Young Brothers Seeks State Help for Barge ‘Crisis’

By Catherine Cluett Pactol

Interisland shipper Young Brothers has declared an “impending cash crisis” and is now seeking help from the state to continue operations, the company announced last week.

YB officials said the COVID-19 pandemic has brought a 30 percent drop in cargo volumes and the company reported losing nearly $8 million through April and projects mounting losses totaling approximately $25 million by the end of the year. In a letter to the state Public Utilities Commission (PUC), YB called its financial situation “extremely dire.”

The company claimed it will no longer receive cash infusions from its parent company as of June 1. In a final ditch effort, YB is now begging the state legislature for $25 million of the federal Coronavirus Aid, Relief and Economic Security (CARES) Act to cover operating losses through the end of this year.

“Until now, our parent company has graciously and generously covered our losses,” wrote Jay Ana, president of Young Brothers, LLC, in the company’s letter last week. “But they are not in a position to continue covering the staggering COVID losses and have told us that we must now find other solutions. We know they have deep aloha for Young Brothers – and for Hawaii – and we are grateful to them for carrying us through the challenging times. But we must now find a cooperative solution with the state that allows YB to continue to operate.”

The company has already reduced sailing schedules to Maui and Hawaii counties, dropping Molokai’s previously twice weekly barge delivery to once a week during the month of May.

If unable to secure the requested funding, the company said it will be required to prioritize revenue-generating lines of service to sustain operations. YB would pursue a phased approach to service modifications, which, subject to PUC approval, would begin on June 8 “to reduce costs and provide continuity of service for as many customers for as long as possible.”

“We hope to avoid any disruption in service,” said Ana. “Support from the state legislature would put the company on solid ground while we seek solutions from the Public Utilities Commission to achieve a more sustainable future for the company. Our goal is to ensure Young Brothers is here to serve all of Hawaii beyond 2020 and into the future.”

Phase one of the company’s contingency plan called for a continuation of its modified sailing schedule that was approved by the PUC on May 5, initially for one month. YB says it would continue to accept dry and refrigerated less than container loads (LCL) and mix cargo options to and from Molokai and Lanai only.

Phase two would call for a further reduction in sailing frequency to all neighbor island ports and eliminate all dry and refrigerated LCL and mix cargo options, as well as LCL shipments of livestock, to and from all ports.

“The neighbor island communities that rely on Young Brothers can rest assured that we are not closing on June 1,” said Ana. “We will serve our customers as long as possible while we pursue every avenue of assistance.”

YB said it will not make further adjustments to the sailing schedule at this time; however, the contemplated additional sailings requested by Molokai farmers will not be reinstated. The company is also seeking permission from the PUC to not resume LCL and mixed cargo lines.

However, Ana said special procedures may be made for Molokai.

“After June 8, Young Brothers is committed to continue providing the specialized services and delivering the gas, groceries, and other critical supplies that Molokai and Lanai need to survive and thrive,” he said. YB announced it is establishing special procedures to continue transporting livestock between the islands after June 8.

Meanwhile, YB has also requested a rate increase to cover losses prior to COVID-19. In January, YB came to Molokai to discuss increase request with Molokai residents. A decision on the rate case is still pending, however, due to the COVID-19 pandemic.

Honolulu Civil Beat reported that lawmakers are considering the company’s request for $25 million. Hawaii Rep. Sylvia Luke, who chairs the House Finance Committee, said her committee will weigh the bailout as it decides how to allocate the $650 million for Hawaii under CARES.