State seeks big hike in harbor fees

The state Department of Transportation wants to hike fees for unloading cargo at Hawaii ports by about 50 percent over two years in a move that would pay for harbor improvements and likely make most things local consumers buy more expensive.

The Department of Transportation proposes to raise fees for using state wharves 17 percent next month, then 15 percent next July followed by another 15 percent in July 2018.

Compounded, the increases amount to a 55 percent hike and would add about $100 to the charge on a 40-foot container, from $179 today to $277 in 2018.

There also would be a $15 security fee added to each container or shipped item under 60,000 pounds.

If implemented, the higher costs affecting prices of goods including food, general merchandise, building materials, cars and fuel will follow seven straight years of increased wharfage — payment for use of the port — that compounded into a 180 percent increase, or a near tripling, since 2010.

The DOT intends to make a decision on its own proposal Nov. 25 and has scheduled public hearings on the subject throughout November.

Hawaii is hugely dependent on ocean cargo, as about 80 percent of all goods consumed in the state are imported, and 98 percent of that comes by ship, according to state estimates.

Earlier this week, the DOT wasn’t able to say about how much money the proposed increases would raise. But the agency said it is spending $450 million on the Kapalama Container Terminal that will expand Honolulu Harbor’s container yard space by 80 acres.

DOT also said state-owned commercial harbors need to pay for themselves from operations because the agency gets no money from the state’s general fund for harbor administration, maintenance or development.

According to an April bond rating report from Fitch Ratings, Hawaii has $618 million worth of port improvement plans that will require selling $250 million in revenue bonds in the current fiscal year that began July 1.

The state is getting more revenue through its ports just by way of increased cargo volume. The Fitch report said cargo volume rose 2.3 percent in fiscal 2015 to 20.9 million tons and is above pre-recession levels. The report also said harbor revenue in the nine months through March was 3.5 percent above the DOT’s budget while expenses were 12 percent below budget.

Paying for harbor improvements is largely falling to local businesses and consumers through wharf use fees that will be felt in their pocketbooks.

“We will have to pass these charges to our customers (wholesalers) who will then increase the shelf price of the products,” Tony Fairfax, a merchant importing goods to Honolulu and Hilo from Los Angeles, said in an email.

He added that he views the added security fee for containers coming from other states as bogus. “Why do containers coming from the mainland need to be checked again?” he said.

Matson Inc., Hawaii’s largest ocean cargo transportation company, said it understands the need for the harbor improvements and fees to pay for the work.

“We support the state’s program and see it as necessary to support a growing economy,” Keoni Wagner, a Matson spokesman, said in an email. “Matson has already outgrown its footprint. The improvements will increase operational efficiency and safety for all harbor users and are needed to accommodate continued growth in the economy.”

Matson, which collects wharfage from customers and passes it on to the state, calculated that for some items, the cost increase from the harbor fee hike will be small. For instance, a 17 percent increase to wharfage amounts to about 1/3 of a cent on a six-pack of soda.

Kelvin Shigemura, vice president of Armstrong Produce Ltd., said the average cost for shipping a container for his company is about $7,500. So another $100 isn’t a very big additional expense, especially compared with fuel surcharges and terminal handling charges. Still, it adds up. “Any type of increase is going to affect the cost of living here,” he said.

Beyond 2018, the DOT proposes automatic annual wharfage increases of either 3 percent or the inflation rate as measured by the consumer price index, whichever is greater.

The first public hearing on the proposal will be Nov. 7 at noon at the Pier 11 terminal at Honolulu Harbor. Another Oahu meeting will be Nov. 23 at 6 p.m. at the same location.

Neighbor island meetings will be Nov. 7 on Hawaii island, Nov. 9 on Maui, Nov. 10 on Lanai, Nov. 21 on Kauai and Nov. 22 on Molokai. Meeting places and times as well as details of the proposal can be found at 808ne.ws/hiharbors online.