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2012 Shipping & Transportation

High fuel costs challenge shippers and transporters to keep supply lines open to Hawaii

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A Matson ship arrives in Hawaii almost every other day, allowing businesses to rely on the company’s vessel schedules to replenish their inventories.

Ever adaptive to rising operating costs and a fluctuating economy, Matson has been leading the way in new technology and ideas in the shipping and transportation industry for 130 years. A pioneer, Matson introduced the concept of container shipping in the Pacific, a feat that contributed to the company’s recognition in the Smithsonian for transforming the waterfront.

While you may have seen the name on containers across the state, what you may not know is just how deeply rooted Matson’s history in Hawaii has been. Founded by Captain William Matson in 1882, the company started off servicing the sugar plantations on the Big Island. Soon after, Matson’s passenger ships started bringing visitors to Hawaii. The company opened the famed Royal Hawaiian Hotel in 1927, and also served as owners of the Moana and Princess Kaiulani hotels. “We are part of the fabric of the state,” says company spokesperson Jeff Hull. “We had a key role in the development of tourism.”

Today, Matson continues to support the state by providing what Hull refers to as “a vital lifeline” to and from the state. “We bring in every type of product that’s used to support the state’s economy: perishables, dry goods, construction materials, vehicles, rolling stock,” he says.

Hull credits the ships’ steady and reliable schedule. “Because you have limited warehousing space in Hawaii, customers rely on Matson’s vessel schedules to replenish their inventories, rather than relying on storage,” he says.

With five ship departures from the West Coast per week, customers can be sure not only that a ship is constantly on its way, but also that it will arrive on time. “We have a disciplined service where we measure ship arrivals by hours, not by days,” Hull says. 

Upon arrival, shipments go out just as efficiently as they came in. “We have applied GPS technology to track the freight in the container yard,” Hull says. “We make sure truck turn times are around 20 minutes.”

They are also constantly looking ahead and making adjustments to better serve their customers. To account for rising fuel costs, Matson incorporated a triangulating service among Oakland, Los Angeles and Honolulu that allowed it to use fewer ships, while keeping up with its schedule. “That’s how we reduced operating costs without compromising the service,” Hull says.

Most recently, Matson invested $500 million in new, more fuel-efficient ships that allow for more capacity. “It is a huge investment in Hawaii’s future in ensuring on-time service and offering a modern suite,” Hull says. “We always look at ways to adapt technology in order to make our service as efficient as possible.”

Aloha Air Cargo

Aloha Air Cargo is the only interisland cargo carrier with extensive containerized cargo capacity over 135,000 lbs. across their fleet.

Shipping and transportation is, of course, not limited to the sea. Aloha Air Cargo has taken the industry to the skies and carried on the spirit of aloha Hawaii residents remember so fondly from its beloved predecessor, Aloha Airlines.

“Originally, Aloha’s cargo business consisted of carrying freight in the cargo holds below the floors of regular passenger flights (on Aloha Airlines),” says Johnny Hobayan, vice president of sales and marketing. When Aloha Airlines closed its doors in 2008, the cargo division lived on, carrying that distinguishable spirit along with it. A locally managed company, Aloha Air Cargo employs local people as well, with more than 67 percent being former Aloha Airlines employees.

But the new emphasis on the cargo division came at a time of dramatically rising fuel costs. This forced Aloha to get creative in order to counter those costs in a sustainable manner. To do this, the company has incorporated a Flight Management System (FMS) that allows its pilots to fly the most fuel-efficient routes available and also take advantage of single-engine taxiing when possible. They also save by utilizing Ground Power Units (GPU) instead of the traditionally used Auxiliary Power Units (APU), which have been known to use significantly more fuel. Other initiatives have also been taken.

“In our ground operations, we are currently implementing a new cargo management system to automate strategic pieces of our network and bring process flow efficiencies and cost savings to our customers,” Hobayan says.

