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by Alicia Rudnicki, Editor, The IRTA Report
Baltimore's heat and humidity were enough to slow the most earnest sightseer to a languorous stroll. But inside the blessed air conditioning of the Hyatt Regency on the Inner Harbor, Bill Bryant had us all thinking about avalanches-both real and metaphorical.
Bryant gave a bracing keynote speech at IRTA's sixth annual convention, June 22 to 23. He is the chairman of Bryant Christie, Inc., a Seattle-based marketing and consulting company that helps exporters negotiate the difficulties involved in international trade.
Bryant, who enjoys snow and ice climbing, said that June is avalanche season in the mountains around Seattle. To survive and succeed at mountain climbing, Bryant said, a climber must know a lot about different kinds of snow conditions, the warning signs of avalanches, proper equipment and climbing technique.
Shifting Environment
Comparing the "shifting environment" of the snowy high country to the global trade environment for fresh produce, Bryant warned his audience always to be prepared for change and unforeseen obstacles. He noted that to avoid business catastrophes it is necessary to pay attention to "warning signs" such as the evolution of international demographics, trade trends and technology. For more information about Bryant's comments, see page 7 of this issue, where we have reprinted Ken Cottrill's excellent article from Traffic World Magazine about Bryant's speech.
Staying on Your Feet
Attending professional meetings is one way to stay on your feet atop a shifting business environment. As usual, IRTA's annual convention proved to be an excellent learning and networking experience for the wide range of professionals who are involved in the refrigerated transportation industry.
Due to the relaxed schedule of this year's convention, it was also a pleasant opportunity to play tourist and become acquainted with a different port city.
In particular, it was a treat to be so close to the OpSail 2000 gathering of tall ships that docked for the weekend at the Inner Harbor and other Baltimore sites. The ships eventually sailed on to New York, Boston and then their home ports around the world. Whether climbing aboard the ships or admiring them from dockside, viewers couldn't help but think about how much the world has changed in a century and what the future will bring. o
by Douglas Ravnholdt, CAE
Editor's Note: We're trying something new. Starting with this issue, IRTA President Robert C. Mirone and Executive Director Douglas Ravnholdt will take turns every other issue writing our letter to members.
Quality not quantity. We've all heard that saying and this year's annual convention reflected that saying exactly. The programming and speakers were great thanks to the efforts of Sheldon Meyer, convention chair, and his committee members. Although numbers were down overall, attendance at each of the meeting's sessions was excellent.
Our best marketing efforts for the annual conference come from our own members by word of mouth. With your indulgence please allow me to quote from a wonderful letter we received: "I had the pleasure of attending your Baltimore conference last week. This was the first transportation conference our company chose to visit. Having been to United, PMA, FMI, Super Floral, etc. I felt compelled to write you this letter. Ninety percent of the speakers had interesting information to share that was educational and beneficial to my company. The format was professional, yet comfortable and I felt that my two days out of the office where well worth the time. You and your staff are to be commended for arranging such a well-planned informative conference. I look forward to attending next year."
Member Survey
In a survey of members who missed the meeting this year, 54% said the dates were inconvenient. Another 19% said the location was inconvenient.
IRTA's planning committee will address these issues as we begin work on next year's annual conference. Call or write us with your ideas. We'd love to have some input on the questions of dates, location and programming.
Election of Board
During the Baltimore convention, IRTA voted on new members to the Board of Directors. We welcome new board members John O'Donnell of the Port of Wilmington and Bart Salomone of International Adjusters, Itd.
In other action an Executive Committee was elected in an effort to streamline IRTA's decision-making process. The seven-person Executive Committee will meet six times during the year to run the association and plan the annual convention. The full 21-person Board of Directors will meet twice a year-in September and during the annual conference.
Executive Committee members are Joseph Carone, Secretary, Marcia Holland, Executive Vice President, John LaRue, Vice President, Robert Mirone, President, George Proios, Treasurer, Peter Read, Vice President and Ted Schroeder, Vice President.
Goodbye to Paul Zottoli
We bid farewell to Paul Zottoli, one of our dedicated board members. Paul announced his resignation after accepting a new position with a large chemical company. We will miss Paul at our meetings and wish him the best in his new job.
Positive Growth
The international flavor of IRTA grows. Aside from an increasing global diversity in our membership, companies in countries ranging from China to Mexico are sending us news releases, which we appreciate.
