Thursday, August 28, 2008

Shipping Fuel Surcharges Grow As Oil Cost Falls

The cost of oil is coming down fast after a summer spike, but many Hawaii consumers are left wondering when they'll see a break from hefty "fuel surcharges." Hawaii's ocean carriers are going ahead with big fuel surcharge increases soon despite oil prices heading in the opposite direction. As of Aug. 31, Matson is boosting its fuel surcharge to 42.25 percent, 4 points but 10 percent higher than it's already tacking on top of the thousands it costs to ship a container. That matches what Horizon Lines put into effect Sunday. Pasha will push up their surcharge to 37.25 percent at the end of the month.

"That's over $2 million in fuel surcharges for 1 voyage,” said Jason Hartley regarding the Matson and Horizon costs. Hartley is a California antitrust attorney representing plaintiffs in one of several lawsuits over the fuel surcharges. “We know that no vessel is burning $2 million in fuel on a single voyage between Hawaii and the mainland."

KHON2 asked Matson and Horizon why surcharges continue to grow, with oil prices coming back down to earth, down 17 percent in just over a month. Horizon lines has been pointing out to some of their customers that while the cost of crude oil has been dropping, they have yet to see the same on their bills for bunker fuel.

Matson says of its diesel and bunker fuel: “We are starting to see a downward trend, but you have to recognize that there were still enormous spikes this year,” according to spokesperson Jeff Hull.

"While the current trend is encouraging, we have to wait to see if this really holds," Hull said.

"I think they're unjust and unreasonable,” Hartley said. “And the real frustration as I've talked to so many different consumers and shippers in Hawaii is they feel there's nothing they can do about it."

Matson points out the surcharge only means 2 cents per 12-oz canned beverage for instance, or about 35 cents per 20-pounder of rice.

Critics contend that's disproportionate to what fuel is really costing.

"When you mask this profit-making machine as a fuel surcharge it's easier for the consumer to swallow," Hartley said.

Fuel surcharges have embroiled the companies with now 19 antitrust lawsuits alleging Horizon and Matson conspired to raise their Hawaii surcharges in lockstep, and alleging what they charge outpaces fuel cost hikes by thousands of percent.

Last week those 19 lawsuits were consolidated into one giant litigation that will be tried in Seattle.

The Surface Transportation Board that regulates ocean shipping has heard an earful about Hawaii surcharges from freight companies, local leaders and even the state attorney general. They could tackle this in response to formal complaints.

Our series examining fuel surcharges continues in the coming days with your utility bill, and what you're paying at the pump.

Source : Source - Khon2 - 21 August 2008