More than $600 million in harbor and port improvements are needed to handle the state's growing cargo and transportation needs, according to a report released yesterday by a maritime transportation industry group.

The report, commissioned by a group including Matson Navigation Co. and Norwegian Cruise Line, points to a looming shortage of port facilities in the state caused by the growing cruise industry, the introduction of interisland ferry service and the continued growth in cargo traffic. The organization, the Hawaii Harbor Users Group, retained Bellevue, Wash.-based Mercator Transport Group to prepare the report.

"Harbor users are already facing shortages of available berth space," said Hawaii Harbor Users Group chairman Gary North, who is also senior vice president at Matson. "The study confirmed that the growth of cargo traffic and transportation services will use up all the reserve capacity of Hawai'i's harbor facilities. If harbor improvements are not addressed, port users will no longer be able to efficiently service the Hawai'i market, which will result in increased costs and potential shortages of goods to Hawai'i residents."

Container traffic volume is expected to grow by up to 27 percent by 2010, and 93 percent by 2020, the report said. The report also said Maui's harbor capacity needs are the most critical, with major disruptions possible within the next few years.

The report is meant to help guide the state in addressing harbor needs, and the group has been working closely with the state Department of Transportation, North said. The Hawaii Harbor Users Group, formed last year, includes a dozen key harbor users, including NCL, Matson, Horizon Lines and Young Brothers/Hawaiian Tug & Barge.

"Considering the fact that more than 90 percent of all goods and materials enter Hawai'i via our harbor system, it is imperative that the state address these critical harbor needs," North said. The group is also commissioning a study exploring ways to fund the improvements and expects to release it this summer.

Transportation department spokesman Scott Ishikawa said: "We do appreciate the comments and efforts made by the harbor users, and we look forward to collaborating with them on many of these ideas to improve the harbor infrastructure."

The report projected about $125 million in harbor improvements will be needed in the next four years, including Pier 40 improvements in Honolulu and an interisland terminal expansion in Kahului. Necessary improvements in five years and beyond total another $500 million, including $300 million to redevelop the former Kapalama Military Reservation for expanded commercial cargo operations.

Ishikawa said the department is fast-tracking the Kapalama development plan and hopes to begin construction by 2010. He said the department is also seeking $10 million to purchase property at Kahului Harbor from landowner Alexander & Baldwin.

Short-term projects include eliminating part of the shed at Pier 1 in Honolulu to free up about six acres for harbor use, as well as finalizing a new lease with Matson to provide an additional seven acres on the Sand Island property, Ishikawa said.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.