Even when the experts all agree, they may well be mistaken.
As soon as we abandon our own reason, and are content to rely upon authority, there is no end to our troubles.
Be scrupulously truthful, even if the truth is inconvenient, for it is more inconvenient when you try to conceal it.
~ Bertrand Russell
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Hawaii Public Utilities Commission - Young Brothers - Matson - Pasha - Rate Increases - Rate Makers
1. YOUNG BROTHERS (YB) IS REQUESTING AN OVERALL 11.05 PERCENT
INCREASE IN ITS SHIPPING RATES
Young Brothers President Joseph Boivin said in a letter to commissioners
in April that the company's fnancial condition “has accelerated its need
for rate relief” and that the shipper has been unable to garner signifcant
cost recovery since 2014, when a 2.21 percent rate increase went into
efect.
In May 2017, the PUC approved a 0.1 percent increase that was
projected to add $88,000 to Young Brothers' interisland revenue.
The company had originally sought a 4.4 percent increase, while the
Consumer Advocate recommended a 5.9 percent decrease, according
to published reports. {Emphasis Supplied]
Boivin said the company also has lost nearly 40 percent in cargo
volume from interstate shipper Matson — equal to approximately $1.9
million in annual interstate general freight revenues. {Emphasis Supplied]
The company, is the sole carrier of shipped goods between Honolulu and
the Neighbor Islands.
Source: Hearings on Young Brothers rate hikes set. By Chris Sugidono.
The Maui News. June 24, 2018, accessed June 25, 2018
http://www.mauinews.com/news/local-news/2018/06/hearings-on-young-brothers-rate-
hikes-set/
CARGO VOLUME GROWTH – EXCESS CARGO CAPACITY
Mike Hansen, a local shipping industry observer who heads a group
called the Hawaii Shippers Council, said historical annual cargo volume
growth rates around 2%. [Emphasis Supplied]
2. Local economist Paul Brewbaker said carriers need to plan for long-
term future demand growth, but he questions how overall ocean cargo
capacity can feasibly grow much beyond the rate of general state
economic growth. [Emphasis Supplied]
Hawaii’s economy is closely tied to shipping, as about 80% of all goods
consumed in the state are imported, and 98% of that comes by ship,
according to state estimates. Some of these shipped goods arrive on
foreign carriers, but Matson and Pasha are the backbone of the
industry. {Emphasis Supplied]
Source: Shipping Companies’ Expansion in Hawaii Could Go Bust for
Some. By Andrew Gomes. The Honolulu Star-Advertiser. September 19,
2017. Transportation Topics. Accessed June 21, 2018
http://www.ttnews.com/articles/shipping-companies-expansion-hawaii-could-go-bust-some
___________________________________________________________
ECONOMIC GROWTH AND FORECAST FOR HAWAII
Overall, Hawaii's economy, as measured by real GDP, is projected to
show a 1.9 percent increase in 2018, 0.2 of a percentage point above the
growth rate forecast last quarter. The real GDP growth forecast for 2019
is 1.6 percent, the same as the previous forecast.
Beyond 2019, the economy is expected to continue its expansion path,
with job growth projected to be 0.9 percent in 2020 and 0.8 percent in
2021.
Source: Hawaii Department of Business, Economic Development and
Tourism, Research and Analysis. Outlook for The Economy.
http://dbedt.hawaii.gov/economic/qser/outlook-economy/
3. Additional References
UHERO County Forecast: Healthy county economies face growing pains.
June 1, 2018, accessed June 21, 2018
http://uhero.hawaii.edu/assets/18Q2_County_Public.pdf
UHERO State Forecast Update. May 4, 2018, accessed June 21, 2018
http://uhero.hawaii.edu/assets/18Q2_SU_Public.pdf
___________________________________________________________
MIDYEAR CONTAINER SHIPPING OUTLOOK
ANALYZING THE PEAK SEASON
The Journal of Commerce (JOC)
June 19, 2018, accessed June 25, 2018
https://www.joc.com/webcast/midyear-container-shipping-outlook-analyzing-peak-season
With US imports surging 7.6 percent in the frst three months of 2018,
according to PIERS, and little sign of a slowdown in demand, the trans-
Pacifc is in the healthiest shape it's been in years.
