Matson Signs $220M Contract With Kvaerner Philadelphia

In a widely expected announcement, late last month Matson Navigation Company, Inc. signed a contract with Kvaerner Philadelphia Shipyard Inc.

(KPSI) for two new containerships worth a cumulative $220 million. The 2,600-TEU diesel-powered vessels will be deployed in the company's Hawaii service when construction is completed in late 2003 and in 2004, respectively.

"This significant investment in our Hawaii service underscores our longterm commitment to remaining the state's leading ocean carrier." said C.

Bradley Mulholland, Matson president and CEO. The vessels are similar in size and speed to Matson's flagship MV R.J.

Pfeiffer, a 713.5-ft, 23-knot, 2,229-TEU containership, which is the fastest and biggest containership currently operating in the U.S. domestic offshore trades.

While the containership market has been in a severe downturn since the 2001 terrorist attacks in the U.S.. these ships will operate in the protected Jones Act trade and will be equipped with features specifically designed to meet Hawaii's current and projected market requirements, particularly bigger container sizes for both refrigerated and dry containers. The two ship construction project has been underway since 1999 and is part of an overall plan to rebuild the former Philadelphia Naval Yard as a world class commercial shipyard.

"We are pleased to be working with Matson Navigation on its fleet renewal program," Ron McAlear. president and CEO of KPSI said, "and we are proud to have the historic name of Matson on the side of the first ships built at Kvaerner Philadelphia Shipyard. This contract confirms Matson's confidence in Kvaerner's ability to build high quality ships." Mulholland said, "Matson historically has modified and enhanced its fleet to meet the changing needs of our customers. Examples of this include the SSs Lurline and Matsonia mid-body replacements, which increased their capacity, and conversion of the SSs Maui and Kauai to open-top vessels. We have also purchased suitable Jones Act vessels as opportunities have arisen.

These measures have allowed Matson to maintain a high level of service while concurrently maximizing the overall value of these assets." Serving Hawaii Since 1882 Matson Navigation Company's association with Hawaii began in 1882, when Captain William Matson sailed his three-masted schooner Emma Claudina from San Francisco to Hilo, Hawaii, carrying 300 tons of food, plantation supplies and general merchandise. That voyage launched a company with diverse operations, but one whose primary interest throughout, however, has been carrying freight between the Pacific Coast and Hawaii.

In 1887, Captain Matson sold the Emma Claudina and acquired the brig- antine Lurline, which more than doubled the former vessel's carrying capacity. As the Matson fleet expanded, new vessels introduced some dramatic maritime innovations.

The bark Rhoderick Dhu was the first ship to have a cold storage plant and electric lights. The first Matson steamship, the Enterprise, was the first offshore ship in the Pacific to burn oil instead of coal. The most dramatic advance, arguably, was the introduction of containerization to the route.

In 1956, a research department was established and its first major assignment was to develop the most modern, efficient and economical means of transporting cargo to and from Hawaii. The result was Matson's freight containerization program, which revolutionized Pacific cargo carrying.

In 1958, several C-3 freighters were adapted to carry containers on deck.

In July 1959, the S.S. Hawaiian Citizen was converted into an all-container ship. In that same year, the Company divested itself of all non-shipping assets, including the Matson hotels, which were sold to Sheraton Corporation.

When the Hawaiian Citizen entered service in April 1960, with a capacity for 436 24-ft. (7.3- m) containers, it was the first all-container carrier in the Pacific service. The fleet improvement program continued, with Matson freighters converted to combination container and bulk sugar or to container and automobile carriers.

Two jumboized C-4s, the SS Hawaiian Queen and SS Hawaiian Monarch, joined the fleet in late 1965 and early 1966. Each vessel was lengthened by adding a 110-ft. (33.5-m) midbody section. In the fall of 1967, Matson launched the first fully containerized freight service between the Pacific Coast and the Far East.

A major ship construction program was undertaken in the late 1960s. When the Hawaiian Enterprise (now named Manukai) entered service in March 1970, it carried a record load of 1,165 containers and clipped more than a day from the regular 5.5-day run from the mainland to Hawaii. Also in 1970, in line with the decision to concentrate on its Pacific Coast-Hawaii freight service, the company sold its passenger vessels and suspended its Far East service.