WASHINGTON — The port bottlenecks that have plagued the mainland have spared Hawaii’s major shippers, but the state’s businesses are still struggling to get merchandise that’s been slowed down by supply chain crimps likely to continue into 2022.
Fortunately, at least so far, Hawaii has avoided the biggest problems seen on the mainland, where the combination of a backlog of super-sized foreign-owned container ships at major West Coast ports, record shipping prices and transportation gridlock have combined to slow cargoes to a crawl.
The problems aren’t over yet: Trans-Pacific cargoes are still experiencing lengthy delays between Asia and far-flung mainland destinations, with shipments that took under 45 days in the summer of 2019 now dragging to a record 110 days.
The picture in Hawaii has been brighter for consumers, with most food staples and household essentials arriving as needed.
The state has two primary marine carriers — Matson and Pasha Hawaii — and neither sails the big ships that have caused the crisis on the mainland. They have their own dedicated terminals, a long-established workforce and reliable and long-standing relationships with port officials on the West Coast and in Hawaii. Matson, the largest of the Hawaii carriers, has been operating in the islands for 140 years.
“Those ships never, never get delayed,” said Tom Heberle, vice president of the Hawaii Pilots Association. “We have the infrastructure to handle it. We are really fortunate.”
Matson operates nine ships between the mainland and Hawaii, with three arrivals weekly to Honolulu, said spokesman Keoni Wagner. “The domestic service to Hawaii has been virtually unaffected by the chaos that is making headlines with the West Coast congestion issues,” Wagner said.
Randy Swindell, Honolulu ports’ representative for the International Organization of Masters, Mates and Pilots, who also fills in as a longshoreman at Honolulu harbor from time to time, said he’s able to find what he wants at stores. “The necessities are still at our fingertips,” he said.
During the crisis, the much-criticized Jones Act has helped to protect Hawaii from higher prices.
Both Matson and Pasha are domestic carriers that operate under the Jones Act, a 1920 maritime law that requires ships operating between ports in the United States be American-built, American-owned and crewed by U.S. citizens or permanent residents. The goal of the legislation was to ensure the continued existence of an American merchant marine in case of crisis or emergency and to protect the rights and livelihood of American mariners. Amid the Covid-19 pandemic and as news reports describe the plight of foreign seamen marooned aboard abandoned ships elsewhere in the world, the Jones Act has given Hawaii extra insulation.
Over the years, critics have complained that the Jones Act is outdated because of the protected higher wages paid to American seamen, arguing that opening all American ports to foreign maritime competition would drive down costs. Others have defended the Act, saying that it buys reliability.
But today, it is the foreign-owned cargo carriers that are alleged to have engaged in overcharging consumers. Global freight rates are expected to jump 126% in the coming year. The shipping giant, Denmark-based A.P. Moller-Maersk, was already reporting record profits of more than $17 billion for 2021, up from $ 2.9 billion in 2020.
At a recent hearing on Capitol Hill, senators were told that hefty new shipping fees, in addition to product shortages and increases in the prices of raw materials, will lead to higher prices for consumers and a profit squeeze for American manufacturers.
These global problems are also hurting Hawaii businesses, according to Sherry Menor-McNamara, president and chief executive officer of the Hawaii Chamber of Commerce. Even if transportation to Hawaii runs smoothly, many suppliers on the mainland do not have the products to ship.
Health care companies have grappled with shortages of personal protective equipment. Construction companies have been hit with delays because materials are not quickly available. Furniture stores can’t get the items consumers want in a timely way. And restaurants are being forced to remove popular menu offerings because they can’t get the ingredients. Many items are back-ordered, often with little information on when they will arrive, she said.
“They are all affected by the supply chain,” she said. “It’s a trickle-down effect.”
About 99% of the goods for sale in the state are imported, she said.
“So far, shipping has been managed so they can get products but the problem is getting products from the manufacturer to the distributor to here,” she said.
At the Senate hearing, some participants blamed the problems on America’s increasing dependence on foreign-made goods, while others cited structural problems that have developed over time.
Sen. Jon Tester, a Democrat from Montana and a farmer, asked why shipping prices had gone so high for fertilizer, saying he thought the “lack of competition in the industry” bore some of the blame.
John Butler, president and chief executive officer of the World Shipping Council, a trade group, defended the shipping industry and said that the ratio of imports to exports used to be 2 to 1, but it climbed to 3 to 1 as American consumers bought more goods from overseas during the pandemic. But West Coast ports are located “on the most valuable real estate in our country,” he said, and there was simply not enough space to store all the stuff that showed up.
“The entire supply chain is saturated,” he said.
Greg Regan, president of the Transportation Trades Department of the AFL-CIO, said railroads cut 20% of their workforces between 2014 and 2019 and reduced their fleet of locomotives to save money, leaving themselves without adequate capacity or enough workers to convey goods smoothly when business rebounded. Trucking companies replaced union drivers with independent contractors, he said, and many of those workers dropped out when bottlenecks at the ports made their work unprofitable.
Sen. Rick Scott, a Republican Senator from Florida, asked why the secretaries of transportation and commerce, Pete Buttigieg and Gina Raimondo, were not playing a more visible role leading efforts to solve the problems.
“I don’t see them do squat,” he said.
Commerce Department officials did not respond to a request for information on what they have been doing to address the crisis.
Other government agencies are also stepping up. The Federal Trade Commission has launched an inquiry with major retailers into supply-chain disruptions and the Federal Maritime Commission has initiated a review of container shipping practices.
Rep. Ed Case of Hawaii is asking for more information about what it all means. He is co-sponsor of a bipartisan bill to create a commission to analyze why American manufacturers are not producing key goods, such as masks, ventilators and testing kits, as the country’s dependence on foreign-made goods grows. The 12-member commission would investigate ways to help boost domestic manufacturing and create a “more robust and resilient supply chain.”
But at the Senate hearing, Paul Doyle, chief executive officer of a Michigan-based auto parts company, begged for faster government action. Squeezed between a 20% hike in the prices of materials, worker shortages and a 29-week delay in receiving needed replacement parts, he asked Congress to do something more dramatic, like at Dunkirk, when British civilians were organized into a flotilla to quickly rescue stranded soldiers during World War II.
“I’d ask for urgency,” he said.
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A Kailua girl, Kirstin Downey is a reporter for Civil Beat. A long-time reporter for The Washington Post, she is the author of "The Woman Behind the New Deal," "Isabella the Warrior Queen" and an upcoming biography of King Kaumualii of Kauai. You can reach her by email at firstname.lastname@example.org.