“In logistics, we expect full-year operating income to be moderately higher than the level achieved in 2018. For ocean transportation, we are maintaining our prior full-year operating income outlook and expect a higher contribution from Alaska, offset by lower contributions from our China service and at SSAT, both of which are coming off exceptionally strong years,” Cox said.
The China service had volumes in the first quarter of 2019 that were “16% higher year-over-year largely due to one additional sailing and stronger volume post Lunar New Year. Matson continued to realize a sizable rate premium in the first quarter 2019 and achieved average freight rates modestly higher than the first quarter 2018.
“For 2019, the company expects volume to approximate the exceptional level achieved in 2018 and expects average freight rates to approach the levels achieved in 2018,” Matson said.
Bad weather impacted its Hawaii service.
“In my 32 years in the business, I haven’t seen storm activity like this,” said Cox. The company’s container volume in the Hawaii service in the first quarter was 2.2% lower year-over-year, primarily due to one less westbound sailing and weather-related impacts.
In Alaska, Matson said “container volume for the first quarter 2019 was 5.7% lower year-over-year, primarily due to a decrease in northbound volume mainly related to the dry docking of a competitor’s vessel in the year ago period and one less northbound sailing.
“For 2019, the company expects volume to be modestly higher than the level achieved in 2018, with higher northbound volume supported by improving economic conditions in Alaska and higher southbound seafood-related volume due to stronger seafood harvest levels than in 2018,” Matson said.
Matson said there was strong demand for its logistics services and that it was increasing its outlook for 2019. It said the increase was primarily driven by transportation brokerage and Matson’s Span Alaska unit.
The company expects operating income this year to be “moderately higher” than its record $32.7 million in 2018.
Philly Shipyard has yet to attract a new order, and Cox was asked if he was concerned about the paucity of U.S. shipyards. He responded by saying the company was pleased with the work of Philly Shipyard and hoped it would get additional orders. But he said Matson does not plan to build any new ships until it replaces its ships in the Alaska trade in the late 2020s. When that does happen, he noted they will be smaller ships, which would give the company the ability to order not only from yards like Philly Shipyard and NASSCO, but U.S. shipyards that build smaller vessels.
Three new gantry cranes were delivered to Matson’s terminal on Sand Island in Honolulu.
Matson is preparing for the IMO regulations requiring shipowners to either use low-sulfur fuel or equip vessels with scrubbers. It had previously said it was putting scrubbers on three ships and the first is in dry dock having the installation done.
The cost of installing each scrubber is approximately $10 million. Matson said its board has also authorized scrubbers for three additional ships. Five will be deployed in Matson’s transpacific service that has a Long Beach-Honolulu-Guam-Okinawa-Ningbo-Shanghai rotation between the U.S. West Coast and China, and another will be placed on a reserve ship.