A shift in major cargo shipping companies could mean higher prices for goods in Hawaii.
Horizon Lines announced Tuesday it is selling its Hawaii shipping operation to The Pasha Group for roughly $141.5 million.
In becoming part of Pasha, Horizon’s Hawaii business would operate alongside Pasha’s existing operations.
“Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service,” said George Pasha IV, president and CEO. “With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane.”
In a separate transaction, also announced Tuesday, Horizon is merging with Matson in a $456.1 million deal that includes its Alaska operations and all non-Hawaii business liabilities.
The transaction is expected to close in 2015, subject to regulatory approval, satisfaction of the closing conditions to the merger of Horizon and Matson and other customary closing conditions.
All three companies say the change will greatly expand the opportunities for shipping between the mainland and Hawaii, but an economist KHON2 spoke to has concerns, because it would mean having one less option. Pasha and Matson already service Hawaii.
As an economics professor at the University of Hawaii at Manoa, Sumner La Croix studies the current state of economies in the Asia-Pacific region. He says he’s skeptical of this multi-million dollar merger.
“Matson and Horizon are two big competitors in Hawaii. Clearly the antitrust authorities wouldn’t allow this merger, so Matson essentially had to not buy Horizon’s Hawaii service. Instead, they sold it to Pasha. They’re a third player in Hawaii’s market,” La Croix explained. “As a result of this merger, Hawaii’s market is reduced from three to two players. That’s always a concern with small firms.”
Could this affect prices on goods like food and clothing?
“It’s possible the everyday person would see some increase in goods, but mergers also take place because firms expect to see cost savings, and cost-savings can also push prices down,” La Croix said. “At this point, it is too early to tell.”
Pasha says there are no plans to change current inter-island shipping.
Costco says it has a pre-existing relationship with Pasha and doesn’t see its prices rising right now.
The Hawaii Department of Transportation said in a statement Tuesday that “the Harbors Division will continue to work with all partners in shipping cargo to and from the islands and remains committed to a diverse shipping marketplace that provides the best possible service and prices for Hawaii’s consumers.”
In addition to the construction industry, the local car business is one of the largest ocean shipping customers in Hawaii. Each year, local dealers bring upwards of 50,000 into the islands.
But the head of Hawaii Auto Dealer Association says he doesn’t expect to see much change, as the lion’s share of cars already come on Matson and Pasha.
“When I look at it, competition, it’s great, but you know you need service too and this is the one thing they bring. They bring good service to the table,” said Dave Rolf, executive director, Hawaii Automobile Dealers Association.
Horizon also operates a domestic liner service in Puerto Rico. The company says it plans to shut down that operation by the end of the year.