When you are talking about an air cargo fleet that regularly operates more than 1,000 flights per month, these savings add up. This translates into lower costs for Aloha’s customers, which in turn results in lower costs for consumers, considering the wide variety of goods Aloha carries. “From perishables, electronics, dry goods, to live animals, we move it,” Hobayan says.

Hobayan points out the state’s dependence on shipping. “More than 80 percent of our consumables are being shipped in. This fact, along with the unique geographic layout of our state necessitates a premium price on all of our goods due to the additional shipping requirements,” he says. “As fuel, labor and several other components continue to drive shipping costs up, we are working with our customers to develop multi-modal solutions fit specifically to their needs with the objective of effectively managing and minimizing transportation costs.”

This attention to customer needs may be at the heart of Aloha’s success. “We extend value not just through efficient, on-time air cargo transport, but by understanding our customers’ supply chains and building end-to-end logistic solutions for their entire distribution network,” Hobayan says.

Pasha Hawaii

Reggie Maldonado
General Manager, Pasha Hawaii

In an effort to stay above the curve in innovative and cost-effective solutions, Pasha Hawaii started by listening to client needs.

Specializing in ocean transportation of vehicles, machinery and other materials between the U.S. Mainland, Oahu, Maui and the Big Island, Pasha Hawaii was created as a response to customer requests for the larger Pasha Group to provide enclosed roll-on, roll-off service to Hawaii. Pasha Group has been in the transportation and logistics industry since 1947, and they created Pasha Hawaii as a separate entity in order to fulfill these requests.

More recently, customers expressed a desire for an expanded specialized shipping service to include container shipping, so Pasha will be introducing a new combination container and roll-on, roll-off ship in 2013. “We have also modified Jean Anne (Pasha’s first and only Pure Car Truck Carrier) to accommodate up to 50 forty-foot standard containers per voyage,” says Reggie Maldonado, Pasha Hawaii’s general manager. “Again, this was at the request of our customers, and we are delighted to be able to add this capability to our roster of services.”

Pasha Hawaii’s stellar reputation has grown tremendously, which may be due in part to their exceptional ability to respond to their customers’ unique needs.

Maldonado recalls a recent delivery to the W.M. Keck Observatory near the summit of Mauna Kea. The 10,000 pound Multi-Object Spectrometer for Infra-Red Exploration (MOSFIRE) is a $7.3 million camera, built to take pictures of solar instruments. “It is extremely fragile and irreplaceable,” Maldonado says. To ensure proper delivery, the Pasha Hawaii team stayed in constant contact with the customers regarding requirements and also following shipment progress.

“The surveyor who met the ship at discharge was impressed at how securely MOSFIRE had been stowed and how well it had traveled. Neither the crate on the carrier, nor the camera inside the crate had moved at all in transit.”

Pasha’s response to customer needs is not limited to shipping service alone. They have also taken incredible leaps toward environmental stewardship. They have incorporated fuel-saving technologies to many of their ships, while also taking steps toward reducing carbon dioxide emissions. “Pasha Hawaii is now realizing a fuel reduction of about 12 percent,” Maldonado says.

Fulfilling customer needs has proven successful for Pasha Hawaii. “Our ship is running at capacity, and the flexibility of our service has proven to be highly advantageous to our customers, who have never waivered,” Maldonado says. “Adding containers to the cargo mix will deliver value to a broader range of customers, which is good for us—and good for Hawaii.”

Horizon Lines

A Horizon Lines vessel departs Honolulu harbor.

Keeping a keen sense of community at the heart of its business, Horizon Lines has thrived in Hawaii, providing reliable delivery to some of the state’s biggest names.

“Horizon Lines is the largest domestic containerized shipping carrier in the U.S.,” says company vice president Ali Nikkhoo.

Operating in Hawaii since 1986, Horizon Lines began life 30 years earlier as Sea-Land Service, which pioneered containerized ocean shipping.  Being in the state for such a long time, the company has experienced  all of Hawaii’s economic highs and lows and still continues to prosper. Perhaps part of that is due to the company’s emphasis operating efficiently. 

