization. The 299-page Miscellaneous Trade Bill also suspends or reduces duties on hundreds of imported goods not produced domestically & traded in small volumes. The bill passed the Senate by a 88-5 vote. The same bill passed the House Oct. 8. The 1916 Antidumping Law allows U.S. companies to sue overseas producers for triple damages for dumping goods on the American market with the intent to hurt domestic producers. No plaintiff has ever collected damages under this law. However, the European Union & Japan challenged the law in the WTO. An amendment to the bill helps CBP implement its new account-based monthly payment system for duties & fees by extending the payment due date to 12 business days, from 10 business days. The bill now goes to President Bush for signature.
Read the bill. (Search - Bill Number H.R. 1047)
***Less Is Not Enough ...... as the U.S. Commerce Dept. said the U.S. trade gap narrowed 3.7% in Sept. to US$51.6Bn as oil imports fell & exports of U.S. goods & services rose to a record. However, the deficit was still the 3rd-largest ever. The record gap was US$55Bn in June.
***Fructose Wars ........ as the Bush Administration told the Senate Finance Committee it's prepared to drop the Dominican Republic from the recently negotiated Central American Free Trade Agreement (CAFTA). The U.S. added the Dominican Republic to CAFTA in Aug. Other members of CAFTA are Costa Rica, El Salvador, Guatemala, Honduras & Nicaragua. The Bush administration said the Dominican Republic's recently imposed 25% tax on beverages containing high fructose corn syrup (HFCS) was "incompatible" with its obligations under the free trade agreement. U.S. trade representative Robert Zoellick told Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, in a recent letter that the Bush administration is willing to "move forward, if necessary, with a regional free trade agreement that includes the U.S. & our 5 Central American partners, but not the Dominican Republic." Grassley, who represents many corn growers in Iowa, has been an outspoken critic of countries that tax high fructose corn syrup imports. He recently targeted Mexico, which has a similar tax on this commodity.
***Running Out of Road ....... as a U.S. transport study shows that the nation's rail & road systems will not be able to cope with projected growth in both domestic freight & import-export tonnage by 2020, the Financial Times reported. The article quoted the findings of a study carried out by the American Assn. of State Highway & Transportation Officials (Asshto) which indicated that the volume of domestic freight will increase by 57% while import-export freight will nearly double by 2020. According to Asshto, the U.S. highway system - which currently carries 75% of the domestic freight volume - will not be able to take on the extra demand, mainly due to increasing congestion and the social, economic & environmental costs of adding new highway capacity being prohibitively high. Many U.S. states are now looking at expanding their rail systems to provide a more cost-effective way to transport freight; with fuel presently accounting for 9% of rail transport costs, as opposed to 40% in trucks. However, Asshto pointed out in the article that many railway companies have complained their cost of capital, put at 10%, exceeded their return on investment of 8%, preventing them from making any long-term investments to upgrade infrastructures. One of the major railway operators is reportedly using GPS as a solution to the problem to better judge distances between trains in a move to help increase throughput by "spacing trains more intelligently". But, the report stated that most industry observers feel private-public partnerships to raise funding could be the ultimate solution.
***But Plenty of River ........ as the Mississippi River system which has access to more than half of U.S. consumers may be the savior for shippers who are constantly facing problems with overcrowded roads & railways, according to the Financial Times. The report points out that at present only a fraction of U.S. freight is transported by river, describing the Mississippi River system as "one under-utilized, low-cost transportation route that stretches from the Gulf of Mexico to the Great Lakes & reaches 60% of U.S. consumers along the way". The president of the Port of New Orleans, situated at the mouth of the 2,300-mile river, Gary LaGrange said "we're starting to use the Mississippi as a way of bypassing transport bottlenecks". Osprey Line, which is based in Houston, is trying to offer container services between New Orleans, Baton Rouge, Memphis & Chicago which is linked to the Mississippi by the Illinois-Michigan canal. In the U.S., it is 6 times cheaper to use river freight compared to road freight, but it takes much longer. An Osprey spokesman said "The cost by truck is US$40 a ton, but by barge it's $6 a ton. So it's a question of how much is that additional speed by road worth?"
***China's $$ Welcome Mat ...... as the mainland's Ministry of Commerce (MOC) has predicted that Foreign Direct Investment (FDI) in China this year is expected to reach over US$62Bn, compared to last year's total of US$53.5BN. The MOC was also quoted by the news agency saying that FDI rose 21% to US$48.69Bn in the 1st 9 months of the year, compared to the same period last year. The vice director of the MOC's foreign investment section, Deng Shan, said that the PRC was expected to import more than US$500Bn worth of goods this year. The balance is there.
***Inventing The Chinese 3PL ....... as a survey conducted in China reveals that more than half of all companies surveyed are not happy with existing third party logistics(3PL) services available. The report said the survey was conducted by the mainland's Fifth Research Report of Supply & Demand Condition of the Chinese Logistics Market by Storage Assn. (catchy name), which interviewed a total of 353 companies, comprising 150 logistics firms, 98 manufacturing outfits, & 105 commercial and trading establishment. The findings showed that 56% of the manufacturers were not satisfied or entirely satisfied with the current 3PL services, while the rate of dissatisfaction among commercial & trading companies was much higher at 75%. Results indicated that "high logistics costs" was the main source of complaint, followed by inaccuracies in schedules & information provided. While most manufacturers would look for quality when opting for a logistics firm, the choice of commercial & trading companies was based on economic efficiency. But one problem for 3PLs is that the industry is suffering from heavy Chinese bureaucracy & needs help. One 3PL company said currently it has to register separate taxes & paperwork for its 100 branches but is not allowed to operate as one entity, which is affecting business, while another said overly complicated accounting practices were hampering growth of the business.
***Time For Your Yearly Physical ...... as border crossings at Laredo, Texas; Douglas, Ariz.; & Port Huron, Mich. have begun testing the Homeland Security Dept's new, increased border security technology on some visitors. The technology calls for fingerprinting, photographing & running checks on suspicious visitors. It has been in place at U.S. airports & seaports since Jan. 5, but officials want to pinpoint any glitches before the program extends to the nation's 50 busiest land crossings in the coming months. Local merchants complain the system could hurt tourism -- tourists from Douglas, Ariz.?
