Matson to name ship after Inouye

Matson Inc., the state’s largest ocean shipper, will pay tribute to late U.S. Sen. Daniel Inouye by naming one of two new container vessels it is acquiring after the longtime maritime industry supporter.

The gesture by Matson comes at a time when it is under heavy criticism for a molasses spill in September that leaked 233,000 gallons of the thick, syrupy substance into Honolulu Harbor and killed 26,000 fish. An initial cost of $1.3 million related to that spill from a corroded steel pipe contributed to Matson’s earnings declining 9.9 percent in the third quarter. Future costs, penalties, damages or expenses related to the incident still have to be determined, the company said.

Matson said Wednesday the vessel named after Inouye will be the first of two 850-foot "Aloha Class" ships being built under its $418 million contract with Aker Philadelphia Shipyard Inc. The vessels will be the largest Jones Act containerships ever constructed and are expected to be delivered in the third and fourth quarters of 2018.

"The decision to name the first Aloha Class ship in honor of Sen. Inouye was a natural one," Matson President and CEO Matt Cox said in a statement. "He is recognized throughout the maritime industry as one of its most powerful advocates. Having a modern, U.S.-flag containership dedicated to serving Hawaii bear his name is an appropriate tribute to this great man."

The Jones Act requires that all cargo moved between two U.S. seaports be shipped on vessels that are built in the United States, owned by a U.S. citizen or company and manned by a U.S. crew. The law is intended to protect domestic shipping and ensure a capable merchant marine in times of war.

In addition to costs related to the molasses spill, Matson said a decrease in auto and container shipments also factored in its lower net income last quarter.

The $1.3 million in molasses-related costs included response costs, legal expenses and third-party claims for the molasses spill. Cox said in an earnings conference call that Matson is cooperating fully with a federal grand jury subpoena received last month for documents linked to the spill.

Matson also has received information requests about the spill from the state departments of Health and Transportation.

The company has since suspended its molasses operation although there was no impact to container operations, Cox said on an earnings conference call.

Last quarter, net income fell to $17.2 million, or 40 cents a share, from $19.1 million, or 45 cents a share, in the year-earlier period. Revenue rose 3.4 percent to $415 million from $401.4 million.

"We still think it’s too early to say that the Hawaii recovery is complete and this was an example of the uneven nature of the market rebound," Cox said during the conference call.

In its core market of Hawaii, automobile shipments from the mainland to Honolulu dropped 24.3 percent to 16,800 from 22,200 due to the timing of rental fleet replacement, while container shipments slipped 3.1 percent to 34,600 from 35,700. Matson warned that the slowdown will continue with Hawaii container volume in the fourth quarter "modestly lower" than the year-earlier quarter.

The company also said it will conduct a $100 million, senior unsecured private placement of 30-year debt. It plans to issue the notes in early 2014 at a long-term fixed rate of 4.35 percent.

Matson’s stock fell 38 cents, or 1.4 percent, to $26.97 Wednesday on the New York Stock Exchange. The financial results were announced before the market opened.