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Item 1A. Risk Factors

2024-02-23 compared with 2023-02-24 · 109 added, 95 removed, 209 unchanged (49% of the section changed)

The following material factors, events and uncertainties may make an investment in the Company speculative or risky and should be reviewed carefully.

The Company’s business faces the material risks set forth below;

however, these risk factors do not identify all risks the Company faces, and additional risks or uncertainties that are currently unknown or are not currently believed to be material may occur or become material.

The occurrence of these or the events and uncertainties described below may, in ways the Company may not be able to accurately predict, recognize or control, adversely affect the Company’s business, financial condition, operating results, cash flows, liquidity, demand, revenue, growth, prospects, reputation or stock price.

All forward-looking statements made by the Company or on the Company’s behalf are qualified by the risks described below.

The following material risks, events and uncertainties may make an investment in the Company speculative or risky and should be reviewed carefully.

The Company faces the material risks set forth below;

however, the description below does not purport to include all risks the Company faces, and additional risks or uncertainties that are currently unknown or are not currently believed to be material may occur or become material.

The occurrence of these or the risks and uncertainties described below may, in ways the Company may not be able to accurately predict, recognize or mitigate, adversely affect the Company’s business, competitive environment, strategy, financial condition, operating results, cash flows, liquidity, demand, revenue, growth, prospects, reputation or stock price.

All forward-looking statements made in this Form 10-K are qualified by the risks and uncertainties described below.

Risks Related to the Jones Act

Repeal, substantial amendment, or waiver of the Jones Act or its application would have an adverse effect on the Company’s business.

Repeal, substantial amendment, or waiver of the Jones Act or changes in its application would have an adverse effect on the Company’s business.

The Merchant Marine Act of 1920 (commonly referred to as the Jones Act) regulates all interstate and intrastate marine commerce within the U.S.

If the Jones Act were repealed, substantially amended or waived and, as a consequence, competitors were to enter the Hawaii or Alaska markets with lower operating costs by utilizing their ability to acquire and operate foreign-flagged and foreign-built vessels and/or being exempt from other U.S.

If the Jones Act were to be repealed, substantially amended or waived and, as a consequence, competitors were to enter the Hawaii or Alaska markets with lower operating costs by utilizing their ability to acquire and operate foreign-flagged and foreign-built vessels and/or being exempt from other U.S.

regulations, the Company’s business would be adversely affected.

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If maritime cabotage services were included in the General Agreement on Trade in Services, the United States-Mexico-Canada Agreement, or other international trade agreements, or if the restrictions contained in the Jones Act were otherwise altered, the shipping of cargo between covered U.S.

ports could be opened to foreign-flagged or foreign-built vessels and could have other adverse impacts to our business.

ports could be opened to foreign-flagged or foreign-built vessels, which could have other adverse impacts to our business.

The Company’s business would be adversely affected if the Company were determined not to be a U.S.

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citizen under the Jones Act.

Such an event could result in the Company’s ineligibility to engage in coastwise trade and the imposition of substantial penalties against it, including seizure or forfeiture of its vessels.

Such an event could result in the Company’s ineligibility to engage in coastwise trade and the imposition of substantial penalties against the Company, including seizure or forfeiture of its vessels.

Risks Related to the Company’s Operations

Changes in macroeconomic conditions, geopolitical developments, or governmental policies, including from the COVID-19 pandemic, have affected and could in the future affect the Company.

The transportation industry in which the Company operates has been impacted by fluctuations, volatility, downturns, inflation, recessions and other economic shifts or market instabilities, as well as the development of and changes in governmental policies and relations and geopolitical developments, across the jurisdictions in which it operates.

Changes in macroeconomic conditions, geopolitical developments, or governmental policies, including due to outbreaks of disease, have affected and could in the future affect the Company.