We are also getting more attention from the press such as the Traffic World article reprinted in this issue and some positive reflections on the conference, which appeared in the June/July issue of the new AmericaFruit magazine, which is edited by Tad Thompson.
A new, improved membership marketing brochure is now available. You can help our recruitment in two ways. One is to give us the names and addresses of those people you think would benefit from membership in IRTA. We will send them a letter and membership brochure. A second and more effective method is for us to send you a few of the brochures and ask that you contact the prospective member. Either way there is no question that an association's best source of new prospects comes from its existing members. Please give us a hand. It will be appreciated. o
by Marjorie Dale, Marketing Director, Port of Pensacola
An adaptation of an old saying would seem to describe the position of smaller ports throughout the world: "A port can't be all things to all people." But when a match is made between the right port and the right people, a smaller port can be everything to the right customer.
As super-size ships make calls with their super-size cargoes to major ports, smaller ports have picked up business from smaller lines and have seen their niche grow in handling specialized cargo. Cold storage warehouses, on-dock rail and quick truck turnaround times due to little traffic congestion are factors cited by companies that migrate to smaller ports.
However, size isn't the only factor affecting growth among smaller ports. The trend among distributors of using a spoke-and-hub distribution system has also increased business. For example, a company distributing to Central and South America might house its distribution center in Jamaica from which it can make shorter runs to major distribution points instead of shipping from a North American port. This also allows for just-in-time distribution, a major selling point to receivers who don't have to worry about warehousing imports because they can order as needed from a nearby distribution point.
Since port logistics are not an exact science, ports of all sizes need to be flexible. While smaller ports develop their niches, they must be careful not to "put all their eggs in one basket." Developing a port to handle only one type of cargo can be risky if customer preferences or world markets shrink demand for that cargo through that port.
So the challenge for smaller ports is to diversify what they handle and strategically integrate their operations with trends in the transportation industry, including the increasing use of technology. o
by Stephen J. Galati, Esquire, Mattioni, Ltd.
Author's Note: This is the second article in a two-part series that briefly discusses the key areas in which the new, proposed U.S. Carriage of Goods by Sea Act ("revised COGSA" or "the new Act") would change the existing law. Part II covers changes the new Act would make in provisions concerning the carrier's defenses, package limitation and choice of forum. The article in last May's issue addressed the history of COGSA, the reasons why revisions are being proposed, and how the coverage of the new Act would differ from the coverage of the original COGSA. The proposed revision of COGSA was initiated by the Maritime Law Association.
Cargo damage caused by an error in navigation or management of the ship is not the responsibility of a carrier under the original Carriage of Goods by Sea Act (COGSA). However, the new Act would modify this defense.
Relative Degree of Fault
Under the revised COGSA, if a cargo claimant could prove that a loss was caused solely by an error in the management or operation of a vessel, then the carrier would be liable for the loss. If, however, the cause of the loss was only partially attributable to such an error and was partially due to a cause for which the carrier would not be responsible under the Act, such as a peril of the sea, then the court would determine the relative degrees of fault and apportion damages accordingly.1
In a case where it is impossible to determine the relative degree of fault, the damages would be divided equally between the cargo claimant and the carrier.2 This in effect would overrule the law as set forth by the United States Supreme Court in Schnell v. Vallescura, 293 U.S. 296 (1934).
The prevailing law, as set forth in Schnell, provides that where a loss is the result of two causes-one for which the carrier is responsible and the other for which it is not-the carrier is liable for the entire loss unless it can prove the extent to which each caused the loss. This is an almost impossible burden.
Increase in Package Limitation
Under the original COGSA, a carrier's liability is limited to $500 per package or customary freight unit. Cargo interests argue that while this sum might have been an acceptable limitation when COGSA was enacted in 1936, it is unacceptably low today because of the increased value of packages. It is also much lower than the limitations set by two international liability regimes-the Hague-Visby Rules and the Hamburg Rules (see our May issue for more details).
The Hague-Visby Rules provide for a liability of 666.67 Special Drawing Rights3 (SDRs) per package or two SDRs per kilogram which, as of the writing of this article, equals a limitation of approximately $896 for packages weighing less than 735 pounds and $1.22 per pound for packages weighing more than 735 pounds.