***Ink Shortage? ......... as the U.S. Transportation Security Administration will yet again delay until May 31 its requirement for states to conduct fingerprint-based background checks for drivers renewing or transferring their hazardous-materials endorsements. Also as expected, TSA said it would keep to the Jan. 31 deadline for starting fingerprint checks of new applicants for authority to haul those materials. "Under this exemption," the agency said in a special regulatory notice, "processing of security threat assessments for transfers & renewal of hazardous materials endorsements may begin March 31, 2005, & become effective May 31, 2005. TSA is not exempting new [applicants] from the effective date of Jan. 31."
***Paying The Piper's Driver ...... as after years of a buyers' market in which shippers enjoyed low rates, trucking companies are now insisting they be paid fairly, a top trucking executive said. Labor is one of many costs that have risen dramatically for motor carriers this year. Fuel costs have also skyrocketed & insurance remains expensive."Our industry has to be paid more for the services being provided," said Jerry Moyes, CEO of Swift Transportation Co., in San Antonio. The shortage of drivers in the truckload industry will force companies to raise wages by 30% in the next 2 years in an effort to attract & retain qualified employees, Moyes said. In the past year driver wages have risen 12% to 15% & the upward trend will continue, Moyes said at the joint annual conference of the National Industrial Transportation League, the Transportation Intermediaries Assn. & the Intermodal Assn. of North America. The average wage for a truckload driver is US$45,000 to US$50,000 compared with a private fleet average of US$72,000. Truckload carriers are experiencing a stunning 116% turnover rate, while private carriers only have to replace 4% of their driver pool each year, Moyes said.
***Intermodal Volume Surges ....... as the Assn. of American Railroads said intermodal volume totaled 233,788 trailers or containers in the week ended Nov. 13, the 2nd strongest week on record. Total volume was 11.7% higher than the same week a year earlier, with trailer volume up 12.1% and container traffic 11.6% ahead of a year ago. Railroad volume is considered an important economic indicator.
***Train Set ........ as the Canadian National Railway Co. & Union Pacific Railroad announced that they have reached a routing protocol agreement to streamline their exchange of rail traffic at major gateways. The agreement will help to reduce rail congestion at Chicago. Under the protocol, CN & UP have established a structured plan to direct rail traffic flows through the most efficient interchange locations, a change that will improve transit times & asset utilization for the customers of CN & UP. The new routing protocol will be implemented over a 3 month period. CN said: "With the significant amount of North American rail freight traveling over more than one carrier, we work continually with our rail partners to find new & innovative ways to improve customer service & rail efficiency. We firmly believe this routing protocol with UP will help to expedite shipments, generate more system capacity, improve equipment cycles & help to control costs." The major interchange points for traffic moving between CN & UP are Superior, Wis., Chicago, Salem, Ill., Memphis, Baton Rouge, La., and, via Burlington Northern Santa Fe, Vancouver, B.C. The routing protocol will result in a number of changes in traffic patterns:
- Rail traffic moving between Western Canada & Texas will now be consolidated & interchanged at Superior, avoiding the Chicago terminal & reducing handlings en route;
- Wisconsin traffic between Texas & Arkansas will move in a new run-through service to Salem in Southern Illinois, rather than being interchanged at Chicago; and
- Traffic moving between Eastern Canada & the South-Central U.S. will be interchanged at Memphis, avoiding congestion in Chicago.
Canadian National Railway Company spans Canada & mid-America, from the Atlantic & Pacific Oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, & Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, & Jackson, Miss., with connections to all points in North America. The Union Pacific Railroad is the largest railroad in North America, covering 23 states across the western 66% of the U.S.
***Robo Trains ......... as a number of U.S. railroads are considering using remote-controlled train technology for freight deliveries in Southern California to increase safety & service reliability, reported the LA Times. With the new technology, all railroad switching engines can be operated by remote control & do not require the presence of an engineer. The technology was 1st introduced 2 years ago & is currently used by Burlington Northern Santa Fe. Union Pacific, 1 of the 2 largest railroads in the U.S., is currently training operators at its freight yards in Orange, Los Angeles & Riverside counties. "The safety record is superior to the conventional approach," said the Union Pacific. Adding: "We believe remotes can match or surpass engineer-driven locomotives in efficiency." According to the article, the move to remote-controlled engines is part of a 3 year effort by the U.S.'s 7 major railroads to adopt the technology. However, the relevant workers' unions have not reacted favorably to the news -- this is a great shock. Strongest opposition comes from the Brotherhood of Locomotive Engineers & Trainmen, a powerful railroad union, which has launched a campaign against further development of the technology. It does not believe the technology is as safe as reported, moves less cars, but mostly it appears concerned that perhaps thousands of engineers will be out of a job. Timothy L. Smith, a Brotherhood spokesperson, was reported as saying: "The railroads have blindly jumped into this thing, thinking it will cure all their ills. With all the new technology, CEOs will not be happy until they can go to work & push a green button and have their life-size Lionel train set move automatically." Ah, but have you priced a Lionel Train Set lately?
***Inner Mongolia Rail Hub ........ as Western China's largest railway logistics center in the capital of the Inner Mongolia Autonomous Region, Huhehaote City, came into service on Nov. 16. The center consists of a multifunction office building, a goods yard, 2 modernized warehouses & a supporting transportation base in the city's Ruyi Development Zone spread over an area of 133,000 square meters, with a 60,000 square-meter storage facility. So bring on the Britney Spears unauthorized CD copies.
***Native Shell Collecting........ as in a major victory for Jazz Photo Corp. in its long-running legal battle with Fuji Photo Film Co., Ltd., the U.S. Court of Int'l Trade, in a decision issued this month, held that the process by which Jazz's principal vendor, Photo Recycling Enterprises, collects used camera shells in the U.S., and the processes by which Jazz's cameras are reloaded abroad, fully comply with the 2001 decision of the U.S. Court of Appeals for the Federal Circuit, and the 2003 decision of the U.S. Int'l Trade Commission. In ordering the release of imported containers of reloaded single use cameras held by U.S. Customs, the CIT found that Jazz had established by the preponderance of the evidence that Jazz's single use cameras had been permissibly repaired using shells collected from U.S. photo processors. Hence, U.S. duty paid.
***Taiwan Goes "E" Customs ..... as its head of customs services announced that the island would have its customs clearance services fully automated by 2005. Electronic clearing facilities are being introduced to achieve faster processing time as well as save money. The revisions are based on the Int'l Convention on the Simplification & Harmonization of Customs Procedures, or Kyoto Convention.
***Phoenix Int'l Freight Services Speaking With A Drawl ...... as it is opening a branch office in Charleston, S.C. Phoenix Int'l, founded in Chicago in 1979, has grown to become the largest American privately owned full-service Int'l freight forwarder/NVOCC and Customs broker based in North America. Last years sales surpassed US$450M
***China Speak & See ...... as Ningbo customs statistics show imports of cell phone cameras have increased by 1.071 million for Jan. to Oct, compared to same period last year.
***Let Go My Lego ....... as more than 10 tons of Chinese-made plastic toy bricks went up in smoke when the largest customs haul of illegal imitation Legos ever seized was incinerated. The bricks were crushed on Nov. 19 & burned to produce energy for the southern Finnish town of Lahti. Scandinavian environmentalists shouldn't worry: no toxins were found in the toys. The phony Legos, totaling more than 54,500 fake sets, were seized by Finnish Customs en route to Russia, said the Danish company that makes the genuine toys.
***Bifurcated Rail Crisis ...... as commuters waiting for a train to suburbs of New York City were surprised to see a boa constrictor lying on the tracks, but snake didn't block the rails for long. Passengers in Yonkers saw the 10-foot snake curled up on the tracks Oct. 13. "We couldn't figure out if it was alive or not," passenger Edith Beer said. "It was very thick. It had those rectangular markings." A few minutes later, while police debated what to do, a train rumbled into the station & "bifurcated the reptilian trespasser," said a spokesman for the Metro-North rail line.
2. The Cargo Letter Financial Page _____
**CP Ships. UP as net income was US$31M in Q3 compared to the restated US$27M in Q3 of 2003.
**Cronos. UP with a 124% rise in net income to US$2M on 10% higher revenue in Q3.
**Emirates Air. UP with a record net profit for the 1st half of financial year 2004-05 (April-Sept) of US$236M a 41% increase over the same period last year.
**Hyundai Merchant Marine. UP with net income soaring more than 10-fold to US$286M in the 1st 9 months.
**Lufthansa. UP with net profit US$155M in Q3, more than making up losses a year ago.
**Pacific CMA Inc. UP for 3ird quarter as net income was US$195,241 up from $116,144 for same quarter in 2003.
**Royal P&O Nedlloyd. UP with a net profit of US$107M for Q3, up from US$24M a year ago.
**Target Logistics Inc. UP with net income for fiscal Q1 ended Sept. 30 was US$245,723 compared with US$48,361 year earlier.
***Penny China ....... as it has been reported that Air China Ltd. will price the shares in its initial public offering (IPO) at between HK$2.35-3.10 (US$.30-.35), when it lists on the Hong Kong Stock Exchange in early to mid Dec., according to Dow Jones. The airline plans to raise up to US$750M by offering 2.81 billion shares, or 31% of its total shares. More details are expected soon, but Bloomberg estimated the airline would purchase another 46 planes by 2006 to greatly expand the line.
***Dollar China ...... as government-owned COSCO Container Lines plans to raise US$2Bn to US$3Bn from an IPO in Hong Kong. If confirmed, the IPO will mean a major change of policy for China's largest container carrier, part of the Beijing-based China Ocean Shipping Co. group, and will publicize its financial results for the 1st time. COSCO operates more than 120 container vessels totaling 256,000 TEUs. It is largest liner carrier in China & operates some 50 scheduled routes worldwide. In June, China Shipping Container Lines raised US$1Bn from its IPO on the Hong Kong stock exchange, by selling a 40% stake in the formerly state-owned company to the private sector.
OUR "B" Section: FF World Air News***
3. Freight Forwarder World Air Briefs _______
***Cancelled Stamps ........ as the U.S. Postal Service is expected to begin seeking approval for an increase in postage rates of at least 10% in 2005, the Wall Street Journal reported. A rise would raise the price of a 1st-class stamp to at least 41 cents. First-class stamps have increased 12% since early 2001, with the last increase coming in 2002.
***The Sino Rush .......... as 5 U.S. airliners competing for lucrative routes to China under the Sino-U.S. pact signed in July will have to submit their final bids to U.S. authorities by the end of Nov. The 5 lines in the running are the long-haul carriers Delta, American & Continental, & 2 smaller carriers, Hawaiian Airlines & North American airlines. However, Northwest is reported to have applied to operate a cargo route only. Up for grabs are 2 daily round trips from a major city in the U.S. to Shanghai or another larger city in China, which the Chinese authorities will introduce over the next 15 months. Delta estimates that the service to China will bring in an additional US$400M annually for the airline; Hawaiian Airlines said it will generate US$11M in tax revenue for the state of Hawaii; while American, which did not put a money value on the extra business, said it planned to fly 136,000 passengers to China the 1st year, added the article.
***Raising The Air Bar ...... as the Transportation Security Administration (TSA) has begun seeking views from the aviation & airfreight industries to set up security measures throughout the air cargo supply chain in a move to make it more difficult for terrorists seeking to use the air cargo transportation system for malicious purposes. Some of the initiatives being looked at include: creating a new mandatory security regime for domestic & foreign air carriers in all-cargo operations using aircraft with a maximum certificated take-off weight of more than 100,309 pounds; creating requirements for foreign air carriers in all-cargo operations with aircraft having a maximum certificated take-off weight of more than 12,500 pounds but no more than 100,309 pounds; creating Security Threat Assessments on individuals with unescorted access to cargo; enhancing existing requirements for indirect air carriers (freight forwarders); & codifying & further strengthening the Known Shipper program.
