Matson sees FY17 Ocean Transportation operating income down from $143.1M in FY16
The Hawaii economy experienced modest growth in the Q2; however, the Company's container volume was lower due to the absence of volume gains associated with a competitor's service reconfiguration and related issues in the Q2 of FY16, and lower construction related volumes. Given the timing of the expected transition of construction activity and the absence of a 53rd week in 2017, the Company expects its FY17 Hawaii container volume to be modestly lower than in 2016. In China, the Company's container volume in the Q2 was 15.0% higher year-over-year due to stronger demand for Matson's expedited service and an additional sailing. The Company continued to realize a sizeable rate premium in the Q2 and achieved average freight rates modestly higher than the second quarter 2016. For the remainder of 2017, the Company expects continued strong demand for our highly differentiated expedited service amid a chronically over-supplied international container shipping market. In Guam, as expected, the Company's container volume in the Q2 was lower on a year-over-year basis, the result of competitive losses to a U.S. flagged containership service that increased its service frequency to weekly in December 2016. For the balance of 2017, the Company expects a continued heightened competitive environment and lower volume. In Alaska, the Company's container volume for the Q2 was 1.1% lower year-over-year, primarily the result of the continued energy sector related economic contraction, partially offset by improved seafood harvest. For the remainder of 2017, the Company continues to expect modestly lower volume based on declining northbound freight due to ongoing contraction of Alaska's energy-based economy, partially offset by improved southbound seafood volume. As a result, the Company expects Ocean Transportation operating income for the FY17 to be lower than the $141.3M achieved in 2016.