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The Honolulu Advertiser
Posted on: Tuesday, April 29, 2008

CARGO CRISIS
Hawaii bakery ships interisland via L.A.

Video: Love's Bakery goes with Delta
Photo gallery: Aloha cargo service ends
Photo gallery: Love's deals without Aloha cargo

By Greg Wiles
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Love's Bakery worker Roque Topetoc readies bread for shipment to the Neighbor Islands. The bakery used to depend on Aloha for that service.

ANDREW SHIMABUKU | The Honolulu Advertiser

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Love's Bakery, thrown into a tailspin by the sudden shutdown of Aloha Airlines' cargo unit, is going the distance to make sure its customers on the Big Island and Kaua'i get their baked goods.

After learning that Aloha wouldn't be flying cargo last night and not having other options for interisland cargo flights, Love's made arrangements with Surefire Consulting to ship the baked goods on flights to Los Angeles where they could be loaded back on to other commercial passenger planes headed directly to Neighbor Island airports.

"They (Aloha) just left us high and dry," said Mike Walters, president of Love's Bakery, the biggest customer of the cargo operation.

"This came as a complete surprise to us because we were assured for the last month that they had a contingency plan."

Walters wasn't the only one scrambling yesterday after word began filtering around Honolulu that Aloha, the state's biggest air cargo carrier, was shutting down immediately after unsuccessful attempts to sell the freight business in bankruptcy proceedings.

Shippers yesterday bemoaned being blindsided by the unexpected shuttering as they worked to put contingency plans in place. Aloha's six cargo aircraft carried an estimated 85 percent of non-postal service air cargo shipments, typically ferrying time-sensitive goods back and forth between Honolulu and the Neighbor Islands.

Love's was Aloha's biggest customer, shipping an average of 36,000 pounds of baked goods daily. Aloha also carried the bulk of mail sent between the Big Island, Maui and Honolulu. Another smaller carrier also delivers mail, including to Kaua'i. Late yesterday the U.S. Postal Service said it was hoping to put its emergency plans into place seamlessly so that customers would not notice a service disruption.

Aloha's problems with the sale of the cargo division had been well known and players within the business had met with the state Airports Division as recently as a week and a half ago to discuss possible scenarios if Aloha stopped flying, said Brian Suzuki, president of Hawaii Air Cargo, the largest Hawai'i-based air freight forwarder.

He said carriers such as Pacific Air Cargo, Trans Air Cargo, and Kamaka Air were polled on their ability to bring in extra aircraft and crews, while others talked about how they could use the Hawaii Superferry to ship goods between Maui and O'ahu. Suzuki said while Hawaiian Airlines is being eyed as a possible solution, its Boeing 717 passenger jets can only carry a limited amount of freight and shippers need to pass a security check.

Hawaiian is also operating a larger Boeing 767 for Maui flights, but it is unknown how long the carrier will continue to schedule that flight and its added cargo capacity, Suzuki said.

CONTINGENCY PLANS

The other local air cargo airlines indicated they could increase service but that filling the void left by Aloha may take weeks, Suzuki said. He said yesterday Hawaiian Airlines stopped accepting cargo before 7 p.m. and that he was wondering what to do with a 300-pound pallet of freight for the Big Island.

Among his ideas was a solution similar to Love's — sending the shipment to the West Coast on United Airlines where it could be loaded onto the carrier's flight to Kona. He already had begun getting some Mainland shipments destined for the Neighbor Islands flown directly there.

Suzuki said a trucking company was making plans to start shipping four 40-foot containers each day on the Superferry and pledging to have Maui deliveries done on a same-day basis.

While there was much focus on Honolulu shippers getting cargo to Neighbor Island customers, there also were questions about how Hawai'i's cut flower and ornamental plants business would fare with shipments into O'ahu. Similarly, Neighbor Island growers of fruits and vegetables availed themselves of Aloha's overnight flights to get their produce to Honolulu.

In 2006, 47,000 tons of non-mail air cargo was transported from Honolulu to the Neighbor Islands and 22,000 tons from the Neighbor Islands to Honolulu, according to the latest state statistics. In terms of mail, there was 16,500 tons sent to the Neighbor Islands, and 2,200 sent to Honolulu.

"The main concern now is the flowers," said Art Angel of Angel Freight Hawaii, who said he wasn't having any problems with the shutdown, having switched his shipments to Hawaiian Airlines several weeks ago. "You can't ship it on Young Brothers."

LOOKING AHEAD

Watanabe Floral, one of the state's bigger floral businesses, said it uses Hawaiian for shipments of roses from its Big Island farm. But the company is concerned that as Aloha's shutdown reverberates, Hawaiian's space will be in great demand. This also comes near the start of May, which is a big month for the business.

"We may not be able to bring over everything we want to," said Monty Pereira, Watanabe sales and marketing director. "We are concerned."

He said the company had people working the telephones yesterday trying to make sure it can secure freight space.

"We're hopeful, yet very cautious on what may happen."

Others had the foresight like Angel to move away from Aloha even though they were longtime freight customers. At Big Island-based Pacific Floral Exchange, that meant putting more shipments on to direct flights to the Mainland, even if it entailed trucking the flowers to Kona so they could be sent out.

"It's nothing I wanted to do," said Mike Inouye, Pacific Floral sales manager. But, "I didn't want to be caught holding the bag."

Inouye, who ships about 10,000 pounds of flowers and plants weekly, said he needs to get products to customers within two days, whether that be in Honolulu or somewhere on the Mainland. Therefore, using interisland barge service provided by Young Brothers Ltd. wouldn't suffice, he said.

EYEING ALL OPTIONS

Love's has been looking at Young Brothers for its Big Island and Kaua'i shipments as part of its contingency planning. It had begun shipping its goods to Maui on the Superferry on Sunday.

But it is now having to come up with and accelerate other plans after being blindsided by Aloha, Walters said.

He said the company already was considering freezing baked goods and using Young Brothers for those Neighbor Island markets because the fuel surcharges on Aloha were getting too high. Walters said he and his staff were planning to brainstorm through the night at Love's Middle Street facility to come up with ideas for the shipments. Neighbor Island goods are roughly one-third of what it produces daily.

"We will entertain anything to take care of our customers," said Walters, who has been in the bakery business for 36 years.

"I've dealt with a lot of strike situations, I've been sent to 10 different states to help out with strikes, but nothing as catastrophic as this."

Advertiser reporter Curtis Lum contributed to this report.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.