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The Honolulu Advertiser
Posted on: Thursday, June 13, 2002

Matson invests in diesel-run ships

By B.J. Reyes
Associated Press

Matson says the company has been cooperating with authorities on maritime security measures, which have intensified since Sept. 11. The company also is working with an independent contractor to evaluate security efforts.

Advertiser library photo • October 1999

Matson Navigation Co.'s recent purchase of two new diesel-powered container ships should help keep costs manageable as the cargo shipping company confronts future challenges, the company's president and chief executive said yesterday.

Matson, Hawai'i's largest shipping company, has invested $220 million in the new ships, the first of which is about 55 percent complete and expected to be delivered late next year, Matson's C. Bradley Mulholland said at a news conference.

The new ships will be bigger, faster and more efficient to operate, Mulholland said, allowing Matson to manage overhead amid future challenges including Hawai'i's still-sputtering economy since Sept. 11, upcoming contract negotiations and increased maritime security measures.

"We want to have an infrastructure in place that can handle Hawai'i's future," Mulholland said. He noted that for Matson, the shipping market in Hawai'i has remained stagnant over the past four to five years. "If the market's not going to grow, you've got to find a way to get costs out of your business."

A contract for Matson's purchase of two 600-foot plus container ships from Kvaerner Philadelphia Shipyard Inc. was signed May 29.

Matson, the San Francisco-based ocean transportation business of Honolulu-based Alexander & Baldwin, is the shipyard's first paying customer since the former Navy yard was converted to commercial shipbuilding in 1997.

"Matson is a very quality operator," said Ron McAlear, president and chief executive of Kvaerner. "Twelve of these (types of) ships have been built at one of our sister shipyards in Germany. The technology was there, the ships have been proven and the design has been done."

Aside from improving its ships to strengthen its core business, Matson also is working to boost revenue from noncore businesses, Mulholland said.

Those businesses include Matson Intermodal System, which provides and arranges transport services for cargo by truck or train once it reaches the Mainland, and an air freight service that operates between a handful of airports in the United States and Canada.

Of immediate concern to the company is a new three-year contract for about 12,000 employees on the West Coast and another 480 or so workers in Hawai'i.

The current contract ends this month, and Mulholland said he is optimistic that common ground can be found, saying a slowdown or work stoppage would have negative impacts on Hawai'i similar to the terrorist attacks.

"After 9/11," he said, "we don't need another major reason for people not to come here."

Mulholland said he did not have an estimate on how much Matson has spent to evaluate and implement new security measures since the terrorist attacks, but said the company has been working with the Coast Guard and Honolulu Harbor to enhance shipping security.

Additionally, an independent contractor has been brought in to evaluate security measures and make recommendations.

"It's changed our culture," Mulholland said of the attacks. "Before, you never even talked about it because it didn't happen."

Being in Hawai'i, where the economy is more dependent on shipping than other states, "you have to take this a little more seriously," Mulholland said.

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