The transportation industry in which the Company operates has been and could in the future be impacted by macroeconomic fluctuations, volatility, downturns, inflation, recessions, rising interest rates and other economic shifts or market instabilities, including due to outbreaks of disease and instability in financial institutions, as well as the development of and changes in governmental policies, relations, priorities and budgeting constraints, and uncertainties resulting from the U.S.

political environment, including increased political polarization and the potential for political gridlock (such as the prospect of a shutdown of the U.S.

federal government), and geopolitical developments across the jurisdictions in which it operates.

For example, there have been increases in geopolitical and trade tensions among a number of the world’s major economies.

These tensions have resulted in the implementation of tariffs, non-tariff trade barriers and sanctions, including the use of export control restrictions and sanctions against certain countries and individual companies, which have, and may continue to have, an adverse economic impact in the markets in which the Company operates.

These adverse economic conditions may also impact customers’ business levels and needs.

Within the U.S., a weakening of economic drivers in Hawaii, Alaska and Guam, which include tourism, military spending, construction, personal income growth and employment, the weakening of consumer confidence, market demand, and the economy in the U.S.

Mainland, inflation, rising interest rates, recessionary fears and the effect of a change in the strength of the U.S.

dollar against other foreign currencies may reduce the demand for goods, adversely affecting inland and ocean transportation volumes or rates.

These adverse economic conditions may also impact the Company’s customers’ business levels and needs.

Mainland, inflation, rising interest rates, recessionary fears, increased political polarization and the potential for political gridlock (such as the prospect of a shutdown of the U.S.

federal government), and the effect of a change in the strength of the U.S.

dollar against other foreign currencies has reduced and could in the future reduce the demand for goods, adversely affecting inland and ocean transportation volumes or rates.

In addition, overcapacity in the global or transpacific ocean transportation markets, a change in the cost of goods or currency exchange rates, pressure from U.S.

or foreign governments, imposition of tariffs

and uncertainties regarding tariff rates or a change in international trade policies could adversely affect freight volumes and rates in the Company’s CLX and CLX+ services.

Fluctuations in the price of oil could further impact the Alaskan economy, which in turn could impact the Company’s business.

In addition, the global macroeconomic effects of the pandemic and related impacts on the Company’s customers’ business operations, including financial difficulties or bankruptcies, may persist for an indefinite period, even as the pandemic subsides.

As the COVID-19 pandemic subsides, supply and demand trends normalize, and supply chain congestion eases, the high volumes and rates the Company previously experienced in its China service have declined, but the Company cannot predict the size and duration of such decline.

These declines have reduced and are expected to continue to reduce revenues, but certain fixed costs remain.

For example, the Company cannot terminate leases early for chartered vessels in the CLX+ service absent a breach by vessel owners.

The Company’s operations may be further impacted if its employees, including mariners aboard our vessels, are otherwise restricted from or unable to perform their duties, the Company’s or SSAT’s terminals are temporarily closed, or there are outbreaks aboard the Company’s vessels that cause the Company to miss port calls, due to a COVID-19 outbreak.

Some vessel dry-dockings could also be delayed or become more expensive if shipyards are unable to accommodate demand or obtain parts in a timely manner or if necessary personnel are not allowed to travel to the shipyards.

As the COVID-19 pandemic reaches endemic stages, the future impact on the Company’s business, financial condition, operating results or cash flows remains difficult to predict at this time.

Additional or unforeseen effects from COVID-19, including resurgences or mutations of the virus and the actions taken in response to the virus, may give rise to additional risks or instigate or amplify the other risks described throughout these Risk Factors.

The shipping industry is competitive, and the Company has been impacted by new or increased competition.

The Company may face new competition by established or start-up shipping operators that enter the Company’s markets.

or foreign governments, imposition of tariffs and uncertainties regarding tariff rates or a change in international trade policies could adversely affect freight volumes and rates in the Company’s China services.

Additionally, fluctuations in the price of oil could further impact the Alaskan economy, which in turn could impact the Company’s business.

The shipping industry is competitive, and the Company has been and may continue to be impacted by new or increased competition.

