Matson reported another solid quarter, benefitting from higher freight yields in transpacific trade lanes, improved lift volumes at their terminals and continuing improvements in logistics.
By Patrick Burnson
Published: September, 2014
Matson reported another solid quarter, benefitting from higher freight yields in transpacific trade lanes, improved lift volumes at their terminals and continuing improvements in logistics.
However, Matson’s President and Chief Executive Officer Matt Cox said these benefits were offset by lower Hawaii container volume, increased vessel operating expenses stemming from vessel relief activities and increased terminal handling expenses.
“Our operating platform continues to generate significant cash flow that positions us well to fund our fleet renewal program, undertake new growth opportunities and grow our dividend incrementally,” said Cox. “As we look to the balance of 2014, we expect overall results to exceed the results achieved in the second half of 2013.”
In the second half of 2014, Matson expects ocean transportation operating income to increase significantly from the level achieved in the second half of 2013, which was $51.4 million (exclusive of a $9.95 million litigation charge). For the full year 2014, ocean transportation operating income is expected to be near or slightly above the level achieved in 2013, which was $104.3 million (exclusive of the $9.95 million litigation charge). This outlook excludes any future impact from the September 2013 molasses incident.
Transpacific Carriers Propose Rate Increase
Member container shipping lines in the Transpacific Stabilization Agreement (TSA) are proposing an across-the board general rate increase (GRI) of at least $600 per 40-foot container (FEU) to all destinations, effective September 1. Carriers had filed increases in their individual tariffs in late July and subsequently began notifying customers directly.
TSA lines said the planned GRI follows strong cargo demand and high vessel utilization levels in recent months, which forward bookings suggest will continue through September. With equipment, inland transport and other cargo handling costs rising steadily, carriers see higher baseline rates going into 2015 as essential to maintaining adequate service levels over time.
“Lines have made modest revenue gains to date this year, but they continue to struggle in terms of returning to profitability,” said TSA Executive Administrator Brian Conrad. “In most route segments they are operating at or near full capacity with little room for error in managing assets, so this increase is needed as a cushion to cover costs and assure service choice and reliability.”
Port of Stockton to Reduce Marine Highway Service
On September 1, the Port of Stockton transitioned the M-580 Marine Highway demonstration project from a weekly service to an “as-needed” service. The M-580, which has been in operation as a demonstration project for the last 14 months, is a viable alternative to trucking containers to and from the Central Valley and the Bay Area.
“This project has demonstrated tremendous air quality benefits, reducing air emissions by 80 percent and eliminating nearly 25,000 truck trips, making highways safer,” stated Port of Stockton Director Richard Aschieris. “The M-580 has significantly reduced associated maintenance costs as well. However, challenges remain as the Port of Stockton is the only operating underwriter of this regional project. During this initial period, we learned that the time it takes to build sustainable volumes was longer than anticipated.”
During the past several months, the port met with numerous state and federal agencies to identify possible financial partners to assist in keeping the current level of service viable and thus continue to see the significant emission reductions and associated health benefits. As of today, no state or federal agency has made a financial commitment toward the weekly operation of the project.
PTA’s Steamship Night Coming September 18
The Pacific Transportation Association’s Annual Steamship Night will be held on Thursday, September 18 at the San Francisco Marriott Marquis. Now in its 35th year, this gathering has long been considered the networking event of the year for the Bay Area’s trade and transportation industry. Sponsorships will help fund the PTA’s newly established scholarship for outstanding cadets at the California Maritime Academy—one of only six maritime academies in the country and the only such institution on the West Coast.
Dispute over Israeli-Owned Vessel in Oakland
Political activists convened at the Port of Oakland last month to prevent the discharge of cargo from the Zim Integrated Shipping Services ship Piraeus, because they view the ship as a representative of Israeli actions in the current Gaza Strip conflict. Although the vessel does not serve ports in the Middle East, Zim is an Israeli shipping firm and as such became a target of the protests.
Meanwhile, San Francisco-based BSR recently applauded the strides made by Zim in reducing its SOX emissions. BSR’s “Clean Cargo Working Group” noted that Zim only joined the group last year, and was ranked fourth (out of 22 container carriers) in the 2013 lowest-average emissions performance.
Zim was ranked first on SOX average emissions, with the lowest emissions of 22 carriers; fourth on CO2 emissions for reefer containers; and fifth on lowest average CO2 emissions for dry containers.
Patrick Burnson is the past president and current board member of the Pacific Transportation Association, based in San Francisco. www.pacifictrans.org
