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Matson fuel cost climbs to 26.5%

The change, effective Feb. 27, follows raises in its base rate and terminal handling rate

By Kristen Consillio


Matson Navigation Co., the state's largest ocean shipper, will boost its fuel surcharge by 4.75 percentage points to 26.5 percent next month, further increasing the cost of shipping mainland goods to Hawaii.

The new fuel surcharge, effective Feb. 27, is the first increase in a year for Matson, which raised its ocean freight charge, or base rate, by an average 3.8 percent and its flat-rate terminal handling charge by 19.4 percent on Jan. 2. The current fuel surcharge is 21.75 percent.

For a container of produce with a base shipping rate of $4,592 to Hawaii from the mainland, the fuel surcharge will increase by $218 next month to $1,217 from $999.

"Unfortunately, fuel prices have been rising dramatically over the past several months, necessitating this new upward adjustment," said Dave Hoppes, Matson senior vice president, ocean services. "Fuel costs comprise a substantial component of Matson's operating costs and are an unavoidable expense for transporting goods."

Bunker fuel costs are approaching the high prices seen in early 2008 when Matson's fuel surcharge exceeded 30 percent, he said.

Matson previously decreased fuel surcharges by 2 percentage points on July 18 and by 3.75 percentage points on Sept. 12. The company also will raise its fuel surcharge to 28 percent from 23.25 percent for its Guam/Commonwealth of the Northern Mariana Islands and Micronesia service next month.

Pasha Hawaii Transport Lines General Manager Reggie Maldonado is reviewing the issue, while Horizon Lines Inc., which implemented identical base and terminal handling rate hikes this month, did not respond to calls for comment.

"Of course, everybody has the same complaint that these kinds of increased fuel surcharges will mean higher and increased costs for the consumer," said Tish Uyehara, marketing director at Armstrong Produce Ltd., which ships 1.5 million pounds of goods to Hawaii each week and distributes them to supermarket chains, hotels, restaurants and military commissaries on Oahu and the neighbor islands. "It certainly does impact all business margins when these kinds of taxes, in a sense, are added to the cost of doing business in Hawaii."

Fuel surcharges are adjusted periodically to match increases and decreases in fuel prices.


Commodity examples of the impact of Matson Navigation Co.'s 4.75 percentage-point increase in its fuel surcharge:

12-ounce canned beverages
» $142 per 40-foot container
» 51,744 12-ounce canned beverages in a 40-foot container
» $142/51,744 = less than a half-cent per can (0.27 cents)

» $216 per 40-foot container
» 24,000 heads of lettuce per 40-foot container
» $216/24,000 = less than 1 cent per head of lettuce (0.9 cents)

» $106 per 40-foot container
» 2,280 20-pound bags of rice per 40-foot container
» $106/2,280 = 4.63 cents per 20-pound bag

Lumber (two-by-fours)
» $81 per 40-foot flat rack
» 3,550 two-by-fours per 40-foot flat rack
» $81/3,550 = 2.28 cents per two-by-four

Source: Matson Navigation Co.



Matson Navigation Co. announced yesterday it was increasing its fuel surcharge for the first time in about a year:

May 24, 2009: 16.5%

June 21, 2009: 20.0%

July 5, 2009: 28.0%

Oct. 4, 2009: 24.0%

Feb. 7, 2010: 27.5%

July 18, 2010: 25.5%

Sept. 12, 2010: 21.75%

Feb. 27, 2011: 26.5%


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