By Andrew Gomes
Advertiser Staff Writer
Matson Navigation Co., the state’s largest ocean-freight carrier, is getting into the airfreight business under a new alliance that is part of the Hawai‘i-based company’s ongoing effort to diversify operations.
Matson announced yesterday that it recently reached an agreement with the Los Angeles-based airfreight forwarding company Commodity Forwarders Inc., which buys space on commercial airlines and fills it with client cargo.
Under the agreement, Commodity Forwarders, which has offices in Honolulu, Hilo, Kahului and Lihu‘e, will expand from handling only perishable cargo to all types of freight.
Three levels of service between Hawai‘i and the West Coast are being offered: expedited (delivery within 24 hours), regular (two to three days) and deferred (three to four days).
"It’s an experimental thing," said C. Bradley Mulholland, Matson president and chief executive officer. "We don’t expect to make a tremendous amount of money ... but it fits in with everything else we’re doing."
Matson, a subsidiary of local firm Alexander & Baldwin Inc., has been increasing its noncore operations as a way to expand business outside a market that is still below 1990 levels despite improvements in recent years.
Mulholland said 51 percent of Matson’s operating profit last year came from its noncore business, which represented only 36 percent of revenue.
Core business for the company consists of container cargo and automobile shipping between the West Coast and Hawai‘i. Noncore business includes Seattle-Los Angeles freight service by train, ocean-freight service between the West Coast, Guam and the Orient, unique cargo deliveries, West Coast terminal operations and a joint-venture ocean-freight service between Florida and Puerto Rico.
The diversified operations helped Matson increase operating profits to $93.7 million last year from $83.8 million in 1999. Noncore business contributed $47.4 million to those results.
Hawai‘i core operations still contributed 64 percent of revenue and 49 percent of operating profit. However, Mulholland does not expect much change in the company’s share of the West Coast-Hawai‘i ocean-freight market, which he said was 68 percent last year, or substantial expansion of the overall market.
Container volume for Matson in the local market increased just 0.2 percent last year after a 5.4 percent increase in 1999. Automobile volume increased 30.7 percent last year after a 37.1 percent increase the previous year.
Matson saw enough added business to return two ships to service, bringing its Hawai‘i fleet back up to eight ships.
Rising costs are largely being kept under control by instituting higher rates. The company is into its second year of a three-year contract that provides a 7.8 percent wage increase over three years. To cover that and other expenses, such as a $31.5 million terminal improvement project, a 3.5 percent rate hike goes into effect today.
Fuel costs were mostly offset by a customer surcharge, which is at 4.25 percent. Matson’s fuel bill to power its fleet was about $45 million last year, about half of which was due to a 60 percent jump in the price of oil. The company has offset all but $3 million of the additional costs, which it expects to eventually cover.
[back to top] |
