Interisland shipping company Young Brothers last week asked the state to authorize a 24 percent rate hike for less-than-container load cargo. The minimum charge for the shipments would jump from $25 to $31, said Roy Catalani, vice president of strategic
Interisland shipping company Young Brothers last week asked the state to authorize a 24 percent rate hike for less-than-container load cargo.
The minimum charge for the shipments would jump from $25 to $31, said Roy Catalani, vice president of strategic planning and government affairs at Young Brothers.
Combined with a 5.6 percent increase for items including refrigerated containers and automobiles, the jump would average out at 10.7 percent — an amount almost twice the reasonable zone set by the Public Utilities Commission.
“In this case they’re saying that the rate increase under the zone is not enough,” said Stacey Djou. “They say they need the opportunity to meet their rate of return.”
The request comes four months after the state intervened to keep the company from terminating less-than-container load service to a crowded Maui harbor.
Gov. Linda Lingle agreed in October to pay for the expansion of harbors on Maui, O‘ahu and the Big Island. The two-year budget proposal she released yesterday included about $9 million in capital improvements for ports and harbors on those islands.
In a press release announcing its application for a rate increase, Young Brothers pointed to the rising cost of business, as well as capital improvements of its own, including new tugs, barges and equipment.
But Catalani also pointed to the need for long-term sustainability.
“Ultimately we would have to move to each line of service paying for itself,” he said. “This would be a transition over the years.”
The new rate would allow the company to break even on less-than-container load shipments that require more handling — and more space for loading and unloading — than full containers, Catalani said.
“It takes a lot of space to consolidate and deconsolidate,” he said. “It’s a relatively difficult process to make profitable.”
The company has been working with the Farm Bureau to help farmers on Maui consolidate shipments, Catalani said.
A little less than a quarter of the company’s business involves LCL shipping, he said. The company expects business as a whole to increase 2.4 percent each year.
“Even with relatively modest growth rates, we’re going to have cargo capacity issues,” he said.
If the change goes through, the cost of each six-pack of soda shipped as less than a container load on a pallet would rise 2 cents, according to Catalani’s calculations.
Any change in price likely would be handed along to consumers, said Melanie Zaima-Higashi, manager of Royal Hawaiian Movers.
“Young Brothers is the only deal in town,” she said. “The customer will have to pay more.”
The PUC has 45 days to review the company’s expenses and revenues, after which it may hold public hearings on the application.
• Charlotte Woolard, business writer, can be reached at 245-3681 (ext. 251) or cwoolard@kauaipubco.com.
