CINDY ELLEN RUSSELL / CRUSSELL@STARBULLETIN.COM The state's largest ocean shipper will increase its fuel surcharge by two percentage points from 17.5 percent to 19.5 percent as of March 11. The increase also will affect its services in Guam and the Northern Mariana Islands. Above, a Matson ship docked last month at Honolulu Harbor. CLICK FOR LARGE

Matson reverses course on fuel-rate adjustments

The shipping company broke a string of three consecutive reductions in its fuel surcharge

Matson Navigation Co. is increasing its Hawaii fuel surcharge in response to a spike in bunker-fuel prices, reversing three consecutive decreases since late last year.

The state's largest ocean shipper will increase its fuel surcharge by two percentage points from 17.5 percent to 19.5 percent as of March 11. The increase also will affect its services in Guam and the Northern Mariana Islands.

While Matson saw a decline in fuel prices late last year and earlier this year, recent trends have increased its fuel costs by more than 15 percent, said Dave Hoppes, senior vice president of ocean services at Matson, a wholly-owned subsidiary of Honolulu-based Alexander & Baldwin Inc.

Every dollar increase per barrel adds more than $2 million in Matson's annual expenses, he added.

"Fuel consumption is an unavoidable and significant component of our operating costs," Hoppes said. "We will continue to monitor fuel costs and adjust the fuel surcharge accordingly."

Horizon Lines Inc., the state's second-largest ocean shipper, has matched Matson's three previous decreases, totaling 3.75 percentage points, since Oct. 1. The company will wait on changing its own surcharge until after Matson formally files with the Surface Transportation Board, said Kuuhaku Park, Horizon's government and public affairs manager. Horizon's current fuel surcharge is 17.5 percent.

"We are acutely aware of the rise in bunker fuel prices in recent weeks, and it is obviously a very critical cost area for Horizon Lines," Park said.

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While unwelcome fuel surcharge hikes often alarm consumers, Matson said the increase announced yesterday means that a 40-foot container holding 51,744, 12-ounce aluminum cans will cost $52 more to ship, which translates to one-tenth of a cent more per can.

Matson buys bunker fuel from multiple ports from California to Guam and China, which have all seen fuel prices rise in recent months.

"Every increase hurts, but it's not as bad as it sounds," said Jeff Hull, Matson spokes-man.

Sheryl Toda, spokeswoman for Foodland Super Market Ltd., said yesterday the slight fuel surcharge increase will not affect retail prices.

As recently as last summer, oil prices rose to more than $75 a barrel, while dropping six months later to nearly $50 a barrel. It has now moved back to around $60 a barrel, reflecting fluctuating global energy prices, said Paul Brewbaker, Bank of Hawaii's chief economist.

"At any given moment in time a variety of global sources are moving those prices up and down," he said. "Everybody has a sense now that oil will stabilize a little bit compared to last year. If that's true, we should expect to see less up and down movement in prices and therefore surcharges."

Brewbaker expects lower energy costs will continue through 2007.