Horizon Lines hikes fuel surcharge rate

Horizon Lines will be increasing its fuel surcharge fee on its Hawaii and Guam tariffs by a 1.3 percentage point effective April 18, 2005.

In a statement issued Wednesday evening, Horizon Lines said it has filed a fuel surcharge increase with the Surface Transportation Board, raising its fuel surcharge rate from 9.2 percent to 10.5 percent.

This comes three days after rival shipping firm Matson announced an increase in its fuel surcharge fee on April 2.

Horizon said this increase is necessary to offset a portion of rapidly increasing fuel costs.

“Horizon Lines will continue to monitor fuel costs closely and adjust the fuel surcharge as trends warrant. We understand that any increase in the fuel surcharge impacts transportation costs. Horizon Lines implemented this fuel surcharge increase only after experiencing an extended trend in escalating fuel costs,” the statement said. “Thank you for your understanding and for your business.”

Matson had also cited the sustained increases in fuel costs as a major factor behind its fuel surcharge increase in its Hawaii, Guam, and Northern Mariana Islands services. Matson raised its fuel surcharge rate from 9.2 to 10.5 percent, also effective April 18, 2005. This is the company’s fourth increase since March 2004.

Matson had also announced that it is implementing a new program in which fuel costs will be reviewed on a quarterly basis, with the fuel surcharge adjusted accordingly, up or down.

The increases are expected to impact on the prices of basic goods on Guam and the CNMI, which largely depend on goods shipped in from off-island. Consumers on both territories have already started noticing slight increases in basic commodities at retail stores.

David Hoppes, vice president of Matson’s ocean services, said in the past two months, bunker fuel prices have risen 20 percent, necessitating this new adjustment.

“Record high fuel prices have been widely reported in the media and is a subject that touches virtually all consumers,” said Hoppes. “For transportation companies, fuel consumption is an unavoidable and significant component of operating costs. Many of the major railroads, trucking companies and international ocean carriers currently have fuel surcharges exceeding 13 percent. While we continue to invest in modern, fuel-efficient vessels that help reduce our overall fuel consumption, the impact of fuel prices on Matson’s business remains a cost factor we cannot simply absorb. In the past two months, bunker fuel prices have risen 20 percent, necessitating this new adjustment.”

As for the new quarterly review process, Hoppes said this will better allow their customers to plan their shipping costs and anticipate any adjustments on a regular, predictable schedule, rather than monitoring fuel prices on an ongoing basis.

“We will announce adjustments, up or down, each quarter, 21 days in advance of implementation, with the effective date being the first Sunday of the respective month. No adjustments will be made between these quarterly reviews, despite any strong fluctuations in fuel costs,” he added.

Matson raised its fuel surcharge three times last year, the last hike was in October. The fuel surcharge began in 2004. (PR)