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Freight

FreightWaves Classics: Matson helps provision Alaska, Hawaii, U.S. territories and more

Essential supplies of all kinds are carried to Alaska by ship, truck and air, and to Hawaii by air and ship. Matson, Inc., a U.S.-owned and -operated transportation services company, carries tons of supplies to these two U.S. states, U.S. territories and other destinations across the Pacific Ocean. The company is headquartered in Honolulu, Hawaii and is listed on the NYSE (ticker symbol MATX).

Corporate overview

Matson subsidiary Matson Navigation Company, Inc. (MNC) has been a leading Pacific Ocean shipping firm since 1882. MNC carries goods of all kinds to the states of Alaska and Hawaii and the U.S. territory of  Guam. It also serves Micronesia and islands in the South Pacific. In addition, MNC offers a premium expedited service from China to Southern California and services from China to Alaska. 

MNC’s fleet includes containerships, combination container and roll-on/roll-off ships and custom-designed barges. The company also provides container and chassis leasing services.

Matson Terminals, Inc. is also a subsidiary of Matson, Inc. It was founded in 1925, and it provides container maintenance, stevedoring and other terminal services in Alaska and Hawaii that support Matson’s ocean shipping operations in Hawaii and Alaska. 

In addition, Matson owns 35% of SSA Terminals, LLC, a joint venture with a subsidiary of Carrix, Inc. The joint venture provides terminal and stevedoring services to carriers at eight U.S. West Coast ports (and to Matson at three of those facilities – Long Beach, Oakland and Tacoma).

A third Matson subsidiary is Matson Logistics, Inc., which was established in 1987. Matson Logistics increased Matson’s transportation network. It provides a variety of services, including: domestic and international rail intermodal service; regional and long-haul highway brokerage; supply chain services; and less-than-truckload (LTL) transportation services. Matson Logistics also offers third-party logistics services that include warehousing, distribution, less-than-container-load (LCL) consolidation and international freight forwarding to its customer base across North America.

This map shows the breadth of Matson's service to Pacific Ocean nations. (Image: Matson)
This map shows the breadth of Matson’s service to Pacific Ocean nations. (Image: Matson)

The Jones Act 

The Jones Act is a federal law that regulates maritime commerce in the United States. It requires goods shipped between U.S. ports to be transported on ships that are built, owned and operated by United States citizens or permanent residents.

Many of Matson’s ports of call are located in U.S. states or territories. Therefore, Matson’s ships and assets are U.S.-built, U.S.-crewed and U.S.-operated. 

A Matson containership near Honolulu. (Photo: Matson)
A Matson containership near Honolulu. (Photo: Matson)

Serving Hawaii

In 1882, Captain William Matson sailed a three-masted schooner from San Francisco to Hilo, Hawaii. His ship carried 300 tons of food, plantation supplies and general merchandise. That voyage began Matson’s long-term association with Hawaii.

The voyage also launched a company that over its 140-year history has been involved in a variety of industries: oil exploration; hotels and tourism; military service during two world wars; and briefly, the airline business. Despite these other lines of business, Matson’s primary focus has been and continues to carry freight between the U.S. West Coast and Hawaii.

After five years, Matson sold his original ship and acquired the brigantine Lurline. The Lurline more than doubled the earlier vessel’s capacity. Over time the Matson fleet expanded, and new vessels pioneered some key maritime innovations. For example, the Rhoderick Dhu was the first ship to have a cold storage plant and electric lights. In addition, the Enterprise was the first Matson steamship; it also was the first offshore ship in the Pacific to burn oil instead of coal.

A Matson vessel at anchor in Hawaii. (Photo: imagesofoldhawaii.com)
A Matson vessel at anchor in Hawaii. (Photo: imagesofoldhawaii.com)

In addition to carrying cargo to Hawaii, Matson began passenger service as Hawaii became a tourist destination for the wealthy. Matson’s second ship (also named Lurline) joined the Matson fleet in 1908. It had accommodations for 51 passengers and the 146-passenger ship S.S. Wilhelmina was launched in 1910. It rivaled the finest passenger ships that plied the Atlantic Ocean routes. More steamships were added to the fleet. 

Captain Matson died in 1917; he was 67. At that time, the Matson fleet included 14 of the largest, fastest and most modern ships in the Pacific passenger-freight service.

World War I and its aftermath

World War I began in August 1914; however, the U.S. stayed out of the war until 1917. When the U.S. did declare war on Germany and its allies, most of the Matson fleet was requisitioned by the government to be used as troopships and military cargo carriers. Remaining Matson vessels served Hawaii’s needs until the Armistice was declared in November 1918. Matson ships reverted to civilian duty after the war. In addition, the largest freighters in the Pacific – the S.S. Manulani and S.S. Manukai were added to the fleet.

