Earnings call transcript: Matson’s Q2 2025 results surpass expectations

Published 31/07/2025, 23:20
Earnings call transcript: Matson’s Q2 2025 results surpass expectations

Matson Inc. reported strong earnings for the second quarter of 2025, significantly surpassing market expectations. The company’s earnings per share (EPS) came in at $2.92, well above the forecasted $1.98, marking a 47.47% surprise. Revenue also exceeded projections, reaching $830.5 million compared to the anticipated $752.33 million. Following the earnings release, Matson’s stock experienced a slight increase, closing at $106.78, a 0.26% rise from the previous close. According to InvestingPro analysis, the company maintains a "GOOD" financial health score and appears undervalued based on its Fair Value model. With a P/E ratio of just 6.94, the stock trades at an attractive earnings multiple relative to its peers.

Key Takeaways

  • Matson reported a significant EPS beat, with a 47.47% surprise over the forecast.
  • Revenue exceeded expectations by 10.39%, reaching $830.5 million.
  • The company launched a new expedited service in Vietnam, enhancing its transshipment capabilities.
  • Matson raised its full-year 2025 outlook despite a muted peak season forecast for Q3.
  • Stock price saw a modest increase post-earnings announcement.

Company Performance

Matson’s performance in Q2 2025 was marked by robust financial results despite a challenging global trade environment. The company reported a consolidated operating income of $113 million, although this represented a decrease of $11.6 million year-over-year. Net income also fell by 16.3% to $94.7 million. While InvestingPro data indicates net income is expected to drop this year, management has been actively returning value to shareholders through aggressive share buybacks and maintaining its impressive 53-year streak of consecutive dividend payments. Matson’s strategic initiatives, such as expanding services in Southeast Asia and maintaining leadership in expedited Transpacific services, have positioned it well against competitors.

Financial Highlights

  • Revenue: $830.5 million, up 10.39% from forecasts.
  • Earnings per share: $2.92, a 47.47% surprise over forecast.
  • Cash flow from operations: $617.9 million.
  • Shareholder returns: $284.4 million through dividends and share repurchases.

Earnings vs. Forecast

Matson’s actual EPS of $2.92 significantly outperformed the forecasted $1.98, resulting in a 47.47% surprise. This performance represents a notable improvement compared to previous quarters, highlighting the company’s effective cost management and strategic market positioning. Revenue also surpassed expectations by 10.39%, indicating strong operational execution.

Market Reaction

Following the earnings announcement, Matson’s stock experienced a minor increase, closing at $106.78. This represents a 0.26% rise from the last close. The stock remains within its 52-week range, with a high of $169.12 and a low of $91.75. The modest stock movement suggests that while investors reacted positively to the earnings beat, broader market conditions may have tempered enthusiasm.

Outlook & Guidance

Matson raised its full-year 2025 outlook, anticipating continued strong performance despite a projected muted peak season in Q3. The company expects ocean transportation operating income to be moderately lower than in 2024 but remains optimistic about its strategic initiatives. Maintenance capital expenditures are projected at $100 million to $120 million for the year.

Executive Commentary

CEO Matt Topps emphasized Matson’s resilience and strategic focus: "It is during uncertain times like these that Matson demonstrates its unique capabilities and service qualities." He also highlighted the company’s commitment to maintaining the fastest and most reliable Transpacific services, stating, "We’re focused on maintaining the two fastest and most reliable Transpacific services."

Risks and Challenges

  • Tariff uncertainties: Ongoing geopolitical tensions may impact trade routes and costs.
  • Economic conditions: Slow tourism recovery in Guam and global trade challenges could affect demand.
  • Competition: Maintaining leadership in expedited services requires continuous innovation and investment.
  • CapEx commitments: High capital expenditure for new vessel construction could impact cash flow.
  • Market volatility: Fluctuations in freight rates and demand may affect revenue stability.

Q&A

During the earnings call, analysts inquired about the impact of tariffs on trade routes and the company’s strategy for expanding services in Southeast Asia. Matson’s management addressed potential shipbuilding opportunities and confirmed stable run rates for China volumes, underscoring their focus on adapting to shifting market dynamics. With a moderate debt level and strong cash flows sufficient to cover interest payments, the company appears well-positioned to navigate market challenges. For deeper insights into Matson’s financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.

