The Interisland Repricing: What the 2025–26 Young Brothers Rate Increases Mean for Hawaiʻi Island Food

Paper 08 of 8 · Ka Lako ʻĀina · Hawaiʻi Island Food Resilience Initiative

A joint program of Hawaii Farmers Union United (Big Island) and the Pure KNF Foundation. Prepared for boards, policymakers, and funders. Data as of June 10, 2026 — day 102 of the war. Every load-bearing number links to its source; illustrative figures are labeled as illustrative.

The finding in one paragraph. Interisland shipping — the barge leg that carries Hawaiʻi Island's food, fertilizer, fuel, and building materials from the Honolulu transshipment point — has been repriced three times in twelve months: an 18.1% interim increase in July 2025, the PUC's permanent 25.75% increase effective January 1, 2026, and a 3% automatic increase landing July 1, 2026 under SB 2694 (Act 16, signed May 19, 2026). The new law directs the PUC to give every regulated water carrier annual rate adjustments indexed to state wharfage-rate changes and capped at 5% per year — applied without a rate-case hearing in the first two years of each cycle — mandatory through mid-2029 and extendable to 2033. Young Brothers, the sole regulated interisland carrier, sought the increases against documented financial distress: it operates at a net loss, owes the state about $30M in diverted wharfage fees plus penalties and interest, has reinvested $120M in infrastructure over four years, and is — in the PUC's own words — "in arrears with its vendors" and "in a state of default with its lenders." State wharfage fees rise 3% on the same July 1 date. Two facts in the record matter most for this island: customers eligible for preferential agricultural rates are exempt from the automatic mechanism, and every scheduled increase widens the cost gap between imported goods and food grown here. This paper documents the chronology, the law's terms, the carrier's finances as the record states them, and what the schedule means for Hawaiʻi Island food.

1. The rate changes: chronology and numbers

1.1 November 2025 — the PUC approves a 25.75% across-the-board increase

The Hawaiʻi Public Utilities Commission unanimously approved a 25.75% rate increase for Young Brothers LLC on November 17, 2025 (Aloha State Daily, Nov 17, 2025; PUC news release). Effective January 1, 2026:

The average cost to ship a 20-foot container between non-Hilo ports is about $700, rising $136 (Aloha State Daily; Young Brothers rate-case fact sheet, July 2025). The new schedule replaced an 18.1% interim increase authorized in July 2025 as a stopgap; Young Brothers' last permanent rate adjustment had come in 2020 (Civil Beat, Nov 2025).

1.2 May 2026 — SB 2694 establishes automatic annual adjustments

Governor Josh Green signed SB 2694 into law on May 19, 2026, as Act 16 (Civil Beat, May 2026). The law (SB 2694 CD1 text) directs the PUC to establish, by July 1, 2026, a "water carrier inflationary cost index" — an automatic rate-adjustment mechanism for every water carrier of property. The mechanism mirrors the annual percentage change in state wharfage rates set by DOT's harbors division, capped at "not more than five per cent per year." It applies automatically — without a rate-case hearing — in the first and second years of each cycle; the third year requires a standard PUC rate application. It is mandatory from July 1, 2026 through June 30, 2029, may be extended at the PUC's discretion through June 30, 2033, and sunsets July 1, 2033. (Civil Beat's shorthand: the bill "grants Young Brothers automatic rate increases of up to 5% a year for the next three years.") One provision matters most for producers: customers eligible for preferential agricultural rates "shall be exempt from any automatic adjustment mechanism" (SB 2694 CD1). Three things took effect together:

1. The statute changed. The Legislature amended the water-carrier law so that the first two annual increases of each cycle take effect without the traditional PUC hearing process. An automatic adjustment mechanism of this kind is what the PUC had declined to approve in its November decision (§2 below). Civil Beat reported that Governor Green declined an interview request; his senior adviser Will Kane said the change was "squarely within the prerogative of the Legislature to amend the responsibilities of an agency." (Civil Beat)

1. Young Brothers announced a 3% rate increase effective July 1 — the first adjustment under SB 2694, applied on top of the January increase and matching the 3% wharfage change the new index mirrors. Hawaii Food Industry Association's Lauren Zirbel: "People are kind of surprised that the 3% rate increase was already announced on top of the 25.75% increase that went into effect in January." (Civil Beat)

1. State wharfage fees rise 3% on the same date — DOT has scheduled the increase for the same July 1, a separate cost layer on every container that crosses a state pier. (Civil Beat)

The PUC's November 2025 decision had stated there would be no additional rate increases for the next two years; SB 2694 supersedes that term of the decision. Opposition to the bill was on the record before the signing. Maui Chamber of Commerce president Pamela Tumpap: "Businesses are already reporting that the freight costs are already high with what they just got hit with. It adds to more uncertainty. This just adds one more pain point." (Civil Beat)

1.3 The cumulative picture for Big Island

From the producer's perspective in Papaikou or Waiakea, the shipping math looks like this (illustrative, compounding Young Brothers' own published category increases):

\Young Brothers publishes dollar averages only for the non-Hilo container (~$700, rising $136) and the car category; Hilo-bound containers took the steepest increase (+35%) but have no published average base, so that row — like the per-unit pallet and reefer rows — is shown as an illustrative ratio.*

The wharfage increase compounds on top — DOT has scheduled a 3% wharfage-fee increase for the same July 1 date (Civil Beat) — and the Food Industry Association warned of "what the impact is going to be on food prices" (Civil Beat). For a Hamakua grower shipping ʻulu or co-crops to Hilo, the comparison runs one direction: every kilo arriving from the mainland carries these increases at the same market; every kilo grown here does not. The differential is widening monthly.

2. Behind the increases: Young Brothers' finances in the public record

Young Brothers' own financial data, confirmed by PUC filings and Civil Beat's reporting, explains why the company sought — and the Legislature provided — a standing adjustment mechanism:

• Operating costs +44% since 2020 while cargo volume fell ~14% (Aloha State Daily);
• No profitability since August 2024; projected losses of more than $24M in 2025 despite the rate increase (Aloha State Daily);
• Losses of at least $6M expected even with the new revenue (estimated at +$26M annually) (Aloha State Daily);
• Owes the state about $30M in wharfage fees: in 2024 and 2025 it diverted more than $26M in state wharfage fees collected from customers — money it was supposed to remit to the state — to its own operating expenses, and DOT imposed penalties and interest on top (Civil Beat);
• "In arrears with its vendors, and … in a state of default with its lenders" — the PUC's own characterization, in a statement quoted at the time of the decision: "[Young Brothers'] financial condition has continued to worsen to the point where it now operates at a net loss, is in arrears with its vendors, and is in a state of default with its lenders" (Aloha State Daily; the PUC's release cites "YB's escalating financial instability" — PUC news release);
• The company states it has reinvested $120M in infrastructure since 2020, including nearly $50M for two new barges (Aloha State Daily);
• No automatic inflation adjustment was permitted in the November 2025 decision: the commission rejected Young Brothers' proposed mechanism (a water carrier inflationary cost index), finding it would have "served to increase rates, offset inefficiencies and mask shortcomings in [Young Brothers'] operations, to the detriment of customers" (Aloha State Daily). SB 2694 subsequently mandated a mechanism of that kind;
• The two-year prohibition on new rate increases imposed by the PUC in November 2025 was superseded when the Legislature passed SB 2694, which mandates the automatic annual adjustments instead (PUC news release; Civil Beat).

The sequence in the record is straightforward. The company had told both regulators and lawmakers — through what the PUC described as repeated requests "for various rate increases, debt financing and other measures" (Aloha State Daily), and through its November 2025 request for an automatic inflation index — that it could not operate under the existing pricing framework. The PUC granted the 25.75% increase and declined the automatic mechanism; the Legislature then enacted one. The governor's office said the law allows "reasonable, manageable rate increases" (Civil Beat).

3. The war layer: why the timing matters

The Iran war (day 102 as of June 10) has already repriced every gallon of diesel, every ton of fertilizer, and every container's fuel surcharge (Paper 01). The new rate schedule arrives on top of that repricing, and the two compound directly for Big Island:

1. Fertilizer arrives on the barge from the mainland: nitrogen fertilizer, already up 24.5–35.6% in first-quarter war impact (Paper 01), now carries an additional 30% on the barge leg for dry cargo pallets, plus the July wharfage increase.

1. Refrigerated freight at +40% compounds the cold chain: every reefer bay bringing fresh produce into Hilo or Kawaihae now carries war-driven fuel costs and the new rate schedule simultaneously.

1. Matson discharge at Kawaihae followed by trucking over the Saddle adds a diesel leg on top of the barge cost already in the container. The entire supply chain to the island inflates — and the Hamakua producer who grows in Papaikou and ships to Hilo competes against goods that arrive at the same market carrying every one of those layers.

1. The schedule replaced a moratorium. The PUC's November decision had barred further rate increases for two years; SB 2694 replaced that bar with scheduled annual adjustments. For Big Island consumers, the scheduled increases arrive at the grocery register. For producers, each one widens the cost advantage of food grown here. That is the structural fact at the center of this initiative's plan (Paper 04).

Opposition to SB 2694 was broad and documented: the Hawaii Island Chamber of Commerce, the Molokaʻi Chamber of Commerce, the Hawaiʻi Restaurant Association, and the Hawaii Food Industry Association all opposed the bill (Civil Beat). The Maui Chamber's Tumpap called it "one more pain point" for businesses already absorbing a major rate increase (Civil Beat). The Food Industry Association's Zirbel pointed to consumers "having to absorb a second rate increase in one year after the PUC had already denied this request … and what the impact is going to be on food prices" (Civil Beat). The bill passed with that opposition on the record.

4. The convergence: five cost layers at once

No single factor drives the current repricing of Hawaiʻi Island's food supply. Five cost layers are converging on the system at the same time:

The shipping layer is the most predictable of the five: it is already legislated, with known dates, a known index, and a known cap, running through at least mid-2029. This convergence is not a forecast — every layer in the table is documented and active. Any plan that assumes shipping costs stay stable or decline is planning against the legislated schedule.

5. What this means for Hawaiʻi Island producers

5.1 Every kilo grown locally gains ground on a legislated schedule

For a Hamakua grower moving produce from Papaikou or Waiakea to Hilo's wholesale market, the barge leg of the imported competition's cost chain is already repriced at +35% for Hilo containers and +40% for reefers — then +3% in July on top, plus wharfage. Next July brings another automatic adjustment: whatever the wharfage index gives, up to 5%. The cycle runs through at least mid-2029 and can be extended to 2033. Local production does not carry Young Brothers' fuel surcharge, bunker insurance, or state wharfage exposure. Each month the schedule runs, island-grown food gains on imported food on price alone — before quality and freshness enter the comparison.

The law itself sets producers apart. Customers eligible for preferential agricultural rates "shall be exempt from any automatic adjustment mechanism" (SB 2694 CD1): farm goods moving interisland under the preferential tariff are the one cargo category the automatic schedule does not touch — an exemption written into the same act that schedules everyone else's increases. Growing and shipping local food is the position the statute itself favors.

5.2 The plan's case strengthens

This chronology reinforces every argument in Paper 04 (The Plan): the five moves are not aspirational — they are structurally necessary, because the shipping cost differential is widening monthly and the trendline has legislative backing through at least mid-2029, extendable to 2033. The input-making cohorts, the staple planting cohorts, the input co-op model — each gains urgency proportional to the rate trajectory, and each runs on the movement's own engine: every bed planted and every batch of island-made fertility captures a differential the schedule only widens.

5.3 The planning window

Young Brothers' last permanent rate adjustment before this cycle came in 2020 — "more than five years ago," in the company's own framing (Aloha State Daily; Civil Beat, Nov 2025). The industry held one permanent price for five years; it has now absorbed three increases in twelve months, with annual adjustments scheduled through at least mid-2029. For producers, the planning implication is direct: the differential at which island-grown food undercuts imports widens on a published schedule, and capacity built now captures that advantage earliest. Every season of delay forgoes a gap the schedule only opens further.

What you can do now

Producers (Hamakua and island-wide):

• Join the chapter. HFUU Big Island's producer network is how this initiative organizes throughput, inputs, and market access (Paper 04).
• Price the differential into planning. The import side's rate schedule is legislated through at least mid-2029 — budget acreage, staples, storage, and delivery against it.
• If you ship interisland, confirm preferential agricultural rate eligibility with Young Brothers: SB 2694's automatic increases do not apply to that tariff class.

Residents:

• Buy the local line first. Every scheduled increase widens local food's price advantage — the simplest act in this campaign is also, increasingly, the cheaper one.

County policymakers:

• The rate trajectory is already on the initiative's public watchlist (Paper 01, §8). Take the Civil Defense briefing; attach the food-supply annex and producer-network liaison per Paper 01.

The rate schedule is public, dated, and capped. Planning to it is not alarm — it is arithmetic.

— Prepared for the Hawaiʻi Island Food Resilience Initiative, led by Drake Weinert (president, HFUU Big Island; president, Pure KNF Foundation). June 10, 2026.

Companion papers: 00 — Executive Summary · 01 — Threat Assessment · 02 — How We Fed Ourselves · 04 — The Plan (Five Moves) · 06 — The Free Economy

Sources:

1. Aloha State Daily, "Young Brothers' rates to increase by more than 25%" (Nov 17, 2025): link
2. PUC Hawaii, "PUC Approves Young Brothers Rate Increase to Preserve Intraisland Shipping Services" (Nov 2025): link
3. Civil Beat, "Interisland Shipping Rates Set To Rise July 1 After Governor Signs Bill" (May 2026): link
4. Civil Beat, "Young Brothers wins 25% rate hike but faces stricter oversight" (Nov 2025): link
5. SB 2694, CD1 (Act 16, signed May 19, 2026; effective July 1, 2026): bill text · measure status
6. Hawaii Tribune-Herald, "Hawaii lawmakers pave way for regular Young Brothers rate hikes" (May 14, 2026): link
7. Civil Beat, "Hawaii Food Banks And Farmers Are In Real Trouble With Federal Cuts" (Oct 2025): link
8. Young Brothers, "UPDATED Rate Case Fact Sheet" (July 2025): link
9. Young Brothers, Fact Sheet (n.d.): link