Australia-U.S. Free Trade Agreement; Plenty of Jokers With much of CII’s activities geared to the South Pacific, we naturally take a great interest in new developments there. The recent Australian-U.S. Free Trade Agreement is a major evolution in the business and commercial relationship between the two countries. From the U.S. standpoint, the Agreement is a win-win situation. More than 99 per cent of American manufactured exports to Australia now will be free of all import duties. As an air cargo wholesaler overwhelmingly moving finished manufactured goods as well as spare parts and components for our forwarder customers to Australia, CII expects to benefit from this new trade agreement. From the Aussie side, the picture is far less rosy. So one sided is the agreement favoring the U.S., many in the Australian public and Parliament protested the new accord. For an advanced nation with a very high standard of living, Australia surprisingly has little industry. Its exports are almost wholly agricultural and raw material products. It is just these products that the U.S. Trade Commission refused to consider for duty elimination. Beef, for example, the largest single export to the U.S., will retain its high tariffs because of objections from U.S. cattle ranchers who complained that “cheap” Australian beef would cost thousands of U.S. jobs. Perhaps the most egregious example of U.S. lobbying muscle was the sugar industry. Sugar was taken off the table during negotiations, with U.S. trade representatives insisting there was to be no change in the tiny Australian sugar quota. If changes were even contemplated, the entire Trade Agreement would be scuttled. The sugar lobby is a disgrace to the United States. Here is a minuscule group of sugar growers in politically powerful states throughout the South and Southwest making policy for the $1 trillion generated by U.S. trade with the rest of the world. Speaking as a freight forwarder whose customers will benefit, I applaud the new Australian-U.S. trade agreement. Speaking as a new American, I am ashamed at the enormous pressures placed on the Australians epitomized by a personal telephone call from President Bush to Australian Prime Minister John Howard, urging adoption of the agreement Back to Top

Another Loader Becomes A Co-Loader! Keith Loader, our Chicago representative, convinced still another member of his family to get into the coloading business, better known as wholesaling. Last February, his nephew, Ian Loader, joined CII as Vice President, Eastern Region, with headquarters at New York’s JFK. Before venturing out to the big airport in Queens, Ian spent the previous three months being tutored by the best teacher in the business—his uncle Keith! From driving a forklift to pallet building, to mastering the paperwork, to negotiating with the airlines, to looking after customers, Ian had to learn fast or he would have been cut up by the great white sharks in our business! When Ian joined CII in February, it was sink or swim. We threw him into the deep end of the pool, knowing his three month stint with Keith would stand him in good stead. The results? Uncle Keith would be proud of his nephew’s progress and achievements in that snake pit called JFK cargo. It’s one of the toughest freight environments in the world, especially for a non-New Yorker. Here we are, headquarters in Los Angeles with a midwesterner heading our N.Y. operations. Yet, our business is growing by leaps and bounds. Keep up the excellent work, Ian. We’re not the only ones who think so. Feedback from customers and airlines is, they think you are number one in their books. Back to Top

Airline Security Gets Tighter Because Of Stowaways Last autumn, Kitty Hawk received a great deal of unwanted attention when it was discovered that a man “shipped” himself in a box from New York to Dallas on one of the cargo carrier’s airplanes. Far less publicity was given to a more recent incident involving three men from the Dominican Republic. They shrink wrapped themselves in a pallet on a Capital Cargo International flight and were discovered when they attempted to tear themselves out at Miami International Airport. This incident seems to have galvanized a number of U.S. carriers to step up security procedures, particularly Northwest Airlines. Northwest has put forwarders on notice that it will start random inspection of freight, including opening packages it considers “suspicious.” This new action will pose a serious dilemma for all forwarders, particularly those who handle customers’ shipments from Asia. Northwest, of course, is the largest combination carrier in terms of cargo and is the only American passenger airline with all freighter service out of the everincreasingly important Asian market. Once again, forwarders are faced with an almost insoluble problem; making sure cargo coming into the U.S. is properly screened and inspected yet making money from time definite transportation.  As Yul Bryner sang in “The King & I,” is a puzzlement. That “puzzlement must be solved if air freight can continue serving customers with the speed and preciseness of delivery they expect, while obeying tougher security rules.  Back to Top

GM’s J-I-T Strategy Backfires Readers of our Newsletter will remember my criticism of the “gung ho” just-intimers; those ideologues who proclaimed that anyone who didn’t believe in the J-IT mantra were hopeless fuddy-duddies, 100 years behind the times and should be drummed out of the air freight business. My criticism of J-I-T was based on thirty years experience in cargo; that no one system or methodology answers the very many different needs of shippers. The latest event, involving General Motors and Just-In-Time delivery of raw steel for GM’s assembly lines, illustrates my contention. Readers of our Newsletter will remember When Just-In-Time first made its appearance about fifteen years ago, the car companies were among its earliest and most fervent apostles. “We’re going to save millions by moving parts and supplies at the last minute to avoid excess inventory costs,” said the auto makers. “We’re also going to cut down on the number of suppliers so that we can better monitor the flow of auto parts,” they continued. Yes, the auto makers saved millions but it seems they will be losing hundreds of millions of dollars to cover rising steel costs. Rather than risk cutting off its supply of parts since inventory deliberately was cut to next to nothing according to the gospel of J-I-T, GM reluctantly will pay its suppliers the higher cost of steel to ensure on-time delivery. This incident illustrates once again how vulnerable companies have become after years of streamlining their supply chains and relying on a smaller number of suppliers. GM admitted that without paying the higher steel prices for its purchases, “our plants would have to shut down.” Here is another example of Just-In-Time ideology swamping common sense. J-I-T, in many cases, does save on inventory costs but a careful eye should be kept to ensure that the shipper doesn’t save a penny to lose a pound. Back to Top