FORWARDERS SET TO FIGHT KOREAN PLANS FOR US COMPANY

FORWARDERS SET TO FIGHT KOREAN PLANS FOR US COMPANY

U.S. freight forwarders are working out tactics intended to prevent a consortium of Korean investors from quickly establishing a large cargo forwarding company here.

Measures under consideration include a possible boycott of Korea's largest ocean carrier and airline, Hanjin Shipping Co. and Korean Air Lines, respectively.About 35 trade and transportation companies in Korea reportedly have committed $20 million to purchase an existing U.S. forwarder, in whole or in part, this fall.

Opponents of the venture, led by Korean-American forwarders, fear the new company, which has the blessing of the Korean government, will hold a monopoly in trade between the two countries.

"I know the government will apply a lot of pressure on Korean trading companies to use it," said Young Chang, president of United Customhouse Brokers Inc. in Los Angeles.

The Korean consortium, which is meeting in Seoul this week to establish investment guidelines for the venture, has set the following timetable to carry out its plans:

* A Korean delegation will visit Washington next month to discuss opportunities for buying an existing U.S. forwarder.

* They will narrow down the list of candidates this summer and complete the

purchase in the fall after securing approval from the Bank of Korea.

* The company will begin operating under its new owners on Dec. 1.

"That's the schedule that's being discussed," said Alfred R. De Angelus, a Washington-based consultant who is representing the Korean investors.

Mr. De Angelus, the former No. 2 man at U.S. Customs in the 1980s, has submitted to the Koreans a list of companies that may be for sale.

Mr. De Angelus said the Korean investors' intention is to begin with freight forwarding operations and later expand to customhouse brokering, warehousing and related activities.

"They're serious, and they're moving ahead, but they want to do one thing well before moving to the next thing," he said.

Late last year, Korean-American forwarders filed an informal complaint with the Federal Maritime Commission, charging the new company would have an unfair trade advantage. The FMC normally moves slowly on such complaints.

Last week, Steve B. Kang, chairman of the Korean Forwarders & Customs Brokers Association of Southern California, said his members are urging more aggressive action, including a boycott of Hanjin Shipping and Korean Air, both subsidiaries of the Seoul-based Hanjin Group.

"Many members of my association told me we have to take some action. The first action should be against Hanjin because we believe Hanjin is leading in this project," he said.

Although investment in the new company has not been independently confirmed, Mr. Kang said his Korean sources say it totals $20 million, with about 30 percent coming from the Hanjin Group.

He said Hyundai Merchant Marine Ltd., another major Korean shipping line, has chosen not to participate.

A spokesman at Hanjin Shipping in Long Beach said if Hanjin is indeed involved, the decision would be made in Seoul, so he could not comment on the proposed venture, or on Mr. Kang's charges that Hanjin would gain a competitive advantage by investing heavily in the forwarding company.

Dae H. Son, vice president of marketing at Hyundai Merchant Marine in Gardena, Calif. - Hanjin's main Korean competitor - said most shippers and forwarders choose a carrier for commercial reasons, and not because of government pressure.

"I don't see it as much of a threat right now," he said.

The Korean government has planned since 1985 to sponsor a U.S. forwarding company.

Korean shipments have incurred millions of dollars in fines because of violations of U.S. customs laws. The consortium has been presented as a way to prevent further infractions through the professional handling of documentation.

"Baloney," said Mr. Chang of United Customhouse Brokers. "The purpose of the company is to make money and create jobs for retirees of (Korean) Customs and to control Korean trading companies," he said.

He has other concerns as well. "I don't like the idea that this company has to be a giant to compete. And I don't like the idea that the government is initiating the whole thing," Mr. Chang said.

U.S. brokers and forwarders have joined their Korean-American counterparts in opposing the venture.

"That company will take cargo right out of our hands," said Jeff Coppersmith, a Los Angeles broker who is tracking developments for the Pacific Coast Council of forwarders and brokers.

"I'm concerned that security issues are not being considered," said William Maron, a New York forwarder who is monitoring the situation for the National Customs Brokers & Forwarders Association of America.

Mr. Maron said as export documentation becomes automated, forwarders will be called upon to ensure that shippers comply with U.S. export regulations. He believes a Korean-owned forwarder's first loyalty will be to his own country, so keeping American forwarders out of the loop could be dangerous for national security.

Although the Federal Maritime Commission is not conducting a formal investigation at this time, a source there said the commission will get involved as soon as Korean investors buy a U.S. company and apply for their forwarding license.

The FMC is also considering a related matter that could affect the Korean venture. A Southern California forwarder, Direct Container Line, has petitioned the commission to take action against Korea because it does not let U.S. forwarders establish subsidiaries in Korea.

U.S. forwarders say the FMC should, as a matter of reciprocity, block any attempt by Koreans to establish a forwarding company here.

The FMC source said Mr. De Angelus asked the commission to extend the comment period on the DCL case until April 13, and that the commission has complied with the request.