Young Brothers Ltd., the state's largest interisland cargo provider, will continue its "less than container load" cargo service to and from Maui for at least another three years, under an agreement with the state.

Young Brothers had asked the state Public Utilities Commission in April for permission to discontinue the service to and from Maui beginning next year, saying there wouldn't be enough room for those operations when the state takes away part of the company's Kahului facility to make way for the Hawaii Superferry.

The request drew strong opposition from small businesses, particularly on Maui and Moloka'i, and others who argued the proposed new system would lead to higher shipping costs and delayed shipments.

Under a deal announced yesterday by Young Brothers and the state, Young Brothers will withdraw its request and provide less than container load service for Kahului and Hilo, Hawai'i, until at least Jan. 1, 2010. The company will provide less than container load service for Kona, Hawai'i; Honolulu; Moloka'i; Lana'i; and Lihu'e, Kaua'i, until at least Jan. 1, 2012.

In exchange, the state will provide Young Brothers replacement land in Kahului as well as additional space and improvements in Honolulu and the Big Island. That includes Kahului land the state is working to acquire for up to $10 million from Alexander & Baldwin, as well as other Kahului improvements totaling about $2 million.

"Fabulous. That sounds good to me," said Jeff Egusa, president of Friendly Market Center Ltd. on Moloka'i, upon hearing of the agreement. Egusa had expected higher costs if Young Brothers eliminated less than container load service.

"It will make things cheaper and it will also make me not have to cut out the smaller guys. ... If (Young Brothers' original request) had gone through I would probably stop buying from certain companies from Maui."

Young Brothers' president Glenn Hong called the agreement a "viable solution for all parties" and said the company is working to reconfigure its Kahului port to incorporate the required changes to continue less than container load shipments. He said the company will re-evaluate operations and space in 2010.

"We had a very difficult situation because of the growth in cargo and a lack of space statewide, and working with the state we were able to come up with a fast-track innovative solution to keep cargo moving," Hong said.

Barry Fukunaga, the state Department of Transportation's deputy director for harbors, said the state began looking for a way to help Young Brothers continue less than container load service when officials realized there likely wasn't enough time for freight forwarders to successfully fill the void.

He said the state is continuing to examine ways to deal with the limited space at the harbors and noted there are no guarantees the less than container load service will continue beyond the dates in the agreement.

"We bought time, but we don't have a definitive way of saying this will always be the case," Fukunaga said. "You really need to keep working the solutions and looking at the planning involved with the harbors so that you can start to look at what spaces there are."

Hawaii Farm Bureau executive director Alan Takemoto said the agreement "gives us more time to focus on the long-term issue of harbor congestion over and beyond just Young Brothers."

While the agreement provides relief for now, "we want people to understand that we are still under the pressure to resolve the harbor infrastructure, because three years is just around the corner," Takemoto said.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.