The expectation of new competition for Matson Inc. in the islands drove down the stock price of Hawaii’s dominant ocean cargo transportation company by nearly a quarter of its value to a four-year low on Friday.
Shares of Matson tumbled after a day of heavy trading to close at $22.79, down
22 percent from $29.35 on Thursday.
The last time Matson shares were lower was in 2013. When the company was spun off from Alexander &Baldwin Inc. in June 2012, shares first closed at $27.83 only to dip as low as $19.96 later that year. Matson shares also hit a high of $53.18 in 2015.
Friday’s trading in Matson followed an announcement Thursday that a major domestic ocean cargo carrier, TOTE Inc., had signed a letter of intent to buy four ships to be built by a shipyard in Philadelphia for use in the mainland-Hawaii trade. The new service would initiate head-to-head competition with Matson and a smaller rival, Pasha Hawaii Transport Lines, a private company based in California.
Trading in Matson’s stock Friday on the New York Stock Exchange was roughly 10 times the daily average over the last 52 weeks, with 2.3 million shares sold. The daily average over the last 52 weeks was 244,999 shares, and the trading volume Thursday was 119,594 shares.
TOTE, a subsidiary of Seattle-based Saltchuk and a sister company to interisland cargo carrier Young Brothers Ltd., is pursuing plans to initiate Hawaii service in 2020 with two new ships to be built by Philly Shipyard Inc. Two additional ships are planned for delivery in 2021.
Matson has 11 ships in its Hawaii and plans to replace three older ships that are near the end of their useful lives. Two new ships were ordered in 2013 for a combined $418 million and are slated for delivery in 2018 and 2019. Matson ordered another pair of ships last year for a combined $511 million and expects to receive them in 2019 and 2020.
Pasha operates six ships, of which four are 36 years old and can’t continue operating as they are after 2020 because of federal pollution control regulations. Pasha said in May that it agreed to buy two new ships to replace two older ships in 2020. Then in June, Philly Shipyard announced that it had commenced building the first of four new ships for an unnamed potential customer.
One linchpin in TOTE’s plan is the state Department of Transportation being able to accommodate a new major domestic cargo service with container handling space at Honolulu Harbor. On Thursday the agency could not say whether it would be possible to add a third cargo terminal at the harbor. “At this point it is early in the discussions and no additional information is available regarding logistical details,” the agency said, adding that it will review opportunities that could benefit the state.
Shane Peters, president of Honolulu-based Peters Communications, representing TOTE, said he understands that it is possible to make space for a new competing carrier at the harbor.
