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The Honolulu Advertiser
Posted on: Saturday, May 13, 2006

Cost of everything going up

By Lynda Arakawa and Greg Wiles
Advertiser Staff Writers

About 80 percent of the goods sold in Hawai'i arrive on ships. Matson's container yard at Sand Island is the biggest entry point for those goods.

ADVERTISER LIBRARY PHOTO | Feb. 21, 2006

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Matson Navigation Co. the state's No. 1 ocean cargo carrier will boost its fuel surcharge next month, adding to a round of price increases that has many consumers pinching their pennies.

The latest surcharge increase, while expected to have a small impact on prices, places one more burden on Hawai'i residents who already are paying more for gasoline, electricity, housing and property taxes.

"It's almost like a runaway train," said 51-year-old 'Aiea resident Pamela Shiroma, who sees prices going up on everything from iceberg lettuce to shoes. She has been turning off lights, switching to quicker cooking recipes, hanging clothes out to dry, hunting for shoe sales online and buying produce in Chinatown to reduce her expenses.

"I'm not going to pay $2.29 a pound for lettuce," Shiroma said.

Matson will raise its fuel surcharge from 18.5 percent to 21.25 percent on June 4 adding another 2.1 cents to the cost of shipping a 20-pound bag of rice.

It will be the sixth fuel surcharge increase since April 2005. Since then, the cost of shipping that 20-pound bag of rice has climbed at least 8 cents. The increase affects most items as about 80 percent of all goods sold in the Islands come via ship.

The price increases are beginning to take a toll on lifestyles.

"We've just cut down on eating cereals," said Kailua resident Robin Kouke, who was "shocked" to see price of milk rise to nearly $6 a gallon. Kouke said she shares driving with her daughter to save money.

TAKING THE BUS

The same rise in the price of oil that forced Matson to raise rates has been pushing up the cost of gasoline.

Kailua resident Mario Canales, 33, said he's pretty much stopped driving to work at Campbell Industrial Park and instead takes the bus because of high gas prices. It takes him about twice as long to get to work.

"Obviously gas is definitely going up that and middle-class housing," said Canales, who rents a cottage at his parents' home.

Matson said the price of the bunker fuel used by its ships has jumped 16 percent in the past month. That's likely to force Horizon Lines, the state's No. 2 shipper, to match Matson's fuel surcharge increase. Horizon said yesterday it is analyzing Matson's move before deciding what to do.

Earlier this week, Pasha Hawaii Transport Lines, a new competitor in the shipping industry that specializes in transporting vehicles, announced it will nearly double its fuel surcharge.

PASSING ON INCREASES

Once the shipping companies increase rates, wholesalers and retailers have little option but to raise their prices.

"We hate to do that, but the fact is no retailer has any real choice about that," said Hardware Hawaii marketing director Larry Lanning. "They can't say, 'Oh, I'm never going to pass that along,' because next year when you call them, they won't be there. They have to pay the rent, they have to pay their employees, the taxes, and we're in the middle of the Pacific Ocean, so we have to expect freight. Freight's part of the deal."

Lanning said he wasn't surprised that fuel surcharges are rising.

"When I see the gasoline prices go up, I know it's going to go up," Lanning said. "Everything that has to do with oil is going to cost us more."

Dave Hoppes, Matson's senior vice president of ocean services, said Matson will continue to monitor fuel prices and make adjustments to the surcharge, upward or downward as needed.

"Fuel consumption is an unavoidable and significant component of our operating costs, with every dollar increase per barrel adding over $2 million in annual expenses," Hoppes said.

HE'S USED TO L.A. PRICES

Adam Miller is learning to deal with the increasing prices in Hawai'i. The 28-year-old Miller moved from California in December.

"You can pay 30 percent more here for a nice car than if you were to buy it in L.A.," said Miller, who is in the military and lives at Tripler.

"Foodland is twice as much as the commissary for eggs, milk and cheese," Miller said. "The cost of living is too high here."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com and Greg Wiles at gwiles@honoluluadvertiser.com.