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Matson raising shipping costs


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POSTED: Wednesday, November 25, 2009

Hawaii consumers, already struggling in a tough economic environment, could see higher prices for groceries and other commodities next year.

Matson Navigation Co., the state's largest ocean shipper, said yesterday it is raising rates for Hawaii service an average of 3.8 percent, with rates increasing $120 per westbound container and $60 per eastbound container, which traditionally has lower volume. In addition, Matson is raising its terminal handling charge by $125 per westbound container and $60 per eastbound container.

All the changes go into effect Jan. 3.

Matson said the rate increases will help offset rises in its operating costs and will support ongoing investments in its Hawaii service.

“;While Matson recognizes this is a difficult time economically, this rate adjustment is consistent with our long-standing philosophy of implementing modest, incremental increases as necessary to maintain the highest level of service to our customers,”; said Dave Hoppes, Matson senior vice president, ocean services.

Carol Ai May, vice president of City Mill, said her company has made a commitment to be competitive, and the impending increases are another economic blow since City Mill ships by sea about 80 percent of its goods from the mainland.

;[Preview]  Matson to Increase Rates on Shipping, Handling
 

Matson will be raising the basic shipping rate and a terminal handling charge come January.

Watch ]

 

“;It's like, here we go again,”; Ai May said. “;This is the most taxed state in the nation, and it's a very difficult place to do business and now it's another thing that's just making this a very, very difficult year.”;

For example, lumber, shipped on a 40-foot flat rack, will go up 6.9 cents per two-by-four, according to Matson.

Among other selected items, canned beverages will go up about one-half cent a can, lettuce will increase by 1 cent a head and 20-pound bags of rice will go up 10.8 cents per bag.

Ai May said City Mill, which sells tools, supplies and building materials, among other things, said, “;If our big competitors absorb it, we'll absorb it.”;

She added, “;We're a local, 110-year-old company, and this is our home. This is where we do business, and we've promised to be competitively priced, so we're just going to take it day by day.”;

Matson said that over the last several years it has implemented across-the-board cost-cutting measures “;without undercutting the quality of its service.”;

The company cited work-force reductions and the idling of two Matson vessels to ensure the company provided the most economical service possible.

“;Nevertheless, Matson remains committed to making long-term investments that will provide the state with a strong ocean transportation infrastructure,”; Hoppes said.

Matson has invested nearly $600 million in fleet enhancements—including more than $500 million for construction of four new container ships—since implementing a terminal handling charge in 2003. Terminal handling costs—associated with moving cargo through terminals—comprise more than 40 percent of Matson's operating expenses, and Hoppes said some of those costs need to be passed on to customers.

The company also charges customers a fuel surcharge that varies with the cost of bunker fuel. Last month, Matson lowered its fuel surcharge to 24 percent from 28 percent.

RISING RATES

Matson rate increases for westbound containers to Hawaii from 2000:

2000—3.9%
2001—3.5%
2002—2.75% (deferred due to Sept. 11, 2001)
2003—None (implemented terminal handling charge of $200)
2004—$125 per container or 4.4%; $25 THC*
2005—$100 per container or 3.5%; $40 THC*
2006—$125 per container or 3.9%; $60 THC*
2007—$100 per container or 3.3%; $100 THC*
2008—$75 per container or 2.5%; $125 THC*
2009—$120 per container or 3.9%; $175 THC*
2010—$120 per container or 3.8%; $125 THC*

* Terminal handling charge

Note: Rates were changed from flat fees in 2004; westbound rates are traditionally higher due to higher volume than eastbound shipments from Hawaii to the mainland.

Source: Matson Navigation Co.

 

GETTING MORE EXPENSIVE

Examples of the $120 westbound rate increase and the $125 terminal handling charge when added to selected commodities, effective Jan. 3:

Canned beverage
40-foot-high cube, with 51,744 12-ounce aluminum cans in container
$245/51,744 cans = .47 cent per can

Lettuce
40-foot-high cube, with 24,000 heads per container
$245/24,000 heads = 1 cent per head

Rice (20-pound bag)
40-foot container, with 2,280 20-pound bags of rice
$245/2,280 bags = 10.8 cents per 20-pound bag

Lumber 2x4, 8 feet long
40-foot flat rack, with 3,550 two-by-fours
$245/3,550 = 6.9 cents per two-by-four

Source: Matson Navigation Co.