The Company has faced and may continue to face new competition by established or start-up shipping operators that enter into the Company’s markets.

The shipping industry is competitive with limited barriers to entry, especially in international tradelanes.

Ocean carriers can shift vessels in and out of tradelanes or charter vessels to manage capacity and meet customer demands.

The entry of a new competitor or the addition of new vessels or capacity by existing competition on any of the Company’s routes could result in a significant increase in available shipping capacity that could have an adverse effect on the Company’s volumes and rates.

The loss of or damage to key customer or agent relationships may adversely affect the Company’s business.

The Company’s businesses are dependent on their relationships with customers and agents, and derive a significant portion of their revenues from the Company’s largest customers.

The Company also competes with air freight carriers some of which are able to offer more attractive schedules and services, or to increase capacity.

The entry of a new competitor or the addition of new vessels or capacity by existing competitors on any of the Company’s routes could result in a significant increase in available shipping capacity that could have an adverse effect on the Company’s volumes and rates.

The loss of or damage to key customer relationships may adversely affect the Company’s business.

The Company’s businesses are dependent on their relationships with customers and derive a significant portion of their revenues from the Company’s largest customers.

The Company’s business relies on its relationships with the U.S.

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The Company’s businesses are dependent upon key vendors who provide terminal, rail, truck, and ocean transportation services.

If the Company cannot secure sufficient transportation equipment, capacity or services from these third parties at reasonable prices or rates to meet its or its customers’ needs and schedules, customers may seek to have their

transportation and logistics needs met by others on a temporary or permanent basis.

If the Company cannot reliably secure sufficient transportation equipment, capacity or services from these third parties at reasonable prices or rates to meet its or its customers’ needs and schedules, customers may seek to have their transportation and logistics needs met by others on a temporary or permanent basis.

If this were to occur, the Company’s business, results of operations and financial condition could be adversely affected.

An increase in fuel prices, changes in the Company’s ability to collect fuel-related surcharges, and/or the cost or limited availability of required fuels on the U.S.

West Coast may adversely affect the Company’s profits.

Fuel is a significant operating expense for the Company’s Ocean Transportation business.

An increase in fuel prices, changes in the Company’s ability to collect fuel-related surcharges, and/or the cost or limited availability of required fuels may adversely affect the Company’s profits.

Fuel, including LNG fuels and biofuels, is a significant operating expense for the Company’s Ocean Transportation business.

The price and supply of fuel are unpredictable and fluctuate based on events beyond the Company’s control, including impacts from global macroeconomic conditions and geopolitical events.

Increases in the price of fuel may adversely affect the Company’s results of operations.

Increases in fuel costs also can lead to increases in other expenses, such as energy costs and costs to purchase outside transportation services.

In the Company’s Ocean Transportation and Logistics services segments, the Company utilizes fuel-related surcharges, although increases in the fuel-related surcharge may adversely affect the Company’s competitive position and may not correspond exactly with the timing of increases in fuel expense.

Any such increases also can lead to increases in other expenses, such as energy costs and costs to purchase outside transportation services.

In the Company’s Ocean Transportation and Logistics services segments, the Company utilizes fuel-related surcharges, although increases in the fuel-related surcharges may adversely affect the Company’s competitive position and may not correspond exactly with the timing of increases in fuel expense.

Changes in the Company’s ability to collect fuel-related surcharges, including recovery of all or most fuel-related expenses, also may adversely affect its results of operations.

Evolving stakeholder expectations related to environmental, social and governance (“ESG”) matters exposes the Company to heightened scrutiny, additional costs, operational challenges and a number of risks.

Investors, advisory firms, employees, customers, suppliers, governments and other stakeholders are increasingly focused on, and establishing expectations for, ESG matters and related corporate practices, disclosures and initiatives.

These evolving expectations may impact the Company’s reputation, business and attractiveness as an investment, employer or business partner to the extent the Company – including its initiatives, goals and reporting – meets or is perceived to meet those expectations, including as a result of any third-party rating or assessment.

