Zone of reasonableness

MATSON, INC. [MATX]“THE ZONE OF REASONABLENESS”

MARITIME SIGNIFICANCE

A PRESENTATION BYCLIFTON M. HASEGAWA & ASSOCIATES, LLC

PUBLIC LAW 104–88DECEMBER 29, 1995 109 STAT. 804

INTERSTATE COMMERCE COMMISSION TERMINATION ACT OF 1995

PART B—MOTOR CARRIERS, WATER CARRIERS BROKERS AND FREIGHT FORWARDERS

CHAPTER 135—JURISDICTIONSUBCHAPTER IV—AUTHORITY TO EXEMPT

§ 13504. Exempt motor carrier transportation entirely in one State

Neither the Secretary nor the Board has jurisdiction under this subchapter over transportation, except transportation of household goods, by a motor carrier operating solely within the State of Hawaii. The State of Hawaii may regulate transportation exempt from jurisdiction under this section and, to the extent provided by a motor carrier operating solely within the State of Hawaii, transportation exempt under section 13503 of this title.

[ Secretary, United States, Department of Transportation - Surface Transportation Board]


CHAPTER 135—JURISDICTIONSUBCHAPTER IV—AUTHORITY TO EXEMPT

§ 13541. Authority to exempt transportation or services

(f) CONTINUATION OF CERTAIN EXISTING EXEMPTIONS FOR WATER CARRIERS ---

The Secretary or Board, as applicable, shall not regulate or exercise jurisdiction under this part over the transportation by water carrier in the NON-CONTIGUOUS DOMESTIC TRADE of any cargo or type of cargo or service WHICH WAS NOT SUBJECT TO REGULATION BY, OR UNDER THE JURISDICTION OF, EITHER THE FEDERAL MARITIME COMMISSION OR INTERSTATE COMMERCE COMMISSION UNDER FEDERAL LAW IN EFFECT ON NOVEMBER 1, 1995.

NON-CONTIGUOUS DOMESTIC TRADE

The term “noncontiguous domestic trade” means transportation subject to jurisdiction under chapter 135 involving traffic originating in or destined to Alaska, Hawaii, or a territory or possession of the United States.

Title 49 United States Code §13102


CHAPTER 137 --- RATES AND THROUGH ROUTES

§ 13701. Requirements for reasonable rates, classifications, through routes, rules, and practices for certain transportation

(d) ZONE OF REASONABLENESS.—

(1) IN GENERAL. — For purposes of this section, a rate or division of a motor carrier for service in noncontiguous domestic trade or water carrier for port-to-port service in that trade is reasonable if the aggregate of increases and decreases in any such rate or division is not more than 7.5 percent above, or more than 10 percent below, the rate or division in effect 1 year before the effective date of the proposed rate or division

(2) ADJUSTMENTS TO THE ZONE. — The percentage specified in paragraph (1) shall be increased or decreased, as the case may be, by the percentage change in the Producers Price Index, as published by the Department of Labor, that has occurred during the most recent 1-year period before the date the rate or division in question first took effect.

SURFACE TRANSPORTATION BOARDCODE OF FEDERAL REGULATIONS

Volume 9Date: 2011-10-01

Title 49 – Transportation

The provisions of this part DO NOT APPLY to:

(2) The transportation of any cargo or type of cargo or service which was not subject to regulation by, or under the jurisdiction of, either the Federal Maritime Commission (FMC) or the Interstate Commerce Commission under Federal law in effect on November 1, 1995

FEDERAL MARITIME COMMISSION

FEDERAL MARITIME COMMISSION – No. 77-45, 21 F.M.C. 44, 59

(1978)

Hawaii Meat Company v Matson Navigation

“The standard for unreasonableness is set forth by the Commission in Matson Navigation Company Pallets and Containers Pacific Coast/Hawaii Trade, 77 F.M.C. 771, 772 (1964) , in which the Commission stated that it only can disapprove a rate if it finds that the rate exceeds a just and reasonable figure.”