***Buy The Big Boy ........ as Boeing is looking to Asia for a 1st customer to buy its Boeing 777 freighter which it says will be cheaper to operate than any present or future cargo plane, Aviation Week & Space Technology magazine reported. Boeing is tight-lipped on who are the potential customers. A launch is expected over the next few months. According to the report, the official decision to offer the aircraft for sale was made this month for delivery in 2000 with 1st delivery in 2008. It will be the world's largest 2 engine freighter with a revenue payload capabiity of 222,000 pounds & will accommodate 27 standard pallets on its main deck & 10 in its lower cargo hold. Boeing is promoting the sale of the aircraft, which is based on 777-200LR, by assuring that it will be "the lowest trip-mile costs of any current or anticipated freighter". Boeing is predicting strong air freight growth in Asia, with a forecast that air cargo to & from the region will increase to 59% of the world's total from 48% by 2023.
***French Foil To Dreamliner? ........ as aircraft manufacturer, Airbus, is hoping to announce by the end of the year its plan for a new aircraft to compete with Boeing's new 7E7 "Dreamliner" jet, according to Reuters. The board of Airbus majority owner EADS will soon discuss proposals for developing the new A350 plane as a long-range version of its existing A330 widebody twinjet, the company's CEO, Noel Forgeard said, adding that he was "reasonably optimistic" the board would back the project. According to the article, the A350 is widely seen as Airbus's answer to the Boeing 7E7 in the expanding market for mid-sized aircraft. Airbus marketing chief John Leahy is reported to have said that they were looking at the A350 aircraft after airlines had asked if they could build an A330 that flew longer. "Will we launch the 350? I hope we do. A lot of airlines are hoping we do... I hope we have something more to say by the end of the year," he said. In addition, Airbus's CEO, Mr. Forgeard, was reported to have said that the company could now spend as much as US$5.22Bn to build "a direct challenger to the 7E7", which will seat as many as 300 people in 3 versions & offer airlines lower operating costs. The Wall Street Journal said that Airbus was expected to propose the competitor to the 7E7 to its shareholders EADS & BAE Systems in coming weeks.
***United Airlines Still Bleeding ....... as it has applied to a bankruptcy judge in Illinois for permission to reject its labor contracts with its 6 unions if it fails by Jan. to extract an additional US$725M of annual savings from its employees. The proposed cuts are in addition to the US$2.56Bn of concessions that unions have already provided. In its motion to the U.S. Bankruptcy Court in Chicago, UAL said its "urgent financial needs" demand the additional savings. It said these savings are the "minimum" it needs to secure financing for when it emerges from Chapter 11, and "eventually restore United to long-term financial health." In addition, its reported that UAL wants to cut its pension liabilities to secure the financing, and has also proposed that all employees' pay be reduced by 4% from Jan. 1 2005 until the company emerges from Chapter 11.
***Continental Airlines Hemorrhaging ....... as the 7th largest U.S. air carrier, said it will ask employees for US$500M in annual payroll & benefit givebacks in order to help the company return to profitability. The reductions are in addition to US$1.1Bn annual cost savings & revenue enhancements the airline had previously announced. The company has lost hundreds of millions of dollars since Sept. 11, 2001 & expects to lose hundreds of millions of dollars more in 2004. Swell.
***American Airlines Will Sit Out This Dance ....... as it has announced that it will delay the planned purchase of 54 Boeing aircraft, originally slated for delivery between 2006 & 2010. The delay will save the airline an estimated US$2.7Bn in expenditure, mostly between 2005 & 2007. American will delay delivery of 47 Boeing 737-800 jets by 7 years & 7 Boeing 777 aircraft by 6 years, according to a number of media reports. The airline said the delay would increase the airline's ability to restructure its finances; last month, the airline reported a US$214M loss for the July-Sept. quarter & predicted an even bigger loss in the 4th quarter.
***Thailand Says Yes, But Then Plays Chicken Card ...... as the government has given its initial approval for the state-owned Thai Airways to buy 8 Airbus commercial aircraft & 6 Boeing jets worth US$2.4Bn over the next 5 years. Under the deal, Thai Airways will buy 6 Airbus A380s super jumbos, one A340-500, one A340-600, & 6 Boeing 777-200 ERs. But according to Associated Press, a final deal with Airbus may be delayed because of trade disputes with the European Union over a row about Thai chicken exports to Europe. "Even though the Cabinet granted approval to the purchase of aircraft, officials have been instructed to only sign a letter of intent. We will not sign the contract until this issue is cleared," said a Thailand government official.
***Douglas MD-11 Is Their Single Breed ........ as Singapore Technologies Aerospace has delivered to Lufthansa the 1st of 5 MD-11 passenger planes it is converting to freighters for the German airline's cargo division. Lufthansa is standardizing its cargo fleet by replacing its five 747-200s with older MD-11s from its passenger fleet, bringing to 19 the number of MD-11s operated by the carrier. The rest of the planes are scheduled to be redelivered in Feb. Lufthansa hopes to enjoy the economies from operating & maintaining a single aircraft type, but also favored the MD-11 for its lower fuel consumption & extended range. We miss Douglas Aircraft & then McDonnell Douglas Aircraft of Long Beach, CA -- they brought us everything from the DC-3 (inventing the modern airline concept) to the MD-11.
***UPS Triples China ..... as it began the 1st of 12 new flights to China with MD-11 service to Shanghai in Nov. The new flights will triple current service from 6 to 18 flights a week & comes on the heels of UPS's 129% growth in China export volume in 3rd quarter.
***FedEx Has New China Home ...... as it has opened its China headquarters in Shanghai. In Oct, FedEx was awarded 12 additional weekly China-U.S. flights, bringing the total to 23. It has applied for another 6 weekly flights for 2006. The company 1st entered the China market in 1984 and by the end of the 90's had 10 branch offices there.
***China Southern Airline Co. Takes Two More ..... as it reports that its board of directors has given the green light to buy Northern Airlines & Xinjiang Airlines from its parent company. The US$1.8Bn acquisitions will increase the airline's fleet from 139 to 214 planes. Once there were a dozen or more airlines, but China continues the consolidation.
***Air India Grows New Wings ..... as it is planning to buy 50 aircraft from either Airbus or Boeing (who else is there?) -- so that it will have a fleet of 74 planes by 2013 after the purchase of the new aircraft & after phasing out older ones. The airline's current fleet comprises 15 Boeing 747s & 19 Airbus A319s.
