Horizons Lines in ‘Precarious’ Financial Situation
Michael Hansen, president of the Hawaii Shippers’ Council, said today in a Hawaii Reporter editorial that recent news on the financial state of Hawaii and Guam ocean carrier Horizon Lines, Inc is “precarious.”
The loss of Horizon would likely mean that Matson Navigation Company, Inc. would become a true monopoly as the sole provider of liner container service between the United States West Coast, Hawaii and Guam. Currently Matson handles about two-thirds of cargo containers coming here.
He gives specifics: “This year Horizon incurred a first quarter loss of $33.3 and a second quarter loss of $5.4 million. In March they announced their U.S. West Coast/Guam/Far East service, which was restructured in 2006, has yet to become profitable. On May 31st, the New York Stock Exchange put Horizon on notice that their market capitalization had fallen below the minimum requirement to remain listed and were given 18 months to rectify the situation. On August 15th Horizon defaulted on $330 million in convertible notes. And, since June, the share price of their common stock has fallen below one dollar, which can be a sign of potential corporate failure.”
Delisting on top of the debt default and operating losses would dramatically further reduce Horizon’s ability to raise capital and take on new debt, Hansen said.
In addition, he notes that Horizon has an old domestic Jones Act fleet inherited from U.S. Lines and Sea-Land that need to be replaced, however that could cost as much as $2 billion because “ship construction costs in the U.S. are 2.5 and 3 times comparable international costs.”
If the company decides to build more affordable ships overseas, Horizon could retire their oldest least efficient U.S.-Built ships, but the company would have to drop the “lucrative” Jones Act cargo from U.S. West Coast to Honolulu, leaving Matson to carry most of cargo.
“These Jones Act cabotage restrictions on Horizon’s restructured Foreign-Built U.S.-Flag Guam / Far East Service operation have lead directly to their losses on the route,” he said, noting the directive that the ships be manned with American crews would not have to be changed. “Horizon’s situation points out the real and immediate need for Jones Act reform, especially in respect of the U.S. Build requirement in the domestic noncontiguous trades – i.e., in the Alaska, Guam, Hawaii & Puerto Rico trades – to allow larger deep draft self-propelled Foreign-Built U.S.-Flag ships in those trades. Such a reform would allow Horizon to rationally renew their domestic fleet and rectify the performance of their Guam / Far East service. And, it would retain and even foster new competition in the noncontiguous waterborne trades, which would greatly assist consumers and help to hold down the costs of living and doing business in the noncontiguous jurisdictions.”
Endorsement? US Senators Inouye, Akaka Make Appearance at Hirono Fundraisers
As the Democrat-publication, Daily Kos, blogs today about U.S. Senators Daniel Akaka and Daniel Inouye showing up to support Congresswoman Mazie Hirono at her recent fundraiser.
“Hahah! Suck it, Ed Case. Hawaii’s veteran Democratic senators, Dan Inouye and the retiring Dan Akaka, were both seen at a recent DC fundraiser for Rep. Mazie Hirono. While neither of the Dans have formally endorsed Hirono, the fact that they’re openly helping her raise money is a great sign. I’m also pleased to see that the AFL-CIO and AFSCME hosted the event. I’m really wondering if the conservaDem Case thinks he has a path to victory that doesn’t involve bogus polls,” the publication said in today’s morning digest.
While all of these politicians are Democrats, the Daily Kos commentary shows the split in Hawaii’s dominating political party.
Case, who is a former state legislator and Congressman (2002-2007), challenged the then 82-year-old Akaka for his Senate seat in 2006, saying that Hawaii has to plan for the next generation of leaders in the U.S. Senate as both senators were in their 80s. That angered many local Democrats who believed that Case’s challenge was disrespectful. In Hawaii, Democrats elected to Congress typically go unchallenged by members of their own party and the seat remains with that elected official until they die or decide to retire.
Case lost that race, and has been out of office since 2007. He ran for an open Congressional seat in 2010 when then Congressman Neil Abercrombie stepped down to run for Hawaii governor.
In that three way race in May 2010, Case came in last, with Republican Charles Djou winning that seat for 5 months. Colleen Hanabusa, who was the other Democrat in the race, challenged Djou again in the general election, winning by 6 percent of the vote or 10,000 votes.
Inouye, who has been openly hostile to Case since his 2006 run, campaigned for Hanabusa against Case, calling her “his girl.”
Hanabusa was helped in part by Case stepping down as a candidate for the Democratic primary in 2010, allowing Hanabusa to save her resources for her battle against Djou. He also went to Inouye and asked him to repair their relationship.
Case has said their meeting went well, however, the Daily Kos is interpreting the presence of Akaka and Inouye at Hirono’s fundraiser last Thursday in Washington DC’s The Monocle as a bad sign for Case that the Senator that Hirono hopes to replace and Hawaii’s most powerful Senator are in fact openly backing his opponent.
Neither Case, nor Hirono could not be reached for comment.
However, Peter Boylan, spokesperson for U.S. Senator Inouye, said: “Senator Inouye has a long and productive working relationship with Congresswoman Hirono and he would like that relationship to continue in the United States Senate.”
The Senior Senator also attended a private reception for Hirono over the August recess, Boylan said.
Governor to Speak at Asia Pacific Clean Energy Summit & Expo
The 3rd Annual Asia Pacific Clean Energy Summit & Expo opens Tuesday, September 13, with Gov. Neil Abercrombie addressing attendees at the Hawaii Convention Center.
Also speaking will be F. James Woolsey, venture capitalist and energy security expert and former head of the Central Intelligence Agency, and Dr. George Ka‘iliwai, Director of Resources and Assessment for the U.S. Pacific Command and former Gov. George Ariyoshi.
Sessions include informational briefings by energy entrepreneurs, and will cover topics such as Biofuel supply, Department of Defense energy programs, Energy and water, Funding for energy innovation, Hawaii smart grid projects on Maui and Managing limited water and land resources.