Full transcript - Matson (MATX) Q2 2025:

Conference Operator: Thank you for standing by and welcome to the Matson Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. As a reminder, today’s program is being recorded. And now I’d like to introduce your host for today’s program, Justin Schoenberg, Director of Investor Relations and Corporate Development.

Please go ahead, sir.

Justin Schoenberg, Director of Investor Relations and Corporate Development, Matson: Thank you. Joining me on the call today are Matt Topps, Chairman and Chief Executive Officer and Joel Winnie, Executive Vice President and Chief Financial Officer. Slides from this presentation are available for download at our website, www.matson.com, under the Investors tab. Before we begin, I would like to remind you that during the course of this call, we will make forward looking statements within the meaning of the federal securities laws regarding expectations, predictions, projections or future events. We believe that our expectations and assumptions are reasonable.

We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward looking statements in the press release, the presentation slides and this conference call. These risk factors are described in our press release and presentation and are more fully detailed under the caption Risk Factors on pages 24 to 35 of our Form 10 Q filed on 05/06/2025, and in our subsequent filings with the SEC. Please also note that the date of this conference close 07/31/2025, and any forward looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these forward looking statements. I will now turn the call over to Matt.

Matt Topps, Chairman and Chief Executive Officer, Matson: Thanks, Justin, and thanks to those on the call. Starting on Slide three, our second quarter financial performance exceeded our expectations amid the challenges of market uncertainty and volatility arising from tariffs and global trade. In Ocean Transportation, operating income was lower year over year primarily due to lower year over year volume in our China service. In our domestic trade lanes, we saw higher year over year volume in Hawaii and Alaska and lower year over year volume in Guam. In logistics, our operating income was lower year over year primarily due to a lower contribution from transportation brokerage.

Looking ahead, we expect uncertainty regarding tariffs and global trade, regulatory measures, the trajectory of The U. S. Economy, and other geopolitical factors to continue. However, given our financial performance in the second quarter and assuming these factors do not materially change from current conditions, we are raising our outlook for the full year 2025. Joel will go into more detail on our updated outlook later in the presentation.

I will now go through the second quarter performance of our trade lanes, SSAT and logistics, so please turn to the next slide. Container volume in our Hawaii service increased 2.6% in the second quarter year over year. The increase was primarily due to higher general demand. For the full year 2025, we expect volume to be modestly higher than the level achieved in 2024, reflecting modest economic growth in Hawaii and stable market share. Please turn to slide five.

According to UHERO’s second quarter twenty twenty five economic report, the Hawaii economy remained stable, supported by strong construction activity, but faces potential headwinds from slowing tourism, increasing unemployment, and high inflation and interest rates. Hawaii is currently experiencing solid construction activity from the public sector and the Maui rebuilding effort. Hawaii tourism showed modest growth in the second quarter despite international tourist arrivals remaining challenged. Please turn to slide six. Moving to our China service, container volume in the 2025 decreased 14.6 year over year primarily due to the challenges of market uncertainty and volatility from tariffs and global trade.

Freight rates were modestly higher year over year. As you might recall, we began to see elevated rates in the middle of the second quarter last year due to tighter supply chain conditions including the effects of the Red Sea situation coupled with the supportive economic and consumer demand environment. Please turn to slide seven. At the onset of tariffs in April, we experienced significantly lower year over year freight demand as our customers held back less urgent shipments to work through the tariff impacts. Many of our customers were negotiating the tariffs with their trading partners on an order by order basis.

At the same time, we saw carriers and alliances begin to reduce capacity in the Transpacific trade lane based on the significant volume downturn. Starting in mid May, we saw a rebound in demand after The US and China agreed to a temporary reduced level of tariffs, but also in anticipation of country specific reciprocal tariffs returning in August. The buildup of freight that had taken place unwound over several weeks. Market freight rates increased quickly to meet the higher demand levels and capacity returned over the subsequent few weeks. Following the London meeting in June between The US and China that upheld the terms from May, we saw a stabilization of volume modestly below the prior year period amid a number of evolving trade lane supply and demand factors including trade lane capacity reductions after the cargo rush in May, customers in Vietnam and other Southeast Asian countries advancing freight ahead of July 9 when the ninety day pause on country specific reciprocal tariffs expired and some customers pulling forward freight from the traditional peak season in the third quarter to de risk ahead of the next US China deadline.

