Chris D’Angelo The Garden Island LIHUE — A penny saved is a penny earned. And when it comes to groceries and other store-bought goods, every cent counts, right? Well, consumers in Hawaii — a state known for its high cost
Chris D’Angelo
The Garden Island
LIHUE — A penny saved is a penny earned. And when it comes to groceries and other store-bought goods, every cent counts, right?
Well, consumers in Hawaii — a state known for its high cost of living — will soon take another hit.
“Every year it’s the same thing,” said Joe McEvoy, manager of Kauai Lumber Inc. in Lawai.
Late last month, Matson announced that beginning Jan. 5 the cost of shipping containers to and from the islands would increase by an average of 5.5 percent. The very next day, on Nov. 27, Young Brothers announced its own 5.5 percent across-the-board rate increase, which kicked in Nov. 29.
The cost of shipping a container from the Mainland to Hawaii via Matson will go up by $225 — $175 plus a $50 terminal handling charge. Eastbound containers will increase by $110 — $85 plus a $25 handling charge.
“We basically do this every year,” said company spokesman Jeff Hull. “These are pretty much very predictable.”
The rate increase, Matson says, will translate to less than 3 cents for a 12-pack of canned beverages, 1 cent per head of lettuce, 10 cents per 20-pound bag of rice and 7 cents per 8-foot-long, 2×4 piece of lumber.
“It doesn’t seem like a lot but it adds up,” McEvoy said.
On Friday afternoon, Lawai resident Virgil Sears could be spotted walking from Times Supermarket in Lihue with a 12-pack of beer. While another bump in price — even if its only a few cents — bothers him, he said there’s nothing that can be done about it.
“I’ve seen prices go up so bad because of shipping,” said the four-year Kauai resident. “It just absolutely sucks.”
With no other way to get products here, Darryl Labuguen, warehouse manager at Paradise Beverage in Lihue, said his company has no choice but to pay the higher rates and increase their own prices.
“All the prices go up, except for our paychecks,” he said. “Which is sad. Hard to survive.”
Historically, Matson announced average percentage increases based solely on the rate increase, excluding terminal handling charges. However, it now combines both numbers for the average percent increase, the company said in a release.
“This rate increase will help offset rises in operating costs and support ongoing investments in our Hawaii services,” Dave Hoppes, Matson’s senior vice president of ocean services, said in a release. “The adjustment is consistent with our long-standing philosophy of implementing modest, incremental increases as necessary to maintain the highest level of service, and is identical to increases implemented in 2012 and 2013.”
Hull said three Matson ships arrive to Hawaii each week from the West Coast, and generally sail at 90 percent capacity.
“Last year, we shipped 137,200 containers and 78,800 autos to and from Hawaii,” he wrote in an email.
While Matson does not publicly disclose the exact number of westbound and eastbound containers, Hull said the “majority of freight” comes to Hawaii.
While the increase may seem relatively reasonable for the consumer, McEvoy says it represents a large increase in revenue for the company.
If all containers cost the same amount to ship — which they don’t — and Matson were to ship 100,000 from the Mainland to Hawaii next year, the rate increase would generate an additional $22.5 million in revenue for the company.
But it’s not nearly that simple, as Matson charges different prices for different goods.
“It depends on the commodities we ship,” Hull said.
For example, shipping refrigerated items costs more than dry goods.
Referring to a pair of recent shipping receipts, McEvoy said shipping a container of lumber costs about $3,300, while one filled with drywall is about $5,100.
In addition to containers, Hull said Matson will up its price for shipping cars to or from Hawaii by $25 each — from $1,100 to $1,125.
If the company were to ship another 78,800 cars next year, the bump would bring in an additional $1.97 million.
McEvoy said his biggest problem is the shipping companies never lower rates.
“When do costs go the other direction?” he asked. “It’s just sad that we have to continually pay more and it never gets adjusted the other direction.”
McEvoy estimated the upcoming increase will result in an additional $15,000 per month at Kauai Lumber, which will fall on Kauai consumers.
“We’ve almost been numb to the fact that here we’re just going to have another increase,” he said.
So far, Kauai Chamber of Commerce President Randy Francisco has not heard grumbling from local businesses. However, he said he was “quite sure it is in the minds of everyone since transportation, and especially ocean transport, is critical to our economy.”
“I would anticipate that heavy and bulk items such as vehicles, construction and other heavy equipment-related industries would have the most impact,” he wrote in an email. “As far as the construction and housing sector, we have all been anxious for this sector’s recovery. And, the momentum is continuing to build.”
Francisco said that because the island is experiencing its seasonal drop in prices, he doesn’t expect many people to feel the impact in their wallets until February.
In the past decade, Matson says it has invested nearly $1 billion in four new container ships, fleet enhancements, equipment and more.
And earlier this month, the company announced it had signed a contract to build two new ships for its Hawaii service, at a price of $418 million.