***Please Return Your Nerves To The Full, Upright Position ....... as Baghdad's airport - former Saddam Int'l Airport -- may be aviation's closest thing to the Wild West. Last year, a civilian cargo jet was hit after takeoff with a shoulder-launched missile, & earlier this year a burst of automatic gunfire killed a passenger aboard an Australian C-130 Hercules transport. More recently, a bomb was found in the baggage of a passenger leaving Baghdad, prompting a warning from the U.S. Embassy. To lessen the threat of being shot or destroyed, pilots have adopted a "non-standard approach" for landings: The pilots arrive at 15,000 feet over Baghdad's airport & then descend sharply like screaming demons in a stomach-churning series of tight, spiraling turns that pin passengers deep in their seats & suspend their disbelief. After landing, crews perform a quick walk around to check fuselage & wings for bullet holes, artillery hits or RPG strikes. An underwear exchange facility will be established at the terminal this Dec.
***No Carry On - No Wear On .... as Canadian Neil Melly, 31, angry he was refused a plane ticket to Australia -- because he had no valid credit card -- at Los Angeles Int'l Airport, stripped naked, sprinted across the tarmac & climbed into wheel well of a moving jumbo jet on Nov. 3. Pilots of the Qantas Airways flight stopped the plane. Neil was coaxed out of the wheel well & arrested for trespassing. Melly had been reported missing to Royal Canadian Mounted Police & suffering from bi-polar disorder, a manic-depressive illness. What's in your wallet?
OUR "C" Section: FF World Ocean News***
4. FF World Ocean Briefs ______________
***The Pacific Log Jam Has Ended ........ as the Pacific Maritime Assn. of West Coast Terminal Operators declared last week it has cleared the backlog of ships waiting to be handled at ports of Los Angeles & Long Beach after 5 months of congestion. Hong Kong to New York via the Port of Los Angeles gateway, normally a 19 day transit, reached 26 days during the recent delays. However, it is not yet known whether recruitment of several thousand additional dockworkers, or cargo diversions, were the main factor behind easing of port delays in California. Most of the recent growth in eastbound Asia-to-U.S. container traffic was handled by ports other than Los Angeles & Long Beach as shippers & carriers diverted cargo to less congested ports, industry statistics for Sept. show. Citing PIERS statistics, MOL Research said in a report that eastbound traffic for Sept. rose 22% -- representing some 170,000 TEUs -- to about 935,000 TEUs. But in Sept., the ports of Los Angeles & Long Beach increased their combined inbound loaded container traffic just 5% -- or about 26,000 TEUs -- year-on-year to 574,314 TEUs. The balance between the total cargo growth & the modest growth in Los Angeles & Long Beach is believed to have been handled by Pacific Northwest ports, the Port of Oakland, and East & Gulf coast ports. For example, total box traffic at Seattle soared 33% in Sept. to 162,000 TEUs. The Ports of Los Angeles & Long Beach will now gain a federal ombudsman to monitor cargo conditions for the U.S. Transportation Secretary & Maritime Administrator.
***U.S. FMC Issues "NVOCC Service Arrangement" ..... as it has obtained the approval of the Office of Management & Budget for its proposed Form FMC-78 on the registration of the new "NVOCC Service Arrangement" between non-vessel-operating common carriers & shippers. NVOCCs wishing to obtain log-on IDs & passwords to enable them to file into the commission's automated system may begin the registration process. Form FMC-78 & its instructions, indicating the OMB control number, are now available online. On Oct. 27, the FMC voted to issue a notice of proposed rulemaking to permit NVOCCs to offer NVOCC service arrangements, or individually negotiated contracts between NVOCCs & their shipper customers. The contracts must be filed with the FMC. The New Rule.
***2006 Rate Warning ...... as Credit Suisse First Boston has warned in a report on Asian container shipping that a "major downturn" in the liner shipping market is probable in 2006, with ship capacity increasing much faster than cargo volumes. "It's a cyclical business," the investment firm said. "Unless economic growth and global trade is unexpectedly strong going into 2006, & port congestion effectively reduces the growth in global capacity, we believe that 2006 will see a major downturn in container shipping." Credit Suisse First Boston's analysis is based partly on forecasts of overall capacity & traffic made by Drewry Shipping Consultants. It predicts the global container fleet will soar about 14% in 2006, while traffic will rise only 9% to 10%. "We forecast that freight rates will fall substantially in 2006, which will mean a sharp earnings decline for the container shipping companies," the Hong Kong and Singapore-based analysts wrote in the firm's investment report. Forecasts show "a big gap" between expected supply & demand in 2006, with ship capacity predicted to go up about 14% in 2006 & traffic growth forecast to rise about 8%.
***Big Year For Japanese Lines ....... as buoyant market conditions & cargo volumes in the container, bulk & tanker shipping sectors helped all 3 of Japan's major shipping groups report better-than-expected increases in profits & higher margins for the 6 month period ended Sept. 30. Despite high fuel prices this year, Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K. Lines (MOL) & Kawasaki Kisen Kaisha ("K" Line) report each of their net interim profits exceeded US$250M, and promised their year-long net profits for the fiscal year ending March 31, 2005 would be substantially higher than their annual earnings in the previous fiscal year. Beware 2006?
***Dutch Hand Shake ...... as the Port of Rotterdam is using hand geometry technology in conjunction with a smart chip card to verify that truck drivers entering & exiting the port are who they say they are. Fraud is virtually impossible by using the biometric hand scan in combination with the CargoCard. The Port of Rotterdam system is a predecessor application to the "Transportation Worker Identity Program (TWIC)" now being developed by the U.S. Transportation Security Administration, which could ultimately involve 6 million workers at U.S. seaports, airports & railways. HandReaders automatically take a 3 dimensional reading of the size & shape of a hand & verify the user's identity in less than 1 second.
***U.S. Hand Shake ....... as truck drivers, longshoremen, harbor pilots & other workers are receiving a biometric card that verifies their identity for access to secure areas at the Port of Long Beach container terminal under a prototype test conducted by the Transportation Security Administration for a universal ID system. TSA is the lead agency for developing a Transportation Worker Identification Card that workers in the transportation sector can use to access multiple transportation facilities. Currently, individual terminals, airports, rail yards & intermodal facilities may each have separate access control systems requiring different badges. In Florida, for example, some truckers carry up to 13 ID different cards to enter each of the state's deepwater ports under a state law requiring ports to control access to their facilities. TSA said the prototype test will expand to 34 sites in 6 states & last 7 months. The next prototype sites are the Philadelphia Maritime Exchange, as well as Port Pensacola & Port Canaveral in Florida.
