Rate Increases Approved

Public Utilities Commission passes Molokai and Lanai exceptions

Young Brothers Press Release

Young Brothers received approval from the Public Utilities Commission (PUC) for a rate increase for regulated inter-island cargo services on July 28. The average overall rate increase will be 13.46 percent. The newly approved rates include a 9.66 percent increase for containerized cargo, a 9.22 percent increase for automobiles and “roll-on, roll-off” cargo and a 21.26 percent increase for less than container load (LCL) cargo, except for Molokai and Lanai, for which the LCL increase is 12 percent. The rate increases become effective for cargo booked on barges sailing on August 1.

“The revenue from this rate case is needed to finance new investments in vessels and other cargo equipment, and to pay for costs associated with maintaining reliability of service and the same number of sailings, despite falling cargo volumes,” said Roy Catalani, Young Brothers’ Vice President of Strategic Planning and Government Affairs.

Last December, Young Brothers submitted a request for an average rate increase of 17.9 percent to the PUC, including a 15 percent increase for containerized cargo, a 10 percent increase for automobiles and “roll-on, roll-off” cargo and a 25 percent increase for LCL cargo.

In June, Young Brothers and the Consumer Advocate entered into a settlement agreement, agreeing upon an average overall increase of 14.61 percent, with a 10.5 percent increase for containerized cargo, a 10 percent increase for automobiles and “roll-on, roll-off” cargo and a 23 percent increase for LCL cargo, except for Molokai and Lanai, for which the rate was set at 12 percent for LCL cargo. On July 28, the PUC reduced these rates to their current state after further negotiations.

With respect to cargo volumes, Young Brothers experienced a 9.6 percent decrease in inter-island cargo volumes in 2008, and projects an additional 11 percent decrease in 2009. However, in order to meet its customers’ demand for frequent service, Young Brothers has maintained twelve regularly scheduled weekly sailings to the Neighbor Islands.

As an example of measures to control and reduce costs, Young Brothers obtained community input on and PUC approval of certain Maui County sailing schedule changes earlier this year. Young Brothers was able to reduce its intrastate costs by over $900,000.

The 21.26 percent increase in LCL rates will add about eight to nine cents to the cost of shipping a 24-package case of saimin (shipped on a pallet of 90 cases) or a case of 24 cans of juice or soda (shipped on a pallet of 110 cases). For Molokai and Lanai, the increases will be about half of these amounts.  Alternatively, shipments made in a 20-foot container load (9.66 percent rate increase) would add about two cents per case.