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The Honolulu Advertiser
Posted on: Wednesday, September 7, 2005

Shipping firms raising charges

By Rick Daysog
Advertiser Staff Writer

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Hawai'i consumers, who have already seen higher gasoline prices as a result of Hurricane Katrina, now face higher shipping costs as well.

Horizon Lines, the state's second largest cargo shipping company, told customers that it has filed for an emergency 2.5 percent fuel surcharge that will take effect on Sept. 15. The increase is on top of an 11.5 percent fuel surcharge imposed incrementally by Horizon during the past two years.

Matson Navigation Co., the state's leading ocean transporter, will likely increase its fuel surcharge later this week, according to company spokesman Jeff Hull. Matson, which also has imposed an 11.5 percent fuel surcharge, said the new costs will likely take effect in early October.

"We've been seeing continued increases in fuel surcharges during the past few years and it's beginning to have a dramatic effect on our business," said Greg Shimabukuro, director of purchasing and marketing at Y. Hata & Co., the state's largest food wholesaler.

Shimabukuro said the cumulative impact of the surcharges will increase the cost to ship a 40-foot container by $100 to $120. While wholesalers and retailers have to absorb some of the higher costs, consumers will likely bear the brunt of much of the increase.

About 80 percent of all goods sold in Hawai'i arrive by ship.

In a letter to its customers, Horizon cited Hurricane Katrina's impact on oil prices. Prices for crude oil and bunker oil were already rising when the disaster hit, cutting off more than 2 million barrels a day of production from the Gulf region, Horizon said.

Horizon said that the new fuel charge will remain in effect until fuel prices decline and oil production returns to normal levels.

According to Hull, Matson is reviewing its fuel costs on a quarterly basis, rather than on an ongoing basis, with fuel surcharges adjusted accordingly, up or down.

But based on the fuel shortages and record prices, the carrier will likely increase its fuel surcharge later this week when it completes its review, Hull said.

Since Katrina hit last week, the price of crude oil soared to more than $70 a barrel before falling back to about $66 a barrel. During the same period, the retail price for a gallon of gas jumped to over $3 at most local stations.

Y. Hata's Shimabukuro said Katrina's impact goes beyond higher shipping costs for his company. He noted that fuel costs for Y. Hata's trucks and electricity costs for the company's Sand Island warehouse will rise in wake of last week's disaster.

"There are lots of ways it is going to impact us all," added Bill Tobin, owner of Tiki's Bar & Grill in Waikiki and chairman of the 3,600-member Hawaii Restaurant Association.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.