Matson raises fuel surcharge to 8 percent
By Kelly Yamanouchi
Advertiser Staff Writer
A recent rise in global oil prices will be reflected in higher costs for goods shipped into the state.
Matson Navigation Co. said yesterday that it will raise its fuel surcharge from 7.5 percent to 8 percent beginning March 14 to offset rising fuel costs.
Matson increased shipping rates by an average of 4.4 percent in January and last increased the fuel surcharge in September, when it went from 6.5 percent to 7.5 percent.
"The cost of living in Hawai'i is going to increase because of this," said George Aoki, president of Pacific Fence & Wire, which ships in materials for fences.
The increase comes as crude oil prices rose to $36.76 a barrel yesterday, the highest since March 17 last year, just days before the United States invaded Iraq.
Yesterday's rise in the fuel surcharge will increase the cost of shipping a car from the Mainland by $4.74, from $948 to about $952.74.
"I think people are aware that fuel costs have been fairly high in recent months," said Matson spokesman Jeff Hull.
Matson uses about 1.9 million barrels of fuel a year, so a $1 increase per barrel translates into a $1.9 million increase in annual operating costs, according to the company.
"While fuel prices impact virtually all businesses, as well as consumers, the costs are especially significant for transportation companies," said Dave Hoppes, vice president of ocean services for Matson, in a written statement. "We will continue to monitor fuel prices and adjust the surcharge accordingly."
Matson's fuel surcharge increases often are matched by rival Horizon Lines. Horizon officials were unavailable for comment yesterday.
Armstrong Produce Ltd. president Mark Teruya said the fuel surcharge increase will add about $5 to the cost of shipping a 40-foot container, an amount that he said may be viewed as minimal.
"What kind of disturbs me is how profitable Matson and (Matson's parent company Alexander & Baldwin) is and to raise their rates like this, I don't know if it's necessary," Teruya said.
Alexander & Baldwin said its profits jumped 40 percent last year, earning $81.3 million in net income in 2003.
Some businesses will pass on the increase in the form of higher prices for the consumer.
Other companies, afraid of losing customers if prices rise, will absorb the increase as an added expense.
"A lot of our prices are fixed already and, competition wise, it's just not easy to pass it on," said Aoki with the fence company.
At food service distributor Y. Hata & Co., director of finance Brian Marting said it takes about one to two weeks for an increase in shipping costs to trickle down to the consumer.
"Anytime there's an increase in the freight costs, it affects the cost of goods all the way through, from the distributors to the end users (consumers)," Marting said.
Rising fuel costs also have pushed up prices in numerous other industries in recent weeks.
Hawaiian Airlines raised its fuel surcharge last month for trans-Pacific flights from $10 to $15 each way, said spokesman Keoni Wagner. The surcharge for interisland flights has been $5 each way since December.
Aloha Airlines also raised its fuel surcharge, following Hawaiian, said spokesman Stu Glauberman.
Fuel cost changes also are transferred directly to customers of Hawaiian Electric Co, which has an energy-cost adjustment that shows up on electric bills.
An average residential customer in March using 600 kilowatt hours a month will pay $92.19, including a 77-cent increase over February because of fuel costs. But the March cost is $1.15 lower than the high point last May.
Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.
