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Shipping & Transportation Outlook for 2011 & Beyond

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

(page 2 of 2)

 

“There is a perception that air cargo is
expensive, too costly compared to
ocean transport. But for some companies,
air movement can be the right, cost-effective
option for their type of business.”
-Tracy Reasoner,
Vice President, Transair Cargo

Transair Cargo:

Fuel is a large component of air cargo companies operating costs, says Tracy Reasoner, vice president of locally owned Transair Cargo, one of the state’s largest transporters of goods by air. “We’re seeing the industry trying to maximize existing lift for greater efficiency, growing more aggressive in marketing services, and finding customers reliant on air transport because of time-sensitive, perishable products placing greater emphasis on using providers that can help them reduce their costs.”

As the state’s longest running all-cargo airline providing uninterrupted service to Hawaii businesses since 1982, Transair provides overnight air transport every night, 365 days a year, throughout the state, says Reasoner. It began with one plane and now has a fleet of seven cargo planes serving all major airport locations. The air cargo service has carried Krispy Kreme doughnuts from Maui and has even flown dolphins and monk seals interisland. The Honolulu Star-Advertiser is flown daily to the Neighbor Islands. Transair has assisted in natural disaster relief, flying food and water to Kauai after Hurricane Iniki in 1992 and bringing in supplies following the 2006 earthquake off the Big Island. It is also on-call for the Hawaii National Guard and the Department of Defense bomb squads, but is grateful to have never been called into action, says Reasoner.

“There is a perception that air cargo is expensive, too costly compared to ocean transport. But for some companies, air movement can be the right, cost-effective option for their type of business,” says Reasoner. He believes there will always be a need for air cargo services, especially with continued growth on the Neighbor Islands.

“Demand has been steady for us this year and we might see some increase by year end. We think the fourth quarter of 2011 may provide a good indicator of what lies ahead for economic recovery,” he adds.

“My projections are rosy for Hawaii.
We have increased our air freight
tonnage greatly with retail business
and are now moving multiple pallets
to Hawaii daily, which enables us to
increaseour service offerings to the Islands.”
-Brad Decther,
President,
DHX - Dependable Hawaiian Express

DHX – Dependable
Hawaiian Express:

With the opening of its new 40,000 square-foot Maui terminal in 2009 and the addition of new trucks and equipment, DHX-Dependable Hawaiian Express has spent about $10 million in its Hawaii operations, according President Brad Dechter. Part of Dependable Company of Transportation Services’ “Offshore” Group, DHX is a leading Hawaii and Guam ocean freight and logistics specialist, offering trucking, warehousing, freight forwarding and distribution to and in the Islands. It owns its own trucking operations and trucking terminals in Los Angeles, Maui, Kona and Guam.

“My projections are rosy for Hawaii. We have increased our air freight tonnage greatly with retail business and are now moving multiple pallets to Hawaii daily, which enables us to increase our service offerings to the Islands,” says Dechter. “We are seeing a decline in the size of less-than-container-load shipments and the size of orders being shipped, due to the fuel surcharge being at one of the highest levels. Customers are still buying, but they’re buying less.”

Dechter has also observed an absence of construction building materials moving for major projects, but believes that when the high fuel surcharge recedes, the state will see a surge in business. “This situation is unique to the Hawaii market because fuel surcharge is extremely high in this trade lane.”

He cautions, however, that as Hawaii’s economy moves into growth phase, local companies in trucking business need to be concerned about the future price of diesel fuel and future facilities, as fuel and warehousing usually rise over the long term growth timeline. Dechter also believes consolidation within the local freight industry is likely as a result of excess capacity created during the recession.

“Managing our own operations and facilities and having common ownership of our Mainland and Hawaii companies makes us unique in the forwarder business and are major factors in our ability to control the quality of our ISO (International Standards Organization) 9001-2008 certified freight service,” says Dechter. Incorporated in Hawaii in 1980 and currently with 10 offices throughout Asia and the Pacific Rim, in addition to offices on the Mainland, Hawaii and Guam, the company is adding an office in Malaysia and exploring expansion into Europe.

“For business customers watching
the bottom line, our LCL service
offers a less expensive and slower
transport option using existing
ocean carriers.”
-Jeff Bell,
Director (Mid-pacific),
Lynden International

Lynden
International:

Celebrating 25 years of doing business in Hawaii in 2011, the company, which began service in the state as Lynden Air Freight, launched a new LCL (less-than-container-load) ocean freight service to the Islands in June as an expansion of its ocean and air freight service.

“For business customers watching the bottom line, our LCL service offers a less expensive and slower transport option using existing ocean carriers,” says Jeff Bell, director of the Mid-Pacific overseeing Hawaii and Guam for Lynden International. As part of the Lynden family of companies providing integrated freight transportation services by land, sea and air, the Hawaii operation utilizes established ocean and air carriers to the Islands, buying their shipping services in bulk and, in turn, providing savings to its customers.

Bell says customers are responding to increased transport costs caused by high fuel prices by maintaining a “thin supply chain,” keeping just as much stock as they need on hand, which allows them to save on inventory expenses and warehousing costs. He is optimistic that the industry is poised for an upturn, and volume will start to rise by the second or third quarter of 2012. Bell also believes for the economy to grow that “construction needs to come back because it’s a volume industry.”

Leveraging technology to help customers “ship smart” has been a key strategy for Lynden. Its e-commerce services provide customers with information on every aspect of their freight and logistics – from booking, tracking, data reporting, invoicing and more. “Customers can make decisions based on real information on their transportation profile and with enhanced predictability on the supply they can provide to their own customers,” says Bell.

Bell expects stricter government security measures for air and ocean cargo will impose new safety regulations for shipping and transportation companies. He says Lynden hopes to see growth in its new LCL ocean freight service and will continue to promote its longstanding air freight service in the Islands.

 

2,103

Number of miles between Honolulu and Oakland, California.

Sources: Matson Navigation Company, Transair Hawaii, and DHX-Dependable Hawaii Express.

 

90 million

Estimated cubic feet of cargo transported annually to Hawaii by the freight industry.

Sources: Matson Navigation Company,Transair Hawaii, and DHX-Dependable Hawaii Express.

 

2,280

20-pound bags of rice can be carried in a 40-foot ocean cargo container.

Sources: Matson Navigation Company, Transair Hawaii, and DHX-Dependable Hawaii Express.

 

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