Under the Hamburg Rules, the applicable limitation is $1,299 for packages weighing less than 735 pounds and $1.77 per pound for packages in excess of that size. For packages shipped in containers, the Hague-Visby Rules and Hamburg Rules provide that the limitation should be applied to each package in the container, so long as the number of packages is set forth on the bill of lading.
Adoption of Hague-Visby Limits
The revised COGSA would adopt the package limitations of the Hague-Visby Rules. However it would require the highest amount under those limits-currently the greater of $896 per package or 1.22 per pound.4
Under the new Act, as under current law, the shipper would be free to declare a higher value and pay a correspondingly higher freight rate. Unlike the current law, however, the new Act would permit the parties to agree to a lower package limit where service contracts are involved.5
Any agreement to raise or lower the applicable package limitation would be binding only on the parties to the service contract. It would not be binding on any other parties performing any of the carrier's responsibilities under the contract of carriage, or on subsequent holders of the bills of lading. Therefore, a subsequent holder of the bill of lading would not need to examine the bill of lading or service contract to determine if the package limitation was changed by agreement.6
An unreasonable deviation by the carrier would not invalidate the package limitation unless the carrier knew or should have known that the deviation would result in such loss or damage.
Also, the carrier would not be entitled to the benefit of the package limitation if the loss or damage was caused by an act or omission of the carrier, within its privity or knowledge, done with the intent to cause the loss or damage. Nor would the carrier be entitled to the limitation if the act or omission was done recklessly and with the knowledge that such loss or damage would probably result.
Forum Selection Clauses
The revised COGSA would legislatively overrule the United States Supreme Court's decision in Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 115 S.Ct. 2322 (1995). That decision held that foreign forum selection clauses were valid and that a shipowner, through a forum selection clause in the bill of lading, could force a cargo claimant to litigate its case in a foreign jurisdiction.
Under the new Act, a foreign forum selection clause would not be enforceable if (1) the goods are loaded or discharged in a U.S. port, or (2) the carrier receives or delivers the goods in the United States, or (3) any of these events were intended to occur in the United States. Foreign forum selection clauses also are not enforceable if the defendant's principal place of business or habitual residence is in the United States or if the contract of carriage was made in the United States.7
However, under the new Act, foreign forum selection clauses would still be valid if a claimant brings an action in the United States solely because the claimant is able to obtain jurisdiction over the vessel in this country.
No Radical Change
As can be seen from the brief discussion in this article, the revised COGSA would result in a fine tuning, rather than a radical change in the law applicable to the carriage of goods by sea. It would attempt to clarify the law in cases where courts, in considering the original COGSA, have diverged. It would also bring the law in the United States in closer conformity with the laws prevailing in other countries.
While there are those who oppose the revision of COGSA because they think it will delay the United States' enactment of a uniform foreign convention, Congress has shown no willingness to enter into such international agreements. So the revised COGSA would offer a reasonable compromise among those involved in the carriage of goods by sea.
Stephen J. Galati, Esquire is the new chair of IRTA's Law and Legislation Committee. He is a graduate of the United States Merchant Marine Academy and Tulane University School of Law. He is a shareholder with the firm of Mattioni, Ltd. Mr. Galati's practice is concentrated in all areas of maritime and transportation law, including cargo claims, charter parties, ship operation and management disputes, inland transit and maritime liens. He can be contacted c/o Mattioni, Ltd., 399 Market Street, Philadelphia, PA 19106, Tel.: 215-629-1600, Fax: 215-923-2227, e-mail: sgalati@ mattioni.com. Mr. Galati welcomes any questions about the above article or related areas of law.
Notes
1. "Revising the Carriage of Goods by Sea Act," Final Report of the Ad Hoc Liability Rules Study Group, at pp. 15-16.
2. Id.
3. A Special Drawing Right (SDR) is a term of the International Monetary Fund. Its rate varies according to the values of an index of currencies used to calculate it. The SDR is reported daily in financial publications. At the time of writing this article, the SDR had a value of $1.34405.
4. Revised COGSA, section 4(5)(a)(1); "Revising the Carriage of Goods by Sea Act," at p.19.
5. "Revising the Carriage of Goods by Sea Act," at p. 34.
6. "Revising the Carriage of Goods by Sea Act," at p. 35.
