Young Brothers threatens to cut more neighbor island services without help from the state

Local News

HONOLULU(KHON2) — Neighbor islands could see even fewer shipments from Young Brothers unless the state takes immediate action. The shipping company claims they face an “impending cash crisis” due to COVID-19.

Young Brothers already scaled-back deliveries to both Maui and Hawaii county in early May reducing stops to Molokai — a community that relies on those shipments — from twice a week, to just once a week.

Kit Okimoto, Friendly Market Center CFO, said the reduction has been challenging. Friendly Market is one of two main grocery stores on the ‘Friendly Isle.’

“Everyone’s sacrificing and we’re doing our part as best we can to get products on the shelves to customers,” Okimoto explained.

Young Brothers’ reported losses of more than $21 million in 2018 and 2019 due to declining cargo volumes and increased operating costs.

They claim the pandemic exacerbated the problem.

In a statement, Jason Childs, Young Brothers’ board of directors chairman, said they are “in a shared crisis that is far from over” and “is not sustainable.”

Young Brothers is asking for $25 million in CARES Act funds to keep them afloat.

In a statement, Young Brothers’ president Jay Ana said:

“Support from the state legislature would put the company on solid ground while we seek solutions from the Public Utilities Commission to achieve a more sustainable future to the company.”

Senator Rosalyn Baker (D) said money from the CARES Act or General funds needs to first be appropriated by the legislature.

Baker, whose district includes South and West Maui, previously sat in the House of Representatives for West Maui, Molokai and Lanai from 1988 to 1993. She said she knows just how important the services Young Brothers’ offer are to those communities.

She said it makes sense for the state to step up.

“Our thinking is it’s better to help (Young Brothers) restructure. It’s better to work with the PUC and provide some regulatory relief and work with the existing company rather than try to create one from the ground up.”

Without help, Young Brothers’ contingency plan includes making even more cuts such as: Further reducing stops to all neighbor islands, eliminating all dry and refrigerated LCL/mixed cargo options and eliminating LCL shipments of livestock.

“If it gets to that point, where all LCL and mixed cargo would be eliminated to and from all ports, then that would be devastating to the island,” Okimoto said.

“(Young Brothers) is a critical service,” Baker said.

“Folks (on Molokai), they need this vital infrastructure link, transportation link, in order to get transportation services to the island as well as get their goods of the island.”

Even if the state gives Young Brothers the $25 million in CARES funds, that only gets them through December 2020.

In a letter to the PUC, Young Brothers listed several options to survive long term including: permanent rate relief, which could include rate increases, regulatory flexibility, long-term financing options, the implementation of the COVID-19 related regulatory tracking mechanisms and at least the partial suspension of LCL/mix to certain ports.

The letter further stated that “delayed receipt of CARES Act funding would increase the urgency with which Young Brothers would seek the implementation of such a suspension.”

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