PACIFIC SHIPPING LINES PLAN SURCHARGE HIKE

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By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Sept. 8) - It takes more money to drive around Guam, use the electric oven at home, run air conditioning at the office and fly tourists to Guam because of record-high fuel prices, but more troubles lie ahead.

Now, the cost to ship in almost everything Guam needs could increase, too.

Horizon Lines and Matson Navigation Co., which serve as Guam's sea link to U.S. ports, are preparing for another increase in their fuel surcharge as a result of Hurricane Katrina's impact on fuel supplies, The Associated Press reported yesterday.

Horizon Lines told its customers in a letter that an emergency 2.5 percent fuel surcharge will take effect September 15, according to the wire report from Honolulu.

Matson Navigation's fuel surcharge also likely will go up later this week and take effect in October, company spokesman Jeff Hull was quoted as saying in the wire report.

Matson just last month raised rates for the company's Guam/Rota/Tinian service by US$100 per container, and that went into effect August 21.

The rate action represented an overall average increase of 2.6 percent, according to a previously issued Matson press release.

Matson had scheduled an increase to its West Coast terminal handling charge by US$40 per container, from US$125 to US$165.

More than 85 percent of goods needed on Guam, from food to construction materials to vehicles, are shipped in, so shipping rate increases leave consumer and business wallets vulnerable.

Some island businesses have said, however, they try to absorb as much cost increase as they can because Guam consumers, still reeling from years of economic decline and higher costs of basic necessities, including health care, tend to look at price tags first, product second.

Roseann Jones, an associate professor of economics at the University of Guam, in an e-mailed comment, stated that as gas prices increase, consumers will prioritize their travel for work, health-care needs, grocery shopping and important social events. "Consumers may simply choose to avoid unnecessary shopping ventures. Businesses co-located with necessity goods and services will likely fare better than isolated stores."

And transportation costs are not simply local, according to Jones.

"Our island region may be in similar jeopardy when one considers the market for resort/travel destinations. One wonders whether island economies will continue to fare as well as they have in the past," she stated.

For Continental Airlines, for example, every US$1 increase in the barrel price of oil represents a US$40 million rise in the annual cost to keep the airline in the air, according to the airline.

Travel links are coming under pressure, as prices for fuel increase for all modes of transportation, according to Jones.

Japan Airlines' decision to pull out of the Saipan market already has affected jobs on the tourism-dependent island, with the reduction in hours at tourist-centered retailer DFS Saipan.

For the tourists, Jones stated, "it may be coming down to a decision about where to travel to get the biggest bang for the buck."

"And with rising fuel prices, the buck does not travel very far."

September 9, 2005

Pacific Daily News: www.guampdn.com

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