Businesses and residents on Molokai and Lanai are hopeful the state will assist their only ocean cargo carrier, struggling financially due to COVID-19-related shipping reductions, before any major disruptions to their “lifeline” occurs.
On May 26, Young Brothers announced that it was seeking help from the state Legislature to provide $25 million in CARES Act federal funding to the interisland shipper to sustain its operations through December. Young Brothers also asked for changes from its regulator, the state Public Utilities Commission, to cargo loads and shipping schedules.
The shipper said that there has been a 30 percent drop in cargo volumes since the COVID-19 emergency orders, resulting in $8 million in losses through April — with more losses projected. Young Brothers’ parent company, Seattle-based Saltchuck, has been covering losses and will no longer be doing so beginning this month, the shipper added.
Maui County businesses and residents queried were skeptical about Young Brothers’ claims but still wanted to see help from the state.
“I hope they will,” said Kerry Honda, owner of Pine Isle Market on Lanai, regarding the financial assistance to the shippers. “That’s people’s lives, our outer islands, especially Lanai and Molokai.”
Honda, the owner of one of the two grocery stores on the island, said that without the shipper, prices for goods will rise if he needs to rely on air freight. And the loss of the shipper will further exacerbate COVID-19-related shortages; he said he still cannot fill shelves with items, such as flour, yeast and sanitizer.
On Molokai, Maricel Kanemitsu of Take’s Variety Store — True Value Hardware agreed that the state should help.
“It is the lifeline for our community,” Kanemitsu said. “Two of our major grocery stores rely on them (previously) twice a week. With us, 90 percent of our merchandise ships through them.”
Take’s gets a container shipment once a month from Young Brothers.
“If they shut it down, it will be unfortunate and bad impact, not just our business, but our community” Kanemitsu said.
A bright spot for Molokai residents is the return of two barge runs to the Friendly Isle effective June 12, Young Brothers confirmed late Thursday night. As requested by Young Brothers, the PUC on May 4 granted the company’s request to trim weekly sailings to Maui County, which included taking away one of two barge calls to Molokai.
Molokai businessmen and residents complained that the reduction posed problems for them even as cargo volume remained the same.
On Wednesday, Young Brothers proposed additional schedule changes with one calling for the return of a barge run to Molokai. The PUC quickly approved the changes, which will affect shipping schedules from Honolulu to the ports of Hilo, Kaumalapau on Lanai and Kaunakakai on Molokai.
Instead of a barge departing Saturday and arriving on Lanai on Sunday, it will now depart Tuesday and arrive Wednesday.
For Molokai, the Saturday departure and Sunday arrival will remain. The additional barge will depart Honolulu on Tuesday and arrive on Molokai via Lanai on Wednesday.
“The people of Hawaii should know that our top priority is finding real solutions to ensure uninterrupted service to all of the communities we serve. We remain hopeful that our continuing conversations with the PUC, Consumer Advocate and state will yield a sustainable path toward a stronger future for our company,” said Jay Ana, Young Brothers president, in an email statement.
“We’re very pleased with the PUC ruling that reinstates the second regular barge to Molokai,” said Robert Steph-enson, president and CEO of the Molokai Chamber of Commerce. “It’s going to alleviate a tremendous amount of stress our businesses have been under for the past few weeks.”
He felt that businesses and community members telling their stories helped the situation.
Kevin Misaki of Misaki’s grocery store on Molokai said the once-a-week shipments meant more storage needs with larger shipments and longer waits if an order was forgotten or items were needed.
On Tuesday, the PUC opened an emergency docket to institute “an emergency investigative proceeding” regarding Young Brothers financial condition. The panel said it was opening the docket during a tumultuous period for the state, the country and the world with the pandemic.
“During this time, the commission cannot stress enough the paramount importance of maintaining affordable, reliable service to the Neighbor Islands.”
The PUC said that “it is critical” that Young Brothers understand that the company’s continued ability to provide affordable, reliable service to the state is contingent upon stabilizing its finances, mitigating the effect of the company’s’ current and future financial position on customers and improving its long-term competitive position.
Young Brothers on May 26 said that it has submitted contingency plans to the PUC if it cannot secure financial relief.
The first phase proposals included eliminating dry and refrigerated less-than-full container loads to and from the ports of Kahului, Kawaihae, Nawiliwili and Hilo. The first phase could be effective Monday if approved.
While still pending, Young Brothers said that a more dire phase could mean eliminating shipping less than container loads of goods to all ports. The majority of the goods shipped to Lanai and Molokai come on pallets, not in full containers, which will create a multitude of problems, business officials said.
Those on Lanai and Molokai said they could use freight forwarders to get around the less-than-container-load shipping, but that option would not be economical and could lead to delays. Containers could not ship until being filled by thefreight forwarders.
Maui County state lawmakers whose districts include Molokai and Lanai are looking at ways to ensure services remain steady.
State Rep. Lynn DeCoite and state Sen. J. Kalani English said Thursday there could be an issue with Young Brothers qualifying for COVID-19 aid. One problem could be that the shipping company reported losing money prior to the pandemic and had a rate increase pending before the PUC.
English noted some of his constituents on social media were critical of financially helping the company, even if it would impact them.
Another issue is company management and whether Young Brothers have made enough cutbacks, the lawmakers said.
“I would like to see the actual financials and what else can be cut,” DeCoite said.
She also noted that if money is given, it should be with some accountability.
“I don’t agree to just hand over a blank check,” she said.
English said legislators are watching what the PUC does in the meantime. But he said legislators and state officials will need to plan in case the company goes out of business.
“We got to make sure something is in place to make sure the next couple food (deliveries) get to Molokai and Lanai,” English said. “We are tracking this very, very closely to ensure the continuation of service.”
The Legislature is schedule to reconvene June 15.
Earlier this year, DeCoite introduced a bill that would have taken funds from a harbor special fund to provide subsidies to cargo carriers. The legislative website said the bill stalled in March as lawmakers recessed due to concerns over COVID-19.
* Melissa Tanji can be reached at [email protected].
