• Chairman’s Corner
• Important TSA info and wood packaging rules
• Martinair sees growth in America
• Korean Air keeps on growing
• Vancouver Terminals facing capacity issues
• Only the tough survive
• Gunmen grab $16.5 million
• Cargolux shows foresight
• Cathay Pacific’s “Silver bullet”
• Emirates Airline introduces Hamburg-New York
• Fuel surcharges continue to rise
• Impact of Imports from China on US employment
• Anniversaries
• Winner of the month

Judging by many comments and compliments, our Punta Cana, Dominican Republic meeting was a big success. Our Network partners, invited customers, and friends from our insurance companies in Hamburg as well as the government officials from U.S. Customs and Department of Commerce, were full of praise for such candid and productive discussions in a beautiful setting. Thanks again to Connie for her hard work in organizing this event. Next year's meeting will be held in a similar venue in a different country ... Stay tuned.

The TSA has finally come up with new rulings; you will find them as a link in this newsletter. I urge everyone to read them carefully since a lot of the responsibility for cargo safety is on the shoulders of the shippers, forwarders and carriers alike. It is clear that the cost of security will rise.

We had a successful Scandinavian meeting in Oslo, Norway and now have a cohesive network in that region. Co operations in Denmark with Interscan, in Finland with Beweship, in Norway with Fellestransport, and in Sweden with Gothenburg/Stockholm Shipping. We will also appoint a Route Development Manager for that area shortly. This will help us to participate in the Scandinavian market much stronger than before.

Over the last few months we have also established additional Route Development positions for Asia, Latin America and South Africa. For GAC / Asia our RDM is Mr. Ove Christensen who is based in Los Angeles; for GEFCO / Latin America (Argentina and Brazil) Mr. Andres Calistri, based in Buenos Aries and for Sebenza/South Africa, Mr. Eric Poujol who will reside in Johannesburg. We are confident that these new positions will give us the desired boost in those designated areas. Please take advantage of these positions for future development to these countries for your own regions. EMO Trans also welcomes Darren Ball an additional GAC representative based in our Houston, Texas office. Darren’s initial focus will be development of the Middle East expanding to other areas as he goes forward.

I am sure many of you have seen the news about the investigations by European and American officials of a number of international air carriers for allegedly price fixing related to surcharges. Let us hope that by the end of the year this unfair practice of surcharges by air carriers be changed and the problem solved.

The first 6 months of 2006 have shown again healthy growth for the company over 2005. However, the rising Dollar, continuing high energy costs and the sagging stock market may not provide similar developments for the 2nd half of 2006. We need to be mindful of those changes and proceed with caution.

I wish everyone a happy and healthy summer.

All the Best
Jo Frigger
Chairman & CEO

a. TSA Issues New Regulations to Substantially Strengthen Air Cargo Security
Press Office
U.S. Department of Homeland Security

May 17, 2006
Contact: TSA Public Affairs
(571) 227-2829

WASHINGTON, D.C. – The Transportation Security Administration (TSA) today continued comprehensive efforts to strengthen air cargo security by announcing requirements designed to protect the more than 50,000 tons of cargo that is transported aboard passenger and all-cargo aircraft each day. The security requirements mark the first substantial changes to air cargo regulations since 1999, and represent a joint government-industry vision of an enhanced security baseline.

“Working with the industry we have set a solid foundation for a major segment of the transportation network,” said TSA Assistant Secretary Kip Hawley. “In addition, TSA is working with our partners on a series of separate operational measures that raise security in air cargo.”

The Air Cargo Final Rule makes permanent some practices already in place and adds others. Major
new security measures include:

• Consolidating approximately 4,000 private industry Known Shipper lists into one central database managed by TSA. This will allow TSA to have more visibility into the activities of companies shipping on passenger aircraft and 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 and cargo facilities. This will require an additional 50,000 cargo aircraft operator employees to receive full criminal history background
  checks.

These new measures will be enforced by an expanded force of air cargo inspectors. In the coming weeks, TSA will complete the hiring of 300 air cargo inspectors. These inspectors are stationed at 102 airports where 95 percent of domestic air cargo originates.

The policy changes implemented by the final rule complement ongoing TSA operational and technological initiatives that aim to strengthen air cargo security through a risk-based approach that balances the twin goals of enhancing security without unduly disrupting the flow of commerce.

Operational measures recently implemented include:

Surge initiatives that incorporate an element of unpredictability into the daily inspection activity of approximately 1,000 aviation security inspectors at airports across the country.

Using transportation security officers and TSA equipment to screen cargo that is delivered directly to airport ticket counters.

Expanded use of canine explosives detection teams in air cargo facilities.

The details of how to implement the new regulatory changes are spelled out in the security programs that air carriers and freight consolidators must maintain. Draft security programs will be provided to the carriers and consolidators for comment concurrent with release of the Final Rule. Enhancementsare expected to be phased in during the next six months.