7. Revised COGSA section 7(h)(2)(i). o
DOT Extends Comment Period On Controversial Driver Hours
DECEMBER 15, 2000 IS THE NEW deadline to comment on the U.S. Department of Transportation's (DOT) proposed changes to its 60-year-old hours-of-service rule for truck and bus drivers. The current rule permits drivers to be behind the wheel for 10 hours out of an 18 hour cycle.
The proposed rule would require long-haul drivers to take off at least ten consecutive hours in a 24-hour cycle, in addition to two hours off during the work shift. The DOT asserts that truckers usually get only five hours of sleep in their eight hours off. It cites studies saying drivers need seven or eight hours of sleep to be alert.
Shippers and trucking companies maintain that such a new rule would worsen the current shortage of qualified truck drivers. They say it would reduce highway safety, because it would force trucking companies to hire many new, inexperienced drivers.
In addition to lengthening the comment period, which was originally scheduled to end in July, the DOT is organizing three roundtable meetings to be held in the Washington, D.C., area from late September to early October. DOT has invited leaders from the trucking industry, labor unions and safety groups to attend these gatherings.
U.S. Transportation Secretary Rodney E. Slater said that the purpose of the proposed changes "is to assure that drivers of trucks and buses have sufficient opportunity for rest so that we can reduce the number of fatalities that result from fatigue-related crashes."
Comments may be sent to the USDOT Docket Facility, Attn: Docket FMCSA-97-2350, 400 Seventh St., S.W., Washington, D.C., 20590. The proposal may be viewed on the Internet at http://dms.dot.gov/. o
VFM Becomes Partners With CargoNow.com
VFM INTERNATIONAL, LTD., providers of vfm.net, an independent business to business e-trade solution specifically designed for the fresh produce industry, signed a partnership agreement in July with CargoNow.com, a marketplace for the global transport and logistics industry.
Users of vfm.net will be given access to CargoNow.com. They will be able to post requests for freight quotations and make online bookings.
Mats Svensson, area development director of CargoNow.com said "There is obviously a need for transportation when you purchase or sell fruits and vegetables, so the vfm.net system and CargoNow's website will interact well."
CargoNow.com, formerly known as LSXS.COM, is an Internet-based global marketplace that connects transport and logistics providers with companies that purchase such services. Its objective is to help its members to optimize their logistics solutions and create new business opportunities. o
ESL Enters Support Agreement with RTE
IN JULY, ESL POWER SYSTEMS, INC, began representing RTE (Refrigerated Transport Electronics, Inc.), a remanufacturer of reefer controllers and related products that is based in McGraw, New York.
ESL is providing sales and support services in California, Oregon, Washington and Hawaii as well as Mexico and Central America. ESL and RTE have frequently worked together in the past on RTE's remote reefer monitoring products. This new alignment will improve service to RTE's West Coast customers and will expand ESL's line of products and services for the refrigerated transportation industry.
RTE has offered quality repair and refurbishment of electronic controllers since 1981. The company repairs all major manufacturer's equipment including Carrier™, Thermo King™, Sabroe™, Mitsubishi™, Klinge™ and others. Additionally, RTE manufactures the GRASP™ remote reefer monitoring system and provides custom software and hardware solutions for the refrigerated transportation industry.
ESL Power Systems, Inc. is a world leader in the design and manufacturing of electrical power outlets and related electrical equipment for powering refrigerated containers. o
PMA Offers IT Help for Floral and Produce Marketing
THE PRODUCE MARKETING ASSOCIATION is offering an e-mail listserv "virtual community" to help members of the floral and produce industry who want to know how to integrate information technology into their marketing. PMA hopes that this networking service will help members of its industry to "demystify technology, create efficiencies and build value into the marketing cycle." The listserv can be accessed at freshtech@listserv.a1is.com. o
Reprinted with permission from Traffic World Magazine
How to ship product to emergent megacities and beyond is the big logistical challenge facing shippers of refrigerated cargoes, according to William Bryant, chairman of the Seattle-based trade consulting firm Bryant Christie Inc.
In his keynote address last June at the annual convention of the International Refrigerated Transportation Association, Bryant said that as the demand for fresh produce increases globally, large cities and areas where refrigerated infrastructure is crude or even nonexistent will present difficulties to exporters and importers.
At the end of this decade, "cities the size of Mexico City will be the norm, and mostly in Asia and China," Bryant said. As a result "we must plan for more shipments to Asian megacities," he said.