The adoption and expansion of ESG-related legislation and regulation have also resulted and may again result in increased capital expenditures and compliance, operational and other costs to the Company.

The Company’s public disclosures on its climate, sustainability, human capital and other ESG initiatives include its goals or expectations with respect to those matters, including GHG emission reduction targets.

The Company’s initiatives and goals may not be favored by certain stakeholders and could impact the attraction and retention of investors, customers and employees, as well as the Company’s willingness to do business with other companies or customers or their willingness to do business with us.

Efforts to achieve the Company’s initiatives and goals face numerous risks and may be unsuccessful, result in additional costs or experience delays, and as a result may have an adverse impact on the Company, including its brand, reputation and stock price.

The development of alternative fuels (such as low- or carbon-neutral fuels), including the necessary infrastructure and technology to utilize such fuels, is still in early experimental stages.

There is significant uncertainty as to when, if at all, these alternative fuels will become commercially available or viable, and whether Matson will be able to utilize or have access to these alternative fuels (or any such alternative fuels developed in the future) in a timely and cost- effective manner.

In addition, advances in fuel technology could require Matson to incur significant capital costs to utilize any such technologies (including, for example, efforts to accelerate building of new vessels, retrofit existing vessels, retire

vessels early or make reserve vessels unusable) and Matson may be unable to equip its vessels with these technologies on a timely basis, if at all.

Evolving regulations and stakeholder expectations related to sustainability matters exposes the Company to heightened scrutiny, additional costs, operational challenges and a number of risks.

The SEC and other regulators, investors, advisory firms, employees, customers, suppliers, governments and other stakeholders are increasingly focused on and have established regulations and expectations related to sustainability matters and related corporate practices, disclosures and initiatives.

These evolving regulations and expectations may impact the Company’s reputation, business and attractiveness as an investment, employer or business partner to the extent the Company – including its initiatives, goals and reporting – fails to satisfy or is perceived to fail to satisfy those regulations and expectations, including as a result of any third-party rating or assessment.

The adoption and expansion of related legislation and regulations have also resulted and may again result in increased capital expenditures and compliance, operational and other costs to the Company.

For example, the state of California has adopted new climate change disclosure requirements.

Compliance with such rules could require significant effort and resources and result in changes to the Company’s current GHG emission reduction goals.

The Company’s public disclosures on its climate, sustainability, human capital and other initiatives include its goals or expectations with respect to those matters, including GHG emission reduction targets.

These disclosures are aspirational and based on standards and frameworks for presenting and measuring progress that are not harmonized and are still developing, assumptions that may change, disclosure controls and procedures that continue to evolve, and with respect to our GHG emissions targets, dependent in part on the industry’s successful and timely development of alternative fuels and technologies.

The Company’s use of disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others.

This may result in a lack of consistent or meaningful comparative data from period to period or between the Company and other companies in the same industry.

Efforts to achieve or accurately track the Company’s initiatives and goals face numerous risks and may be untimely, be unsuccessful, result in additional costs or experience delays, and as a result may have an adverse impact on the Company, including its brand, reputation, financial performance and growth and stock price, and may expose the Company to increased scrutiny from the investment community as well as enforcement authorities.

The Company may not be timely or successful in completing its fleet upgrade initiatives, which may result in significant costs and adversely impact the Company’s ability to meet its climate goals.

The Company’s four new Aloha and Kanaloa class vessels include dual fuel capable engines that can run on low sulfur fuel oil or LNG.

The Company has announced plans to install tanks, piping and cryogenic equipment on Daniel K.

Inouye and Kaimana Hila , and re-engine Manukai to operate on LNG.

The Company has completed the installation of tanks, piping and cryogenic equipment on Daniel K.

Inouye to operate on LNG;

begun re-engining Manukai ;

and announced plans for LNG installations on Kaimana Hila in 2024.

