Gathering Places
Gathering Places
Improved ocean transportation
could help Hawaii’s economyFor years, Hawaii's government and business leaders have talked about diversifying the economy. Now is a good time to make changes and the first order of business should be to modernize ocean transportation systems serving the islands. Such a move would:
>> Lower shipping costs, resulting in lower prices for Hawaii consumers;Two carriers currently dominate Hawaii's shipping industry, Matson and CSX Lines. Both have contributed to the growth of the state's economy over the years by developing efficient methods of transporting dry and refrigerated cargo from the West Coast to Hawaii.>> Improve interisland links for freight;
>> Reduce trucking costs by reducing delivery time;
>> Develop Hawaii exports through better ocean freight links.
But there's much room for improvement. Shippers have long complained of high freight rates and increasingly unreliable service. Some observers say another ocean carrier is not needed in Hawaii. The truth is, competition is good for the state and the shipping industry.
The produce industry, with which I am associated, also has suffered through these tough economic times. Local produce wholesalers must deal with high shipping rates and growing competition from big-box retailers.
Average shipping rates for big-box retailers are generally hundreds of dollars less than what local produce wholesalers have to pay the two major shipping lines to bring in the same product. This price advantage for big-box retailers is due to cost averaging, which means that expenses --including shipping costs -- are typically divided among all stores throughout the chain. This creates unfair competition that drives many smaller local wholesalers and retailers out of business.
A development that could help to lower shipping rates is on the horizon. Santa Maria Shipping, based in Santa Rosa, Calif., recently announced that it had signed a contract with an Alabama shipyard to build a vessel to provide regular service between Southern California and Hawaii. The service proposed by Santa Maria would offer Hawaii shippers:
>> Elimination of the fuel surcharge. Because Santa Maria's vessel will be smaller and powered by a modern, fuel-efficient diesel engine, it will require less fuel to operate. The fuel savings means that shippers will not be assessed a fuel surcharge. The fuel surcharge is currently 3.25 percent of the ocean freight charge, but varies with changes in oil prices;Developing an export market for Hawaii goods would be the best insurance for long-term growth and employment, and lessen the reliance on tourism. Agricultural exports could generate new jobs and revenue. Exports would lower ocean freight rates because they would reduce the number of nonrevenue containers returning to the mainland.>> Direct container service to Kalaeloa/Barbers Point Harbor. Currently, cargo from the West Coast is off-loaded at Honolulu Harbor and then trucked to retail storage facilities in Ewa. The new service would not only reduce transit time and trucking costs but would help reduce traffic congestion on our freeways.
To serve the neighbor islands, Santa Maria Shipping proposes replacing the current tug and barge service with a feeder ship to transport agricultural exports. There would be several benefits:
>> Santa Maria Shipping could work with Hawaii companies to jointly operate the proposed service.Such a system will reduce transit time, save shippers money and create the potential for new neighbor island jobs and sales. An investment now would pay dividends in the future.>> A feeder ship could make deliveries in half the time it takes current tug and barge services.
>> Weather delays would be less frequent because the feeder ship would be able to operate better than a tugboat and barge in foul weather.
>> On Oahu, the feeder ship would berth next to the "mother ship" operating from the mainland, eliminating trucking and handling delays.
Mark Teruya is president of Armstrong Produce Ltd., which is based in Honolulu.