Shipping plans scaled back
By Andrew Gomes
Advertiser Staff Writer
A plan to establish a lower-cost alternative to Hawai'i's two ocean transportation firms serving the Islands via the Mainland has been downsized after delays, but the company last week said the venture has overcome a major hurdle and is moving ahead.
Santa Maria Shipping LLC
California-based Santa Maria Shipping LLC has reduced its proposed service from weekly arrivals using two 450-foot ships to one 300-foot ship arriving every other week.
Santa Maria promised to provide shipping service to the Islands with a vessel similar to this one, but has run into hurdles and is downsizing its plans.
Santa Maria announced its original plan in July 2001, and expected to have the first ship built in Alabama and operating between Southern California and Barbers Point and Kahului harbors next year.
But company President Stas Margaronis said the company could not find a U.S. shipyard willing to build the vessels for a price low enough to be competitive in the Hawai'i market, so he plans to found his own shipyard and build the ship for $15 million to $20 million.
"Nobody would build the ship anywhere near the price we wanted it," he said. "What we want is a ship that will compete in the Hawai'i market, and the other (shipyards) want to make a profit. So we decided to do it ourself."
Margaronis said a consortium of steel fabricating companies have agreed to partner in the ship-building venture, which he expects to establish at one of three available sites.
He said he was close to an agreement to lease an old plant in Vancouver, Wash., used during World War II to build Liberty Ships. But since then two other landowners in Washington and Oregon offered sites for consideration.
A site selection is expected sometime next month, Margaronis said. Then Santa Maria would proceed with financing, which he said should not pose any difficulty.
According to Margaronis, Santa Maria has $2 million to $2.6 available for the project, and will apply to the U.S. Maritime Administration to guarantee the rest as soon as a site is agreed upon.
"The application is ready," he said. "It's been ready for two weeks."
Dean Ota, a local freight consolidator working with Santa Maria as a consultant, said the guarantee, which acts as a bond protecting lenders willing to finance the balance of the project cost, is the last anticipated hurdle. "There shouldn't be any obstacle to stop it going through," he said.
The ship is of Dutch design, and similar to one of 20 in service overseas, Margaronis said. It will be significantly smaller than ones operated by Matson Navigation Co. Ltd. and CSX Lines, the two ocean transportation companies serving Hawai'i via the Mainland.
By comparison, Matson is having two 712-foot ships built for $220 million. The first is more than half complete and scheduled to begin service in late summer 2003, followed by the second in mid-2004.
Matson, which handles about 70 percent of ocean freight moving between the Mainland and the Islands, will be able to carry up to 2,600 20-foot containers with each new ship.
Santa Maria's 300-foot ship will be capable of carrying 300 20-foot containers. Still, Margaronis said his alternative will save shippers money.
Ota said Santa Maria's service would save Hawai'i shippers $12,000 to $15,000 a year if they ship 24 containers from the Mainland annually.
Next month Matson will institute rate increases ranging from 2.5 percent to 13 percent by imposing a new $200 fee to bring a container into the Islands and another $100 to ship freight out.
The new charge would increase costs anywhere from 2.5 percent for a $4,000 container headed to the Mainland to 13 percent for a $1,500 container headed to the Islands.
Margaronis said he may still decide to build a second ship if service with a single ship proves to be viable. The shipyard he is working to develop would be used for only the one or two Santa Maria vessels.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
