Life in Hawaii depends on a strong, reliable interisland shipping network. For 125 years, Young Brothers (YB) has carried that responsibility, delivering the supplies that sustain and make daily life possible in our island communities.
As the state’s only regulated water carrier, YB operates as a public utility, ensuring essential service to every island. Today, the system that has served Hawaii for generations is under serious financial strain.
Public-utility regulation is a partnership: customers receive safe, reliable service, and the utility is allowed to recover its costs and earn a fair return on the investments that make that service possible. For years, that balance has been slipping out of alignment at YB, to the detriment of customers and the company.
To restore stability and protect the statewide service our communities depend on, YB filed a rate case before the state Public Utilities Commission (PUC). The proposal includes a rate reset and a new Water Carrier Inflationary Cost Index (WICI), designed to replace the large, disruptive rate increases of the past with smaller, predictable adjustments that reflect real-world costs. The goal is stability and reliability for the entire state.
For years, YB has operated under rates that failed to cover the true cost of service or reflect the investments required to keep operations safe and reliable. Losses accumulate, debt grows, and the company must seek a large rate increase to catch up. That’s the cycle we are trying to break—one where years of underfunding and regulatory lag are followed by sharp, unavoidable corrections. It’s unsustainable for any utility and disruptive for our customers who deserve consistency.
For decades, YB has operated without earning the PUC-approved rate of return—the amount of profit a utility is permitted to earn on investments in ships, barges, and other infrastructure needed to provide reliable service. Since 2005, the company’s actual return has averaged 1.1%, compared with the approximately 10% the commission allows. Even if our current request is approved, we project a return of only 1.4% in 2026.
This cycle makes it harder to secure the private capital needed to keep the ships sailing and reinvest in the infrastructure that keeps Hawaii’s supply chain reliable.
Since our last rate reset, operating costs have increased by about 44%, while cargo volume remains roughly 14% below 2020 levels. E-commerce companies now use their own transport networks, and more goods arrive directly from the mainland or overseas, bypassing YB on routes where it was once the primary carrier.
Despite these changes, YB continues to serve every island, including Molokai and Lanai, where we operate at a combined $7 million annual loss—because that’s our responsibility as a public utility.
YB has also invested more than $120 million in new barges, tugs, harbor upgrades, and electric vehicles to enhance safety, reliability, and environmental performance. Our investment in four Kapena-class tugs, which have served Hawaii since 2018, illustrates how regulatory lag affects the system: only one is currently reflected in customer rates.
This investment benefits everyone who depends on interisland shipping, but without timely and fair recognition of those costs, that commitment becomes harder to sustain.
The rate reset allows YB to catch up after years of underfunding and ensures that future rates better reflect the actual cost of each service, factoring in the handling required and the distance it travels.
WICI would then enable modest, inflation-based adjustments each year, mitigating future shortfalls and avoiding the significant emergency increases that have defined the past.
This approach creates transparency and predictability for customers while giving YB the stability to plan ahead, secure capital, and continue providing safe, frequent, and dependable service.
YB isn’t asking for special treatment—only the same tools other utilities already use to maintain financial stability. With balanced regulation, we can continue to do what we’ve done for more than a century: connect our islands, support our local economy, and move what matters most for Hawaii.
https://www.staradvertiser.com/2025/10/26/editorial/island-voices/column-puc-must-bring-balance-to-interisland-cargo-rates/