***Re-Shining Up The Apple ....... as Port of New York has sprung back to life with a dramatic surge of trade with China, which is increasingly producing goods for U.S. retail outlets. Trade through New York was "shrinking or flat" a decade ago, but had since the last 5 years grown faster than at any time since just after World War II. There had been a 65% increase in overall container traffic since 1998. Last year, the port handled goods worth US$100Bn, an increase of 12% over the previous year. A recent report states that the Port Authority of New York & New Jersey was "straining to respond" to the latest development, and the authority and the terminal operators had embarked on US$1Bn worth of expansion projects which included new cranes, bigger railyards, and new & enlarged new wharves. The Port Authority & U.S. Army Engineers have also started to dredge the harbor to allow it to accomodate the new generation of freighters. The work, costing US$2.25Bn, will continue round-the-clock, 7 days a week, through the next decade.
***Bad Boys Or No Phones? ..... as the U.S. Coast Guard has released its latest port security advisory, listing countries that have not provided the Coast Guard or the Int'l Maritime Organization (IMO) with data regarding port facility security compliance. The nations are: Albania, Benin, the Democratic Republic of Congo, Equatorial Guinea, Guinea-Bissau, Liberia, Madagascar, Mauritania & Nauru.
***C-PAT Not Enough ...... as the U.S. Customs-Trade Partnership Against Terrorism is "a very creative" program to get the private sector to improve supply chain security, "but it's not a substitute for regulations" in some areas to protect against terrorist smuggling of weapons or people into the U.S. in shipping containers, said Chris Koch, President of the World Shipping Council. U.S. Customs & Border Protection should continue to use C-TPAT as a tool to get at importers to pressure their foreign suppliers, who are outside U.S. regulatory jurisdiction, to ensure the integrity of shipments at their source, Koch told a Transportation Table luncheon gathering of journalists in Washington. But the recent implementation of the Maritime Transportation Security Act and related international ship & port facility security codes by the Coast Guard lessens the need to overlay C-TPAT requirements on terminal & vessel operators, said Koch, whose organization represents ocean carriers. Security measures such as verifying proper use of container seals should be imposed on the entire industry through regulation because importers & carriers will not be able to do it on their own, he added. The U.S. Dept. of Homeland Security is developing a proposed rule that would mandate use of some type of high-security seal & methods to verify it is properly applied.
***Container Club....... as shipping lines, container lessors & other organizations involved in the operation of ocean containers have formed a common association to cooperate on standards & other technical issues. Called "Container Owners Assn," the new London-based body held its inaugural meeting in Copenhagen Nov. 2, when it elected a board of directors. More than 30 container operators & lessors attended the association's 1st meeting, & 15 companies have already applied to join. Its board of directors comprises 5 executives from Maersk Sealand, CMA CGM, United Arab Shipping Co., GE SeaCo & Capital Lease.
***Neptune Orient Sells The Philippines ...... as NOL is selling its stake in Lorenzo Shipping, a Philippine-listed shipping & cargo concern operating out of Manila. NOL has signed a memorandum of understanding with National Marine Corp for proposed sale of all its shareholdings (28.68% of outstanding common shares & 82.19% of redeemable preference shares), according to Dow Jones.
***New Road To Hong Kong ...... as a new bridge is being constructed between Hong Kong & Shenzhen - two of the busiest ports in the world. The bridge, measuring 3 miles long, is a collaboration between both city governments & is being built to help ease congestion on the roads caused by the numerous trucks ferrying containers. The construction is now nearly halfway near completion with Hong Kong having already completed 40% of its portion, whilst Shenzhen only completed 7% of its construction project. Customs stations are expected in place by mid-2005. In 2003, Shenzhen handled 10.6 million TEUs - an increase of 40% year-on-year, while Hong Kong handled 20 million TEUs. Whereas in the 1st 10 months of this year, Shenzhen had already handled some 11.2 million TEUs - up 29% over same period last year.
***On The Waterfront ........ as Chuck Mack, director of the Int'l Brotherhood of Teamsters' Port Division, rejected an offer by A.P. Moller - Maersk Line to run an independent investigation into the Nov. murder of Teamster union representative Gilberto Soto in El Salvador. In a statement, Mack suggested the offer was insincere, claiming Maersk has worked hard to thwart attempts to unionize drivers at its facilities. Soto, a union organizer in New Jersey, was gunned down on a vacation trip to his parents' home. He had planned to meet with labor leaders & others about trying to organize port truck drivers in the country. Soto worked to organize port truck drivers in the U.S. Northeast. The Teamsters want to represent these workers, but so far has not been able to unionize the independent drivers.
***Port of Oakland Gets Deeper ...... as it has received Congressional approval to continue dredging work to make its harbor deeper & a program to support containerized goods movement between the Port & the Central Valley of California. The federal spending bill passed by the Congress includes US$27.5M for the Port's continued efforts to deepen its outer & inner harbor channels to a final depth of 50 feet, & an additional US$7M for annual maintenance dredging work. At present, the harbor is 42 feet deep and with the current dredging efforts underway, it's expected to bring the depth to 46 feet by early next year. "The 50 Foot Project is necessary to accommodate the next generation of container ships," said the Port. The federal bill also includes US$1M for the Port's California Inter-Regional Intermodal System (CIRIS), a freight rail shuttle between the Port of Oakland & the Central Valley. CIRIS will shift the flow of containerized goods movement from truck to rail in order to reduce traffic on the Bay Area & Central Valley highways. Port of Oakland is the 4th largest containerport in the U.S. & moves some US$26Bn worth of goods annually.
***New Age Port? ....... as China Shipping Terminal Development (CSTD), a subsidiary of China Shipping Group, has signed a terminal agreement with Jinzhou Port (northern China) to build a new container terminal along a 533 meter stretch of coastline & will have a depth of 15.4 meters. It is designed to handle 800,000 TEU per year & will feature 2 berths, each with a capacity to handle vessels up to 5,700 TEU. The parties will use a previous joint venture company - Jinzhou New Age Container Terminal - for the construction of the terminal, an estimated cost of US$61.6M.
