Matson to raise rates as much as 13 percent

By Dan Nakaso
Advertiser Staff Writer

Hawai'i's leading shipping company plans to boost Island cargo charges next year by what could be as much as 13 percent in some cases, imposing a new $200 fee to bring each container of goods into the Islands and another $100 to ship freight out.

Matson Navigation Co. said the new charge — which takes effect Jan. 12 and will become a permanent addition to the typical $1,500 to $4,000 cost for shipping a container of cargo — is in response to terminal handling costs that have risen more than 23 percent in the past four years.

The new charge would increase costs anywhere from 2.5 percent for a $4,000 container headed to the Mainland, for example, to 13 percent for a $1,500 container headed to the Islands.

The added shipping costs come at a tough time for Hawai'i's economy and are likely to be problematic for shippers and retailers struggling to recover from delays caused by the West Coast dock shutdown last month.

Some Island businesses also said yesterday that the added costs undoubtedly will be passed on to consumers.

"Like everybody else, we'll probably have to pass it along," said Mark Teruya, president of Armstrong Produce Ltd., Hawai'i's largest produce distributor. Teruya estimated the new charges will increase Armstrong's costs 5 percent to 7.5 percent. "Ultimately the customers will have to pay more for their product, whether it's cars or clothes or food that's coming from the West Coast."

In announcing the new "terminal handling charge" yesterday, Matson officials said they will not raise their basic shipping rates next year. They last increased rates 2.75 percent in April after delaying the increase six months because of Sept. 11.

But the company said the new terminal handling charges will be applied to all cargo containers regardless of size or type of freight involved. An extra $30 charge also will be added for vehicles being shipped to and from the Islands.

"Isn't that special?" Corky Bryan, vice president of livestock operations for Parker Ranch on the Big Island and president of the statewide Hawai'i Cattlemen's Council, said yesterday of the new charge. "They just added another 4 bucks and 50 cents to the price of a head of cattle. I'm sure they have their reasons, but I don't understand why they have to do it. It's just something we have to live with, I guess."

Matson said the new charge is separate from any increased costs Matson may face from the labor contracts being negotiated on the West Coast and Hawai'i. And although the charge is new for Hawai'i, Matson spokesman Jeff Hull said, "it's not new in the maritime industry."

Terminal handling costs make up about 40 percent of Matson's operating costs and amount to more than $200 million a year, said James Andrasick, Matson's president and chief executive officer.

"This terminal handling charge will allow us to recover only a small portion of the dollar amount of moving cargo through West Coast and Hawai'i terminal facilities and will be adjusted periodically as conditions dictate," Andrasick said.

In the third quarter of this year, the cost of cargo handling at Matson's Sand Island terminal was up $2.4 million from last year.

Brian Taylor, of CSX Lines, Hawai'i's other major shipping company, CSX Lines, said that while CSX could not comment on how it might respond to Matson's announcement, its "costs in those areas have gone up as well."

That left even CSX customers such as Robert Loomis, manager of Costco's Iwilei store, feeling wary.

"It's pricey to get a container over here already, about $3,000," Loomis said.

Sharon Park, managing director of Aloha International moving company, was dismayed to hear of the new Matson charge.

"In the end the general public is going to have to pay for it," Park said. "It's unfortunate. But in Hawai'i, I don't think that there's very much that we can do."

The cost of new security measures being imposed on shipping ports also will be passed along to consumers, Park said, forcing her to consider finding less-expensive trucking companies on the Mainland to keep costs down.

The typical 3,500-pound shipment of household goods to or from Hawai'i costs between $2,500 and $7,000 and may soon take more time getting to its destination, Park said.

Brian Christensen, president of Fleming Companies, a distributor of packaged goods, did not welcome Matson's announcement.

"Any time there's a price increase, it's tough to take," he said. "It all adds to the cost of doing business here."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.