MATSON TO INCREASE RATES, CITES RISING LABOR COSTS

MATSON TO INCREASE RATES, CITES RISING LABOR COSTS

Matson Navigation Co. is increasing its ocean freight rates by 3.5 percent next year, the company announced.

Matson said the across-the-board increase, effective Jan. 16, is needed to offset rises in labor and operating costs associated with its fleet and shoreside operations.The ship line, a unit of Alexander & Baldwin Inc., serves the shipping trades between the continental United States and Hawaii.

"The decline of Matson's operating income in 1993 clearly reflects how the current recession has affected Hawaii's two primary economic sectors, tourism and construction," C. Bradley Mulholland, Matson's president and chief executive, said in a statement.

"In addition, agriculture and defense have declined in 1993. Matson continues to implement cost-reduction measures throughout the organization, without sacrificing the quality and stability of our service," he said.

Matson said a new longshore labor agreement went into effect over the summer, increasing the cost of shoreside labor services. In addition, Matson initiated a ship-improvement program. A $21 million contract for modification of the Matson vessels Maui and Kauai was awarded this year.

"By extending the service lives of Matson's major fleet units, significant capital investments for fleet replacements will be deferred and will dramatically reduce future costs," the company said.

The company also has spent $10.8 million on its information technology program, $10.4 million for new container equipment and $9.4 million in terminal upgrades.

Matson said it doesn't expect to impose any more rate increases during 1994.