State regulators today approved a rate hike of 16.58 percent for Young Brothers that will raise the cost of shipping goods interisland.

The increase, which will generate $10.6 million in revenue for Young Brothers, is less than the 23.97 percent hike originally sought by the company.

The hike approved by the Public Utilities Commission will result in higher prices for some goods on the Neighbor Islands and mean higher costs for farmers shipping refrigerated produce to Honolulu.

Young Brothers said it needed to raise rates because it otherwise would not have been able to sustain its ability to serve customers in the face of falling cargo volumes.

 PUC Chairwoman Hermina Morita said the commission attempted to balance Young Brothers’ “financial health with adequate service at reasonable rates.  We recognize that rate incrases are difficult for customers, especially in today’s economic climate, but regular cargo service is critical in maintaining economic activity throughout Hawaii,” she said.