In addition, the Company has announced plans to construct three new LNG-ready Aloha Class vessels.

The Company anticipates making significant capital expenditures in connection with these fleet initiatives.

These initiatives may be hindered by substantial delays and long lead times for necessary equipment, including as a result of ongoing supply chain congestion, other residual impacts from the COVID-19 pandemic, increased demand across the industry for LNG installations and conversions, and new ship-building.

These initiatives may be hindered by substantial delays and long lead times for necessary equipment, including as a result of ongoing supply chain congestion, increased demand across the industry for LNG installations and conversions, and new ship-building.

Additional operating costs may be incurred to the extent additional ships are needed to maintain schedule integrity while such updates and installations are performed.

Once completed, operation of these vessels may be slowed to the extent they present new maintenance requirements or unforeseen complications.

Use of LNG fuel may not result in anticipated GHG emission reductions, and the Company’s investments in LNG-ready vessels, whether on their own or in addition to other Company initiatives, may be insufficient to meet the Company’s previously announced GHG emission reduction goals on a timely basis or at all.

The Company’s investments in LNG-ready vessels, whether on their own or in addition to other Company initiatives, may be insufficient to meet the Company’s previously announced GHG emission reduction goals on a timely basis or at all.

There is no guarantee that the Company will be able to secure LNG via bunker barges or other methods on the U.S.

West Coast or in China in sufficient amounts to fuel its vessels or at a reasonable cost, as increased demand for LNG could decrease available supply of LNG and

increase prices.

West Coast or in China in sufficient amounts to fuel its vessels or at a reasonable cost, as increased demand for LNG could decrease available supply of LNG and increase prices.

Governments have in the past and may again in the future impose tariffs on LNG that also may increase supply costs.

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Such a failure could happen for a variety of reasons, including but not limited to (i) delivery delays, (ii) delivery of vessels that fail to meet any of the required operating specifications (for example, capacity, fuel efficiency or speed), (iii) events in South Korea that prevent one or more significant subcontractors to Philly Shipyard from performing, (iv) loss of key personnel at either Philly Shipyard or any of its subcontractors, (v) work stoppages or other labor disruptions that may occur as a result of the failure of Philly Shipyard to negotiate collective bargaining agreements with its unions, or (vi) the insolvency of, or the refusal or inability to perform for any reason, by Philly Shipyard or any of its subcontractors.

Significant delays in the delivery of the new vessels could limit our ability to replace aging vessels in the Alaska service without substantial modifications, which could also have an adverse impact on our business plans, financial condition and results of operations.

Significant delays in the delivery of the new vessels could limit our ability to replace aging vessels in the Alaska service without substantial modifications and delay the Company’s ability to upsize the CLX service, which could also have an adverse impact on our business plans, financial condition and results of operations.

The Company’s operations are susceptible to weather, natural disasters, maritime accidents, spill events and other physical and operating risks, including those arising from climate change.

As a maritime transportation company, the Company’s operations are vulnerable to disruption as a result of weather, natural disasters and other climate-driven events, such as rising temperatures, sea levels and storm severity, bad weather at sea, hurricanes, typhoons, tsunamis, floods and earthquakes, as well as a maritime accident, oil or other spill, or other environmental mishap.

As a maritime transportation company, the Company’s operations are vulnerable to delay, disruptions and loss of life and property as a result of weather, natural disasters and other climate-driven events, such as rising temperatures and heat waves, rising sea levels, bad weather at sea (including increased storm severity), lightning strikes, wildfires, lava flows, hurricanes, typhoons, tsunamis, droughts, windstorms, floods and earthquakes.

Climate change has increased and may continue to increase the frequency, severity and uncertainty of such events.

Such events interfere with the Company’s ability to provide on-time scheduled service, resulting in increased expenses and potential loss of business associated with such events.

For example, sea level rise could potentially impact coastal and other low-lying areas, cause erosion of shorelines, higher water tables and increased flooding, which could damage the Company’s vessels, terminals or facilities.

