Matson was glad to bid '97 aloha

The container shipping company was frustrated on several fronts

By Russ Lynch
Star-Bulletin

Labor problems on the West Coast, railway congestion in Southern California, and continuing economic stagnation in Hawaii combined to make 1997 probably the most difficult year in the 1990s for Matson Navigation Co., the company said today.

Matson, the biggest subsidiary of Alexander & Baldwin Inc., said its Hawaii container volume was down 1.5 percent in 1997 and the number of automobiles it shipped was down 5 percent from 1996. And 1996 had not been a good one for Matson either. Its Hawaii container volume that year was down 3.2 percent and its automobile volume was down 22 percent from 1995.

Last year was a year of frustrations for the company, C. Bradley Mulholland, Matson president and chief executive officer, said in a report prepared for an annual media briefing today.

Problems that brought on the biggest of those frustrations caused a slip in the quality of Matson's mainland-Hawaii service and that is one reason the company won't impose a rate increase this year, Mulholland said.

For years Matson has been covering costs with small annual increases to prevent a big hit on customers, he said, but this year it won't do that because service problems last year hurt its shippers. Another reason is that Matson doesn't want to burden Hawaii businesses in a tough time, Mulholland said.

A railroad merger of Union Pacific and Southern Pacific caused freight slowdowns, which were exacerbated by labor disputes among Los Angeles port pilots and United Postal Service workers, he said.

"A severe ILWU labor shortage compounded the railway congestion problem in Southern California," Mulholland said, "due in part to the fact that new contract provisions expanded ILWU jurisdiction to include on-dock rail facilities."

Freighters had to wait for up to 72 hours until labor was available to load and unload them, he said.

"In 1998, I can assure you that every effort is being made to resume the high service levels customers have come to associate with Matson," Mulholland said.

As a start, Matson expects to have more ship capacity in the mainland-Hawaii trade because of restructuring its Pacific alliance with American President Lines, which recently merged into Singapore-based Neptune Orient Lines.

Matson will drop its mainland-Hawaii-Guam service and replace it with direct mainland-Guam runs. Although that will cut a Guam connection for a small number of Hawaii customers it will increase efficiency, Matson said.

On the mainland, most of the Matson-APL alliance freight will be handled at APL terminals, making movements easier for Matson's own freight, Mulholland said.

Matson, which had its best year in freighting construction materials in 1990, continues to be adversely affected by the slowness in that industry.

"Although tourism is Hawaii's prime industry, changes in the construction industry have the greatest impact on Matson's results," Mulholland said. "The good news is that the descent appears to have finally stopped. The bad news is that there are no clear signs of a recovery."