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The Honolulu Advertiser
Posted on: Saturday, July 19, 2008

HORIZON LINES
Horizon raising fuel surcharge to 42.75%

By Andrew Gomes
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

A Horizon Pacific container ship is offloaded at Pier 51A. Horizon Lines has announced its fourth fuel-surcharge increase of this year.

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Rising fuel costs have pushed Hawai'i's No. 2 ocean cargo carrier, Horizon Lines LLC, to charge customers more for shipments to and from the Mainland just a month after its last fuel surcharge increase.

The company yesterday said it will raise its fuel surcharge by 4.5 percentage points to 42.75 percent effective Aug. 17.

The move follows a 4.5 percentage-point increase that took effect Monday. The hike announced yesterday is Horizon's fourth this year that collectively have added 14.25 percentage points to the surcharge since January. Until yesterday, however, the increases had been spaced about three months apart.

In a letter to customers, Horizon said continuing unprecedented escalation of the cost of bunker fuel resulted in the latest surcharge adjustment.

"Horizon Lines understands that this adjustment impacts your cost of doing business, just as these fuel cost increases have affected our cost of providing service," the company said in the letter.

Kelvin Shigemura, vice president of local produce supplier Armstrong Produce Ltd., said the relatively rapid succession of Horizon's surcharge was not unexpected, in part because airlines have been increasing their fuel surcharges every two weeks.

"It's not surprising," he said. "Oil has been going up and up and up. We kind of had a feeling the shipping rates would follow. We're just waiting until oil settles down. If it comes down, we hope (cargo carriers) follow suit and bring surcharges down."

Matson Navigation Co., Horizon's larger rival in Hawai'i, as of yesterday had not announced a fuel surcharge increase. The last Matson fuel surcharge adjustment took effect Sunday and was identical to Horizon's previous increase to 38.25 percent.

Typically, Horizon matches Matson surcharge adjustments, but not always. In January, Matson announced an increase a week after Horizon for a surcharge that had the same effective date and percentage point rise as Horizon's surcharge.

The fuel surcharges have become a focal point in several lawsuits filed against Matson, contending it and Horizon conspired to raise prices for container shipments between the Mainland and Hawai'i.

One lawsuit filed in Seattle by Aloha Agricultural Consultants Inc., a company that does business as Nui Nursery, alleges that the two ocean cargo transportation firms on more than 25 occasions have raised fuel surcharges by the same amount and within days of each other since the surcharges began in October 1999 at 1.75 percent.

Matson has previously said it will defend against the complaints.

Horizon yesterday said it closely monitors fuel costs and will adjust its surcharge as trends warrant.

Horizon also said fuel surcharges for shipments between Guam or Micronesia and the Mainland will rise by 4.5 percentage points to 44.25 percent. Those increases take effect Aug. 17 for Guam and Aug. 21 for Micronesia.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.