In addition, the Company’s customers and the island communities it serves throughout the Pacific are particularly vulnerable to rising sea levels and severe storms, which may drive inhabitants away from these regions and reduce demand for the Company’s services in the affected areas and adversely impact our business.

The Company’s operations are also vulnerable to risks related to the operation of ocean- going vessels, including risks of potential marine accidents, or disasters, including grounding, fires, explosions, collisions, mechanical failures, human error, maintenance issues, latent defects, oil or other spill or environmental accidents, whale strikes, war, terrorism and piracy, lost or damaged cargo, delays, injury and loss of life.

These risks could be exacerbated by severe weather or other climate-driven events.

Changing macroeconomic and geopolitical conditions, including geopolitical conflict, may also result increased attacks on vessels, piracy or terrorism.

Such events could interfere with the Company’s ability to provide on-time scheduled service, require evacuation of personnel or stoppage of services or impact the Company’s customer’s operations, resulting in increased expenses and potential loss of business associated with such events.

In addition, severe weather and natural disasters can result in interference with the Company’s terminal operations and may cause serious damage to its vessels and cranes.

These impacts could be particularly acute in ports such as Dutch Harbor and Kodiak, Alaska where the Company is dependent on a single crane.

The Company’s vessels and their cargoes are also subject to operating risks such as mechanical failure, collisions and human error.

The Company’s vessels and their cargoes, terminals and other facilities are also subject to operating risks such as mechanical failure, collisions and human error.

The occurrence of any of these events may result in damage to or loss of terminals, port facilities and infrastructure, vessels, containers, cargo and other equipment, increased maintenance expense, loss of life or physical injury to its employees or people, pollution, or the slow down or suspension of operations.

These events can expose the Company to reputational harm and liability for resulting damages and possible penalties that, pursuant to typical maritime industry policies, it must pay and then seek reimbursement from its insurer.

Affected vessels may also be removed from service and thus would be unavailable for income-generating activity.

For example, damage to the Company’s vessels could require repair at a dry-docking facility.

The costs of repairs may be substantial which may adversely affect the Company’s business and financial condition.

Further, the Company may be unable to find space at a suitable dry-docking facility, the vessels may be forced to wait for space or be towed to a different facility, all of which could result in additional expenses and delays, and may adversely affect the Company’s business.

These events can also expose the Company to reputational harm and liability for resulting damages, including for loss of life and property, and possible penalties that, pursuant to typical maritime industry policies, it must pay and then seek reimbursement from its insurer.

Affected vessels may also be removed from service and thus would be unavailable for

income-generating activity.

Furthermore, the Port of Alaska requires upgrades to its port facilities and infrastructure to improve operational safety and efficiency, accommodate modern shipping operations and improve resiliency, as well as to mitigate the risk of failure due to corrosion or loss of load bearing capacity.

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This, in turn, could adversely affect transportation volumes or rates in Alaska and adversely impact the Company’s Ocean Transportation business and Span Alaska’s freight forwarding business, particularly given the Alaskan economy’s dependence on this port for ocean cargo.

There is no assurance that our efforts to mitigate the impact of these risks, including from severe weather or other climate-driven events on our operations, will be effective.

Although we take measures that we believe are reasonable to mitigate these risks, it is not practicable to eliminate such risks altogether.

The Company’s casualty and liability insurance policies are generally subject to large retentions and deductibles and may not cover all losses the Company may incur.

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The Company may be impacted by transitional and other risks arising from climate change and the global shift toward a low carbon future.

Organizational, industrial and governmental shifts in operations as well as legal and regulatory requirements to reduce or eliminate emissions and/or increase efficiency may require the Company to increase expenditures, make changes to existing infrastructure, vessels and equipment and shift its business model.

For example, the maritime industry is moving toward deployment of clean energy technologies and use of electricity powered by renewable energy sources to power terminal operations as a way to reduce shoreside GHG emissions.