From the mid-1920s to the mid-1930s Matson expanded significantly. As noted above, the company established Matson Terminals, Inc., as a wholly owned subsidiary. It was established to perform stevedoring and terminal services for its fleet. 

Passenger traffic to Hawaii continued to grow, and Matson built the S.S. Malola, a world-class luxury liner, in 1927. It was the fastest ship in the Pacific when it began sailing, cruising at 22 knots. Success with the Malola led Matson to build three more luxury liners (Mariposa,  Monterey and Lurline) between 1930 and 1932.

The “White Ships” of the Matson line helped to develop and increase tourism in Hawaii and the South Pacific. To take advantage of the rise in tourism, Matson built several hotels in Waikiki. The first hotel the company built was The Royal Hawaiian, in 1927. Others followed, which meant that Matson was capable of providing luxury accommodations both ashore and afloat. 

A timeline of Matson's involvement in Hawaii. (Image: Historic Hawaii Foundation)
A timeline of Matson’s involvement in Hawaii. (Image: Historic Hawaii Foundation)

World War II

Even during the Great Depression, Matson was able to do well with its cruise liners and hotels, since most of its patrons were wealthy and less affected than many by the economic situation.

However, everything changed following the Japanese sneak attack on Pearl Harbor. Almost immediately, Matson’s passenger liners Lurline, Matsonia, Mariposa and Monterey, as well as 33 Matson freighters were requisitioned for military service. Matson’s four passenger liners collectively completed 119 voyages during the war. They covered 1.5 million miles and carried almost 750,000 troops.

The government established the War Shipping Administration, and Matson was designated as General Agent for it. Responsibilities included manning, provisioning, maintaining and servicing over 100 of the government’s rapidly expanding fleet of cargo ships.

The Matson Line's SS Lurline at anchor in Hawaii in 1941-42. (Photo: Digital collection of the National World War II Museum)
The Matson Line’s SS Lurline at anchor in Hawaii in 1941-42. (Photo: Digital collection of the National World War II Museum)

During the course of the war the number of Matson freighters was reduced to 14 ships, due either to sinkings or sale to the federal government. Therefore, the post-war period was a difficult time for the company and its subsidiaries. Restoring its remaining ships was costly; it necessitated the sale of the Mariposa and Monterey in order to have enough capital for its other ships. After a $20 million reconversion, the Lurline returned to civilian service in 1948. Two new Matson hotels were built on Waikiki in the 1950s, and in 1955 Matson began a major $60 million shipbuilding program. South Pacific liners Mariposa and Monterey were built, and the rebuilt original Monterey was renamed Matsonia and returned to the Pacific Coast–Hawaii passenger service.

A Matson container ship is pictured on this U.S. stamp. (Image: USPS)
A Matson container ship is pictured on this U.S. stamp. (Image: USPS)

Intermodal containers change the industry

As noted in this FreightWaves article, Malcom McLean revolutionized shipping by developing the intermodal container in the early to mid-1950s. Matson understood the importance of this to shipping, and on August 31, 1958, Matson’s S.S. Hawaiian Merchant departed San Francisco Bay carrying 20 24-foot intermodal containers on deck. 

That voyage was the start of the company’s transformation from break-bulk cargo handling to a containerization program. Transforming the Matson fleet to container vessels began in 1960. The line’s S.S. Hawaiian Citizen became the first vessel plying the Pacific Ocean to be converted to a  container ship. In addition, it was the first ship to incorporate large-scale refrigerated container capacity. A number of other ships in the Matson fleet were converted in the early 1960s. Construction of the first true containership in the world began in 1967. The ship design was developed by Matson’s naval architects.

Containerization revolutionized transportation; intermodal containers led to immediate gains in productivity and efficiency. An average commercial ship could carry 10,000 tons at a speed of 16 knots in 1950. With containerization, the average commercial ship carried 40,000 tons at a speed of 23 knots. 

Concurrently, innovations at ports were introduced, including the world’s first A-frame gantry crane, which was erected in Alameda, California in 1959. It became the prototype for container cranes that followed. In addition, Matson introduced the first transtainer and the first straddle carrier – both developed to meet Matson specifications.

