by Michael Hansen, Hawaii Shippers Council

The Jones Act shipping company Horizon Lines which operates services in three of the non-contiguous domestic trades – Alaska, Hawaii and Puerto Rico – reported their 2012 annual results on March 12th. Horizon Lines withdrew their Guam service in November 2011.

Horizon Lines continued to improve its financial situation, annual year over year results were:

Revenues increased by approximately 4.8% to $1.075 billion from $1.026 billion in 2011

Net loss decreased by approximately 48% to $94.7 million from $229.4 million in 2011

Stockholders’ deficiency decreased almost 90% to $16.7 million from $165.9 in 2011

Net loss per share declined 97.7% to $4.15 from $156.70 in 2011.

Horizon reported completing the refit of their three Puerto Rico trade containerships in Asia, and said the dry docking and transit costs negatively impacted net income.

Horizon said that they would be refitting four of their Pacific service ships in Asia during 2013.

Despite the great age of their containerships, Horizon has chosen to refurbish them as opposed to building new ships simply because they don’t have the financial wherewithal to construct new ships, especially in the U.S. as required by the Jones Act where ship construction costs are up to five times as great as in the major shipbuilding countries of Asia – i.e., Japan, South Korea and China.

In comparison, Matson Inc. announced earlier this year that they would be budgeting $200 million apiece for two new ships to be built sometime in the next two to five years.

TOTE Inc. also announced a contract to build two new containerships at General Dynamics NASSCO shipyard in San Diego at a cost described as at least $185 million apiece.

The Hawaii Shippers’ Council (HSC) has put forward its non-contiguous trades -- Alaska, Guam, Hawaii and Puerto Rico – Jones Act reform proposal. In a nutshell, the proposed HSC reform would exempt the non-contiguous domestic shipping trades from the U.S. build requirement of the Jones Act for deep draft self-propelled ships. The HSC is not proposing to change the other Jones Act requirements in respect of the non-contiguous trades, i.e.: U.S.-flag, U.S.-ownership and U.S.-crew.

The HSC proposal would allow Horizon Lines to renew its fleet with modern and efficient ships, and provide lower cost shipping to the consumers of the non-contiguous jurisdictions.

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