It has become as routine as the countdown to welcoming the new year in the islands — but without the cheer. On Jan. 1, the cost to ship goods to and from Hawaii on the state’s largest ocean cargo transportation firm will rise.
Matson Inc. announced Wednesday that rates will increase by $175 for each westbound container and $85 for each eastbound container.
Also, a separate terminal handling charge will increase by $50 per westbound container and $25 per eastbound container.
The two increases are identical to hikes implemented at the beginning of this year, and will cause average shipping costs to rise an estimated 5.6 percent.
The company said the higher rates are needed to offset rising operating costs and support investments in its service.
"Matson continues to diligently look for ways to operate the most efficient, cost effective service possible, without undercutting our standards of quality,"Dave Hoppes, Matson’s senior vice president of ocean services, said in a statement.
The firm, which handles about two-thirds of goods shipped to Hawaii, typically makes one annual increase to its shipping and terminal handling fees in early January. Fuel surcharges are adjusted periodically throughout the year, based on shifts in bunker fuel prices.
Matson does not need approval for rate increases, but files them with the U.S. Surface Transportation Board.
Bob Stout, president of Times Supermarkets, questioned the justification for the size of Matson’s increase.
"Idon’t think it needs to be as high as it is,"he said."Of course nobody likes it, and it hurts everybody in the state."
The effect from higher shipping prices is widespread, affecting costs for food, transportation, construction and other sectors.
An estimated 80 percent of what is consumed in Hawaii is imported, and 98 percent of that comes by sea.
Matson uses revenue from its base rate to pay for things like new ships and employee salaries. The company said it has spent nearly $1 billion through the last decade on equipment, including containers and four new ships. Matson expects to spend another $400 million just on two more new ships in the next three to five years.
Terminal handling charges cover onshore expenses Matson incurs from third-party terminal operators. Such expenses include crane costs and paying stevedores who load and unload containers from ships.
Matson initiated the terminal handling fee in 2003 to give customers a better idea of what they are paying for. The item is included on freight bills, and represents about 40 percent of Matson’s operating costs.
"Matson continues to absorb a substantial amount of the expenses associated with terminal operations, the majority of which are driven by factors that are outside of our control,"Hoppes said in the statement.
Matson is a Honolulu-based company with publicly traded stock, and until earlier this year was a subsidiary of local firm Alexander &Baldwin Inc.
The ocean cargo company recently reported that it carried 102,100 containers to Hawaii during the first nine months of this year, down 2.8 percent from 105,000 containers in the same period last year. Matson’s Hawaii automobile volume was down 2.1 percent to 60,000 vehicles from 61,300 vehicles.
Matson earned $30.3 million through September this year on revenue of $1.16 billion. That compared with a $32.6 million profit on $1.09 billion in revenue a year earlier.
SHIPPING AND HANDLING |
Increases for westbound containers to Hawaii: |
|
|
|
Terminal |
|
Basic rate |
handling charge |
2013 |
$175 |
$50 |
2012 |
$175 |
$50 |
2011 |
$120 |
$175 |
2010 |
$120 |
$125 |
2009 |
$120 |
$175 |
2008 |
$75 |
$125 |
2007 |
$100 |
$100 |
2006 |
$125 |
$60 |
2005 |
$100 |
$40 |
2004 |
$125 |
$25 |
2003 |
0 |
** $200 |
** Terminal handling charge implemented
|
Source:Matson Navigation Co. |