Shipping industry still strong

KAPA‘A — Earl Kashiwagi estimates there is an unforeseen event that dramatically alters the economic climate once every 10 years.

Kashiwagi, general manager of Esaki’s Produce, a produce-distribution center in Kapa’a, has dealt with natural disasters such as hurricanes and tidal waves that have affected the local economic landscape of Kaua‘i in his 50-year tenure with the company.

Kashiwagi has also seen global recessions, and now the latest pitfall for his industry, the COVID-19 pandemic, which has killed over 20,000 people in the United States, according to the statistics from the World Health Organization, which could complicate the shipping of goods into ports in Hawai‘i.

Through adversity, the company has pressed on.

Esaki’s Produce has already scaled back its inventory by an estimated volume of 50%, Kashiwagi said.

The company has cut back on several items that visitors who are traveling from the mainland and the world consume, including exotic mushrooms, pineapple and Brussels sprouts.

“We usually bring in produce for the tourist industry, and a lot of local stores and restaurants carry these items,” Kashiwagi said. “Those things we’ve had to cut back on. Produce such as pineapple is brought in by boat, but we’ve concentrated mostly on our local clients and items that local people consume.”

Kashiwagi estimated the tourist industry accounts for about 60% to 70% percent of the company’s business during standard times.

“The tourism industry brings a lot of things to our economy,” Kashiwagi said. “Local restaurants rely on the income from the tourists to operate their business. Obviously, with no tourism industry, they’ve had to scale back.”

Produce companies like Esaki’s may have scaled back on their inventory being shipped from the mainland, but that hasn’t slowed down the shipping industry yet.

Matson, Inc., a transportation-service company that ships goods to Nawiliwili Harbor, Kaua‘i’s main sipping port, hasn’t seen a decrease in the volume of products shipped into Kaua‘i.

Vic Angoco, senior vice president of the Pacific Division of Matson, said his company hasn’t seen a decline in the shipping of goods to the island.

“As far as ships and cargo movement through Honolulu and the neighboring islands, it has been business as usual,” Angoco said in a phone interview with The Garden Island.

“All the ships continue to come in on schedule. We have had two barges today (at Nawiliwili Saturday), the Matson barge coming in on Sunday, and Kaua‘i gets four barges a week as they normally do, with no disruption.”

Matson’s first-quarter projections reflect Angoco’s statements. According to a press release concerning the first quarter of 2020, the consolidated operating income exceeded the company’s expectations.

The press release stated the operating income in the first quarter of 2020 was $2 to $5 million.

Because of the dramatic reduction in tourism to Hawai‘i and Guam, the company anticipates they will face additional challenges in their industry. They have chosen to withdraw their full-year 2020 outlook, and will provide an update on their business during the first quarter of 2020 in a conference call in early May.

“At this juncture, that is something that we are going to review,” Angoco said. “I am not seeing it disrupt services. The big question is how long this thing is going to last, but things remain fluid. We will continue to review our daily operations.”

One area Angoco anticipates will affect the industry is the closing of physical retail stores, which have struggled since the emergence of consumers favoring online retailers. Some have had to expedite their closures, either temporarily or permanently, because of COVID-19.

“That is something that we are watching,” Angoco said. “You have heard in the news about retailers closing their doors in the meantime, while the other business that remains strong is groceries. There are people stocking up and hoarding supplies. That is what has helped our industry remain strong, and it is fluid, depending on regulations. It is tough to say, looking forward, to see what the long-term impact of this virus is going to be.”

Though Matson has refrained from putting out their annual projections to prospective investors, the business continues to stay fluid, Angoco said.

“The message that we are putting out is there has been no disruption to service. We want to kill any rumors out there and we suggest that people go to the website of different companies (to find out accurate information),” Angoco said. “We will confirm whether there was any truth to the rumor because it has really been business as usual.”

Kashiwagi echoed Angoco’s sentiments.

“Our airline connections are still strong, and we’ve never had an interruption with Young Brothers or Matson,” Kashiwagi said.

Kashiwagi said the industry of dealing with perishable items and shipped items is fast-paced.

All of their unused inventory is donated to local institutions, and none of it goes to waste, said Kashiwagi.

“It would be easy to close up shop and dump everything, but we are keeping our staff members, and at the same time, we are doing a service for the island,” Kashiwagi said.

Efforts to reach Young Brothers for comment were unsuccessful after repeated attempts.

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Jason Blasco, sports reporter, can be reached at 245-0437 or jblasco@thegardenisland.com.