Horizon Lines to increase fuel surcharge

Seeing no short-term relief in fuel costs, the ocean shipper will up rates starting May 6

Horizon Lines, the second-largest ocean shipper in the islands, said yesterday it is raising its fuel surcharge 1.25 percentage points to 20.75 percent for goods shipped between the mainland, Hawaii and Guam.

The company, which said the increase will be effective May 6, warned that "there is no immediate relief in sight" and said that it expects fuel costs to remain at this level or rise through midyear.

The increase will boost the cost of shipping a car, for example, by $7.50 from the $950 now being charged, Horizon said.

Matson Navigation Co., the state's largest ocean shipper, said it was reviewing Horizon's increase. Matson typically has been first among Hawaii shippers to make fuel surcharge adjustments, whether up or down.

The highest fuel surcharge so far was 21.25 percent, in June 2006.

Horizon Lines, warning that "there is no immediate relief in sight," said yesterday in a service notice to customers that it will boost its fuel surcharge 1.25 percentage points to 20.75 percent for goods shipped between the mainland, Hawaii and Guam.

The second-largest ocean shipper in the islands said the adjustment, effective May 6, was in response to another upward trend in fuel costs. It followed an increase of two percentage points to 19.5 percent in March.

"Fuel costs are now forecasted to remain at this level or escalate further through midyear," Horizon said in its notice.

The increase means it now will cost an additional $7.50 to transport a car from the $950 presently being charged, Horizon said.

Among other items, a 20-pound bag of rice will rise 1.1 cents per bag, a 2-inch-by-4-inch piece of lumber (8 feet in length) will rise 1 cent, the cost for a head of lettuce will rise one-fourth of a cent, and a 12-ounce aluminum beverage can will rise one-tenth of a cent.

Matson Navigation Co., which typically has been first among Hawaii shippers to make fuel surcharge adjustments -- whether increases or decreases -- acknowledged that fuel costs have been rising and that it was reviewing Horizon's move.

"We have seen fuel prices continue to rise not only for ocean but for land transportation on the mainland," Matson spokesman Jeff Hull said. "We do build in fuel to our pricing structure, but when it's beyond a reasonable amount, we do need to pass on those costs as a separate line item on the bill."

Matson's current fuel surcharge, 19.5 percent, was matched in March by Horizon. Prior to the increase, both companies had reduced their fuel surcharge three consecutive times over a period of nearly four months from Oct. 1, 2006, to Jan. 28, 2007.

Horizon's pending increase will put the surcharge at its second-highest level since June 4, 2006, when both carriers' surcharge was at 21.25 percent. That peak was the highest since Jan. 1, 1999, when the fuel surcharge for both Horizon and Matson last had no surcharge.

Pasha Hawaii Transport Lines, which carries vehicles between Hawaii and California, has a fuel surcharge of 17.5 percent. General Manager Reggie Maldonado said yesterday he was reviewing Horizon's increase.

Gregg Shimabukuro, director of purchasing for Y. Hata & Co., a local food distributor that uses both Horizon and Matson, said that 98 percent of Y. Hata's goods come from outside the state.

"When a fuel surcharge goes into effect, it has an increase on the cost of goods," Shima-bukuro said. "We continue to look at ways to improve our efficiencies to lower the cost of goods to our customers and to try not to pass on these types of increases."