Interisland cargo carrier Young Brothers says it needs an unprecedented 34 percent rate hike to survive. What could this mean for residents, businesses and the future of the more than century-old shipper? Always Investigating pressed the company and regulators for answers.
Young Brothers has not turned a profit since 2017, with losses mounting. At the same time, they poured $88 million into new tugs and equipment, but cut back on things like service hours, leaving customers and their regulators with concerns.
In a filing thousands of pages long, Young Brothers is making its case for why the Public Utilities Commission should grant the request for the rate increase, expected to bring in $27 million dollars in extra fees from customers.
Young Brothers contends the company needs it to make up for more than $20 million in losses in the past 2 years, projected to worsen with another $12.3 million loss likely in 2020.
Always Investigating asked a company representative: Even given the levels of service that are happening now, to frustrated customers, what would you say when they say you want me to pay more? There’s been some belt tightening already.
“I understand where customers are coming from,” said Sandra Larsen, vice president of legal and government affairs for Young Brothers. “We’re doing the best that we can to provide the best service that we can. We are driving operational efficiencies the best we can, so we are continuously looking at ways to improve our business.”
The volume of interisland cargo Young Brothers carries carried has declined, and the company tells the P.U.C. that unregulated and what they call “grey market” competition is eroding business.
Young Brothers contends the hike should be looked at as a “reset” and does not constitute “rate shock.”
“We are the only water carrier that services Molokai and Lanai,” Larsen said. “It’s really critical we stay in service.”
Always Investigating asked Larsen: There will be few to probably no one watching at home whose pay, whose income is going to go up 34 percent in this coming year. How can the consumers possibly afford what could be coming to them especially on neighbor islands?
“I think for the consumer the costs that are going to be passed on to them are most likely marginal,” Larsen said. “It will likely be a smaller percentage of the overall cost of shipping.”
The barge carrier says a container could cost an extra $250 to move between islands. A small car could cost $66 dollars more.
Customers have also been hit with a series of state Department of Transportation double-digit wharfage fee hikes in recent years, on top of shipping company prices, to pay for the state “Harbors Modernization Plan.” Fees went up 17% in February 2017, another 15% later that same year, and yet another 15% in summer 2018. From 2019 forward wharfage will continue to rise at a minimum 3 percent per year.
Always Investigating asked state regulators how their review of Young Brothers’ rate-increase request will go.
“As with any rate increase application, the P.U.C will conduct a thorough examination to determine whether Young Brothers’ request is reasonable.,” said P.U.C. Chairman James Griffin. “The application review process includes a number of opportunities and methods for public comment.”
Public hearings are expected to take place on each island, likely in early 2020, and the P.U.C.’s consumer advocate will also weigh in before any decision. The whole process is expected to take about a year.
“The date, time and locations of the public hearings will be advertised in local news media and on the P.U.C. website homepage,” Griffin said.
To see the full docket filing, go to this weblink and type docket number “2019-0117” in the Docket Quick Link search field: https://dms.puc.hawaii.gov/dms/dockets?action=search
To submit comments to the P.U.C. go to http://puc.hawaii.gov/contact/public-comments/ where any submission should reference “Docket No. 2019-0117.”
Young Brothers distributed the following three information sheets with its perspectives on their proposed rate hike: