How Do You Define Permanent? : DHX-Dependable Hawaiian Express

How Do You Define Permanent?

Yesterday, September 5th, Horizon Lines named a new “permanent” president. A good chuckle. This might be one of the shortest term “permanent” presidents for a public company in years. Why make such a statement? Here’s the logic.

Prior to the rumors throughout our industry and in public about Horizon Lines selling its Puerto Rico line of business this year, Horizon Lines is, and remains, the largest Jones Act Carrier in the country. Click here for a recent article discussing Horizon’s current state. In the past 10 years, they have been sold at least twice, and have had to restructure their debt once at least, maybe twice. Net result, current shareholders are now debt holders. Subject to a fact check, we believe they haven't had a profitable year in about 5 years. To Hawaii, their ships are old and use really old technology which means they cannot compete cost-wise with the newer vessels that Matson and, to a lesser extent, Pasha now have.

There is plenty speculation among those active in the Jones Act shipping trade as to what the rumors about them selling their Puerto Rico properties and/or line of business means to other trade lanes, Alaska and Hawaii. When we polled our shipping company contacts, we could not get any responses to our questions concerning this. Nothing, not a word. Stonewalled. Someone had to know something!

Then a light bulb went off. Our experience buying other companies came in handy. The only reason we didn’t discover anything on the “coconut wire” was because every ocean carrier with Jones Act business was probably talking to them, and Horizon has good investment bankers who most likely put together Non-Disclosure Agreements with penalties if word were to get out. They must be worried that if it became public knowledge they are selling any of their remaining trade lanes, existing customers would start making deals with other carriers with whom they already have relationships. Neither the buyer or seller want that, so nobody is talking at all, except to say things like “Yes, it will be interesting to see what they do” or “I don't have time to speculate about these things, I'm focused on keeping our business and going after theirs”.

In Hawaii we have suspected for years that Horizon has some sweetheart deals with other forwarders. We’re quite certain those forwarders are watching in angst and may be in discussions now with either Matson or Pasha to try and minimize the impact of a change in carriers. The good news is, this potential change does not impact DHX - Dependable Hawaiian Express at all negatively. We pride ourselves in our outstanding quality of service and had eliminated Horizon as one of our service providers years ago due to the age of their ships among other things.

We speculate these deals are in the making and may be announced soon. Their new “permanent” president’s job may become one of deconstructing Horizon Lines and then liquidating what's left.

How permanent is that?

How Do You Define Permanent?

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