Matson to hike
rates 2.5% next year

The Valentine's Day
increase is meant to offset
higher costs

By Jerry Tune
Star-Bulletin

Matson Navigation Co. today said it filed for a 2.5 percent general rate increase, effective Feb. 14, which will affect 70 to 80 percent of goods shipped from the West Coast to Hawaii.

Food suppliers will be among those shippers hardest hit. "We understand their costs go up, but we will pass it along because we can't absorb it either," Roger Godfrey, president of wholesaler Fleming Ha-waii, a division of Fleming Companies Inc.

Matson's planned increase was filed with the Surface Transportation Board which routinely approves increases below the annual 7 percent limit. The company's last across-the-board rate increase was 3.5 percent in February 1997.

Earlier this year, Matson eliminated a 1 percent fuel-related increase.

Matson said the across-the-board increase will help offset rises in operating costs and support investments in the company's fleet, terminal and shoreside operations.

Container equipment purchases this year and next year will total $28 million, the company said, and fleet improvements include the $11 million purchase and modification of the S.S. Lurline. Investments in information systems, much of this to make the firm's computers Year 2000 compliant, will total $10.8 million.

Matson said that a three-year contract with the ILWU which started in 1996 has added 16 percent to Matson's labor costs.

"While Hawaii's economy has remained relatively flat throughout the '90s, Matson's costs have continued to rise," said C. Bradley Mulholland, Matson's president and chief executive. He said Matson, a unit of Alexander & Baldwin Inc., has reduced its costs.

An executive from Sea-Land Service, the other major isle shipper, wouldn't comment until he sees details of Matson's filing.