COVID-19 threatens Hawaii’s sole interisland ocean transportation provider

Young Brothers said it needs $25 million in federal financial assistance immediately, or it will be forced to scale back its ocean transportation services among the Hawaiian Islands.

Hawaii’s sole interisland ocean carrier, which is regulated by the state’s Public Utilities Commission (PUC), said the coronavirus pandemic is expected to leave it with a loss of $25 million by year’s end and it has asked state regulators for an equivalent amount in CARES Act funding by Monday to sustain operations through the remainder of 2020.

The Honolulu-based shipping company described its financial condition as “extremely dire,” adding that it is currently losing on average more than $3 million a month in revenue due to the pandemic’s impact on the Hawaiian economy.

Young Brothers said its parent company, Saltchuk, which also owns U.S.-flag domestic ocean carriers TOTE Puerto Rico, TOTE Alaska and Foss Maritime, will no longer cover its losses as it has in years past due to its own “staggering” COVID-related financial losses.

Jay Ana, Young Brothers’ president, said the company is essentially on its own financially, and “must now find a cooperative solution with the state that allows YB to continue to operate.”

With Hawaii’s stay-at-home orders and substantial drop in tourism since earlier this year, Young Brothers’ cargo volume has fallen 30%.

In May, the company, which operates eight multipurpose barges and six tugs and has a staff of about 130, began cutting costs by reducing its weekly sailing schedules among Maui, Kahului and Hilo for a savings of $6 million. It has also reduced gate hours at its barge terminals, instituted a hiring freeze and reduced executive salaries.

Without a $25 million injection by Monday, Young Brothers has proposed deeper austerity measures for its interisland services, effective June 8 and pending the PUC’s approval.

Source: Young Brothers

Ana said Young Brothers remains committed to providing specialized services and delivery of fuel, groceries and other consumer supplies to Molokai and Lanai. It will also establish new procedures to continue the interisland transport of livestock.

“While this is certainly one of the most challenging times in our 120-year history, Young Brothers is hopeful that our continuing conversations with the state will yield a sustainable path toward a stronger future for our company,” Ana told American Shipper in an emailed statement on Friday. “We will continue to provide the critical inter-island shipping service that links our island communities and economies as we work toward a solution.”

Since Young Brothers is the only ocean carrier to offer interisland service, Hawaiians have sounded the alarm about its solvency.

“The bottom line is this: Hawaii can’t afford to let Young Brothers go bankrupt and cease interisland shipping. To the extent that losses are due to the state shutdown, lawmakers should appropriate federal relief funds to the company when it reconvenes in mid-June,” warned Honolulu’s Star-Advertiser in a Friday editorial.

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