Young Bros. increases its shipping rates by 5.5 percent under pilot program

Young Bros. has raised its shipping rate for interisland cargo by 5.5 percent under a new rate-making process that allows the company to make automatic adjustments between general rate cases filed with the Public Utilities Commission.

The rate increase, the first in nearly two years for Young Bros., went into effect Friday. It follows a 16.6 percent increase in Young Bros.’ shipping rates in 2011.

The PUC cleared the way for the latest increase in October when it approved Young Bros.’ request to implement an "annual freight rate adjustment pilot program."

That AFRA program allows Young Bros. to take revenue from the most recent calendar year and adjust it to reflect a PUC-set inflation rate for nonlabor expenses and increases in labor expenses for union and nonunion workers. Rate increases are capped at 5.5 percent annually under the pilot program.

Friday’s increase would have been higher if not for the cap, according to Young Bros.

Under the pilot program, Young Bros. will use the automatic rate adjustment in the first two years and file a general rate case in the third year. The program’s three-year cycle will continue in the future.

With the latest rate increase, it costs $3.05 more to ship a pallet of 2,964 beverage cans from Honolulu to Molokai, or seven-tenths of a cent per can. The cost to ship a 2,000-pound pallet of agricultural products rose by $3.47, or one-tenth of a cent per pound. Shipping costs for an entire 20-foot container of general cargo between the two ports rose by $33.96, or $3.40 per ton.

Although Young Bros.’ interisland cargo volumes have been rising over the past year, the levels are still about 20 percent lower than they were before the 2008-2009 recession, according to the company.

The drop in cargo volume during the economic downturn was particularly difficult for the company because it had to maintain the same frequency of service even as its revenue declined.