Fuel costs drive Matson 1st quarter loss

Fuel costs drive Matson 1st quarter loss    Rising fuel prices will likely drive U.S. Jones Act carrier Matson Navigation Co. to a first quarter loss, the line’s parent company Alexander & Baldwin said Friday.
   “Increased fuel prices are having a disproportionate effect on transportation companies as fuel is an unavoidable and significant component of operating costs,” said Stanley M. Kuriyama, A&B president and chief executive officer. “Matson’s ability to employ fuel price adjustment mechanisms to limit the impact of price fluctuations on its first quarter earnings has been outpaced by the steep acceleration in fuel prices. We expect to recoup a large percentage of fuel cost increases through surcharge mechanisms in 2011; however, an environment of continually escalating fuel costs could impair timely recovery of these costs and further impact financial results.”
   Kuriyama said soft rates out of China and the natural disasters in Japan might also affect Matson’s business.

Kuriyama

   “We are carefully monitoring the impact of fuel, as well as the ongoing freight-rate environment in China, where spot-market container rates are relatively soft,” he said. “We expect to have more clarity on China rates with the commencement of the new annual contract cycle in May and the beginning of the peak season this summer. In addition, we are paying close attention to the potential impacts of the recent tragic events in Japan on the Hawaii and Mainland economies, and how that may affect our businesses.”
   Matson made nearly $100 million in operating profit in 2010, a 70 percent increase on 2009. Its business primarily revolves around ocean transportation between the U.S. mainland and Hawaii, but it also operates eastbound transpacific services from China to California.