Matson ups fuel surcharge


POSTED: Saturday, June 06, 2009

Matson Navigation Co. is boosting its fuel surcharge again—by the largest amount in at least a decade—even though its recently announced fuel surcharge hasn't gone into effect.

The state's largest ocean shipper, citing rising bunker fuel prices, said yesterday it will increase its fuel surcharge for its mainland-Hawaii trade by 8 percentage points—to 28 percent from 20 percent—beginning on July 5.

Matson's increase is its third in a row following six consecutive decreases and was announced before its previous increase—3.5 percentage points to 20 percent—goes into effect on June 21.

The company also said it is boosting its surcharge for its Guam/CNMI and Micronesia service by 8 percentage points to 29.5 percent from 21.5 percent, also effective on July 5. A previously announced 3.5 percentage-point increase to 21.5 percent will be implemented on June 21.

“;As many of our customers are aware, fuel prices have risen dramatically in recent months,”; said Dave Hoppes, Matson's senior vice president, ocean services. “;The continuing upward trend in fuel-related costs make this new increase, the third in recent months, necessary.”;

Hoppes said fuel costs directly affect Matson and other transportation companies' operating costs and are an unavoidable expense.

“;We had hoped the fuel costs would moderate, but just the opposite has occurred,”; Hoppes said.

Mattson Davis, president and chief executive of Kona Brewing Co., said the increase will cost his company $35,000 to $40,000 for the rest of 2009. Kona Brewing uses Matson to ship malt, hops and supporting equipment and supplies, as well as 20,000 barrels of bottled beer it produces at its Portland, Ore., brewery. Kona Brewing also produces 11,000 barrels of draft beer in Hawaii.

“;It just chews up our margin,”; he said. “;In the beer world we've seen our costs increase 40 percent in 2008 versus 2007 and 30 percent in 2009 versus 2008.

“;On top of a dwindling margin based on the costs of goods to make beer, this is a fluctuating and ever-changing price. We buy grain on contract so we have a price for the year. Fuel is constantly up and down and is just very detrimental to our bottom line.”;

Matson spokesman Jeff Hull acknowledged it was the largest increase in at least the last 10 years but couldn't determine whether it was the largest ever because he couldn't “;verify actions over the past 125 years”; of the company. The highest increase previously over the last decade was a 5-percentage-point increase to 29 percent on Dec. 14, 2007.

The company said the 8 percentage-point increase will increase the cost of shipping a privately owned car between Hawaii and the mainland by $68.14, to $1,171.14 from $1,103.

Twelve-ounce canned beverages will rise by $223 per 40-foot container, or less than 1 cent per can. Lettuce will increase by $348 per container, or 1.45 cents per head. Rice will go up by $159 per container, or 6.96 cents per 20-pound bag. And lumber (2-by-4s) will rise by $153 per 40-foot flat track, or 4.32 cents per 2-by-4.

Horizon Lines, the second-largest shipper in the islands, previously said it was increasing its surcharges 3.5 percentage points to 20 percent for its mainland-Hawaii service and 21.5 percent for its Guam/CNMI trade. Both those surcharges go into effect tomorrow. Horizon said it was reviewing Matson's latest increase.

Pasha Hawaii, which transports vehicles from Honolulu to San Diego, also is reviewing Matson's move. Pasha recently announced it was increasing its surcharge 5 percentage points to 17.5 percent, effective June 21.