Demographic Changes
Shifting demographic patterns is one factor behind the growing demand for refrigerated cargoes. Population growth and increasing affluence will spur the demand for exotic food products, he explained. China and India alone will add about 100 million people to the planet's population over the next decade.
In Japan the size of the population is relatively stable, but rural drift-people abandoning the countryside for cities-is drastically reducing the country's agricultural work force, impairing the country's ability to serve fresh produce markets, Bryant said. The same phenomenon is shrinking the agricultural labor pool in European Union countries, Brazil and China. On the other hand, Bryant said, India is adding to its rural work force.
Another factor reducing the area of land being farmed is a shortage of water. "Twenty countries are now classified as water-scarce," Bryant said.
Even so, over the last decade the European Union has increased its fresh fruit exports by about one-third, Argentina and Mexico have doubled export volumes, and China and the United States have achieved increases of roughly 25 percent. These export volumes are probably sustainable given technological advances and economic growth, Bryant said, but warned that future trade agreements could alter this picture. He added that China will improve its export performance in some areas, but also is expected to import more produce.
Lack of Infrastructure
Developments in temperature-control technology will have a far-reaching effect on the fresh fruit and vegetable trades, Bryant maintained. "In many areas the cold chain simply does not exist," he said.
In India and Israel, for example, a lack of infrastructure means that fresh produce is transported or stored without refrigeration. This is particularly the case outside major urban centers, Bryant said, noting that spoilage rates in India can be as high as 10 percent to 40 percent. "We have to extend the cold chain beyond the capitals," he said.
Bryant urged the industry to engage local authorities in the debate. "We must reach out to port authorities and city governments," he said. Better supply-chain coordination and real-time monitoring of product quality are sorely needed, he said.
In some countries progress is being made. India is investing in more cold storage facilities, for example. But Bryant cited the lack of an adequate road system as being a major problem in India. "It is such a big job," he said. o
Experience is not what happens to a man. It is what a man does with what happens to him. -Aldous Huxley
Editor's Note: I found the following bit of fun about "corporate" decision making on the Internet at www.joker.org. Is it accurate? I don't know, but it certainly sounds plausible. Are there any railroad history buffs among our readers who would care to comment? Also, if you have a joke or a funny story to share with us, just pass it on to The IRTA Report by e-mail irtamail@aol.com.
The Corporate Mind and the Railroad
Decisions made long in the past can have a major impact on corporate decision making in the present. Consider the story of the standard railroad gauge used in the United States.
The US standard railroad gauge (the width between two rails) is four feet, eight and one-half inches. Why was that unusual measurement used? Because it is the standard in England, and English expatriates built the US railroads. The English used that gauge because their first rail lines were constructed by the same people who built the pre-railroad tramways and that was the gauge of the tramways.
Why did the tramway builders choose that gauge? They did it because they used the same jigs and tools that wainwrights used for building wagons based on that wheel spacing.
Okay! Why did the wagons have that particular wheel spacing? Well, if they had tried to use any other spacing, their wagon wheels would have broken on some of the old, long distance roads in England, because the spacing between wheel ruts was eight and one-half inches.
So who built those old rutted roads? Imperial Rome laid out the first long distance roads in Europe for their legions. The roads have been used ever since. Roman war chariots-which all had the same wheel spacing-formed the first ruts in the roads. Everyone else had to match their wagons to the ruts for fear of destroying their wheels. So the United States standard railroad gauge derives from the original specification for an Imperial Roman war chariot.
Specifications and bureaucracies seem to live forever. So the next time you are handed a specification and wonder what horse's behind came up with it, you may be exactly right, because the Imperial Roman war chariots were made just wide enough to accommodate the back ends of two war horses. Thus, we have the answer to the original question.
Here is a further twist to the story: When we see a Space Shuttle sitting on its launch pad, there are two big booster rockets attached to the sides of the main fuel tank. These are solid rocket boosters (SRBs). The engineers who designed the SRBs might have preferred to make them a bit fatter, but the rockets had to be shipped by train from the factory in Utah to the launch site. The railroad line from the factory had to run through a tunnel in the mountains. The SRBs had to fit through that tunnel, which is slightly wider than the railroad track. Of course, the railroad track is about as wide as two horses' behinds.
So, the major design feature of what is arguably the world's most advanced transportation system was determined over two thousand years ago by the width of a horse's behind! o