FEDERAL MARITIME COMMISSION – No. 1123, 77 F.M.C. 771, 772 (1964)

Matson Navigation Company Pallets and Containers Pacific Coast / Hawaii Trade

“… Here as in all such cases coming before this Commission careful attention has been given to the representations of all parties affected by the rate increase. With respect to disapproving a rate however the Commission’s power is strictly limited. It can disapprove only if it finds that the rate exceeds a just and reasonable figure. A rate which yields the cost of loading, carrying and delivering the cargo plus the cargo’s pro rata share of general expense, a moderate contribution to profit and no more, is certainly a just and reasonable rate which the Commission is not authorized to disapprove in the circumstances of this case. With respect to cargo interests who are hard pressed by just and reasonable rates (and often some are) a regulatory body finds itself in the position of the Supreme Court in Matthews v Zane 7 Wheat. 164, 211 (1822) which caused Chief Justice Marshall to say: “The case of the plaintiff may be and probably is a hard one but to relieve him is not within the power of this court.”

MATSON Form 10-K Annual Report. Filed with the US Securities and Exchange Commission: March 27, 1996

In November 1995, Matson filed a 3.8 percent general rate increase for the Hawaii Service that became effective on January 28, 1996.

The Interstate Commerce Commission Termination Act of 1995 (the "Act"), which took effect on January 1, 1996, will substantially revise regulation of water common carriers, like Matson, which operate between the U.S. Mainland and domestic offshore states and territories.

Previously, Matson was regulated by the Federal Maritime Commission ("FMC") with respect to port-to-port service rates, as well as by the Interstate Commerce Commission ("ICC") to the extent of Matson's joint rates with motor carriers.

The Act will end bifurcated regulation by the FMC and ICC of water carriers providing service in the domestic offshore trades. The Act has established within the United States Department of Transportation a new agency, the Surface Transportation Board ("STB"). The STB will have jurisdiction over both water carriers and motor carriers providing service in the domestic offshore trades.

Carriers under STB jurisdiction must file rates with the STB and charge only those rates. The Act establishes a Zone of Reasonableness ("ZOR") which, as adjusted by reference to the Producer Price Index, will allow annual increases not exceeding 7.5% and rate reductions not exceeding 10%, measured against the rate in effect one year before the change. Rates which qualify for ZOR treatment are deemed reasonable and are not subject to investigation or suspension. Rates outside the ZOR also must be reasonable, but no regulations have been proposed for determining reasonableness.

MATSON Form 10-K Annual Report. Filed with the US Securities and Exchange Commission, March 27, 1997

In December 1996, Matson filed a 3.5% general rate increase for the Hawaii Service that became effective on February 2, 1997. A 1.75% fuel surcharge will continue in effect while fuel prices remain high.

The Interstate Commerce Commission Termination Act of 1995 (the "Act"), which took effect on January 1, 1996, eliminated the Interstate Commerce Commission and transferred jurisdiction over port-to-port rates in the domestic offshore trades from the Federal Maritime Commission to the Surface Transportation Board ("STB"), a new agency within the U.S. Department of Transportation. The STB now has sole jurisdiction over water carriers providing service in the domestic offshore trades.

Carriers under STB jurisdiction must file rates with the STB. The Act establishes a Zone of Reasonableness ("ZOR") which, as adjusted by reference to the Producer Price Index, will allow annual increases not exceeding 7.5% and rate reductions not exceeding 10%, measured against the rate in effect one year before the change. Rates which qualify for ZOR treatment are deemed reasonable and are not subject to investigation or suspension. Rates outside the ZOR also must be reasonable, but no regulations have been proposed for determining reasonableness.


Matson is subject to the jurisdiction of the Surface Transportation Board ("Board"), an agency within the U.S. Department of Transportation, with respect to its domestic rates. The Interstate Commerce Commission Termination Act of 1995 ("Act") establishes a "Zone of Reasonableness," as defined in the Act, within which rate adjustments are deemed reasonable. Rate adjustments outside of the Zone of Reasonableness are subject to investigation and/or suspension by the Board.

In December 1997, Matson announced it would defer an across-the-board increase in its Hawaii Service rates in recognition of the weak Hawaii economy.


Matson is subject to the jurisdiction of the Surface Transportation Board ("Board"), an agency within the U.S. Department of Transportation, with respect to its domestic rates.

The Interstate Commerce Commission Termination Act of 1995 ("Act") establishes a "Zone of Reasonableness," as defined in the Act, within which rate adjustments are deemed reasonable. Rate adjustments outside of the Zone of Reasonableness are subject to investigation and/or suspension by the Board.

In December 1998, Matson filed a 2.5 percent across-the-board increase in its Hawaii Service, effective February 14, 1999.


Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic rates. A rate in the noncontiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year before the effective date of the proposed rate.

Matson filed a 2.5 percent across-the-board increase in its Hawaii Service, which became effective on February 14, 1999, and a 1.75 percent fuel-cost-related surcharge in its Hawaii and Guam Services, which became effective on October 11, 1999. A 3.9 percent across-the-board increase in the Hawaii Service became effective February 14, 2000, and an increase in the fuel-cost-related surcharge to 2.25 percent became effective February 20, 2000.


Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic rates. A rate in the noncontiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year before the effective date of the proposed rate.

Matson filed a 3.9 percent across-the-board increase in its Hawaii Service shipping rates, which became effective on February 14, 2000. Also in 2000, substantial increases in bunker fuel costs required Matson on three occasions to file increases in the fuel surcharge, which rose from 1.75 percent at the beginning of 2000 to 4.25 percent at the end of 2000. A 3.5 percent across-the-board increase in the Hawaii Service became effective on February 14, 2001.


Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic rates. A rate in the noncontiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year before the effective date of the proposed rate, subject to increase or decrease by the percentage change in the U.S. Producer Price Index.

Matson filed a 3.5 percent across-the-board increase in its Hawaii Service shipping rates, which became effective on February 14, 2001. Also in 2001, Matson reduced its fuel surcharge in its Hawaii and Guam Services by one percentage point, from 4.25 percent to 3.25 percent, effective November 25, 2001.



Matson filed a 2.75 percent across-the-board increase in its Hawaii Service freight rates which became effective April 14, 2002, and a three percent across-the-board increase in its Guam Service freight rates, which became effective October 3, 2002. Also in 2002, Matson increased its fuel surcharge in its Hawaii Service and Guam Service from 3.25 percent to 4.75 percent, effective May 5, and from 4.75 percent to 6 percent, effective October 20 in Hawaii and November 9 in Guam. Effective January 12, 2003, Matson implemented, in its Hawaii Service, a terminal handling charge of $200 per container for westbound freight, $100 per container for eastbound freight and $30 per automobile. On February 14, 2003, due to dramatic increases in fuel prices attributed to the increasing likelihood of war in Iraq, Matson announced an increase in its fuel surcharge from 6 percent to 7.5 percent in the Hawaii and Guam Services effective March 3, 2003.



Effective January 12, 2003, Matson imposed a terminal handling charge of $200 per container for westbound freight, $100 per container for eastbound freight and $30 per automobile in its Hawaii Service. On June 15, 2003, Matson instituted a $100 per container U.S. mainland terminal handling charge for cargo moving to and from Guam. Matson increased its rates in the Hawaii Service by $125 per westbound container and $60 per eastbound container and increased its terminal handling charge by $25 per westbound container and $15 per eastbound container, effective January 11, 2004. Matson also increased its rates for moving automobiles by $25, both westbound and eastbound, and its terminal handling charge for automobiles by $5. Matson's last general rate increase was in April 2002. No general rate increase was implemented in 2003. Due to dramatic increases in fuel prices attributed to the increasing likelihood of war in Iraq, Matson increased its fuel surcharge from 6 percent to 7.5 percent effective March 3, 2003. Matson reduced the fuel surcharge from 7.5 percent to 6.5 percent effective May 4, 2003, and increased it from 6.5 percent to 7.5 percent effective September 15, 2003.



Effective January 11, 2004, Matson increased its rates in its Hawaii Service by $125 per westbound container, $60 per eastbound container, and $25 per vehicle, both westbound and eastbound, and its terminal handling charge by $25 per westbound container, $15 per eastbound container and $5 per vehicle. Effective June 6, 2004, Matson increased its rates in its Guam Service by $125 per container and $5 on items rated per weight or measure and its West Coast terminal handling charge by $25 per container, $5 per vehicle and $1 per revenue ton on items rated per weight or measure, both westbound and eastbound. Due to sustained increases in fuel costs, Matson increased its fuel surcharge in its Hawaii and Guam Services from 7.5 percent to 8.0 percent, effective March 14, 2004; to 8.8 percent, effective June 21, 2004; and to 9.2 percent, effective October 18, 2004.



