Hawaii’s main shippers
to increase rates
next year

Retailers expect consumers
to feel the impact in store
prices

Matson Navigation Co. and Horizon Lines, Hawaii's major ocean shippers, have both announced they will raise rates for the coming year.

Matson said yesterday it will raise its rates for the company's Hawaii service by an average of 3.5 percent, effective Jan. 3.

Rates will increase by $100 a container and $25 a vehicle. In addition, the company will increase its terminal handling charge by $40 per Hawaii-bound container and $20 per West Coast-bound container, also effective in January.

Horizon sent a letter to customers on Nov. 3 telling them to expect similar increases. However, the company has broken the increase in its terminal handling charge into two steps. That rate will rise $25 in January and another $25 in July.

The rates are filed with the federal Surface Transportation Board, and go into effect automatically unless successfully challenged.

"This rate increase will impact virtually everything because it applies to anything that comes into the state in a container -- that's nearly all food, furniture, retail goods and construction materials," said Tish Uyehara, director of marketing for Armstrong Produce Co. Ltd. "It could potentially have serious impacts on costs for consumers."

While the proposed increases are not necessarily substantial compared with other years, they will nevertheless have a big impact on Armstrong's bottom line, Uyehara said, adding that the company handles 25 to 30 containers weekly and more than 40 around the holidays.

"We'll feel the increase in container costs, and it will be passed onto the consumers of the state of Hawaii," Uyehara said.

Matson's rate increase will help offset increases in labor costs and support investments in the company's service to Hawaii, said James Andrasick, Matson president and chief executive officer.

Matson built two new ships to support its Hawaii service, at a cost of $220 million, and has invested in new container equipment, terminal upgrades and information technology as well as increased security and enhancements to neighbor island service, he said.

Horizon Lines is raising shipping costs to offset increased expenses for security, labor, workers' compensation insurance and increased capital spending for equipment replacement, said Kuuhaku Park, the company's government and public affairs manager in Honolulu.

In response to skyrocketing oil prices, both companies also raised their fuel surcharges in October to 9.2 percent from 8.8 percent.

"They had to pay a price, so they are passing it on to us. It's about survival," said Corey Ann Bebb, merchandising manager for Hardware Hawaii Ace.

Any time shipping costs are increased, Hawaii's businesses take a blow, she said.

"Increased shipping costs have a direct impact because they hit our bottom line, but we've seen bigger increases in other years," Bebb said.

For 2004, Matson raised its rates by $125 per Hawaii-bound container, or approximately 4.4 percent. There was no general rate increase in 2003. In the last several years, Horizon's rate hikes have been 1 percent to 2 percent higher than those set for 2005, Park said.

While most businesses in Hawaii will try to remain competitive by protecting customers from feeling the pinch, they cannot mitigate the full impact, Bebb said.

"That's why Hawaii is so expensive," she said. "You can only stretch a dollar so far."