Hawaii’s harbor system is a lifeline. Roughly 80 percent of all goods consumed in the state are imported, and 98 percent of that comes by ship, according to state estimates.
Due to aging infrastructure and ongoing struggles to maintain the existing statewide system, in which terminal capacity has not been expanded in three decades, the lifeline is not as hardwearing as in decades past.
Local businesses and consumers, therefore, should support the state Department of Transportation’s proposal to increase fees tied to wharfage — payment for use of the port — as a means to putting in place improvements estimated at $850 million.
A series of public hearings on a proposal that would increase fees for unloading cargo at Hawaii ports by about 50 percent over two years will get underway at noon today at the Pier 11 terminal at Honolulu Harbor.
If the proposal is approved, expect some businesses to pass along the fee increase to wholesale customers, who would then pinch consumers with higher shelf prices for goods ranging from food and general merchandise to building materials, cars and fuel.
The DOT Harbors Division maintains there are no viable alternatives to this take-your-medicine approach as the commercial harbor system is by law self-funded and receives no federal or state funding.
In the short-term, the proposed rate and fee increases would generate cash the Harbors Division needs to secure financing to continue implementing its Harbors Modernization Plan. For example, the division is spending $450 million on the Kapalama Container Terminal that will expand Honolulu Harbor’s container yard space by 80 acres. Construction is expected to begin next spring.
In the long term, DOT contends that stepped-up efficiency would better equip it for changing trends in the cargo shipment and transport industry.
Having trouble stirring up even tepid enthusiasm for a spoonful of wharfage medicine? Consider that the Harbors Modernization Plan took shape after an economic study conducted in 2007 concluded: “As high as the costs of harbor upgrades may seem, these costs pale in comparison to the multi-billion-dollar impact of doing nothing.”
Ten years ago, DOT, along with Hawaii’s shipping industry (represented by the Hawaii Harbors Users Group) and the Legislature, acknowledged that while the Harbors Division focused on keeping afloat everyday operations, it was hindered by lack of funding to develop costly wharves and cargo handling terminals.
The Harbors Users Group then teamed up with the Harbors Division to create the modernization plan, which the Legislature passed into law in 2008 to serve as the guide for statewide upgrades.
After current public hearings on the proposed fee hikes wrap up, the DOT intends to make a decision on the matter later this month.
If approved, the increases would add about $100 to the charge on a 40-foot container, from $179 today to $277 in 2018. There also would be a $15 security fee added to each container or shipped item under 60,000 pounds. That fee would cover costs tethered to post-9/11 security requirements set by federal agencies.
If the increases go into effect in early 2017, DOT expects revenue from wharfage to be $100.6 million in fiscal year 2017, followed by $117.9 million and $137.3 million in the subsequent years.
That’s a jump from fiscal year 2015, when wharfage revenues tallied $93.6 million, but operational costs were tagged at $96.9 million for the same year.
Beyond 2018, the DOT wants to see automatic annual wharfage increases of either 3 percent or the inflation rate as measured by the consumer price index, whichever is greater.
All of this follows seven straight years of increased wharfage — a near tripling in port-use payment.
It’s not easy to swallow such medicine, but the strength of Hawaii’s harbor system depends on it. A fraying island lifeline deserves some willingness among consumers to cope with bumps in price tags at the grocery, shopping malls and elsewhere.
