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Horizon Lines also raising fuel surcharge
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Posted on Oct 11 2004
Major ocean shipper Horizon Lines said it will be raising its fuel surcharges to make up for skyrocketing oil prices. This comes on the heels of Matson Navigation Co.’s decision to also raise fuel surcharge effective Oct. 18.
Both companies said the charges would rise to 9.2 percent from 8.8 percent.
The surcharges would apply to shipments to Hawaii, Guam and the Commonwealth of Northern Mariana Islands.
Horizon Lines decided to institute its latest increase—effective Thursday—after crude oil prices rose above $50 a barrel, said Brian Taylor, vice president of Horizon Lines for Hawaii and Guam.
“Given the current record high fuel prices this is a relatively modest increase and will help us recover only a portion of our fuel costs,” Matson spokesman Jeff Hull said.
Both raised their fuel surcharges in March from 7.5 percent to 8 percent and again in June to 8.8 percent.
Gasoline prices have climbed nearly 8 cents a gallon in the past two weeks because of record-high crude oil prices, and they are likely to continue rising, according to Trilby Lundberg, who publishes the semimonthly Lundberg Survey of 7,000 gas stations across the country.
Prices are likely to continue climbing in the short term along with rising crude oil prices, which hit $53.31 per barrel on Friday. A smaller-than-expected climb in U.S. supplies and a drop in distillate stocks has fueled concern that the oil market may not be able to meet demand this winter and has prompted some industry professionals to speculate that the price could rise above $55 a barrel.
Matson burns about 1.9 million barrels of fuel annually and for every dollar increase per barrel of bunker fuel, the company experiences an approximate $1.9 million increase in annual operating costs, Hull said.
Matson has deployed two reserve vessels and has accelerated the transit time for Southern California-bound vessels to get cargo unloaded more quickly upon arrival, he said.
Both Matson and Horizon Lines have said that they will adjust their surcharges as oil prices rise and fall.
“As soon as we see a sustained decrease in the cost of crude … we will adjust our rates,” Taylor said. (PR)