Effective January 3, 2005, Matson increased its rates in its Hawaii Service by $100 per container and $25 per vehicle, for both westbound and eastbound, and its terminal handling charge by $40 per westbound container, $20 per eastbound container and $5 per vehicle. Effective August 28, 2005, Matson increased its rates in its Guam Service by $100 per container, $25 per vehicle and 5 percent on items rated per weight or measure, and its terminal handling charge by $40 per container, $5 per vehicle and 5 percent on items rated per weight or measure, both westbound and eastbound. Due to sustained increases in fuel costs, Matson increased its fuel surcharge in its Hawaii and Guam Services from 9.2 percent to 10.5 percent, effective April 18, 2005; to 11.5 percent, effective July 3, 2005; and to 13 percent, effective October 2, 2005. Matson's new China Service will be subject to the jurisdiction of the Federal Maritime Commission ("FMC").

No such zone of reasonableness applies under FMC regulation.

MATSON Form 10-K Annual Report. Filed with the US Securities and Exchange Commission, February 26, 2007

Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic rates. A rate in the noncontiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year before the effective date of the proposed rate, subject to increase or decrease by the percentage change in the U.S. Producer Price Index ("zone of reasonableness").

Effective January 1, 2006, Matson increased its rates in its Hawaii Service by $125 per westbound container and $75 per eastbound container, and its terminal handling charge by $60 per westbound container and $30 per eastbound container. Matson also announced increases to its rates in its Hawaii Service effective January 1, 2007, by $100 per westbound container and $50 per eastbound container, and its terminal handling charge by $150 per westbound container and $75 per eastbound container. Due to increases in fuel costs in the first half of 2006, Matson increased its fuel surcharge in its Hawaii and Guam Services from 13 percent to 15 percent, effective January 1, 2006; to 18.5 percent, effective April 2, 2006; and to 21.25 percent, effective June 4, 2006. As a result of subsequent declines in fuel costs, Matson decreased its fuel surcharge to 19.75 percent, effective October 1, 2006, to 18.75 percent, effective November 5, 2006, and to 17.5 percent, effective January 28, 2007. In mid-February, due to increases in fuel costs, Matson announced an increase in its fuel surcharge to 19.5 percent, effective March 11, 2007. Matson's new China Service is subject to the jurisdiction of the Federal Maritime Commission ("FMC").



Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic rates. A rate in the noncontiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year before the effective date of the proposed rate, subject to increase or decrease by the percentage change in the U.S. Producer Price Index ("zone of reasonableness").

Effective January 1, 2006, Matson increased its rates in its Hawaii Service by $125 per westbound container and $75 per eastbound container, and its terminal handling charge by $60 per westbound container and $30 per eastbound container. Matson also announced increases to its rates in its Hawaii Service effective January 1, 2007, by $100 per westbound container and $50 per eastbound container, and its terminal handling charge by $150 per westbound container and $75 per eastbound container. Due to increases in fuel costs in the first half of 2006, Matson increased its fuel surcharge in its Hawaii and Guam Services from 13 percent to 15 percent, effective January 1, 2006; to 18.5 percent, effective April 2, 2006; and to 21.25 percent, effective June 4, 2006. As a result of subsequent declines in fuel costs, Matson decreased its fuel surcharge to 19.75 percent, effective October 1, 2006, to 18.75 percent, effective November 5, 2006, and to 17.5 percent, effective January 28, 2007. In mid-February, due to increases in fuel costs, Matson announced an increase in its fuel surcharge to 19.5 percent, effective March 11, 2007. Matson's new China Service is subject to the jurisdiction of the Federal Maritime Commission ("FMC").



Matson is subject to the jurisdiction of the Surface Transportation Board with respect to its domestic rates. A rate in the noncontiguous domestic trade is presumed reasonable and will not be subject to investigation if the aggregate of increases and decreases is not more than 7.5 percent above, or more than 10 percent below, the rate in effect one year before the effective date of the proposed rate, subject to increase or decrease by the percentage change in the U.S. Producer Price Index (“zone of reasonableness”).

Matson raised its rates in its Hawaii and Guam services, effective January 6, 2008 and January 27, 2008, respectively, by $75 per westbound container and $40 per eastbound container and its terminal handling charges by $125 per westbound container and $60 per eastbound container. Increases in bunker fuel prices and other energy-related costs caused Matson to raise its fuel-related surcharge from 29 percent to 31.5 percent in its Hawaii and Guam services, effective February 4, 2008; to 33.75 percent in its Hawaii and Guam services, effective April 6, 2008; to 38.25 percent in its Hawaii service and to 39.75 percent in its Guam service, effective July 13, 2008; and to 42.25 percent in its Hawaii service and to 43.75 percent in its Guam service, effective August 31, 2008.

