February 20, 2014
The latest news, company announcements, DHX-Dependable Hawaiian Express events and industry-position posts.

How competitive are the Hawaii/Guam Shipping Lanes?

A historical review of the Hawaii and Guam shipping lanes will show you there have never been three large ocean carriers shipping from the mainland to the Hawaiian Islands and Guam. Historically, there is Matson, and then there is Brand X - whoever it may be. Brand X is usually someone Matson “lets” into the trade because they see them as being a threat, but a manageable threat.

The last time Matson had a real competitor was in 1974 - I believe a company called Seatrain Lines. Seatrain Lines ran a Hawaii service from 1969 until 1974. They actually competed against Matson service-wise - so, when Seatrain Lines (which had a roughly 20% market share of the Hawaii Trade after being in the business five years) ran into financial difficulties, Matson acquired certain property improvements and rolling stock (keeping anyone else from getting them) and the competitor (Brand X) left in the trade was a weaker, more “manageable” ocean carrier, US Lines.

The winds of change are among us, and right now, nobody is talking. We do know that Pasha Group, the newest Hawaii ocean vessel operating carrier, did not renew their intra-island shipping permit, so they can no longer compete with Young Brothers on intra-island freight moves. Plus when their new vessel comes, they will not have the equipment available to service all the islands themselves in a timely manner.

We also know that Horizon Lines who evolved from US Lines into Sealand into CSX Lines and then into Horizon Lines has old, unreliable vessels which have a tough time staying on schedule given all the mechanical issues their old vessels have.

Pasha, after their new vessel (their second vessel) is operating, will only have one vessel that can take more than a small amount of containers. Between Pasha and Horizon Lines, I believe that sooner or later their managements will realize the benefits of working together, and try to solidify both of their strengths in one “not publicly offered” combined service when they are bidding for the business of steady, weekly or twice weekly shippers/consignees.

Matson will continue to maintain a roughly 70% market share (100% for Guam) until a serious competitor with lots of $$$ gets involved.

Frankly, I do not believe anyone else wants to/can take on Matson given the investment as well as the stiff competition.

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