Firms contest plan to open up shipping

A recent state decision to open up regulated interisland shipping to competition might cause shipping rates to rise and service to fall, according to about 30 neighbor island business representatives who spoke yesterday at a Legislative briefing. 

Farmers, ranchers, retailers and even a hotel industry group testified at the informational briefing on the possible impact of Pasha Hawaii Transport Lines LLC entering the market long served exclusively by Young Bros. Ltd.

The state Public Utilities Commission decided in September to allow a limited service trial by Pasha expected to start up by the end of the year.

PUC Chairman Carlito Caliboso defended the commission's decision, saying the same concerns and objections were raised previously and carefully considered by the commission.

Caliboso also said the PUC decision provides a safeguard against negative impacts on customers because the commission will review financial impacts to Young Bros. and can terminate Pasha's service if the harms of the competition outweigh its benefits.

Young Bros. can't reduce its service or increase rates without commission approval.

Some lawmakers, however, weren't convinced the PUC decision was prudent.

"It is too risky," said Sen. Rosalyn Baker, chairwoman of the Senate Committee on Commerce and Consumer Protection, which hosted the briefing. "The detrimental effects are too real and too potentially devastating to our economy."

Baker, who represents West and South Maui, had the harshest words for Caliboso and his fellow two commissioners on the PUC, calling their decision illogical.

"It just boggles the mind," she said.

The PUC ruling allows Pasha to transport cargo between Honolulu, Kahului and Hilo every two weeks. No stops are possible on Molokai or Lanai because the harbors there are too small for Pasha's ship, the Jean Anne. The Jean Anne is limited to carrying cargo that can be driven onto its decks. Livestock and refrigerated cargo won't be carried.

Young Bros. contends that Pasha is cherry-picking more profitable trade segments, which will take away valuable business that results in reduced service and higher prices, particularly on more costly routes such as Molokai and Lanai.

The PUC considered positions of both carriers and other testimony that included opposing opinions from local economists and shipping customers, and took what it describes as a guarded approach. An interim approval establishes a trial period for Pasha service through Dec. 31, 2013. During that time the PUC will collect operating data from both carriers to make a more informed final decision, which could come before the end of 2013.

Some concerned business leaders asked the committee to intervene in the matter, though it's unclear what action the Legislature could take to stop Pasha from operating.

Some senators questioned why the PUC didn't hold public hearings on neighbor islands to hear from concerned businesses in person.

Sen. Dwight Takamine (D, Hamakua-South Hilo) said that showed arrogance by the commission.

Sen. Russell Kokubun (D, South Hilo-Puna-Kau) said the lack of public hearings reflects Oahu-centric thinking by the commission.

Caliboso said the commission typically doesn't hold public hearings in such cases, but did receive lots of written testimony from many farmers and ranchers directly or through Young Bros. raising the same issues discussed yesterday.

Some businesses welcome Pasha's entry and expect benefits from competition, but others -- such as Mauna Kea Banana Co. on the Big Island and Friendly Market on Molokai -- worry about negative impacts.

"This has the potential of killing agriculture on the outer islands," said Dean Okimoto, an Oahu farmer and former president of the Hawaii Farm Bureau Federation.

Darren Strand, president of Haliimaile Pineapple Co., said his company has received $100,000 this year in shipping discounts from Young Bros., and he worries that could disappear. "We don't know how it's going to impact us," he said.