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Supplies Flow on the High Seas
Supplies Flow
on the High Seas
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Despite uncertain times, shipping and transportation companies maintain steady deliveries of materials to Hawaii’s contractors and suppliers
BY DAVID PUTNAM
Building material shipping delays caused by the coronavirus—and wildfires on the West Coast—have forced suppliers to find ways to keep their warehouses stocked to meet contractors’ needs. The Aloha State, however, has been luckier than most, as transportation companies Pasha Hawaii, Matson Inc. and Young Brothers LLC have maintained steady routes to the Islands’ ports.
“Throughout the spring and summer of 2020,” says Adrian Murphy, vice president of Adrian Murphy products and logistics at HPM Building Supply, “there has been strong demand for building and home improvement products. We have been in close communication with our suppliers so that we can maintain our inventory and ensure that the materials our customers
need are readily available.
“The situation with every supplier is different, as the effects of the pandemic and the details of stay-at-home orders vary by state and are constantly changing. We have proactively taken steps to increase our stock levels on key items in order to safeguard against extended lead times, and we have sought out additional suppliers for products with limited availability.”
Making sure those materials are readily available to Hawaii builders and suppliers are the ocean freighters. “One industry, in particular, that has remained steady is the construction industry. Construction materials and equipment continue to flow on a steady George Pasha IV basis, as compared to the first half of 2019,” says George Pasha IV, president and CEO of Pasha Hawaii. “The state and federal governments have been prudent in their efforts to continue providing funding for public-awarded contracts as a way of supporting our economy.
“Once the state implements its COVID-19 pre-travel testing program for visitors arriving in Hawaii, and the new leadership is able to effectively manage Hawaii’s COVID-19 cases,” Pasha adds, “we will see the economy start to stabilize, easing a lot of the uncertainties that currently exist.”
Vic Angoco, Matson’s senior vice president, Pacific, says “it’s safe to say that we’re all feeling the effects of a Vic Angoco slowing economy and the added challenges presented by the pandemic, but we all know how important the supply chain is to our communities and, as an industry, we are focused on maintain-
ing the safety of our operations and continuity of services.”
For Young Brothers, the pandemic caused an immediate and sharp downturn.
“Following the first stay-at-homeorder in March, we experienced a drastic 30 percent drop in cargo volume, with our barges sailing well below full capacity,” says Jay Ana, president of Young Brothers. “We know the pandemic has hit our customers hard, which is why we are working Jay Ana diligently to streamline our customer communications and website to enhance the customer experience and help them find the best shipping solution for their needs.”
The interisland cargo transportation firm was granted an emergency rate increase in August by the state Public Utilities Commission. According to reports, the increase would cost customers 46 percent more to ship goods.
Ana adds that “demand for Young Brothers’ services is driven mainly by
the small- and medium-sized businesses that depend on us to move cargo between our Island communities. We are hopeful that economic activity—and our cargo volumes—will pick up as we welcome back visitors and more businesses recover from the sustained and repeated closures.
“Ultimately, when Hawaii prospers, Young Brothers can, too.”
Angoco says that “after initially seeing a double-digit decline in cargo volume, we’ve seen a very gradual and modest improvement in Hawaii volume since federal funds for unemployment and stimulus funds for small businesses became available.
“It’s clear that there is still a long way to recovery, but we are optimistic that knowledge about the virus is improving all the time. We are hopeful that Hawaii will continue to see improvement in virus infection rates and that the state’s pre-travel testing program will allow a successful restart of tourism.”
Young Brothers off-loads a container for inter-island shipping. PHOTO COURTESY YOUNG BROTHERS LLC
Murphy agrees that keeping the ocean routes from the Mainland and within the Islands going strong has meant the difference for both the construction industry and the state’s economy.
