Matson Navigation swung to an operating loss of $7.4 million in the first quarter ended March 31 from a profit of $10.4 million in the same quarter a year earlier, as soaring fuel prices ate up the increase in quarterly revenue from higher volumes on its ocean trades.
Matson revenue increased 17 percent in the quarter to $269.6 million from $229.5 million a year earlier.
"The loss was attributable primarily to the precipitous rise in fuel prices, which outpaced Matson's ability to employ its fuel surcharge adjustment mechanisms to mitigate the impact, as well as start-up losses for our second China service, which was not in existence in the first quarter of last year," said Stanley M. Kuriyama, president and chief executive officer of Matson's parent Alexander & Baldwin.
Matson's total Hawaii container volume increased 8 percent in the first quarter due primarily to a newly signed connecting carrier agreement with a large international carrier. Customer gains also reflect continuing growth in the overall market.
Matson's Hawaii automobile volume for the quarter was 18 percent lower than the first quarter of 2010, due primarily to the timing of automobile rental fleet replacement activity.
Volume on Matson's China container service more than doubled as it added a second China string that began in the third quarter of 2010. But volume on its Guam service dropped in the first quarter from a year earlier due primarily to competitive pressures.
Matson Logistics Services operating profit decreased 21 percent, or $400,000, to $1.5 million in the first quarter of 2011 compared with the first quarter of 2010.
A&B attributed the drop to a large military project move last year that generated about $1 million in operating profit and to lower profitability at the company's warehousing business.
Logistics revenue increased 18 percent, or $14.2 million, in the first quarter of 2011 compared with the first quarter of 2010. This increase was principally the result of an increase in intermodal and highway volume, which increased 14 percent and 7 percent, respectively. Intermodal growth was driven primarily by increased U.S. inland activity resulting from Ocean Transportation's expanded China business. Highway volume increased due to an improvement in both full truckload and less-than-truckload business during the first quarter of 2011, partially offset by a large military project move in the prior year.