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Barge Bailout

Young Brothers proposes schedule and rate changes.  

By Melissa Kelsey

Even transportation giants like Young Brothers are feeling the economy’s crunch, and Molokai could potentially see the brunt of the company’s money-saving strategies. Since December, Young Brothers, Limited, a barge company that has become an island life-line, has submitted two proposals to the State of Hawaii Public Utilities Commission (PUC) that have gotten Molokai residents’ attention. One proposal, if approved, would increase shipment costs, while the other would change Molokai’s barge schedule.

Young Brothers ships goods to ports throughout the Hawaiian archipelago on a regular weekly schedule. Because Young Brothers is the only company of its kind, resulting in no inter-industry regulation through price and route competition, Young Brothers is regulated by the government through the PUC. This means that the transportation giant cannot make changes to its sailing schedule or shipment prices without the state commission’s approval.

Requesting a Raise

Last December, Young Brothers submitted a request to the PUC for a 17.9 percent general rate increase and a 25 percent less-than-container load (LCL) rate increase for barge shipments. LCLs are shipments that are not large enough to fill a Young Brothers cargo container, and the majority of businesses on Molokai use LCLs for shipments, according to Roy Catalani, Young Brothers Vice President of Strategic Planning and Government Affairs. As a result, the proposed increases would disproportionately hurt businesses on Molokai.

“It is so important to remember that when it comes to Molokai, the economic scale here is so different,” said Teri Waros, owner of Kalele Bookstore, opposing the rate increase request. “Every blow impacts all of us so much. There is no buffer, on the smaller islands in particular,” she said.

Catalani said Young Brothers requested the increase as a result of higher operating costs, fewer shipment orders, and the company’s recent purchase of four new barges in a long-term investment strategic move.

Because of the recognized impact the proposed LCL rate increase would have on Molokai and Lanai businesses, Young Brothers pledged to research strategies to reduce or limit this rate increase for both islands, according to a December press release.

Reducing and Rearranging

In an effort to reduce overall operating costs and lower the proposed LCL rate increase for Molokai and Lanai, according to Catalani, Young Brothers handed in a second application to the PUC last February. In this second application, Young Brothers proposed to save money by making the barge sailing schedule more efficient, Catalani said.

Currently, Molokai has two weekly barge deliveries to Kaunakakai each Wednesday and Thursday. While the Thursday barge arrives directly from Honolulu, the Wednesday barge stops on Maui before landing on Molokai. If the application is approved, Molokai will still have two weekly barge deliveries, but they would both come directly from Honolulu and arrive in Kaunakakai on Monday and Thursday. There would be no direct sailing from Maui to Molokai under the new proposed schedule. Merchants wishing to send shipments to Molokai from Maui would first need to send them to Honolulu on Fridays. The merchandise would sit in Honolulu until Sunday evening, when the barge will sail from Honolulu to Kaunakakai, arriving Monday morning.      

Some Molokai business owners expressed excitement about the proposed delivery time change.

“We are in strong favor of the proposed schedule change,” said Sonya Yuen, owner of Molokai Wines and Spirits and Kualapu`u Market. “With the proposed change we will have fresher products on the shelves because the barge arrivals are more spread out,” she said.

Others had mixed reactions, such as cattle rancher Jimmy Duvauchelle, who showed concern for cattle sent by barge from Maui to Molokai.

“I like the new schedule, but I really hope that we can somehow allow a Maui barge to come here to Molokai,” he said. “It is a long weekend for the animals,” he said, explaining that live animals being shipped to Molokai from Maui would have to wait a long time in Honolulu.

More Fees

All shipments on Young Brothers barges that are sent on non-direct routes incur a transshipment fee. The transshipment fee is an extra charge equal to 1/4 of the first journey’s fare. For example, under the proposal, a shipment being sent from Maui to Molokai would cost the trip from Maui to Honolulu, and then an extra charge of 1/4 of that cost to send the shipment from Honolulu to Molokai. In addition, the State of Hawaii charges a small fee of less than $3.00 for stopovers. Young Brothers pledged to waive the transshipment fee for shipments being sent from Maui to Molokai for one year if the schedule change is approved, according to Catalani. 

Under the proposal, fresh produce being delivered from Maui to Molokai would be in transit for a slightly longer period of time. However, Catalani said the majority of items shipped to Molokai do not originate from Maui.

If the PUC approves the request to change the sailing schedule, Young Brothers will save nearly $1 million annually, according to application documents. If this savings is achieved, Young Brothers plans to amend the original rate increase request submitted in December to reduce the rate increase request for LCLs from 25 percent to 12 percent for the islands of Molokai and Lanai, according to Catalani. However, it is the PUC that ultimately has the authority to approve or deny rate changes.    

Speak Your Mind

The PUC is expected to respond to the applications as soon as possible after April 6. Young Brothers held an official meeting with PUC officials and Molokai residents on Monday, March 30, but there is still time for community members on Molokai to make a difference by voicing their opinion and explaining their concerns. If possible, residents should offer feedback to officials by April 6, and they have three options to do so.

The best option is to contact the State of Hawaii Division of Consumer Advocacy at 586-2800. Representatives from this government division are currently working on an analysis of the situation from the consumer’s point of view to present to the PUC.

It is the PUC who will ultimately make the final decision. To directly contact the PUC, call 586-2020.

For questions to Young Brothers and for clarification on their proposals, contact Young Brothers at 543-9311.      

 

 

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