Assistant Secretary Hawley said, “In the time-sensitive and dynamic air cargo industry, a layered security approach is essential to thwarting would-be terrorists. Today’s important policy enhancements, when combined with ongoing operational and technological initiatives, create a more vigorous, risk-based strategy for enhancing cargo security. We will continue to invest – along with our partners in industry – in policies, programs and ideas that raise the bar even higher.”

The new cargo rule is another example of how TSA works with its industry partners to ensure the security of air cargo. When industry partners do not fulfill their security responsibility, the agency takes immediate and appropriate action. In recent weeks, TSA revoked the air carrier certification of J.H World Express, Inc., based in Los Angeles; Inter-Shipping Chartering Corporation, based in Miami; and denied the renewal of the cargo security program for Aramex International Courier, based in Washington, D.C. and New York. These enforcement actions prohibit the companies from tendering cargo for transport on passenger aircraft in the United States and reinforce the agency’scommitment to ensure the air cargo industry meets its responsibilities.

Full details of the Air Cargo Final Rule will be published in the Federal Register in the coming days

b. I just wanted to remind everyone of the start of Phase III of the Wood Packaging Materials Regulation on July 5, 2006. As you know, this means full enforcement of all provisions of the regulation, so that all solid wood packaging materials will need to have the proper stamp, or the material, and possibly the associated cargo, will have to be re-exported at the expense of the importer or party of interest. Please pass the word along.

Thank you,

Jim Wehry
Supervisory Agriculture Specialist
U.S. Customs and Border Protection
Port of San Francisco
East Bay Station
700 Maritime Street
Oakland, CA 94607

Dutch carrier Martinair increased its cargo revenues by 16 percent year-on-year in 2005 to $871 million. A statement from the carrier said cargo volume grew by 5 percent compared to 2004 to reach 3,518 million tonne-km. Growth was achieved on routes to North and South America, Martinair said. By contrast, air freight to Africa fell.

From the end of this year, Martinair’s B747 freighter fleet will be replaced by B747-400BCF (Boeing Converted Freighter) aircraft.

Korean Air Cargo inaugurated B747-400 freighter services to Chennai in February as its third freighter destination in India after Mumbai and Delhi.

The carrier has taken delivery of it’s eighth B747-400ERF (Extended Range Freighter) this May. The first in a 20-aircraft order for B747-400BCF equipment placed in June 2004 is also due soon.

In an expansion of its services, Korean Air Cargo will offer bellyhold capacity three times a week on A330-300 flights to Istanbul from Seoul. Korean Air Cargo is then to expected to introduce a three times weekly B747-400F service between Seoul and Seattle-Tacoma airport.

Canada’s Port of Vancouver is struggling with container capacity problems and is raising costs to shippers amid rising Asian trade.

Operating capacity of the two terminals which handle the bulk of the traffic at Vancouver’s three container terminals “has either been reached, as in the case of Vanterm, or has been exceeded, as in the case of Deltaport”, operator TSI Terminal Systems said recently.

Volumes at both terminals increased 28 percent in the first quarter of this year form the same period a year ago. Starting July 1, demurrage for import and export containers would rise from CAN$ 24.80 to CAN$ 100 per day, a substantial increase.

Canada's largest port dominated Pacific Northwest competitors in terms of loaded international containers. Import boxes increased nearly 31 percent to 435,055 TEU’s and loaded export containers increased nearly 9 percent to 314,406 TEU’s, outdistancing rivals at Tacoma and the Port of Seattle by wide margins.

The volume increase was credited to the move this year by CP Ships from Canada's Fraser Port to Vancouver's Deltaport terminal.

May I point out again to all of our readers that the “free times” at the terminals and rail yards are getting shorter and shorter. It is therefore imperative that we receive all of your import documents in ample time to clear goods through US customs. It is in the interest of EMO Trans to avoid demurrage charges for our clients but we need the help of everyone involved to insure a speedy paper process. Demurrage charges are high and an extra day at the pier (including weekends) could cost as much as US $120 depending on the location.

Containerization has claimed many casualties over the years. Few of the early pioneers managed to survive the cut throat container shipping trades through the last 50 years and neither of the world’s greatest trading nations have a deep sea container shipping line to call their own.

In the US the big three of American President Lines, Sea-Land Services and Lykes are all sold to foreign buyers. In Britain famous brands such as Cunard and P&O have vanished from the liner trades.

Perhaps surprisingly, it is not just companies from countries with large export or import trades that now dominate the industry. Far from it, with Denmark’s Maersk Line and Switzerland’s MSC – Mediterranean Shipping Co. controlling the world’s two largest box ship fleets followed by France’s CMA CGM and Germany’s Hapag-Lloyd who recently acquired CP Ships.

Four of the top five carriers are European-owned. The only Asian line in this elite club is Taiwans Evergreen Group. But all of these have to be prepared for the tough competition of China Shipping and Cosco who have large containerships on order and will continue to grow.

