Horizon reins in fuel surcharge

Welcome to fuel-surcharge wars.

Horizon Lines Inc., thwarted in a bid to boost its fuel surcharge to a record 23 percent, reined in its planned increase yesterday to 1.75 percentage points, or 22.5 percent, on its mainland-Hawaii-Guam routes after chief rival Matson Navigation Co. failed to match the higher amount.

Pasha Hawaii Transport Lines, which ships vehicles between Hawaii and San Diego, said it was going to stand pat at 19.5 percent after raising its rates 2 percentage points to 19.5 percent on May 9.

"Our current bunker fuel surcharge is appropriate for our fuel costs at this time, and so we will not be raising our rates," he said.

Horizon had notified customers on May 11 that it was going to increase the fuel surcharge by 2.25 percentage points to 23 percent, but it was forced to issue a revised notice yesterday "to stay competitive," according to Horizon spokesman Ku'uhaku Park.

"Companies do their own fuel projections, and we obviously think fuel prices will be higher than Matson does," Park said.

Both increases from Horizon and Matson go into effect on May 27.

Dave Hoppes, Matson's senior vice president of ocean services, said yesterday Matson's increase was based on its own independent evaluation.

"We don't care what they do," said Hoppes, referring to Horizon. "We do what we believe we need to do for our purposes."

The new surcharges by Horizon and Matson represent the third-straight increases by both shippers and follow three straight declines. Horizon and Matson have now raised their fuel surcharge 5 percentage points since Jan. 28.

"Fuel costs are forecasted to remain at this level or escalate further as we move into the summer months," Horizon said in the May 11 statement to its customers.

Hoppes said Matson has done everything it could to control costs by investing in fuel-efficient ships, but can't do anything about the rising fuel costs. Like Horizon, he sees prices rising through the summer.

"We're seeing unprecedented volatility," Hoppes said. "Our most current fuel surcharge took effect on the sixth of May, and here we are increasing it again on the 27th of May. It's because the fuel prices are increasing so rapidly, and fuel remains a very significant part of Matson's cost structure."