As economy loses steam, Alaska's major shippers report import declines

With Alaska's economy sluggish, the volume of goods brought into the state by its two major shipping lines is on the decline.

The moderate shrinkage of imports has competitors Matson and TOTE, the Totem Ocean Trailer Express, working harder to defend market share while continuing investment in a small regional economy where growth over the next few years is not in the forecast.

The companies deposit their cargoes side-by-side at the Port of Anchorage every Tuesday and Saturday. Crossing the North Pacific from the port in Tacoma, Washington, they deliver goods that make Alaska more comfortable for hundreds of thousands of residents: fleece vests, skis, dog collars, paint, toothpaste, guns and butter.

TOTE, a subsidiary of Seattle-based transportation conglomerate Saltchuk, has a long history in Alaska. Honolulu-based Matson is the newcomer settling in after purchasing Horizon Lines last year. Many of Matson's containers still sport the Horizon logo. The companies carry 83 percent of the general cargo arriving in Southcentral Alaska.

In its latest annual report, Matson estimated 2016 volumes to be "modestly lower" than the 67,300 total containers shipped in last year. The company is publicly traded, while Saltchuk is privately held.

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"There are fewer vehicles, the retail segment is down a bit, and, in construction, orders for materials are down as well," said Matson CEO Matt Cox in a phone interview from Honolulu.

TOTE is seeing similar volume reductions. Orders for parts and materials used by the oil and gas industry are down, said Grace Greene, vice president and Alaska general manager of TOTE Maritime, from her office at the Anchorage port. And the cutbacks in the industry, triggered by a sustained period of low oil prices, are affecting shippers' other customers.

"All the reductions we're seeing are from the oil and gas industry," Greene said. "We're seeing less project-related cargo. If someone provided food and produce to a catering company that served the North Slope, obviously that business is being affected."

Alaska is a highly transient state and people moving away often ship their belongings by container ship. Greene said the company expected, and is seeing, a slight uptick in household goods bound south, but nothing to suggest a dramatic exodus.

"We watch household goods moving out of state pretty closely," she said. "To date, the numbers aren't where I would say I'm very concerned."

On a Tuesday in early October, the ships Matson Tacoma and Midnight Sun, owned by TOTE, were bellied up at the dock an hour after high tide.

Matson crane operators, perched in cabs several stories high, maneuvered containers off the 710-foot Tacoma and deftly landed them on chassis parked alongside the hull. Meanwhile, container trucks and new vehicles drove straight out of TOTE's 839-foot Midnight Sun on ramps that spanned the ship's decks and the dock.

There are pros and cons to each operation, according to port spokesperson Jim Jager. The three ships Matson rotates through Anchorage's port are smaller and take several hours longer to unload, but use less fuel while carrying the same amount of freight as TOTE's, whose ships are larger. TOTE can carry larger, odd-shaped items and adjust the height of its decks.

By Tuesday afternoon, TOTE's Midnight Sun had departed while the Matson Tacoma was still being unloaded.

Both companies say they're focusing more than ever on customer service for their clients, a group that includes big-box stores, food and beverage distributors, supermarkets, hotels, construction companies, government agencies and the military.

"It's second nature of course, but anytime we're in a situation like this, we focus on our relationship with our customers — giving them the best experience and providing them with the most value," Greene said. That's the No. 1 thing we're doing," Greene said.

Both continue to make investments in equipment and customer service in Alaska and say they are committed to the state over the long term.

Matson acquired freight forwarder Span Alaska this year for $197 million and recently added an Alaska committee to its corporate-giving arm, Matson Foundation. TOTE is improving its tracking system so customers can follow their items more closely.

Cox said Matson has wanted to put down roots in Alaska for decades and has no buyer's remorse.

"Of course, it would have been better if we had acquired Horizon in a more robust environment," Cox said. "But in no way would we have decided to pull back knowing what we know now."