The same can't be said about the matching of that demand to capacity,
though there have been improvements. [Emphasis Supplied]
Carriers are injecting an 8 to 9 percent increase in trans-Pacifc
capacity, while imports are projected to increase 5 to 6 percent,
according to industry analyst Alphaliner. [Emphasis Supplied]
That the result is downward pressure on annual service contract rates
and a challenging environment for carriers. [Emphasis Supplied]
4. Amid the persistent overcapacity, carriers are working to diferentiate
themselves by ofering guaranteed reliability and faster transits, while
looking to recoup surging bunker fuel prices through a series of
surcharges and peak-season general rate increases. [Emphasis Supplied]
For benefcial cargo owners, the news could get worse before it gets
better, as the Trump administration engages in tit-for-tat sanctions battles
with some of the largest trading countries and partners in the world.
[Emphasis Supplied]
WESTCOAST TO HAWAII TRADELINE
PORTS SERVICED BY MATSON AND PASHA
CARGO VOLUME – CARGO STATISTICS (TEUs)
PORT OF LONG BEACH
Latest Monthly TEUs
http://www.polb.com/economics/stats/latest_teus.asp
Yearly TEUs
http://www.polb.com/economics/stats/yearly_teus.asp
PORT OF LOS ANGELES
TEU Statistics
https://www.portofosangeles.org/maritime/stats.asp
PORT OF OAKLAND
Container Activity – Container History
http://polb.com/economics/stats/latest_teus.asp
PORTS OF SEATTLE AND TACOMA
NORTHWEST ALLIANCE
Cargo Volume
https://www.nwseaportalliance.com/sites/default/fles/full_mty_by_month_2017vs18-may.pdf
Cargo Statistics
https://www.nwseaportalliance.com/sites/default/fles/5-year_history_may_18.pdf
5. PORT OF SAN DIEGO
Container Trafc May 2018
https://www.portofsandiego.org/maritime/cargo-and-trade
SOUTHERN CALIFORNIA AUTO PORTS FACE CAPACITY CONSTRAINTS
By Joseph Bonney, Senior Editor. The Journal of Commerce (JOC).
August 11, 2017, accessed June 25, 2018
https://www.joc.com/port-news/us-ports/southern-california-auto-ports-face-capacity-
constraints_20170811.html
________________________________________________________
INTRASTATE and INTERSTATE OCEANBORNE CARRIAGE OF GOODS
MATSON NAVIGATION COMPANY, INC., Plaintif
v.
HAWAII PUBLIC UTILITIES COMMISSION, et. al.
and
YOUNG BROTHERS, LIMITED, Defendant-Intervenor
United States District Court, D. Hawaii. July 19, 1990. 742 F.Supp. 1468 (1990)
The Honorable Judge David Alan Ezra, Presiding
Matson has not, nor can it now, demonstrate that the State has applied
the Act unreasonably or in a discriminatory manner. Matson has
never applied for a certifcate of public convenience or necessity.
There is absolutely no indication that the purpose of the requirement is
to prohibit competition or obstruct interstate commerce.
Hawaii has a legitimate interest, as an island state, in regulating
transportation between ports within the state. Applying a balancing
approach, there is no indication that the HPUC does not regulate
evenhandedly or that the burden placed on interstate commerce
clearly exceeds the local benefts.
6. Therefore, the intrastate nature of the commerce sought to be
regulated by the HPUC, the distinctive character of Hawaii as an island
state, and Congress' decision not to intervene in this area, persuade
this court to follow the Supreme Court's reasoning in Wilmington.
