Young Brothers describes current financial situation as ‘extremely dire’
Shipper seeks $25M from CARES, shipping changes
The Maui News
Interisland shipper Young Brothers says its financial situation is “extremely dire” due to COVID-19-related cargo reductions and is seeking $25 million in federal funding from the state Legislature and reductions in shipping operations from the state Public Utilities Commission.
In an announcement Tuesday, the company, which ships supplies between Oahu and Maui County, Kauai and Hawaii island, reported a 30 percent decline in cargo volumes due to the virus and emergency orders and losing nearly $8 million through April. Projections are for Young Brothers to lose about $25 million by the end of the year.
Young Brothers’ parent company Saltchuk will stop supporting the company’s losses starting Monday, the news release said. Saltchuk has covered more than $21 million in losses from 2018-19 as Young Brothers sought shipping rate increases from the PUC.
“Until now, our parent company has graciously and generously covered our losses,” said Jay Ana, president of Young Brothers. “But they are not in a position to continue covering the staggering COVID losses and have told us that we must now find other solutions.
“We must now find a cooperative solution with the state that allows YB to continue to operate.”
Jason Childs, chairman of Young Brothers’ board of directors, said that the shipper is losing $3 million a month, which “is not sustainable.”
The shipper said that if it cannot secure relief it “will be required to prioritize revenue-generating lines of service to sustain operations.” If the PUC approves, the phased approach would begin June 8 to reduce costs.
“We hope to avoid any disruption in service,” said Ana, adding that “support from the state Legislature would put the company on solid ground” while working with the PUC on long-term solutions. The CARES Act funding would help sustain operations through December.
The contingency plans sought beginning June 8 include eliminating dry and refrigerated less-than-container-load mixed cargo between Honolulu and Kahului; Kawaihae, Hawaii island; Nawiliwili, Kauai; and Hilo. The shipper would continue to accept less-than-container-load livestock shipments from all islands and dry and refrigerated cargo to Lanai and Molokai only.
The next phase, whose date is pending, includes further reductions in sailing frequency to all Neighbor Islands, modified tug and barge availability, elimination of all less-than-container-load options from all ports, including shipments of livestock.
“The Neighbor Island communities that rely on Young Brothers can rest assured that we are not closing June 1,” said Ana. “We will serve our customers as long as possible while we pursue every avenue of assistance.”
Gov. David Ige said Tuesday night that his administration “will be considering the request as part of the recovery and resiliency efforts underway.”
“Every business in Hawaii has been impacted by the COVID-19 pandemic, including Young Brothers,” Ige said. “The company is part of the state’s critical infrastructure that keeps goods moving to and between islands.”