Many of the premier lines are family owned and still run by their founders who are most unlikely to want to lose control by selling out. No one expects Maersk Mc-Kinney Moeller or his family, MSC’s Gianluigi Aponte, CMA CGM’s Jacques Saade or Evergreen’s Chang Yung-fa to be in the slightest bit interested in mergers that would weaken their grip on businesses they have nurtured over the past 30 years.

The question is whether their sons and daughters will feel as passionately about the business as their fathers. As the next generation begins to take over, they will be faced with the industry still, to some extent, in its formative years.

Sharp swings in freight rates underline the fact that container shipping continues to be driven by pure supply and demand remains more akin to the tramp shipping trades, or base commodities, than a value-added-service industry.

Most of the mega-carriers now have ship’s that can carry 8000 – 20 ft. containers. New ships are on the drawing board that will carry 10,000 or more. (From a report by Janet Porter)

That brings up a thought: I hope your container was not on this ship?

Gunmen grabbed a large amount of cash as it was being escorted from the bellyhold of a South African Airways B747-400 at Johannesburg International Airport. Reports said between six and ten men armed with AK-47 automatic weapons escaped with up to $16.5 million of bank notes in transit from London Heathrow Airport. No one was injured in the attack. Police are looking into this as an “insider job”.

Cargolux Airlines was a lonely pioneer in the early 1990’s by purchasing the more fuel efficient B747-400F and replacing their older gas-guzzling B747-200. This strategy is paying off now, with oil prices topping $70 a barrel. Revenues rose 19% to $1.45 billion.

Surprisingly, the strongest market was not Asia, but North America, where tonnage grew 11.4 percent and revenue rose 30 percent. That, says CEO Ogiermann, was due to the strength of the US economy and a growth in network cargo (cargo sold from Luxembourg to the US)

The carrier also started a new twice weekly route to Chicago in 2005 and saw strong oil and gas traffic to Houston, now its second largest US station after Los Angeles. In addition, New York saw a boost to six flights a week, and there was a resurgence in sea-air traffic from Korea and China into Seattle.

Cathay Pacific’s first “Silver Bullet” freighter has been put into service as part of its initiative to cut spiraling fuel costs.

Stripped of its colors, the polished silver fuselage makes the Boeing 747 about 200 kg lighter and saves more than HK$1.5 million on its annual fuel bill. Only the tail and the strip along the aircraft’s nose maintain the airline’s identity. All 14 of Cathay’s freighters will undergo the transformation during scheduled maintenance overhauls over the next couple of years.

Emirates is introducing a new service between Hamburg and New York’s JFK airport this summer once it adds a third frequency between its Dubai hub and JFK that will connect with the German city. The carrier is using fifth freedom rights to operate from Hamburg to New York.

CSX Intermodal announced it will implement a June surcharge of 21.5 percent. The carrier previously implemented fuel surcharges of 21 percent in May, 17.5 percent in April, 16 percent in March, 16.5 percent in February and 16 percent in January.

USA Truckers are charging somewhere around 20 percent fuel surcharge these days also. Where is the limit to the rise in oil prices?

You may ask – how can imports from China create jobs here in the US? This question has been studied and answered: The net positive employment benefits are spread across the USA. California gains nearly 100,000 jobs.

Here is the role played by merchandise imports from China in the US economy:

China is the second-largest supplier of merchandise imports to the US market, representing 13 percent of total value in 2004. Nearly 80 percent of those goods are consumer products, most notably toys, footwear, computers and apparel. US manufacturers also use raw materials and capital goods imported from China, including coal. Important exports to China – cotton, semiconductors, leather, for example are incorporated into finished goods, many of which are re-exported to the US again.

Thomas Harlin Freeport, NY 15 years

Phyllis Kephart 10 years

Anita Scheer 5 years

Heather Lane Mobile, AL 10 years

Donna Caiafa Chicago, IL 10 years

John Sobota Houston, TX 5 years

Thank you to all our committed employees! We appreciate your hard work for all of these years.

The “Gourmet Food Gift Certificate” was won by Zach Stehley. Congratulations and enjoy the goodies!!

Next month we will be giving away an authentic WORLD CUP Soccer Ball. I am sure somebody in your family will have fun playing with it. Our crew at Emo Trans San Francisco is enjoying watching some of the games of this exciting event.

If you want the chance to win this soccer ball, please make sure that you let us handle as many shipments as possible because each shipment will be the “entry fee” to our drawing.

If you enjoy reading this newsletter and have a friend or a coworker who you believe might benefit from it, please forward it on. We encourage your ideas and suggestions. EMO Trans respects your privacy. We do not share your information with anybody and will only use this data to send you information via this newsletter. Thank you for taking the time to read our newsletter.

Gisela M. Beckermann
Regional Manager
Northern California , Northern
Nevada and Pacific Northwest

Tel: (650) 697-0646
www.emotrans.com

Newsletter services provided by IMP