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If these outcomes were to occur, the Company’s business, results of operations, cash flows and financial condition could be adversely affected.

The Company faces risks related to actual or threatened health epidemics, pandemics or other major health crises, such as the COVID-19 pandemic, which could significantly disrupt the Company’s business.

The Company’s business could be impacted adversely by the effects of public health epidemics, pandemics or other major heath crises (which the Company refers to collectively as public health crises).

The Company faces risks related to actual or threatened health epidemics, outbreaks of disease, pandemics or other major health crises, which could significantly disrupt the Company’s business.

The Company’s business could be impacted adversely by outbreaks of disease, the effects of public health epidemics, pandemics or other major heath crises (which the Company refers to collectively as public health crises).

Actual or threatened public health crises may have a number of adverse impacts, including volatility in the global economy, impacts to the Company’s customers’ business operations, reduced tourism in the markets the Company serves, potential restrictions on employee travel, or significant disruptions in ocean-borne transportation of goods, logistics demand and supply chain activity, caused by a variety of factors such as quarantines, factory and office closures, port closures, or other government-imposed restrictions, any of which could adversely impact the Company’s business, financial condition, operating results and cash flows.

The Company’s significant operating agreements and leases could be replaced on less favorable terms or may not be replaced on acceptable terms.

The significant operating agreements and leases entered into by the Company in its businesses, including those related to terminals, chartered vessels and warehouses as well as those with SSAT, expire at various points in time and may not be replaced with comparable assets with the specifications necessary for the Company’s or SSAT’s businesses or could be replaced on less favorable terms, thereby adversely affecting the Company’s future financial position, results of operations and cash flows.

In addition, the Company’s business and operations has in the past, and could in the future, be impacted by outbreaks of disease, such as the COVID-19 pandemic.

For instance, during the height of the COVID-19 pandemic, the Company’s operations faced risks from employees potentially being restricted from or unable to perform their duties, the Company’s or SSAT’s terminals potentially being temporarily closed, or potential outbreaks aboard the Company’s vessels that could cause the Company to miss port calls.

As the COVID-19

pandemic subsided, supply and demand trends have normalized and the high volumes and rates the Company previously experienced in its China service have declined, however, certain fixed costs remain.

Additionally, the global macroeconomic effects of the COVID-19 pandemic and related impacts on the Company’s customers’ business operations, including financial difficulties or bankruptcies, may continue to persist for an indefinite period.

The Company’s significant operating agreements and leases could be renewed/replaced on less favorable terms or may not be renewed/replaced on acceptable terms, if at all.

The significant operating agreements and leases entered into by the Company in the course of its operations, including those related to terminals, chartered vessels and warehouses as well as those with SSAT, expire at various points in time and may not be renewed/replaced with comparable assets with the specifications necessary for the Company’s or SSAT’s businesses or could be renewed/replaced on less favorable terms, if at all, thereby adversely affecting the Company’s future financial position, results of operations and cash flows.

The Company may face unexpected dry-docking or repair costs for its vessels.

The Company routinely engage shipyards to dry-dock its vessels for regulatory compliance and to provide repair and maintenance.

The Company routinely engages shipyards to dry-dock its vessels for regulatory compliance and to provide repair and maintenance.

Vessels may also have to be dry-docked or repaired at sea in the event of accidents or other unforeseen damage.

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The Company also operates a number of older active and reserve vessels that may require more frequent and extensive maintenance.

The cost of repairs is difficult to predict with certainty and can be substantial.

In addition, the time when a vessel is out of service for maintenance is determined by a number of factors, including regulatory deadlines, market conditions, shipyard availability and customer requirements, and accordingly, the length of time that a vessel may be out of service may be longer than anticipated, which could adversely affect the Company’s business, financial condition, results of operations and cash flows.

The cost of repairs is difficult to predict and can be substantial.

