Customers of interisland cargo transportation firm Young Brothers LLC will be paying 46% more to ship goods under a regulatory decision made today.
The state Public Utilities Commission granted an emergency rate increase to the company following a hearing on Friday.
The increase is expected to boost Young Brothers interisland shipping revenue by $27 million, which is moderately less than a $30.4 million increase that the company sought based on what it forecast would be enough to break-even financially.
Young Brothers, which sought the emergency rate increase on July 7, told the PUC that it “will have no choice but to immediately begin the process of discontinuing regulated intrastate water carrier services” if it didn’t receive an increase by today.
In May, Young Brothers requested that the state Legislature give the company $25 million from Hawaii’s share of federal COVID-19 emergency funds to sustain operations through this year. Lawmakers did not provide such assistance.
Young Brothers claimed that its Seattle-based parent, Saltchuk Resources Inc., decided to quit putting cash into the interisland cargo carrier to cover financial losses after doing so for the last two years. The company also claimed that it could not find viable other sources of capital.
“It is from this extremely difficult position that the commission makes the decision,” the PUC said in its order.
The PUC attached several conditions to the approved rate hike. They include a requirement that Young Brothers resume its full “pre-COVID” sailing schedule by Sept. 1, which would restore an additional sailing from the ports of Hilo and Kahului to Honolulu.
Another condition requires Young Brothers to submit to a financial and management audit by an independent examiner selected by the PUC.
PUC conditions also prohibit Young Brothers from receiving any further general rate increases for 12 months, and requires the company to develop and implement a comprehensive customer service plan.