“Everything is geared toward creating efficiencies for the customers,” Nikkhoo says. “Anytime we can reduce the turn time in our terminal, for instance, that helps the customer.”

Horizon utilizes technology to assist in this process, such as a sophisticated gate system and other equipment to automate operations as much as possible.  The automation process also includes EDI (electronic data interchange), scanners, online bill of lading creation and paperless documents.  “Processing customer transactions through EDI allows us to eliminate much of the paper, helping ensure faster, more accurate transactions for our customers,” Nikkhoo says.

While automation provides the framework for efficient operations, live customer service and support forms the foundation.  “Building strong customer relationships is so important to our business in Hawaii,” Nikkhoo says. “When people know they are dealing with you, by name, that differentiates you.  My first priority is to make sure that I build strong relationships with our customers here so they can trust me and my staff to take care of their business.”

Looking ahead, Horizon plans to continue to invest in the future of this state. Recently, the company added 450 state-of-the-art refrigerated containers to its Hawaii service.  Horizon also is in the beginning stages of designing new ships that will be more fuel-efficient, environmentally friendly, fast, flexible and, most important, reliable. “You are dealing with just-in-time inventory,” Nikkhoo says. “We need to be here every time we say we are going to be here, and having reliable ships is of utmost importance.”

Horizon also plans to continue its role as a steward in the community, supporting charities such as the Hawaii Foodbank, Children’s Discovery Center and the Bishop Museum, to name a few. “We consider ourselves a big part of the ohana, and that goes a long way,” Nikkhoo says. “Our commitment to the community is very strong.”

Young Brothers

Keith Kiyotoki
Sales and Marketing Manager,
Young Brothers

Exceeding Hawaii’s inter-island shipping and transportation needs for more than a century, Young Brothers has invested in several initiatives to better serve customers and improve operational efficiency. “Our recent additions of newer barges were designed to be more fuel efficient. In addition, we have equipped our tugboats to include monitors that help maximize fuel efficiency. Similarly, in shore-side operations, a photovoltaic system was installed to save on electricity,” says sales and marketing manager Keith Kiyotoki. “This allows Young Brothers to save money and pass that savings along to our customers.”

Efficiency is essential not only for Young Brothers as a shipping company, but also for Hawaii residents and visitors. “Interisland shipping is a major engine in our state’s island economy,” Kiyotoki says. “Hawaii’s businesses rely on our shipments to arrive on time, with their cargo delivered safely and securely, so that they in turn can provide their customers with those same goods and products.”

For Young Brothers, those goods and products encompass just about everything for every kind of customer, whether it’s a grocery store’s perishables, a construction company’s materials and equipment, or a family’s personal belongings. “It’s also important to note that Young Brothers provides an agricultural discount for farmers to ship their local product to and from the neighbor islands, supporting state policy to sustaining local production of agricultural products,” Kiyotoki says.

And the customers they serve have learned to rely on Young Brothers not only for on-time service, but for their frequency as well. “We have 12 weekly round-trip sailings to all major shipping ports,” Kiyotoki says, referring to the ports throughout the state of Hawaii on Oahu, the Big Island, Maui, Kauai, Molokai, and Lanai. “These communities depend on the regular frequency that Young Brothers provides.”

The company operates its barges using what Kiyotoki refers to as “a hub-and-spoke system.” With Honolulu being the hub port, Young Brothers is able to transport cargo to and from the neighbor islands.  In transport, Kiyotoki says a typical transit time is 12 hours, with some longer transit times for barges going to and from ports on the Big Island. That type of turnaround time can make all the difference, as it provides the local businesses and residents a very economical and timely way to ship their cargo, especially when perishables and other time-sensitive materials are on board. “Barges generally depart in the late afternoon and arrive the next morning,” Kiyotoki says.

Founded on a mission to help transport goods and services between Honolulu and the neighbor islands, Young Brothers plans to continue its tradition of providing regular, frequent and on-time sailings to all of the neighbor islands. “That’s our heritage and why Young Brothers is your neighbor island partner,” Kiyotoki says.

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