Please turn to Slide eight. During the second quarter, we moved with our customers as they shifted production throughout Asia in response to the tariffs, which resulted in higher container volume levels originating outside of China. Our transshipment volume in the second quarter twenty twenty five represented approximately 21% of our China service compared to approximately 13% in the first quarter of this year. The sequential quarterly increase is primarily due to higher customer demand and the opening of our new expedited Ho Chi Minh service offering as our second best in class service out of Vietnam with our Hai Phong service from two years ago. While we don’t know where our transshipment percentage will ultimately land given the various factors at play, we do believe in the long run that an increasing percentage of volume will originate from areas outside of China.

We remain focused on supporting our customers in the region as they continue to shift their production capabilities, and we will look at opportunities to further expand our transshipment capabilities. Looking ahead, in the third quarter twenty twenty five, we expect lower year over year freight rates and volume compared to the elevated demand levels achieved in the third quarter last year and our expectation of a muted peak season this year. As I mentioned earlier, we saw a stabilization of volume in June and in July, we continued to see stabilized volume and rates, notwithstanding lower demand levels and continued pressure on the SCFI. As a result, our premium to SCFI widened and we significantly outperformed the market relative to the SCFI due to our service differentiation and brand reputation. Assuming tariffs and global trade, regulatory measures, the trajectory of The US economy, and other geopolitical factors do not materially change from current conditions, we expect for the full year 2025 average freight rates and volume to be lower year over year.

Please turn to the next slide. In Guam, Matson’s container volume in the 2025 decreased 2.2% year over year. In the near term, we expect Guam’s economy to remain stable with a slow recovery in tourism, low unemployment rate, and some increase in construction activity. As such, for the full year 2025, we expect container volume to be modestly lower than the level achieved in the last year. Please turn to slide 10.

In Alaska, Matson’s container volume for the 2025 increased 0.9% year over year. The increase was primarily due to higher AAX volume, partially offset by two fewer northbound sailings compared to the year ago period. In the near term, we expect continued economic growth in Alaska supported by a low unemployment rate, job growth, and continued oil and gas exploration and production activity. As such, for 2025, we expect container volume to be modestly higher than the level achieved last year. Please turn to slide 11.

In the second quarter, our SSAT terminal joint venture contributed $7,300,000 representing a year over year increase of $6,100,000 The increase is primarily due to higher lift volume. For 2025, we expect the contribution from SSAT to be modestly higher than the $17,400,000 achieved last year without taking into account the $18,400,000 impairment charge at SSAT during the 2024. Turning now to logistics on slide 12. Operating income in the second quarter came in at $14,400,000 or $1,200,000 lower than the result in the year ago period. The decrease was primarily due to a lower contribution from transportation brokerage.

For the third quarter twenty twenty five, we expect logistics operating income to be comparable to the level achieved last year. And for the full year 2025, we expect operating income to also be comparable to the level achieved last year. And I will now turn the call over to Joel for a review of our financial performance. Joel?

Joel Winnie, Executive Vice President and Chief Financial Officer, Matson: Thanks, Matt. Please turn to Slide 13 for a review of our second quarter results. For the second quarter, consolidated operating income decreased $11,600,000 year over year to $113,000,000 with lower contributions from ocean transportation and logistics of $10,400,000 and $1,200,000 respectively. The decrease in ocean transportation operating income in the second quarter was primarily due to lower volume in China, partially offset by higher freight rates in China and the timing of fuel related surcharge collections. As Matt noted, the decrease in logistics operating income was primarily due to a lower contribution from transportation brokerage.

We had interest income of $8,000,000 in the quarter compared to $18,800,000 in the same period last year. As you may recall, second quarter twenty twenty four included $10,200,000 in interest income earned on the federal tax refund related to our 2021 federal tax return. Interest expense in the quarter decreased $400,000 year over year due to the decline in outstanding debt in the past year. Net income decreased 16.3% year over year to $94,700,000 and diluted earnings per share decreased 11.8% year over year to $2.92 per share. Note the $10,200,000 in one time interest income earned on our federal tax refund I just mentioned, contributed $0.24 in the earnings per share in the year ago quarter.

Lastly, diluted weighted average shares outstanding decreased 5.3% year over year. Please turn to Slide 14. This slide shows how we allocated our trailing twelve months of cash flow generation. For the LTM period, we generated cash flow from operations of approximately $617,900,000 from which we used $39,700,000 to retire debt, 199,000,000 on maintenance and other CapEx, 161,500,000.0 on new vessel CapEx, including capitalized interest and owners items, dollars 30,300,000.0 in cash deposits and interest income in the CCF, net of withdrawals for milestone payments, dollars 14,500,000.0 on other cash outflows, while returning approximately 284,400,000.0 to shareholders via dividends and share repurchase. Please turn to Slide 15 for a summary of our share repurchase program and balance sheet.

During the second quarter, we repurchased approximately 900,000.0 shares for a total cost of $93,700,000 including taxes. Year to date, we repurchased approximately 1,400,000.0 shares for a total cost of $162,900,000 including taxes. Since we initiated our share repurchase program in August 2021 through June, we have repurchased approximately 12,500,000.0 shares or 28.8% of our stock for a total cost of approximately $1,100,000,000 As we have said before, we are committed to returning excess capital to shareholders and plan to continue to do so in the absence of any large organic or inorganic growth investment opportunities. Turning to our debt levels, our total debt at the end of the second quarter was $381,000,000 a reduction of $9,800,000 from the end of the first quarter. Lastly, on July 23, we entered into a new five year revolving credit facility with commitments aggregating $550,000,000 We reduced the size of our credit facility from $650,000,000 to $550,000,000 due to the nearly fully funded status of the new Aloha Class Vessel Bill program and our expected lower level of capital needs for the remainder of the decade due in part to our next Jones Act build cycle not anticipated until the mid 2030s.

In connection with the new revolver, we also amended the existing private placement debt to match the covenants and terms of the new revolving credit facility. Please turn to slide 16. I’m gonna walk through our outlook starting with the 2025 on the left side of the slide. Based on the outlook trends Matt mentioned earlier, we expect ocean transportation operating income to be meaningfully lower than the $226,900,000 achieved in the 2024. For logistics, we expect operating income in the 2025 to be comparable to the level achieved last year.

As such, we expect consolidated operating income in the third quarter to be meaningfully lower than the prior year. On the right hand side of the slide, we have our expectations for full year 2025. Starting with ocean transportation, we expect year over year operating income to be higher than the guidance we provided in May, but moderately lower than the $500,900,000 achieved in 2024. We also expect logistics full year operating income to be comparable to the level achieved in the prior year. In addition to this full year operating income outlook, we expect the following for the full year.

Depreciation and amortization to approximate $200,000,000 inclusive of $26,000,000 for dry dock amortization. Interest income to be approximately $31,000,000 and interest expense to be approximately $7,000,000 Other income to be approximately $9,000,000 and effective tax rate of approximately 22% and dry docking payments of approximately $40,000,000 Moving to Slide 17, the table on the slide shows our CapEx projections for the full year 2025. Compared to what we previously provided on our first quarter call in May, our range for maintenance and other capital expenditures remains the same at 100,000,000 to $120,000,000 for the full year 2025. Our estimate for expected new vessel construction milestone payments in 2025 also remains unchanged at three zero five million dollars Again, milestone payments for new vessel construction are expected to be paid from our capital construction fund, which already covers approximately 92% of the remaining obligations, excluding future interest income and accretion earned on cash deposits and treasury securities. We currently expect our only remaining cash contribution into the CCF for milestone payments to not be until 2028, and the final amount is expected to be less than $30,000,000 Lastly, in the third quarter, we expect to make approximately $71,000,000 in milestone payments.

With that, I will now turn the call back over to Matt.

Matt Topps, Chairman and Chief Executive Officer, Matson: Thanks, Joel. In closing, we believe we are well positioned at our trade lanes and in logistics as we manage through the period of market uncertainty and volatility. It is during uncertain times like these that Matson demonstrates its unique capabilities and service qualities across our organization. With our China service, we are focused on maintaining the two fastest and most reliable Transpacific services. We’re also focused on being there for our customers, looking for additional opportunities to support them with world class services and customer support as they diversify their manufacturing base and grow in an evolving marketplace.

And with that, I will turn the call back to the operator and ask for your questions.

Conference Operator: Certainly. And our first question comes from the line of Jacob Blacks from Wolfe Research. Your question please.

Jacob Blacks, Analyst, Wolfe Research: Hey, Matt. Hey, Joel. Thanks for your time.

Matt Topps, Chairman and Chief Executive Officer, Matson: Sure, Jake.

Jacob Blacks, Analyst, Wolfe Research: So you discussed expectations for lower volumes in 3Q. I think you had a couple extra sailings a year ago. So, is this just reflecting lapping those extra sailings or is there a bit of a utilization headwind that we should be keeping in mind as well?

Matt Topps, Chairman and Chief Executive Officer, Matson: Yeah, think there’s three or four factors going on here, Jake. I think the first one, we noted that in last year’s numbers, there was some extra demand as you point out in your question. Those resulted in some extra sailings as well as a very healthy freight rate environment. I know I know we’re talking about volume here. And then the other primary factor, although we see the consumer holding up reasonably well in this environment, retail sales holding their own.

We are understanding that many of our customers are in pretty good shape on their inventory, some of whom took advantage of these pauses to if they’re that they could work a deal with their manufacturers to bring in inventory early. And so our view is that we’re going to see a peak season, but it’ll be relatively muted. And so those are some of the factors that are going into our thinking about Q3 year over year comparisons.

Jacob Blacks, Analyst, Wolfe Research: Got it. That’s helpful. And then it feels like we continue to see some new strings of expedited services crop up. Is this having any impact on you in the marketplace? And do you think these are these certain new services have staying power in like a more persistently weaker market?

Matt Topps, Chairman and Chief Executive Officer, Matson: Yeah, it’s a good question. I think at this point, we say in our prepared remarks just a moment ago that our main focus is on maintaining number one and number two, the fastest and second fastest. I think there are three or four other carriers who are in the near expedited segment. We’ve talked about them before, CMA, Zim, Heta, and there’s a couple of others. And so we are seeing activity as they try to position themselves in various markets as sort of the next tranche below our expedited services.

I think your observation is right. It’s our expectation that if the SCFI spot rates remain relatively low, we’re going to these expedited services are expensive and difficult to maintain if you’re just receiving something close to the spot rate. So it would not surprise us that like we did in other down cycles, these expedited markets or carriers would likely look hard at whether all those services continue to make sense for them.

Jacob Blacks, Analyst, Wolfe Research: Makes sense. And last one for me and then I’ll get back into queue. I appreciate the environment is pretty uncertain today, but to the extent maybe you can help us think about the shaping of the back half of the year in the context of your annual earnings guidance. Would you expect seasonality, sort of the breakout between Q3 and Q4 to look something similar to the past couple of years?

Justin Schoenberg, Director of Investor Relations and Corporate Development, Matson: Yes, I would say so.

Matt Topps, Chairman and Chief Executive Officer, Matson: I would say we don’t expect this year to be as peaky, given the starting position of our customers’ inventory levels. We will see cargo that will move. We expect to see a strong Q3 sequentially or related to the quarter, then usually sometime in October, we start to see most of the inventory that’s going to be put into our customer supply chains for the holiday season to be on the water and so we’ll likely see a fall down in October in a more traditional sense. So, that’s our expectation.

Jacob Blacks, Analyst, Wolfe Research: Great. Thanks for your time.

Justin Schoenberg, Director of Investor Relations and Corporate Development, Matson: Okay, thank you.

Conference Operator: Thank you. And our next question comes from the line of Daniel Imbro from Stephens Inc. Your question please.

Daniel Imbro, Analyst, Stephens Inc.: Hey, good evening guys. Thanks for taking our questions.

Matt Topps, Chairman and Chief Executive Officer, Matson: Oh, sure. No problem.

Daniel Imbro, Analyst, Stephens Inc.: Matt, I want start a little higher level. Maybe just on the developments happening in Southeast Asia. I think last quarter, you talked about the Vietnamese service doubled pretty quickly. I’m sure it grew here further in 2Q. Just as you’re seeing the catchment basin develop, what kind of infrastructure investments are needed in those markets?

I guess, what does the path forward look like as we figure out whatever this post tariff or new tariff world is? And how Mattson can continue to maintain its leadership in that Southeast Asia part of the world?

Matt Topps, Chairman and Chief Executive Officer, Matson: Yeah, okay, it’s a good question. I think from us, in our approach to these markets, we’re really going to be first listening to our customers. Where are they going to be moving their production if their goal is to move a larger percent of their manufacturing capability out of China. And where are they going next? And then part of our strategy is we believe that over the long term in various countries, if we can have the fastest and most reliable services, not just from our main Shanghai destination and Ningbo, but from these other origins.

So we’re looking closely at working with feeder partners, those that have existing services or those that are willing to establish new services that have and can share. We’ll do a survey in each of these country origins. Who’s the fastest out of those services directly to the West Coast? And can we beat them? So we’re not going to our goal is not to become a generic average service offering in terms of days.

It’s really important for us to be fast. So once we’ve heard from our customers, once we’ve determined whether we can make a competitive origin transit, if we can find a new partner or the same partner in different markets that would give us that differentiated service, we’re gonna grow in those ways. The other thing I would note is, for example, in our Vietnam services, we do see cargo that moves over land from other locations like Cambodia into Vietnam. So it’s not just those that conserve, but those that are in close land proximity, including a cross border from those origins.

Omar Nokta, Analyst, Jefferies: So I think it’s going to be

Matt Topps, Chairman and Chief Executive Officer, Matson: a combination of those things, but long term, our strategy is to be most reliable and fast out of each of these origins as we evolve.

Daniel Imbro, Analyst, Stephens Inc.: Great. That’s helpful. And maybe for a follow-up, just a couple of financial thinking about the back half of the year. You mentioned to Jake’s question that SEFI has moderated here in the third quarter. I know you’re not going to guide, but directionally, would you expect your China rates to follow suit on a sequential basis?

And then Ocean operating margin in 2Q was stronger than expected. I know we’ll get the full expense detail on the 10 Q, but did you take any cost reduction actions during the quarter that should continue through the back half and into next year? Just trying to figure out what’s happening on the expense side there. Thanks.

Joel Winnie, Executive Vice President and Chief Financial Officer, Matson: Okay, Daniel. So on the expense question side, yes, we did take some actions early in April on the heels of the original tariff announcements, where we wanted to tighten our belt and took some G and A actions. And so therefore and those are still in place. We’d expect that to continue throughout the course of the year. So that was part of the reason of the operating margin that you noted for Q2.

The other part, of course, is it was year over year pricing was strong this year on a year over year basis compared to the full quarter last year. Because remember last year, rates are transfer rates really started moving up about halfway through the quarter and didn’t get to the higher levels till the latter part of the quarter. So those are the two impacts on the year over year on the second quarter. In terms of your question about guidance and the outlook for the Q3 and Q4, it’s really what Matt already reiterated. We feel like the domestic markets are hanging in there okay in the China market.

We’re experiencing overall lower freight rates and volumes. So, it’s going to be a more muted peak season. That’s baked into our thinking of that third quarter outlook that we provided.

Daniel Imbro, Analyst, Stephens Inc.: Great. I appreciate it. Best of luck, guys.

Omar Nokta, Analyst, Jefferies: Okay. Thank you.

Conference Operator: Thank you. And our next question comes from the line of Omar Nokta from Jefferies. Your question please.

Omar Nokta, Analyst, Jefferies: Thank you. Hi Matt and Joel. Good update. Obviously things have progressed quite a bit better than initially expected, at least relative to say three months ago. I did want to maybe just follow-up a little bit on how things are progressing here quarter over quarter.

I understand it’s a little too short term. But just maybe in general, there’s been a lot of volatility this year, especially in 2Q where things started slow, they ramped. You mentioned initially last quarter that April volumes were down 30% from China. They ended up being down 14.6%. Obviously, we know 3Q, as you said, is going to be lower on a year over year basis.

But given that you’re seeing so far a muted peak season, can we assume that the run rate volumes for China in this coming quarter are going to be somewhat similar to the run rate that we saw for the final two months of this past quarter?

Joel Winnie, Executive Vice President and Chief Financial Officer, Matson: Omar, it’s Joel. Yes, that’s a fair assumption. We do have a slightly different number of vessels in capacity this year versus last year. So there’s a little bit of each weekly departure capacity that we offer compared to last year. But the overall trend of what we’re calling this third quarter that we continue to see here in July is consistent with the last, call it, six weeks or so from mid May through June in terms of the demand that we’re seeing.

So, think that’s a fair way to look at it.

Omar Nokta, Analyst, Jefferies: Okay. Thanks, Joel. And you know, just in terms of I think you mentioned in the opening remarks, the Vietnam volumes have stepped up to 21% of the China figures in the second quarter. That’s up from 13%. Knowing it’s a bit difficult to give a really good projection.

