Hawai‘i’s primary interisland shipping company Young Brothers began raising rates 3% Wednesday, the second increase in six months, despite pushback from local businesses and frustration over recent missed shipments to Moloka‘i and Lāna‘i. 

In May, Gov. Josh Green signed into law Senate Bill 2694, now Act 16, that allows Young Brothers to increase rates automatically every year with a cap of 5%. 

“It’s a bigger deal for us because we are most reliant on their service on the Neighbor Islands,” said Pam Tumpap, president of the Maui Chamber of Commerce that strongly opposed the bill. “We have smaller markets than other areas, and so smaller customer bases than other areas. So it’s a big challenge.”

The measure, which Tumpap described as a “sleeper bill” that flew under the radar during the legislative session, aims to help keep the struggling shipping company afloat while making rate increases more manageable, especially after Young Brothers imposed a 25.75% increase in January. 

But it’s another blow for local businesses and farmers, especially those on Moloka‘i and Lāna‘i who recently missed out on multiple shipments to both islands, leaving grocery store shelves bare.

“What are we getting for the rate increase?” said Sen. Lynn DeCoite, who represents both islands as well as East and Upcountry Maui. “Are we getting reliability and dependability or just getting a lot of miscommunication?”

Young Brothers did not respond to a request for comment by deadline on Tuesday evening. 

The company has said that it needs to raise rates as costs rise while cargo volumes stagnate. Young Brothers recorded $15 million in losses in 2024 and $24 million in 2025, “primary driven by the less-than-container load service and annual losses of $7 million for the Moloka‘i and Lāna‘i routes,”  the company told the Hawai‘i Journalism Initiative in April. 

Young Brothers has said that smaller, more predictable rate increases would benefit customers. Rate increase requests often take a long time to review and approve by the Public Utilities Commission, resulting in massive hikes every few years.

But the bill was opposed by groups like the Hawai‘i Farm Bureau, who called interisland shipping “one of the most significant cost drivers for Hawai‘i’s agricultural producers” and said base shipping rates particularly impact small and Neighbor Island farmers who operate on thin margins.

It was also opposed by a slate of Chamber of Commerce officials and economic development advocates across the state, who said higher shipping rates would increase the cost of food, housing materials and other everyday necessities.

“People are trying to ascertain to what degree they can absorb some of this so they don’t have to pass it on to their customers,” Tumpap said.

Local businesses have weathered a storm of changes over the past year that include tariffs and rising costs of fuel due to the war in Iran.

“The bottom line is, uncertainty is bad for business,” Tumpap said.

She also is “really floored” that Young Brothers is getting a rate increase given that it still owes the state nearly $30 million in wharfage fees. 

In the fall of 2024, Young Brothers told the Hawai‘i Department of Transportation that it had to delay paying wharfage fees to pay its salaries and cover its operational costs, so the department “worked with them in order to minimize the impact to the communities that rely on its services and to help with the long-term resilience of the company,” the department told the Hawai‘i Journalism Initiative via email on Tuesday.

In total, Young Brothers owes the state about $26 million in unpaid wharfage fees from October 2024 to April 2025, plus $3.7 million in penalty and accrued interest.

The department recently negotiated a payment plan with Young Brothers that will start today.

DeCoite said she doesn’t like the rate increases, but she thinks a smaller capped increase is better than another 25% rate hike every few years. That’s why she ultimately ended up supporting the bill, despite calling it “a bitter pill to swallow.”

“Any increase isn’t good,” DeCoite said. “But I mean, look around us. Cost of living and everything is just skyrocketing. … I don’t like it at all. But I wouldn’t like it anymore if it went to another 30% or 25%.”

DeCoite pointed out that the freight going in and out of Moloka‘i and Lāna‘i has decreased over time, making it harder to fill containers and make trips profitable. Back when “farming was booming,” the island could easily fill up the barge. But that’s not the case anymore. The cattle industry has declined in the face of disease. And, some farms get a better deal flying supplies over on FedEx, which “comes in heavy” and leaves empty.

There are still things that have to come over on the barge, such as cars. But the rise of other delivery services has decreased reliance on Young Brothers. Now, Amazon and Walmart can deliver straight to their doors. Kamaka Air can fly over big TVs and furniture. 

And, sometimes the barge isn’t always reliable. In early June, Young Brothers missed consecutive shipments to Moloka‘i and Lāna‘i, leaving shelves empty at the island’s few grocery stores. Young Brothers explained that the disruptions were due to dangerous ocean swells that made it unsafe to moor and discharge cargo as well as unexpected repairs to the towing tug. 

DeCoite, who was one of the affected customers, said she was frustrated with the lack of communication Young Brothers had with the community. She bought an icebox on Maui, paid $400 for shipping, and it sat for four weeks during the period of missed shipments.

“They need Plan A, B, C and D,” she said.

Bringing goods over ahead of time also doesn’t work because neither island has the storage space for the additional supplies, Tumpap said.

When asked what the long-term solution is, DeCoite said, “the simple solution is money,” whether that’s state or federal funding that could help subsidize operations. But, she pointed out, Young Brothers already owes the state millions in unpaid fees.

Steen Christensen, president of Young Brothers, said in a statement last month that “Moloka‘i and Lāna‘i are the island communities that define our responsibility as Hawai‘i’s marine highway.”

“We do not cut corners on safety,” Christensen said. “What I can commit to is this: we will always work as fast as safely possible to get cargo to Molokaʻi and Lānaʻi as soon as possible — and when circumstances require more, we will do more.”

With the automatic annual rate increases set to last through 2029, Tumpap said next year will be “an important legislative session.”

“We expect to continue to educate and meet some business members and … engage people in this coming year in the discussion,” Tumpap said. “Without a change, they’ll get another automatic increase next year. And we’re already hurting.”