Matson and Horizon monopolize Hawaii's shipping market because of the Jones Act Photo: Emily Metcalf
Photo: Emily Metcalf

BY MALIA ZIMMERMANIn sharp contrast to what is happening in the U.S. shipping market, Hawaii’s duopoly shipping companies continue to increase their prices for container cargo transported between the mainland United States and Hawaii.

The Journal of Commerce reports that rates to ship containers from Asia to the United States dropped 6.7 percent over the past week because of the excess vessel capacity in the marketplace. (See Drewry says capacity drives pricing down in largest U.S. shipping market)

“The Drewry Container Rate Benchmark for a loaded 40-foot container from Hong Kong to Los Angeles fell to $1,636 in the week ending July 11, down from $1,753 the week before. The rate is the lowest since January 2010,” the paper reports. “The measure marked the second straight week-to-week decline after the rate benchmark had grown or been stable for most of May following weakening pricing this spring. The July 11 measure was down 37.7 percent from the same week a year ago, when the rate was $2,624 per container.”

Prices are expected to fall another 20.8 percent over 2010 prices for the average east-west ocean freight (excluding fuel costs), the Journal reports.

In Hawaii, businesses and consumers that rely on Matson and Horizon to bring the majority of their goods to the state have been deluged with bad news about price increases progressing at a substantial rate.

Discussions with shippers, and reviews of Matson’s tarrifs, show Hawaii’s rates are at least $5,000 to $6,000 per 40-foot container and often several thousand dollars higher.

So far this year, Matson increased:

  • The terminal handling charge from $900 to $1,075 per container, a 19 percent increase;
  • The base rate by $120 per container, a 3.8 percent increase;
  • The fuel surcharge more than doubled.  It was 21.75 as recently as February 2011 and is now 47.5 percent.
  • and Matson added a $52 charge per container as of July 1, 2011, after the state revoked a tax exemption.

Horizon, Matson’s only major container shipping competitor operating between the Continental United States and Hawaii, has followed every one of these increases.

Matson’s published rate for a 40-foot container with “freight all kinds” or a mixed load of goods, is $8,736.62.

Individuals who ship smaller packages are charged more because they have to go through a consolidator who pays this rate.

While Costco, Safeway, Target, Wal-Mart and other big box retailers can secure better rates based on their volume, it is Hawaii’s small businesses and consumers that are impacted most by these rate increases.

Critics of the Jones Act, a federal law that mandates U.S. flagged ships transport goods between U.S. ports with U.S. crews, say the law leads to less competition and higher prices for Hawaii consumers. However, Hawaii’s current congressional delegation – and the shipping unions and carriers – support the Jones Act saying it creates jobs and ensures security at U.S. ports.

Comments

comments