(Continued on the following slide)


(Continuation)

As a result of subsequent declines in bunker fuel prices, Matson decreased its fuel related surcharge to 37.5 percent in its Hawaii service and to 39 percent in its Guam service, effective September 21, 2008; to 33 percent in its Hawaii service and to 34.5 percent in its Guam service, effective October 12, 2008; to 27 percent in its Hawaii service and 28.5 percent in its Guam service, effective October 19, 2008; to 25 percent in its Hawaii service and to 26.5 percent in its Guam service, effective November 2, 2008; to 19.5 percent in its Hawaii service and to 21 percent in its Guam service, effective November 16, 2008; and to 15 percent in its Hawaii service and to 16.5 percent in its Guam service, effective November 30, 2008. Matson raised its rates in its Hawaii service, effective January 4, 2009, by $120 per westbound container and $60 per eastbound container and its terminal handling charges by $175 per westbound container and $90 per eastbound container. Matson raised its rates in its Guam service, effective February 1, 2009, by $120 per westbound and eastbound container and its West Coast terminal handling charge by $175 for westbound and eastbound containers. Effective in March 2009, Matson will implement a new crane surcharge of $125 per container to help recover costs associated with the purchase and operation of three gantry cranes in the port of Guam. Matson’s China Service is subject to the jurisdiction of the Federal Maritime Commission (“FMC”).




Matson raised its rates in its Hawaii service, effective January 4, 2009, by $120 per westbound container and $60 per eastbound container and its terminal handling charges by $175 per westbound container and $90 per eastbound container. Matson raised its rates in its Guam service, effective February 1, 2009, by $120 per westbound and eastbound container and its terminal handling charges by $175 per westbound and eastbound container. Increases in bunker fuel prices and other energy-related costs caused Matson to raise its fuel-related surcharge from 15 percent to 16.5 percent in its Hawaii service and from 16.5 percent to 18 percent in its Guam service, effective May 24, 2009; to 20 percent in its Hawaii service and to 21.5 percent in its Guam service, effective June 21, 2009; to 28 percent in its Hawaii service and to 29.5 percent in its Guam service, effective July 5, 2009. As a result of subsequent declines in bunker fuel prices, Matson decreased its fuel-related surcharge to 24 percent in its Hawaii service and to 25.5 percent in its Guam service, effective October 4, 2009.



(Continuation)

Matson raised its rates in its Hawaii service, effective January 3, 2010, by $120 per westbound container and $60 per eastbound container and its terminal handling charges by $125 per westbound container and $60 per eastbound container. Matson raised its rates in its Guam service, effective January 31, 2010, by $120 per westbound and eastbound container and its West Coast terminal handling charge by $125 for westbound and eastbound containers. As a result of increasing bunker fuel prices and other fuel-related costs since its last fuel surcharge adjustment, Matson increased its fuel-related surcharge to 27.5 percent in its Hawaii service and to 29.0 percent in its Guam service, effective February 7, 2010. Matson’s China Service is subject to the jurisdiction of the Federal Maritime Commission (“FMC”).




Matson raised its rates in its Hawaii service, effective January 3, 2010, by $120 per westbound container and $60 per eastbound container and its terminal handling charges by $125 per westbound container and $60 per eastbound container. Matson raised its rates in its Guam service, effective January 31, 2010, by $120 per westbound and eastbound container and its terminal handling charges by $125 per westbound and eastbound container. Increases in bunker fuel prices and other energy-related costs caused Matson to raise its fuel-related surcharge from 24 percent to 27.5 percent in its Hawaii service and from 25.5 percent to 29 percent in its Guam service, effective February 7, 2010.



(Continuation)

As a result of subsequent declines in bunker fuel prices, Matson decreased its fuel-related surcharge to 25.5 percent in its Hawaii service and to 27 percent in its Guam service, effective July 18, 2010. Matson again decreased its fuel-related surcharge to 21.75 percent in its Hawaii service and to 23.25 percent in its Guam service, effective September 12, 2010. Matson raised its rates in its Hawaii service, effective January 2, 2011, by $120 per westbound container and $60 per eastbound container and its terminal handling charges by $175 per westbound container and $85 per eastbound container. Matson raised its rates in its Guam service, effective January 30, 2011, by $120 per westbound and eastbound container and its West Coast terminal handling charge by $175 for westbound and eastbound containers. Matson’s China Service is subject to the jurisdiction of the Federal Maritime Commission (“FMC”).




