Maui Council to consider response to Young Brothers’ proposed shipping rate hike

The Maui County Council will consider a draft resolution Friday that opposes Young Brothers’ proposed inter-island shipping rate increase of nearly $26.4 million, or 27% increase over current effective rates.

The Council’s draft resolution is on its May 2 agenda and addresses Young Brothers’ application to the Hawaiʻi Public Utilities Commission on Oct. 15. (Public comments and other case filings can be found here under Docket No. 2024-0255.)

Maui County residents are “highly dependent” on shipped imports, which go directly to Oʻahu before being picked up by Young Brothers and taken at a “hefty cost” to Neighbor Islands, including Maui, Molokaʻi and Lānaʻi, the resolution says.

The proposed resolution expresses the Council’s concern about adding costs for essential goods, including food and most other cargo.

“Higher prices will inhibit access to affordable goods and services, which are essential to the quality of life for residents,” draft resolution 25-104 says.

The shipping cost increases risk aggravating already challenging economic conditions, including inflation, rising housing costs and energy prices, it says.

“It is anticipated that this increased financial hardship will make it impossible for many to maintain a home and force them to leave to seek a residence on the US Continent,” the Council resolution warns.

Such an exodus would “disrupt the very fabric of the community” and “further diminish the local economy,” it says.

In response to the Council’s pending action, Young Brothers said higher costs and lower shipping volume are the key drivers behind the proposed shipping rate increases.

“In the five years since our last rate adjustment, Young Brothers has invested $120 million to maintain reliable service while navigating substantial cost increases and less demand than before the pandemic,” said Kris Nakagawa, Young Brothers vice president for legal and external affairs. “Our financial challenges are pressing and threaten our current and future viability. At the current rates, the company lost more than $8.2 million on the Maui County routes alone and is projecting total losses at nearly $18 million in 2025.”

When asked specifically about consumer cost increases, Nakagawa said Young Brothers could not speak to specific price increases across all consumer goods, but it could provide a representative example to help illustrate the potential impact:

“Currently, the cost to ship a personal medium-sized automobile from Honolulu to Kahului one-way is approximately $334,” he said. “If the Commission approves Young Brothers’ proposed general rate increase, that same shipment would cost about $434.”

The shipping company reported significant losses on its Maui County routes alone in 2024, including nearly $1.5 million on the Island of Maui, nearly $3.3 million on Lāna‘i, and nearly $3.5 million on Moloka‘i.

Young Brothers reported that, since the PUC set customer rates in 2020, the company has experienced a 17% increase in operational costs and invested over $120 million in fleet and harbor infrastructure to maintain safe, reliable and sustainable services.

The company noted that it was not permitted to request a rate increase until after September 2023. Moreover, cargo volume and revenue have not recovered to pre-pandemic levels, with intrastate volume down an average of 13% from 2019 to 2023, Young Brothers said.

In response to such financial pressures, Young Brothers has requested temporary rate relief, with a proposed immediate customer rate increase of up to 25%, the company said. It expects these temporary rates would remain in effect for a short period, likely a few months, until the PUC establishes future permanent rates.

Nakagawa said: “The temporary rate increase is intended to provide short-term financial relief while the Public Utilities Commission reviews our full rate case. The general rate increase request would replace, not add to, the temporary rates and reflects the revenue needed to recover the true cost of providing safe, reliable interisland shipping. On average, the proposed general rate increase equates to approximately 3.7% per year since our last increase nearly five years ago, slightly below the overall rate of inflation during that same period.”

Also regarding the temporary rate increase, he said that “while the new rates will replace and take into account the temporary increase, some services will increase by more than the across-the-board percentage because they require additional time or handling. The updated rate structure reflects the actual cost of service based on cargo type, routing and operational requirements.”

For permanent rates, Young Brothers is seeking to reset them to reflect higher costs and its investments in service reliability. The company is proposing to increase rates by an average of approximately 20%. The company also said any approved permanent general rate Increase would be adjusted to account for any temporary increase.

The Council’s draft resolution says Council members are “deeply committed to preserving the well-being of its residents and strives to ensure that all families can afford to live in Maui County, maintaining the unique culture, community, environment and healthy lifestyle.”

Nakagawa expressed understanding about the potential impacts of shipping rate increases.

“It is not lost on us that a rate increase of any kind can be challenging for anyone using our services,” he said. “So please know we do not make these requests lightly. We understand the financial strain many households are facing, especially on Maui. What Young Brothers does affects nearly every business, every person, every day. As Hawai‘i’s regulated interisland water carrier, Young Brothers plays a vital role in connecting our island communities and ensuring essential goods continue to move safely and reliably across the state.”

He also said that, “looking ahead, Young Brothers has proposed an annual adjustment mechanism with a cap not to exceed 5% based on inflation. This mechanism, known as WICI—the Water Carrier Inflationary Cost Index—was recommended by a legislative advisory group and would tie our rate changes to the Gross Domestic Product Price Index. As a result, changes would be steady and manageable through smaller, more predictable rate adjustments each year. If approved in this proceeding, the first WICI adjustment would begin in 2026.”

The cost index is “intended to help customers, businesses and residents more effectively absorb the impact of inflationary cost increases and avoid the need for sudden, significant adjustments in the future,” Nakagawa said. “By adopting WICI, Young Brothers can stabilize operations while continuing to provide affordable, dependable service across Hawai‘i’s island communities.”

The Council’s draft resolution asks Young Brothers to reconsider its proposed price increase and that “relevant authorities work together to find solutions that can stabilize costs and mitigate the impact on Maui County’s residents.”

How to participate:

• Friday’s Council meeting will be televised live on Akakū Maui Community Media, cable Channel 53. It also can be viewed online via Teams at http://tinyuri.com/2p9zhjr2
• To call in testimony, dial 1-808-977-4067, code 234 794 559#
• In-person testimony also is taken at the beginning of meetings in the 8th floor Council Chamber at the Kalana O Maui Building, 200 South High St., Wailuku.
• Written testimony should be submitted at least 24 hours prior to a Council meeting via email to county.clerk@mauicounty.us, by fax to 808-270-7171, or to the Office of the County Clerk, 200 South High St., Suite 708, Wailuku.