Matson to raise shipping rates starting Jan. 1

Matson Navigation Co. will increase shipping costs from the mainland to Hawaii by an average of 5.6 percent beginning next year.

The state’s largest ocean shipper said Tuesday that rates will rise $175 for each westbound container and $85 for each eastbound container, effective Jan. 1. In addition, the subsidiary of Honolulu-based Alexander & Baldwin Inc. said it will raise its terminal handling charge by $50 per westbound container and $25 per eastbound container.

"This rate increase reflects the rise in operating costs that Matson — like almost every other business — is experiencing, and helps support ongoing investments in our Hawaii service," said Dave Hoppes, Matson senior vice president, ocean services. "While Matson recognizes this is a difficult time economically, this rate adjustment is consistent with our long-standing philosophy of implementing modest, incremental increases as necessary to maintain the highest level of service to our customers."

Last year, Matson boosted its westbound shipping rates an average of 7.1 percent.

Shipping and terminal handling fees have been assessed annually in addition to the fuel surcharges that the company adjusts periodically throughout the year. Matson has lowered its fuel surcharges three times since reaching a peak of 47.5 percent in June and now charges 40.5 percent.

The latest increase didn’t sit too well Tuesday with City Mill Vice President Carol Ai May.

"That certainly affects our cost of goods — how much we have to pay for the merchandise we sell," said Ai May, whose company has eight stores on Oahu. "We bring in hundreds of containers a year and 12 a week, but not all of them are Matson. Everything we sell comes over on those ships."

City Mill ships lumber, car tools, electrical components, hardware, garden supplies and more.

The cost for shipping a container of lumber, for example, will rise to $3,767.81 from $3,471.93, including the 40.5 percent fuel surcharge.

"Lumber is one of the commodities that’s very competitive and we really do not make money selling lumber," Ai May shuddered.

Among other goods, Matson said the new rates will increase the cost for shipping a container of canned beverages to $5,570.42 from $5,274.55, a container of lettuce to $7,822.64 from $7,526.76 and a container of rice to $4,494.19 from $4,198.32.

The cost of shipping a privately owned vehicle from California to Hawaii will increase $25 to $1,097.

Matson does not need approval for rate increases, but files them with the U.S. Surface Transportation Board.

The company said increases in the shipping and terminal handling fees are necessary to allow it to provide Hawaii with a strong ocean transportation infrastructure. Since 2003, Matson has invested more than $700 million in four new container ships, fleet enhancements, new container equipment, information technology and upgrades to its terminal facilities.

Matson’s terminal handling charge is designed to recover a portion of the costs associated with the movement of cargo through terminal facilities on the West Coast and in Hawaii. It was initiated in 2003. The charge, which is standard in the industry, is a separate line item that appears at the bottom of a customer’s freight bill. Terminal handling costs make up more than 40 percent of Matson’s overall operating costs, Hoppes said.

"Matson continues to absorb a substantial portion of the costs associated with terminal operations, the majority of which are driven by factors that are outside of our control, but needs to pass on some of the expenses to our customers," Hoppes said.

A&B’s stock slipped 29 cents Tuesday to $35.12. The fee announcement came after the market closed.