Matson costs rise
The shipping firm is increasing its fuel surcharge to a record 29 percent next month
STORY SUMMARY »
Matson Navigation Co.'s fuel surcharge will go up - again.
Matson, citing the recent surge in global oil prices, is increasing its fuel surcharge by 5 percentage points to a record 29 percent, effective Dec. 14.
Costs up for goods
Here are examples of how the newly revised fuel surcharge will affect the cost of shipping various goods between the mainland and Hawaii starting Dec. 14:
» Automobiles: $1,013, up from $975
» 12-ounce canned beverage: 40-foot container, 51,744 cans in a container, up $130 per container or one-quarter of a cent per can
» Lettuce: 40-foot container, 24,000 heads in container, up $208 per container or nine-tenths of a cent per head
» 20-pound bag of rice:
40-foot container, 2,280 20-pound bags, up $90 per container or 3.9 cents per
Source: Matson Navigation Co.
The state's largest ocean shipper said the decision was driven by unprecedented demand for oil on the world market, and that it might consider yet another increase in January if fuel prices remain at the same levels.
Hawaii's already high prices are expected to be pushed even higher by the increased fuel surcharge, although not all economists think there will be an immediate and direct impact.
Matson had announced last month that it would raise its fuel surcharge by 2 percentage points to 26 percent on Dec. 2. Now it has decided instead to forego those plans and raise the surcharge by a total of 5 percentage points in mid-December.
A previously announced increase by rival Horizon Lines boosted that shipper's surcharge to 25 percent effective last Sunday.
That means it will cost $38 more - or $1,013 - to ship a car on Matson, with corresponding increases for shipping containers used to transport staples such as rice, lettuce and beverages.
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Matson Navigation Co., the state's largest ocean shipper, is raising its fuel surcharge to a record 29 percent next month instead of 26 percent as it announced back in October.
The 5-percentage-point increase from the current 24 percent will take effect Dec. 14 instead of Dec. 2. It surpasses the 25 percent surcharge that competitor Horizon Lines implemented Sunday.
But that might not be the end of it.
Matson might consider yet another increase in January if fuel costs remain at the same levels. The company has boosted its surcharge five times since March.
Inevitably, the fuel price increases are expected to push inflation higher and to trickle down to the consumer, although not all economists agree on an immediate and direct correlation.
"Our decision to revise our previously announced increase in our fuel-related surcharge is driven entirely by unprecedented demands for oil in the world market," said Dave Hoppes, Matson's senior vice president of ocean services.
The fuel surcharge applies to the company's Hawaii, Guam and Micronesia services.
Horizon Lines declined to say yesterday whether it would match Matson's latest move, stating only that it plans to review its surcharge once Matson's is officially filed.
Hoppes said that since October, when Matson announced plans for the smaller increase to 26 percent, fuel costs have risen an additional 24 percent. Matson's overall fuel-related costs have gone up more than 36 percent since it previously announced an adjustment in July.
"These rises in fuel prices comprise a large component of operating costs for the transportation industry, both on land and at sea," he said. "The recent spikes have been unusually dramatic and we recognize the impact they have on our customers and consumers in general. Unfortunately, the costs are unavoidable and outside Matson's control."
Paul Brewbaker, Bank of Hawaii economist, said the cost of oil has gone up from $50 to nearly $100 per barrel over the last year, so surcharge increases come as no surprise. But food prices in Hawaii will be no more expensive than anywhere else where food is transported by liquid fuels.
"Everywhere on the planet, oil is more expensive," he said.
However, he said, commodity prices in general have also risen dramatically over the last year.
"It may be more expensive to transport lumber, but it may also be that lumber is more expensive," Brewbaker said. "My guess is that the fuel part is the second order. I see people driving around in their cars like they don't really care how much the gasoline is."
The price commodity inflation in the last year or two can be broadly identified with the growth of emerging market economies and a component of political risk that's shown up of late, Brewbaker continued.
But to make a direct correlation from higher fuel prices to higher consumer prices for goods in Hawaii is just too simple, he said.
"There is a general pass-through of some of these costs, but it's not dollar for dollar," he said. "If you're a shipper, you'll see what it costs per container to move a container. I don't think it really comes down to something that people see on the grocery shelf. ... You'll see it in the paper, for sure, but you might not see it at the grocery store."