May 2, 2024
Subject: Pacific Tariff Restructuring effective June 30, 2024
Matson will implement a restructuring of certain tariff items for Hawaii, Guam, and Micronesia to improve consistency in the application and administration of surcharges and restore historical balance to our Fuel Related Surcharge (FRSC).
These changes will involve how we bill for Wharfage, the harbor user fee levied by the Hawaii State Department of Transportation – Harbors Division to help fund harbor initiatives including the ongoing development of Honolulu’s primary container terminals. The changes also include a significant reduction to our FRSC to bring it more in line with historical levels, and commensurate adjustments to our base Ocean Freight rates.
Importantly, the sum total of all changes will result in no change in total cost for our customers compared to current rate levels.
Hawaii Wharfage
Wharfage is intended to be a pass-through charge, but historically, the fee has been embedded in the base Ocean Freight rate in most, but not all tariffs. When the State Wharfage fee changes – usually annually on July 1 – for those tariffs with embedded wharfage, Matson manually adjusts each individual rate level by the same amount.
Effective Sunday, June 30, 2024, Matson will begin breaking out the Wharfage fee as a separate line item in all tariffs, simplifying our tariff structure and administrative processes while also making this fee more transparent for customers.
For Hawaii shipments, all rate levels will be subject to Wharfage, and any rates that currently have the Wharfage fee embedded will be unbundled. The Wharfage fee will become a separate line item on all tariffs at the surcharge level and the Ocean Freight rate will be reduced accordingly, ensuring no impact to our customer’s total cost.
Fuel Related Surcharge (FRSC)
For more than a decade, increasingly stringent global environmental regulations have contributed to historically high FRSC percentages. Some carriers, including Matson, are now using liquified natural gas (LNG), a leading “bridge fuel” that produces lower engine exhaust emissions compared to traditional marine fuels. Matson has also begun using biofuel as part of its decarbonization strategy. Both LNG and biofuel are consistently more costly than conventional, less environmentally friendly fuel types.
To achieve longer term environmental goals culminating in net zero emissions, we must move away from fossil fuels. During this slow transition, new and likely more costly alternative fuels will become increasingly prevalent. In the near term, traditional fuels will continue to be used and their costs will fluctuate up and down, but as alternative fuels are increasingly utilized, total fuel costs are likely to increase further over time.
Accordingly, we are restructuring our FRSC at lower levels now to restore balance in the proportional relationship between FRSC and base rate – with no monetary impact to Matson or our customers.
Effective Sunday, June 30, 2024, our FRSC for Hawaii and Guam shipments will be reduced by 50%. As a result, the new Hawaii FRSC will be 22.0%. Guam will be 23.0%. Effective Sunday, July 14, 2024, Micronesia will be reduced by 50%, and the new FRSC will be 23.0%.
We will simultaneously raise base rates by the same dollar amount, ensuring no impact to the customer’s total cost.
In recognition that these structural changes may also require some administrative adjustments for our customers, Matson is providing almost 60 days’ notice to allow time for customers to make appropriate changes.
If you have questions about these pending changes, please contact your account executive.
Thank you for shipping with Matson.
