No rate increase
in January

But the shipper
reserves the right to increase
them later next year

By Peter Wagner

Citing Hawaii's ailing economy, Matson Navigation Co. today announced it will not seek its customary January rate increase for West Coast-to-Hawaii container cargo service.

Matson increased rates 3.5 percent this year. Annual increases over the past five years average slightly over 3.6 percent.

The company today also said it plans to reduce its 1.75 percent fuel surcharge to 1.5 percent of shipping costs. The surcharge passes increases in fuel costs on to customers.

"Clearly, Matson and its customers in Hawaii have felt the effects of Hawaii's lackluster economy in recent years," said C. Bradley Mulholland, Matson president. "We strongly support the state's current program to turn this economic environment around."

The company, however, said it may increase freight rates later next year "if necessary."

Mulholland noted that shipping costs typically add less than 5 percent to the cost of goods brought in to Hawaii.

"Matson views this deferral as an opportunity for Hawaii's kamaaina carrier to help lessen the burden island businesses will face next year," he said.

The announcement comes despite a rise in operating costs this year -- including a new contract with the International Longshoremen's & Warehousemen's Union that added 16 percent to labor costs, Mulholland said.

Second-quarter shipments of containers and cars also were down in the second quarter of this year, although the company reported a 1 percent increase in revenues.

Matson, a wholly owned subsidiary of Alexander & Baldwin Inc., said it plans to invest $75 million in containers, vessels, and other equipment in the coming year.

The company's shipping rates vary from commodity to commodity. According to Matson spokesman Jeff Hull, it costs about $802 to ship an automobile to Hawaii from the West Coast, including wharfage charges.

Officials at Sea-Land Service Inc., Matson's competitor in West Coast-Hawaii trade, could not be reached for comment on whether it would also hold rates steady. Last December, Sea-Land followed Matson in raising rates for 1997.

Matson's announcement was welcomed today by other carriers dealing with Matson in the West-Coast-to-Hawaii service.

"This is good news definitely for Hawaii," said Bill Thayer, general manager at Waldron Steamship Co. "We have a German liner called Hapag-Lloyd that brings in cargo to the West Coast from Europe and feeds into Matson."

Waldron is a shipping agent representing most bulk cargo shipping companies calling at Barbers Point Harbor. Bulk cargo rates reflect worldwide fluctuations in the "tramp ship market," Thayer said.

Both Matson and Sea-Land earlier this year passed on a 25 percent increase in state wharfage fees.

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