Young Bros. pitches 5.5 percent rate increase
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Interisland ocean shipper Young Bros. Ltd. is requesting its second rate increase in less than a year to help offset costs for a $186 million plan to improve and develop its shipping infrastructure.
The company has requested a 5.5 percent rate increase, which would raise $3.5 million in a 12-month period, said Roy Catalani, vice president of strategic planning and government affairs.
The state Public Utilities Commission has up to 45 days to review the request, with Young Bros. asking for an effective date of Aug. 1.
All cargo shipments would be affected, the company said yesterday. Young Bros. ships half of the state's cargo, handling 7.5 million tons a year.
Another increase is likely next year, Catalani said.
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Young Bros. Ltd.
said yesterday it has requested a 5.5 percent rate increase for all of its interisland cargo shipments.
If approved by the state, it would be the fourth rate increase in four years for the isle ocean shipper, which raised rates last fall by 7.51 percent.
Young Bros. said yesterday it requested an effective date of Aug. 1. The state Public Utilities Commission can take up to 45 days to review the request.
The $3.5 million in additional annual revenue would help offset costs of a 10-year, $186 million plan to improve its equipment and infrastructure. The company is adding four new, larger barges as well as upgrading facilities in Honolulu, Kawaihae and Kahului. It is also developing a cargo facility in Hilo.
The rate hike comes in the wake of a fuel-surcharge increase earlier this month to 4.22 percent from a 2.78 percent fee set in March. The fee, implemented late last year, covers 37 percent of increased fuel costs, said Roy Catalani, vice president of strategic planning and government affairs.
A fifth straight year of increases is likely in 2009, he said.
"Given our current projections for capital investment and where we think the economy would be, we would foresee a 2009 increase," he said in an interview.
Young Bros. said it may request a rate increase once a year and adjust for fuel prices each quarter.
The infrastructure improvements, announced in March 2006, will cost "far in excess" of the operating income the company is projected to earn over the 10-year period, Catalani said in a statement. This year the company will add two fuel-efficient barges to replace barges more than 30 years old.
With the proposed rate increase, shipping 2,000 pounds of refrigerated isle cabbage will cost about $63; the same amount of frozen chicken will cost about $90; and 40 cubic feet of canned goods, or about 1,920 cans of soup, would cost $31.