Intermodal containers are stacked high. (Photo: Jim Allen/FreightWaves)
Intermodal containers are stacked high. (Photo: Jim Allen/FreightWaves)

Back to its roots 

With its growing focus on containerization, Matson sold all of its non-shipping assets. It sold the Hawaiian hotels in 1959 to Sheraton. A decade later (in 1969), Matson was bought by Honolulu-based Alexander & Baldwin, Inc. (A&B). It became a wholly owned subsidiary of A&B, which had invested $200,000 in Matson in 1908, becoming a minority investor at that time. In 1970, the company sold its passenger vessels and ended its services to the Far East.

During the 1970s, Matson undertook a major ship construction program to modernize its ships to a fully containerized fleet. It also added roll on/roll off (ro-ro) capacity. During the 1980s, the company designed and built three barges – two container barges and a ro-ro barge – for Matson’s Neighbor Island service. A diesel-powered containership was built and joined the Matson fleet in 1992.

New ventures

Matson Intermodal System, Inc., an intermodal marketing company (IMC), was founded in 1987. It grew steadily throughout the 1990s, arranging rail and truck transportation throughout North America for shippers and carriers.

The IMC was renamed Matson Logistics because of its expanded service offerings in 2011. As a provider of North American multimodal transportation services, Matson Logistics provided domestic and international rail intermodal service, long-haul and regional highway brokerage, supply chain services and less-than-truckload (LTL) transportation services. In addition, it provided third-party logistics services, including warehousing, distribution, less-than-container-load (LCL) consolidation and international freight forwarding.

Matson began a four-ship construction program in 2002. The company invested more than $500 million in new containerships to modernize its fleet. With the new ships, Matson began upgraded services to Guam, which had been operated as a joint alliance service with APL from 1996-2006. Matson’s new service included port calls on Honolulu and Guam, and its Pacific footprint expanded to include China. Matson’s China-Long Beach Express (CLX) began in 2006; it included service from Ningbo and Shanghai to Long Beach. Xiamen was added as a port call to the service in 2009.

Matson celebrated 125 years as a leading Pacific shipper in April 2007. Because of the CLX service’s reliability, Matson was the first ocean carrier to offer guaranteed transit times for full container loads to the West Coast as part of its premium trans-Pacific service.

After 43 years as a subsidiary of A&B, Matson was separated in 2012. Matson, Inc. was founded and began trading on the NYSE.

In 2013, Matson acquired Reef Shipping, which was based in Auckland, New Zealand. With that acquisition, it began Matson South Pacific (MSP). It started service from Auckland and Fiji to the island nations of “Nauru, the Solomon Islands, Tahiti, Samoa, Cook Islands, Niue, Tonga, Wallis, Futuna, Vanuatu, Tarawa and Majuro.” Later, MSP expanded, providing service from Brisbane, Australia to the Solomon Islands and Nauru.

An advertisement for Matson's services to Guam and Micronesia. (Image: Matson)
An advertisement for Matson’s services to Guam and Micronesia. (Image: Matson)

In 2015, Matson acquired the Alaskan operations of Horizon Lines, Inc. for $469 million. This strategic acquisition added the Alaska ports of Anchorage, Kodiak and Dutch Harbor to Matson’s Pacific Ocean network. Matson also invested more than $30 million in new equipment for its Alaska operations; this including a 65-ton gantry crane for its Kodiak Terminal. It is the largest gantry in Alaska and is powered by renewable energy.

In 2016, Matson linked its northern Pacific network with its South Pacific operations. It began its South Pacific Express (SPX) service between Honolulu, Samoa and American Samoa; this created a contiguous network that spanned the Pacific Ocean. Matson also continued its investments in Alaska by acquiring Span Alaska, a market-leading provider of LCL freight consolidation and forwarding services in Alaska.

Matson also continued modernizing its Hawaiian fleet. It ordered two new 3,600-TEU containerships in 2013, and two combination container and ro-ro ships (Con-Ro) in 2016. Each of the ships were designed specifically for service in Hawaii with state-of-the-art green technology features. This seven-year, $900+ million renewal of Matson’s Hawaiian fleet has now been completed. 

Cranes at the Matson facilities in Shanghai, China. (Photo: Matson)
Cranes at the Matson facilities in Shanghai, China. (Photo: Matson)

Alaska-Asia express service

Matson provides direct service to Asia from Alaska with its Alaska-Asia Express (AAX). This is westbound service from Dutch Harbor, Alaska to Ningbo and Shanghai, China. It also offers transfers at Matson’s Shanghai hub to other Asian sites through Matson’s partner network, including connections from Shanghai to other ports in China, as well as to Japan, South Korea, Taiwan, Thailand and Vietnam.

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