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Rising Premiums Challenge Transportation Industry
Hawaii’s commercial trucking and transportation cial auto risks are seeing a doublebusinesses may have noticed their insurance premiums digit rate increase while the increases “creeping—or in some cases jumping—up in recent years,” in trucking and transportation risks says Sandra Ferreira, vice president–client consulting at can range from 20 percent to 200 Atlas Insurance Agency. percent depending on the risk expo-
“The commercial trucking and transportation indus- sure, claims severity and frequency try has seen rate hikes over the past few years in both and safety scores.” the truckers and excess/umbrella lines of coverage,” she There are ways for companies to Sandra Ferreira says. “While distracted driving and a shortage of experi- reduce their premiums, Ferreira says. enced drivers contribute to higher frequency and severity “For risks that have been in operation for more than of losses, large jury awards or nuclear verdicts are playing five years, have favorable loss experience and are operata larger role. It is common to see these nuclear verdicts ing in a lower risk jurisdiction, they should see favorable settled over $10 million.” pricing from the insurance carriers,” she says.
Ferreira says “premiums for the commercial auto risk “Having excellent training in safety and road awareness with large fleets have steadily increased over the past five will go a long way in mitigating claims. Safety programs, years, with the most significant changes in the past two safety training and accountability are vital for a transporyears. This is driven by less carriers willing to write the risk tation company if they want to minimize their losses and and a significant reduction in reinsurance capacity. claims.
“This affects the limits the insurance carriers can “Consider investing in a GPS and camera system that provide on their policy tower, which means building can track driver performance such as speeding, tailgating, additional policy layers to match limits of the expiring hard braking and telematics. New technology can provide program." managers with up-to-date safety reports to determine
She cites, for example, how lead umbrella carriers that where additional training is needed and rewarding drivers were providing $25 million in limits are reducing limits to for good performance.” $10 million while rates continue to rise. “Primary commer- —David Putnam
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“We are grateful that construction has been deemed essential and allowed to continue, as these projects provide much-needed jobs, homes and hope for our community. HPM Building Supply has been fortunate in that we have not experienced any significant shipping issues so far due to COVID-19,” he says. “The massive wildfires on the West Coast have caused some brief shipping delays, but as wildfires have been contained or extinguished, shipping schedules have quickly returned to normal.”
Adds Ana: “We know essential businesses across the state are counting on us to keep local markets connected with consumers, and we understand the vital importance of keeping Hawaii’s construction industry, as a primary driver of our economy, moving forward. You can rest assured that we will continue to move what matters most to you—whether it’s lumber, specialized equipment, cement or more—safely and efficiently."
Soon, two new liquefied natural gas-fueled (LNG) containerships will begin arriving in Hawaii. Pasha Hawaii reports completion of M/V George III is expected in late 2020,
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while delivery of M/V Janet Marie is expected in early 2021.
Additionally, Matson expects to complete upgrades on its Sand Island facility.
“Matson’s Sand Island terminal modernization project is progressing on schedule,” Angoco says. “Phase 1, which involves the installation of three new gantry cranes, removal of four older cranes and upgrades to three existing cranes, along with associated power system and infrastructure upgrades, will be completed by the end of this year.
“Next year, Phase 2 of the project will encompass improvements to our container yard, electrical system, cargo identification technology and other equipment. Phase 3, which includes improvements to our gate and expansion of our container yard into Piers 51A and B, will happen after the new Kapalama terminal is completed, which is currently expected to be in the late 2022 / early 2023 timeframe.”
Construction of the new containership Matsonia at the NASSCO Shipyard in San Diego “is nearly complete,” he adds. “We expect to
take delivery of the vessel and put it into service later this quarter.”
Murphy of HPM, which turns 100 next year, remains optimistic for Hawaii’s construction industry.
“While we cannot predict the future of the pandemic, we are hopeful that Hawaii will be able to see the first signs of economic recovery in 2021,” he says. “As we have for the past 99 years, HPM Building Supply will continue to adapt and innovate as the market changes in order to help
Matson’s terminal in Honolulu PHOTO COURTESY MATSON INC.
Hawaii build better and live better.”
And Young Brothers, says Ana, is “always working to optimize our services so we can best serve our customers and connect our Island communities no matter how long the pandemic and its far-reaching impacts last. We moved swiftly at the start of this crisis to establish health and safety protocols for employees and customers, and implement an array of cost-saving measures to streamline our operations and reduce operating costs.”
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