***Paradise Costs More For Matson Navigation ....... as the Jones Act operator, said it will raise rates for its U.S. West Coast/Hawaii service an average of 3.5%, effective Jan. 3. "Rates will increase by US$100 per container & US$25 per vehicle," the Oakland-based shipping line said.
***When Biggest Is Just Not Big Enough ....... as CMA CGM will enlarge 4 ships already ordered from original capacities of 8,200 TEUs to revised capacities of 9,163 TEUs. The enlargement will be done by adding a cargo hold to each vessel. "To cope with the continuing market growth, the group has decided to jumbo-ize some of these vessels," CMA CGM said, referring to the series of 8,200-TEU ships it has ordered. The larger vessels will be delivered by the Hyundai shipyard in 2006-2007. CMA CGM has ordered 16 of the 8,200-TEU ships from the Korean shipyard. CMA CGM said when it ordered the 8,200-TEU ships earlier this year, "such capacity was considered one of the biggest vessel size ever built." Not to be outdone, China Shipping has ordered eight 9,200-TEU vessels for delivery in 2006 & 2007 and Maersk Sealand is rumored to be planning the construction of its own "very large" containerships. Earlier this month, China Shipping confirmed it has ordered an additional four 8,530-TEU containerships from the Hudong-Zhonghua shipyard in China. >> But beware expected 2006 rate declines?
***Self-Service ....... as unions representing dockworkers at Port of Rotterdam, supported by the European Transport Workers' Federation, have protested new rules approved by the Rotterdam City Council Nov. 2 that allow seafarers on board small ships to undertake cargo lashing & securing operations. Threatening the registered dockworkers' traditional monopoly over cargo handling in the port, the Rotterdam mayor & aldermen have decided to allow the crews of ships up to 170 meters (558 feet) long calling at the Port of Rotterdam to lash & secure cargo.
***U.S. FMC Says Stop Booking! ..... as it has revoked 16 Ocean Transportation Intermediary licenses for failure to maintain valid bonds. The firms are >>> Christian Bay Shipping Co. of Pass Christian, Miss.; DSR Shipping Co., Middlesex, N.J.; DRT Int'l, Medley, Fla.; Global Link Logistics, Atlanta; H&T Int'l Transportation (USA), Long Beach, Calif.; Kristen Brandimarte, Ocean, N.J.; Lion Exhibition Freight, Atlanta; Mediterranean Container Line, New York; Mi Hyun Sur, Gardena, Calif.; Orion Logistics, Miami; Planes Moving & Storage, West Chester, Pa.; Ros Forwarding, Miami; Shipping Int'l, Tarpon Springs, Fla.; Sunflower Van Lines, Los Angeles; Taekwang Logistics Corp., Gardena, Calif.; & United Trade Resources, City of Industry, Calif.
***Throughput ........ Fraser River Port, south of Vancouver, British Columbia, handled 27% more Int'l containers in the 1st 9 months of 2004, for a total of 234,000 TEU. >>> Hong Kong's ports handled 1.97 million TEU in Oct, up 11.3% over same month last year. >>> Port of Long Beach handled 557,665 shipments in Oct., a 28% rise from a year earlier & 5.2% above the previous record set in July. >>> Port of Marseilles-Fos throughput increased 9% to 765,000 TEUs in the 1st 10 months of 2004. >>> Port of Seattle had a record throughput for the month of Oct, which has seen the port break its best ever annual record of 1.54 million TEU in 1998 -- as the Oct. container volume was 192,131 TEU, an increase of 42% over the same month previous year & the projected annual figure is 1.72 million TEU. >>> Malaysian ports are expected to grow 11.7% in 2004, with 9.6 million TEU handled, in the 1st 10 months of 2004 & expected to reach 11.5 million TEU by year's end.
***Port of Tokyo Prepares For Heavy Foot Traffic ........ as after 5 decades & 27 movies, one might think Godzilla would have learned a thing or two about computer graphics & synthesizers. But in a new film next month, Japan's favorite mutant will storm through Tokyo harbor the old-fashioned way: in a huge rubber suit, stomping on handmade buildings & howling to the tune of a leather glove on a double bass string. Godzilla turned 50 years old on Nov. 3, still intent on testing the limits of hands-on moviemaking &emdash; and honoring tradition &emdash; with the monster's 28th film. On Nov. 29, Godzilla was honored with its own star in front of Grauman's Chinese Theatre on Hollywood Boulevard in Los Angeles. No casualties.
***Politically Correct Fog ........ as an official with the Canadian Coast Guard is dismissing concerns over the silencing of foghorns along its West Coast. The B.C. Lightkeepers' Union is calling for the reinstallation of foghorns following the grounding of a fishboat off the west coast of Vancouver Island earlier this month. The Union says vessels that travel the coast should get every aid possible -- including foghorns.
***He Now Can See The Light ...... as in 1985, Brian Calen of New York, claimed he was blinded in the right eye in a cruise ship accident -- then 7 years later, he said a ship's telescope blinded him again. Then he reported being blinded on 2 more trips - by a champagne bottle & a flying disc. All in the same eye! Calen's unlucky streak, which allowed him to collect more than US$1M in traveler's insurance proceeds, finally caught up with him this month when he was charged with insurance fraud & grand larceny. Calen took out insurance policies that covered losses while traveling on a ship & did not require a medical examination. In 1992, Calen collected US$75,000 after claiming the filter on a cruise ship telescope fell off, resulting in solar burn -- 5 years later, he collected US$1M after claiming he was blinded by an exploding champagne bottle on another cruise. Authorities said Calen had deliberately broken a bottle & injured himself with the shards. In 2002, Calen filed a claim for US$500,000, alleging he was blinded by a flying skeet disc on a riverboat cruise with a Civil War theme. Medical records showed he suffered retinal damage, but the cause was unknown. Calen could get five to 15 years in prison.
***This Month In U.S. Navy History
1776 - 1st salute to an American flag (Grand Union flag) flying from Continental Navy ship Andrew Doria, by Dutch fort at St. Eustatius, West Indies.
1890 - USS Maine, the 1st American battleship, is launched.