I guess maybe just one, can you remind us what it was in 2Q last year? And any sense of how they’re progressing thus far this quarter?

Joel Winnie, Executive Vice President and Chief Financial Officer, Matson: Yes. So Matt will give some color on the Vietnam trends in general, Omar. But last year on a sequential basis, Vietnam volumes were high single digit kind of numbers. And we it was so it really were they were such a lower level that we were really commenting on them as we were growing that market. And then once we launched the second service, Nochiming, in early April of this year and two markets, and plus the dynamics with tariffs and everything else that happened at that time.

That’s why we started really giving you and the investment community more direct line of sight on what those volumes were.

Matt Topps, Chairman and Chief Executive Officer, Matson: And then, Omar, this is Matt. On a moving forward basis into Q3 and perhaps beyond, I think it’s our expectation that we will see kind of a similar low 20% ish mix of non China origins as we saw as we got towards the end of the second quarter. And you know, it’s interesting because and I expect that to continue. But as things normalize, I think there’s two factors that are going to define longer term, how much we’re sourcing in China versus other origins. I would say the longer term one is that it’s clear that our customers are going to continue to look for ways to de risk their sourcing from from China plus one to perhaps, you know, multi region or closer to end market around the world.

And that will inform I think a lot of their, their thinking over the longer term. But I would say in the medium term, I think what you’re going to look at is where are the relative differences between tariffs between countries. So the question is, if let’s just say Vietnam stays at 20% and The US or China ends up at 30%, both big ifs, there’s no model here. Is that 10% difference? I think that will be a factor in our customers minds about the advantages and disadvantages relative to one another.

So there’s sort of a while we do acknowledge and believe that there will be longer term movement out of China, we continue to believe China will be a powerhouse in terms of manufacturing capacity into the foreseeable future. And also acknowledge that more cargo is likely to be sourced from elsewhere. So I know those are partly conflicting, but that’s kind of what we think is going to happen.

Omar Nokta, Analyst, Jefferies: Okay, thank you. Thanks for that detail. And maybe just one final one for me. It’s perhaps just a bit big picture, but clearly, there’s a growing chorus of building shifts in The US and so far it seems to be a lot of talk and maybe at some point that starts to turn into physical ordering. You mentioned earlier in the call that you’ve got these three shifts, they’ll deliver here in a couple of years.

You don’t really need to do anything until the mid 2030s. Just maybe out of curiosity, it may be a bit early, are you getting a sense at all that you may need to lock up a slot sooner rather than later if there starts to really become a competition for the small number of shipyard slots available here?

Justin Schoenberg, Director of Investor Relations and Corporate Development, Matson: Yeah, I think at this

Matt Topps, Chairman and Chief Executive Officer, Matson: point, you make a couple of observations in your question, you know, Mattson supports the Trump administration’s efforts to try to renew and revive shipbuilding in The US. See those as different than Jones Act carriers in the past. Observed in previous decades. The cost of build in The US for international trades is still quite large. So the question would there be additional support in providing construction differential subsidies or other types of things to make US construction for international trades relatively comparable to whether it’s Korea or Japan or China as an alternative place to build.

That’s, I think, yet to be determined. But I think it’s way too early for us to be worried about trying to fill in a slot. You know, we we do our planning will likely, you know, two or three years before be looking at getting into a contract. Obviously, if those lead times look longer, that may accelerate our thinking. But at this point in time, we feel like we have plenty of time before we need to make any firm decisions in those regards.

Omar Nokta, Analyst, Jefferies: Okay, got it. Well, thank you. I appreciate it. I’ll turn it back.

Daniel Imbro, Analyst, Stephens Inc.: Okay, thanks Omar.

Conference Operator: Thank you. This does conclude the question and answer session of today’s program. I’d like to hand the program back to Matt Cox for any further remarks.

Matt Topps, Chairman and Chief Executive Officer, Matson: Okay, well thanks to everyone. I would just make one other remark before I wish everyone well for the next quarter. And it’s just to repeat a point I made before the Q and A session, which is that it is encouraging for us to see how well we’ve held up in a very dislocated market. It is to us clear that our customers have placed a lot of trust in us when they need to keep production lines moving. They need to keep items on the store shelves.

And, you know, we’re grateful for their trust in us and we expect that to continue. So with that, we look forward to catching up with everyone on next quarter’s call. Thank you.

Conference Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.