Young Brothers Request 24% LCL Rate Increase for Barge Service

Molokai and Lanai to experience largest service hikes from transporter.

Cost of living levels may be on the rise on the friendly isle: a substantial increase on goods shipped between islands is being sought by Young Brothers (YB), Molokai’s only wholesale transporter. The Maui Public Utilities Commission held a meeting March 1 to accept input from the community on the tariff increases proposed by Young Brothers in December 2006.

Young Brothers ships everything from cars to cabbage to small appliances. There is a rate increase breakdown which is contingent on good types (refrigerated, straight load, etc), but the most notable request is a 24% hike on LCL (Less than Container Load) cargo. This means that ports which consume the fewest goods- Molokai and Lana`i- will be hit hardest if the rate hike is approved. A container of toasters, for example, which is only full to 80% of its designated container load weight will be assessed the 24% LCL tariff, likely driving the cost of all those toasters up by that same 24% margin. This could be disastrous to consumers; many here on Molokai consume grains and canned food- among other dry goods which will see the largest tariff adjustment- brought by the barge, and may not be able to afford a 24% rise in their weekly grocery bill.

Molokai businesses, however, are worried that they will not be able to pass the price increase onto consumers, and that it will be them “eating” the price hike- a factor that may stunt Molokai’s economy. Representing Molokai’s largest employer, Molokai Ranch Lodge manager Teri Waros thinks the tariff will hit the tourism industry on Molokai especially hard because of the competitiveness of the industry. “I have eighty-five regular employees whose families I know and value,” Says Waros at the Public Utilities Commission meeting on the matter, on March 1 in Kaunakakai. “What will happen to them, and our business overall, if it becomes too expensive keep things running?”

Coffees of Hawaii owner Dan Kuhn lamented the proposal as well. “We already have the highest electricity costs in the country, and if this goes through- will Molokai become an island of (native) reserves, or a place where it’s actually possible to do business?” Kuhn also expresses his concern over the recent price hike for ag-businesses who need to perform irrigation on the island, another major expense for crop growers.

A big reason for skepticism about the plan is that Molokai and Lana`i are quite literally being punished for being relatively small consumers of goods. Young Brothers presentation at the March 1 meeting gave four reasons for their need for their desired increase: Mounting security costs, volatile fuel markets, rising employee premiums, and the need for shore and vessel improvements.

While those reasons are all within the normal scope of expected business overhead expenditures, one has to wonder at their rate designs. Molokai and Lana`i aren’t receiving “shore improvements” like harbors on Oahu and Maui are, and if the “vessel improvements” hinted at by Young Brothers include the building of lighter vessels to service ports with lower overall shipping weight demand, they certainly have not made that clear as a possibility to the public.

What this boils down to, then, is smaller islands footing the bill to keep Young Brothers service competitive on the larger market islands Oahu and Maui. Barbara Haliniak of Molokai Chamber of Commerce says “because shipping on the inter-island air carriers is unregulated, Young Brothers is Molokai’s lifeline. This increase is just going to make it harder on everyone here.”

Young Brothers’ President Glenn Hong (pictured) spoke at the meeting and says that the company is willing to listen to Molokai. “We realize that this will be hard on some”, said Hong as the meeting wrapped-up. “We are willing to work with Molokai who has any comments and concerns, and we value Molokai as a market”

The Public Utilities Commission is scheduled to make its decision regarding the fare increases on July 15, and if approved, the price change would take effect September 15.