1922 - Cdmr. Kenneth Whiting in a PT seaplane, makes 1st catapult launching from aircraft carrier, USS Langley (CV 1), at anchor in the York River.
1940 - President Franklin D. Roosevelt appoints Adm. William D. Leahy as U.S. Ambassador to Vichy, France, to try to prevent the French fleet & naval bases from falling into German hands.
1942 - Loss of USS Juneau (CL 52) during Battle of Guadalcanal results in loss of the 5 Sullivan Brothers.
1943 - USS Nautilus (SS 168) enters Tarawa lagoon in 1st submarine photograph reconnaissance mission.
1969 - Navy astronauts Cmdr. Charles Conrad Jr. & Cmdr. Alan L. Bean are 3rd & 4th men to walk on the moon. They were part of Apollo 12 mission. Cdmr. Richard F. Gordon Jr., the command module pilot, remained in lunar orbit. During mission lasting 19 days, 4 hours & 36 minutes, astronauts recovered 243 lbs. of lunar material.
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 Oct. 2004: "Coal Face - The Cargo Was Danger"
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..............
Eight Best Practices for Disaster Recovery of Company Data
"Know Before You Go" .......... U.S. Customs & Border Protection for travelers -- new rules
Pay Back Period For RFID?
Port of Rotterdam Goes Paperless
Risk: A Financial View
Tariff & Trade Data Network ......... from U.S. Int'l Trade Commission
U.S. Customs Letter Rulings
U.S. Federal Maritime Commission ........has undergone realignment, resulting in a new organizational structure & reallocation of Agency resources.
Wealth & Travel Habits of America's 600,000 General Aviation Pilots
What RFID Can & Can't Do
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.
Fast Freight - Clean Air ......... Dec. 8 & 9 2004, Oakland Marriott City Center
How Can Real-Time Event Management Transform Your Supply Chain? ........ live Web event - Dec. 2, 2004 2 PM EST
LSP 2004 - Creating Profitable & Efficient Supply Chain Services.......Dec 6-8, 2004 in Miami, FL.
Sea Cargo Americas ........ May 11 & 12 2005, Miami.
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; Dec. 2 in Monterrey; Jan. 25 at Guadalajara; & Jan. 27 in Tijuana. Sponsors are the U.S. Commercial Service & the Mexican Trade Council.
The Art of Pumpkin Bombing
Beijing National Swimming Center ....... "Water Cube" for 2008 Olympics -- impressive.
Int'l Flotilla Conducts SINKEX 2004 ........ photos of sinking the ex-USS Hayler & ex-Research Vessel Gosport Nov. 12-14.
Int'l Space Station
NASA Airplane Movie Collection
RST-V Replacement For The Humvee
Wireless Internet Surfboard
OUR "E" Section: The Forwarder/Broker World***
7. New U.S. Transport Related Legal Cases ____
Norfolk Southern Railway Co. Vs. James N. Kirby, Pty Ltd.
United States Supreme Court
Nov. 9, 2004, No. 02-1028
U.S. Supreme Court upholds Himalaya Clause -- In a unanimous decision, the U.S. Supreme Court upheld the validity of the marine Himalaya Clause for an inland carrier. In the instant case, an Australian manufacturer shipped cargo from Australia to Huntsville, Alabama, via Savannah, Georgia. The shipper contracted with a freight forwarder for the shipment and the bill of lading issued by the NVOCC included a Himalaya Clause extending the COGSA liability limitations to servants of the ocean carrier. The NVOCC, as usual, contracted with a vessel operator (VOCC) for actual carriage of the cargo. The bill of lading issued by the VOCC likewise included a Himalaya Clause. The VOCC contracted with a railroad company for carriage of the cargo from Savannah to Huntsville. En route, the train derailed and the cargo was damaged. The shipper brought suit against the railroad, among others. The railroad contended that its liability was limited under COGSA by means of the Himalaya Clauses. The trial court agreed with the railroad, but this was overturned by the Court of Appeals for the 11th Circuit, which held that there was no privity of contract between the shipper and the railroad as required by state law. On review, the U.S. Supreme Court ruled that the contract was maritime in nature and the need for a uniform maritime approach is not affected by the fact that this damage was incurred during the inland portion of the transit. The Court held that whether a contract was an admiralty contract depended upon "'the nature & character of the contract' and the true criteria is whether it had 'reference to maritime service or maritime transactions.'" State interests in this matter cannot be accommodated without defeating the more important federal interest in efficient intermodal commerce. The court held that the railroad was entitled to avail itself of the COGSA limits of liability by means of the two Himalaya Clauses. The Court reasoned that the NVOCC, although not an agent of cargo interests, did act as a limited agent of the cargo owners for the purpose of accepting the liability limit in the contract with the VOCC. The Court concluded strict privity of contract between cargo & the VOCC was not necessary. In many ways this decision only confirms the industry rules we all learned years ago. Still, we breathe a sigh of relief. Read the case. Second version.
Scarborough Vs. Clemco Industries
U.S. Court of Appeals for the 5th Circuit
Nov. 23 2004, No. 03-30985
Jones Act Seaman May Not Recover Nonpecuniary Damages from Third Party -- that a Jones Act seaman or his survivors cannot recover nonpecuniary damages from a non-employer 3rd party. In the instant case, a seaman contracted (and eventually died from) silicosis while working as a sandblaster maintaining protective coatings on offshore oil platforms. Plaintiff seaman worked on vessels owned by defendant shipowner & wore allegedly defective hoods manufactured by defendant shoreside companies. The trial court held that plaintiff seaman (& then his survivors) were not entitled to recover nonpecuniary damages in the wrongful death suit against shoreside manufacturers. Plaintiff survivors appealed. The appellate court held that a Jones Act seaman is not entitled to recover nonpecuniary damages in a general maritime action & that the uniformity principle dictates the same result in this situation for survivors.
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)
| Cargo law Main Page | The Freight Detective | Transport Law Navigator | Claims Calculator |
| The Freight Detective General Investigations | The Freight Detective Transport Investigations |
| The Logistics Chain | Photo Gallery of Cargo Loss | Our Staff |
| Trans-Cams | Forwarder/Broker Industry Chat & Issue Discussion Board |
| Library & Search Engine of The Cargo Letter | Bookstore |
Back To Main Page