Interisland cargo decline continues

Slackened demand for goods on the neighbor islands and the loss of a big customer pulled business down a bit for Hawaii’s largest interisland cargo operator for a third consecutive quarter.

Young Brothers Ltd. announced in a report set for release Friday that its cargo delivery volume between Honolulu and six neighbor island ports slipped 1.9 percent during the first three months of the year compared with the same period last year.

The decline followed a 0.2 percent dip in last year’s fourth quarter and a 2.1 percent decrease in the third quarter.

Local economist Paul Brewbaker of TZ Economics said the small declines are kind of a head-scratcher given that major elements of the neighbor island economies such as tourism, real estate and construction have been doing fairly well.

"Right now, it’s not entirely clear where there may or may not be a disconnect," he said. "The neighbor islands look pretty good until you look at container shipments."

Brewbaker said that perhaps the size of cargo volume gains in the first quarter of last year was the anomaly. Or maybe there were some ripples from the West Coast port slowdowns earlier this year that affected neighbor island shipping.

Roy Catalani, vice president at Young Bros., characterized the first-quarter volume as continuation of a trend in "a narrow range on either side of even."

During the first quarter, cargo volume dropped in five of the six neighbor island ports served by Young Bros.

The biggest decline on a percentage basis happened on Lanai where 271 fewer container/platform equivalents, or CPEs, were delivered to the island and helped create a 17.4 percent drop that included a small rise in outbound cargo.

On Maui, outbound cargo dropped 16 percent, or by 504 CPEs. But more inbound shipments produced a smaller overall decline of 4.1 percent.

The other declines were 4.8 percent for Kauai, 2.9 percent for Hilo and 1.6 percent for Molokai.

The only gain happened in Kawaihae on Hawaii island, where there was a 10.5 percent rise driven by both exports and imports.

Overall, the 2.1 percent decrease for all Young Bros. interisland shipping represented 585 CPEs, which is a measurement to compare cargo volumes across different sizes of containers.

By cargo type, large declines occurred in government shipments and goods for the food and beverage industry.

Young Bros. said the drop in food and beverage shipping, which is the largest category of business for the company, was largely the result of one big customer opting for another transportation service.

Government cargo was down mainly because of fewer shipments by federal agencies, Young Bros. said.

Automobile shipments were up for new vehicles but down for rental fleets.

Construction, another industry that has a big impact on shipping, was down largely because of a continuing drop-off on Lanai.

The billionaire owner of Lanai, Larry Ellison, had been renovating attractions on the island at a furious pace for most of last year — upgrading one luxury hotel, redesigning a golf course, rebuilding a theater, redoing landscaping in Lanai City and more. More work is still to be done, but much of the equipment and materials have been delivered, which shows up in a year-over-year decline.

Agricultural cargo — locally grown products that qualify for a shipping discount — was a bright spot with a 2.9 percent gain in the first quarter compared with a year earlier. The uptick represented a rebound from a 0.8 percent dip in the fourth quarter.

More agricultural shipments in the first quarter were driven by a 37 percent surge out of Kawaihae, which Catalani said was due to milk exports.

Big Island Dairy LLC, the largest dairy in the state, has been doubling the size of its milking herd from about 1,100 cows to 2,200 cows and sending more fresh milk to Oahu.

Shipping of agricultural goods from Oahu to the neighbor islands also increased by 31 percent. Other ports — Maui, Hilo, Kauai and Molokai — all had agricultural cargo declines.

"Only two ports experienced an increase in agriculture exports, but it was still enough to keep overall volume positive for this category," Catalani said.

CARGO AT PORTS

Shipping volume between Honolulu and neighbor island ports fell in the first quarter of 2015 from the year-earlier period (measured in container/platform equivalents):

* Total does not include multiple shipments between islands.Source: Young Brothers Ltd.