Posted on: Saturday, April 2, 2005

Matson to raise fuel surcharge

By Lynda Arakawa
Advertiser Staff Writer

Matson Navigation Co., the state's leading cargo shipper, yesterday announced it will raise its fuel surcharge this month, citing continued increases in fuel costs.

Roughly 90 percent of all goods sold in Hawai'i arrive by ship. The fuel surcharge increase would add about 1 cent per 20-pound bag of rice, said Matson spokesman Jeff Hull.

Shipping a car to the Mainland will cost $910, up from $899. Just weeks ago Matson and Horizon Lines lowered their automobile shipping price to $899 to match that of Pasha Hawaii Transport Lines, which made its first vehicle shipment to Hawai'i this week.

Matson's latest increase follows three fuel surcharge hikes last year.

"It's been going up so often it doesn't faze me already," said Dwight Otani, owner of D. Otani Produce. "They had so many hikes already. ... We just pass it on to the consumers."

The fuel surcharge increase is "not really that much," he said. "But it will affect the cost to the consumers. I deal with a lot of restaurants. ... So the food service people will feel it more."

Otani noted that fuel costs also have driven up the company's delivery expenses as well as shipping, and it's unclear whether there will be any relief soon.

"I don't know; I hope so," he said. "That's one thing we don't control."

Matson's fuel surcharge will increase to 10.5 percent from 9.2 percent beginning April 18. The surcharge grew from 7.5 percent to 8 percent in March last year, increased to 8.8 percent in June, then reached 9.2 percent in October.

Horizon Lines, Matson's biggest competitor in Hawai'i, will reserve comment until Matson files the surcharge with the federal Surface Transportation Board, said Horizon spokesman Ku'uhaku Park. Horizon often matches Matson's surcharges.

Pasha officials said a fuel surcharge increase is under review.

Dave Hoppes, Matson's vice president of ocean services, said bunker fuel prices have grown 20 percent in the past two months.

"Record high fuel prices have been widely reported in the media and is a subject that touches virtually all consumers," he said. "For transportation companies, fuel consumption is an unavoidable and significant component of operating costs."

Crude oil closed at a record $57.27 per barrel yesterday, up $1.87, on the New York Mercantile Exchange.

Hoppes said many major railroads, trucking companies and international ocean carriers have fuel surcharges of more than 13 percent.

"While we continue to invest in modern fuel-efficient vessels that help reduce our overall fuel consumption, the impact of fuel prices on Matson's business remains a cost factor we cannot simply absorb," he said.

Matson said it will begin reviewing fuel costs quarterly, rather than on an ongoing basis, with fuel surcharges adjusted accordingly, up or down. Hoppes said quarterly reviews will help Matson's customers plan shipping costs on a regular schedule. Matson will not make adjustments between quarterly reviews despite strong fluctuations in fuel costs, he said.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or at 535-2470.