The U.S.-led trade war with China has delivered a hard initial blow to one of Hawaii’s largest companies, ocean cargo transportation firm Matson Inc.
On Monday, Matson said its container volume sank about 30% in April from a year earlier.
Matson officials disclosed the drop as part of reporting a surge in profit for the first quarter ended March 31, and said company operating income for the full year is expected to decline by an uncertain amount.
“Looking ahead, we are lowering our 2025 outlook due to the significant uncertainty regarding tariffs and global trade, regulatory measures, the trajectory of the U.S. economy and other geopolitical factors,” Matt Cox, company CEO and board chair, said on a conference call with stock analysts.
In response to the uncertainty and early impacts, Cox said Matson has frozen the size of its workforce, looked to see what capital spending can be deferred and curtailed overall spending levels.
Cox also expressed confidence that Matson can adjust to changes unfolding in the market to sustain long-term prosperity and that acute retaliatory tariff policies between the United States and China will ease.
“We believe we are in the early innings of U.S.-China trade negotiations, and expect a deal to be reached, although timing is unclear,” he said. “At some point the largest and second-largest economies will find a way of working together. The stakes are too high for both countries.”
President Donald Trump announced April 9 that Chinese imports will be subject to a 145% tariff, prompting China to respond with a 125% levy on U.S. goods. Trump also had announced high new tariffs on hundreds of other countries April 2 but later reduced those rates to 10% for 90 days.
Matson is the largest ocean cargo carrier serving Hawaii. The Honolulu-based company began service between China and California in 2006 initially using leased ships, and has expanded that line of business over the past two decades, in part with its fleet of U.S.-built vessels.
During the first three months of this year, Matson reported that container volume for its China service dipped 1.4% to 28,500 units equivalent to 40-foot containers from 28,900 units in the same period of 2024. Matson’s China service includes containers transshipped in China from other Asian ports.
However, higher rates for Matson’s China service boosted revenue and profit along with contributions from other lines of business that include service to Hawaii, Alaska, Guam and the South Pacific as well as freight forwarding, transportation brokerage and port terminal operations.
Hawaii container volume during the first quarter edged up 3.2% to 35,700 units from 34,600 units a year earlier, and was primarily due a competitor’s vessel being out of service for dry-dock work, Matson said.
Net income for Matson doubled in the first quarter to $72.3 million from $36.1 million a year earlier, as revenue rose to $782 million from $722.1 million in the same period.
“Our first-quarter financial performance was as expected, with significantly higher year-over-year consolidated operating income,” Cox said on the conference call. “The year-over-year increase was primarily driven by our China service, which benefited from the carryover of elevated freight rates from the fourth quarter of 2024 combined with healthy freight demand following a traditional post-Lunar New Year period.”
Cox said part of the company’s strategy to adjust to changes in shipping is to follow customers who move manufacturing to other parts of Asia, including Vietnam, where Matson began a feeder service to China two years ago and then expanded it earlier this year.
“We continue to work closely with our Asia transshipment partners as our customers look at options to diversify and grow their manufacturing locations,” Cox said on the call. “Many of our customers moved to a China-plus-one strategy a few years ago to diversify their operations, and we expect this trend to continue. We will continue to follow our customers as they reposition and expand their manufacturing footprint in response to changing tariffs as part of our catchment basin strategy in Asia.”
Matson at the moment has no plans to reduce service, in part so that it can respond to shifts in demand, which at some point could include a snapback.
“We’ll watch this as it goes,” said Cox, who told analysts that Matson has over 140 years of operating history and has historically performed well during periods of supply chain disruption. “We’re not making any permanent decisions. … Every company, including ours, has been doing a lot of planning and strategic planning and scenario planning. So, we’re going to act when it’s appropriate and it’s obvious that we need to do something.”