Accordingly, the court rejects Matson's constitutional challenge to the
HPU''s ability to regulate interisland freight carriage and fnds that the
HPUC may regulate interisland shipping which is outside the
jurisdiction of the FMC pursuant to the Hawaii Water Carrier Act,
Haw. Rev.Stat. Ch. 271G. [Emphasis Supplied]
In so holding, this court does not pass on the interstate or intrastate
nature of particular Matson goods being shipped pursuant to Tarif
60 or amended Tarif 60. The court only holds that the HPUC may
regulate those interisland shipments which are not within the
jurisdiction of the FMC despite the fact that such shipments pass
over international waters. [Emphasis Supplied]
_______________________
FEDERAL MARITIME COMMISSION (FMC)
LETTER TO CLIFTON M. HASEGAWA – January 17, 2014
Dear Mr. Hasegawa:
The State of Hawaii has jurisdiction over movements in intrastate
commerce. For example, the State of Hawaii has jurisdiction over the
services in Tarif 60-A which is a domestic commodity tarif for
interisland freight published by Matson. The Surface Transportation
Board created in the ICC Termination Act of 1995 and the successor
agency to the Interstate Commerce Commission has authority over
continuous movements in interstate commerce.
7. The FMC regulates Matson Navigation Company, Inc., Organization
Number 001685, and Matson South Pacifc Limited, Organization
Number 024391, only to the extent for carriage of passengers or cargo by
water between the United States and a foreign country.
Matson Navigation Company, Inc. publishes Tarif 088 and Matson South
Pacifc Limited publishes Tarif 024391-001, which is hosted by
Distribution Publications, Inc. (“DPI”). The other service you describe
involves intrastate or interstate commerce by water in the U.S. domestic
trade, over which the Commission does not have jurisdiction under the
Shipping Act.
The 1990 judicial opinion relied upon in the January 27, 2014, letter
from the State of Hawaii was decided prior to the formation of the
Surface Transportation Board, which, as noted above, has
jurisdiction over continuous movements in interstate commerce over
the high seas. [Emphasis Supplied] [High Seas, defned below]
SURFACE TRANSPORTATION BOARD (STB)
LETTER TO CLIFTON M. HASEGAWA – January 17, 2014
STB would only have tarif authority over carriers involved in US
noncontiguous domestic marine trafc.
For example, STB would have authority over carriers operating between
Hawaii and the US 48 states; but would not have authority over Hawaiian
inter-island carriers, trafc between the noncontiguous states or
territories themselves (ex: Alaska to Hawaii, or Guam to Hawaii), or
international trafc (ex: Canada to Hawaii).
8. THE HIGH SEAS
CONVENTION ON THE HIGH SEAS - NOAA GENERAL COUNSEL
The term “high seas” means all parts of the sea that are not included
in the territorial sea or in the internal waters of a State.
Source: NOAA. https://www.gc.noaa.gov/documents/8_1_1958_high_seas.pdf
33 CFR § 2.22(a)(1) TERRITORIAL SEA
Territorial sea means the waters, 12 nautical miles wide, adjacent to the
coast of the United States and seaward of the territorial sea baseline.
Source: Cornell School of Law. Legal Information Institute.
https://www.law.cornell.edu/cfr/text/33/2.22
33 CFR § 2.24 INTERNAL WATERS
(a) With respect to the United States, internal waters means the waters
shoreward of the territorial sea baseline.
(b) With respect to any other nation, internal waters means the waters
shoreward of its territorial sea baseline, as recognized by the United
States.
Source: Cornell School of Law. Legal Information Institute.
https://www.law.cornell.edu/cfr/text/33/2.24
Territorial sea baseline means the line defning the shoreward extent of the
territorial sea of the United States drawn according to the principles, as
recognized by the United States, of the Convention on the Territorial Sea and
the Contiguous Zone, 15 U.S.T. 1606, and the 1982 United Nations Convention
on the Law of the Sea (UNCLOS), 21 I.L.M. 1261. Normally, the territorial sea
baseline is the mean low water line along the coast of the United States.
33 CFR § 2.20