Matson raised its rates in its Hawaii service, effective January 2, 2011, by $120 per westbound container and $60 per eastbound container and its terminal handling charges by $175 per westbound container and $85 per eastbound container. Matson raised its rates in its Guam service, effective January 30, 2011, by $120 per westbound and eastbound container and its terminal handling charges by $175 per westbound and eastbound container.

(Continued on the following slides, 2 and 3)


(Continuation, Slide 2)

Rising fuel-related costs caused Matson to raise its fuel-related surcharge from 21.75 percent to 26.5 percent in its Hawaii service and from 23.25 percent to 28 percent in its Guam service, effective February 27, 2011. Dramatic increases in fuel costs caused Matson to raise its fuel-related surcharge to 35 percent in its Hawaii service and 36.5 percent in its Guam service, effective March 27, 2011. As a result of the sustained surge in fuel prices, Matson raised its fuel-related surcharge to 43.5 percent in its Hawaii service and 45 percent in its Guam service, effective May 1, 2011. Due to sustained near record high fuel prices, Matson raised its fuel-related surcharge to 47.5 percent in its Hawaii service and 49 percent in its Guam service, effective June 12, 2011. As a result of subsequent declines in bunker fuel prices, Matson decreased its fuel-related surcharge to 45.5 percent in its Hawaii service and to 47 percent in its Guam service, effective August 28, 2011. Matson again decreased its fuel-related surcharge to 42.5 percent in its Hawaii service and to 44 percent in its Guam service, effective September 25, 2011. Matson further decreased its fuel-related surcharge to 40.5 percent in its Hawaii service and 42 percent in its Guam service, effective October 9, 2011.


(Continuation, Slide 3)

Matson raised its rates in its Hawaii service, effective January 1, 2012, by $175 per westbound container and $85 per eastbound container and its terminal handling charges by $50 per westbound container and $25 per eastbound container.

As a result of rising bunker fuel prices and other energy related costs, Matson increased its fuel-related surcharge to 45.5 percent in its Hawaii service, effective February 26, 2012. Matson’s China Service is subject to the jurisdiction of the Federal Maritime Commission (“FMC”).




Matson raised its rates in its Hawaii service, effective January 1, 2012 and again January 1, 2013, by $175 per westbound container and $85 per eastbound container and its terminal handling charges by $50 per westbound container and $25 per eastbound container. Matson did not implement a general rate increase in its Guam Service in 2012 or 2013 but did raise the Guam terminal handling charge in both years. Rising fuel-related costs caused Matson to raise its fuel-related surcharge from 40.5 percent to 45.5 percent in its Hawaii service effective February 26, 2012.



(Continuation)

Because of increasing container volume related to the recent exit of a key competitor, Matson did not increase its fuel-related surcharge for its Guam Service at that time, keeping it at 42.0 percent.

Declines in fuel costs caused Matson to reduce its fuel-related surcharge to 42.0 percent in its Hawaii service and 38.5 percent in its Guam service, effective June 17, 2012. Declines in fuel costs continued, and Matson further reduced its fuel-related surcharge to 39.0 percent in its Hawaii service and to 35.5 percent in its Guam service, effective July 15, 2012. After that, fuel prices and fuel-related costs began rising substantially, and Matson raised its fuel-related surcharge to 43.5 percent in its Hawaii service and 40.0 percent in its Guam service, effective October 7, 2012. Matson’s China Service is subject to the jurisdiction of the Federal Maritime Commission (“FMC”).



Matson Navigation Company Pallets and Containers

Pacific Coast / Hawaii Trade

77 F.M.C. 771 (1964), pages 776 and 778

Probably the future is not as bright as pictured by Matson and it seems sure that it not as bleak as indicated by PGAH. If it were the latter Matson would hardly name a rate which would kill the goose that lays the golden eggs and the State of Hawaii which is fully advised in the matter but takes no position would undoubtedly be loud in opposition to the rate … Both Pallets and PGAH understandably complain of cavalier treatment of pallet cargo by Matson in the past. Such treatment was not denied by Matson but certainly under the increased rate it should disappear and pallet cargo should receive first class service at all times.

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Zone of reasonableness

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