Matson Navigation Co. said it will increase its fuel surcharge on goods shipped to Hawaii from the mainland to the highest level in 2 1/2 years because of rising oil prices.
The state’s largest ocean shipper will boost the surcharge to 35 percent on March 27, the second increase in as many months. The surcharge is the highest since it reached 37.5 percent in August 2008 in the wake of crude oil’s record ascent to $143 a barrel.
The latest 8.5-percentage-point hike is the largest increase since Matson began breaking out the fuel charge as a separate item on customers’ bills in 1999. The increase is on top of a 4.75-percentage-point hike announced in January that goes into effect tomorrow.
Pasha Hawaii Transport Lines and Horizon Lines Inc., have matched Matson in the past, but have yet to announce changes in their fuel surcharges.
The increase in transportation costs will be passed along to consumers who are already bearing the brunt of higher production costs for many grocery items shipped to Hawaii, said Steve Smith, vice president for VIP Foodservice, a Kahului-based food wholesaler.
FUEL COSTS RISING
Matson Navigation Co. announced yesterday it was increasing its fuel surcharge. Listed here are the surcharges over the years.
Higher fuel costs are hitting businesses at every step of the supply chain, Smith said. "Everybody is going to be paying higher prices, and for consumers it’s tough."
Matson’s latest price surge means that for a container of produce with a base shipping rate of $4,592, the surcharge will rise by $390 next month to $1,607.
The shipper sent a letter to its customers saying the escalation was the result of recent "dramatic increases in fuel costs," caused in large part by the turmoil in the Middle East.
"Last month, when we announced our first upward adjustment to our fuel surcharge in over a year, we hoped that fuel prices would moderate," said Dave Hoppes, Matson senior vice president, ocean services.
"Instead, just the opposite has occurred. Fuel prices have increased dramatically and have been exacerbated by the current unrest in the Middle East."
Hoppes said the price of bunker fuel oil that ships burn recently eclipsed $100 per barrel, "and are quickly approaching the historic highs last experienced in the summer of 2008."
Crude oil futures traded above $100 a barrel yesterday on the New York Mercantile Exchange before closing at $97.88 a barrel. That’s up about 30 percent from late summer when crude was trading at $75 a barrel.
"We recognize that record high fuel prices are a concern for many businesses, as well as the average consumer," Hoppes said. "Unfortunately, transportation companies are especially hard hit, with fuel consumption an unavoidable and significant component of operating costs," he said.
Smith said rising commodity prices are also flowing through to consumers. Higher corn and soybean prices mean feed costs are going up for mainland beef and pork producers, he said. That in turn boosts the processing costs at feedlots "and then comes the ocean freight to get the products to Hawaii," he said.