In addition, the time when a vessel is out of service for maintenance is determined by a number of factors, including regulatory deadlines, market conditions, shipyard availability, shipyard location, availability of employees and repairmen, and customer requirements, and accordingly, the length of time that a vessel may be out of service may be longer than anticipated, which could adversely affect the Company’s business, financial condition, results of operations and cash flows.

The timing and expense required for repairs could be exacerbated by compliance with MARAD requirements.

The Company is involved in a joint venture and is subject to risks associated with joint venture relationships.

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● Dynamics involving U.S.

trade relations with other countries, including the imposition of or uncertainty associated with the level of tariffs, non-tariff trade barriers or sanctions, including the use of export control restrictions and sanctions against certain countries and individual companies, or other governmental actions.

● Customer preferences to diversify supply chains away from, or otherwise limit sourcing from, certain countries.

The Company’s terminals in Hawaii and Alaska require modernization.

The Company has completed the first phase of renovating and modernizing its Sand Island terminal in Honolulu Harbor.

Significant additional upgrades and projects remain.

The Company is also continuing discussions with state and local authorities regarding a port modernization program for the Port of Alaska.

Significant upgrades to the terminal and port facilities are needed to improve operational safety and efficiency, accommodate modern shipping operations, and improve resiliency.

However, significant upgrades remain, including projects to improve resiliency, including to risks due to severe weather events, natural disasters, sea level rise and climate- change related risks.

The Company is continuing discussions with state and local authorities regarding a port modernization program for the Port of Alaska.

Significant upgrades to the terminal and port facilities at the Port of Alaska are needed to improve operational safety and efficiency, accommodate modern shipping operations, and improve resiliency, including to risks due to severe weather events, natural disasters and climate-change related risks.

For example, the aging docks of the port are increasingly exposed to the risk of failure due to corrosion and the loss of load-bearing capacity particularly in the event of extreme seismic events or other natural disasters.

Regulatory, construction or other delays or cost overruns related to the expansion and modernization of the terminals could have an adverse impact on the Company’s business plans, financial condition and results of operations.

In addition, the terminal modernization programs may not result in improved operational productivity or generate expected returns.

In addition, the terminal modernization programs may not result in improved operational productivity or improved resiliency to severe weather events, extreme seismic events or other natural disasters or generate expected returns.

Heightened security measures, war, actual or threatened terrorist attacks, efforts to combat terrorism and other acts of violence may adversely impact the Company’s operations and profitability.

War, including the war in Ukraine, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawaii, Guam or Alaska, thereby adversely affecting those economies and the Company.

War, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawaii, Guam or Alaska, thereby adversely affecting those economies and the Company.

Wars or terrorism could impact global supply chains due to changes in vessel routing, product sourcing decisions, or governmental sanctions or restrictions.

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Acts of war or terrorism may also be directed at the Company’s shipping operations or may cause the U.S.

government to take control of Matson’s vessels for military operation.

government to take control of Matson’s vessels for military operations.

Heightened security measures, including customs inspections and related procedures in countries of origin and destination, potentially slow the movement and increase the cost of freight through U.S.

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There is no assurance that the Company will be successful in identifying, negotiating, or consummating any future acquisitions.

Even if suitable candidates are identified, such transactions may result in difficulties in assimilating acquired assets or companies, and may result in the diversion of the Company’s capital and its management attention from other business issues and opportunities.

Even if suitable candidates are identified, such transactions may result in regulatory scrutiny, litigation and difficulties in assimilating acquired assets or companies, and may result in the diversion of the Company’s capital and its management attention from other business issues and opportunities.

The Company may not be able to integrate companies that it acquires successfully, including their personnel, financial systems, distribution, operations and general operating procedures.

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Furthermore, the Company relies on the services of third parties, including SSAT, which employ persons covered by collective bargaining agreements.

For additional information on collective bargaining agreements with unions, see Item 1.C.

Employees and Labor Relations of Part I of this Annual Report.

The Company has been adversely affected by actions taken by employees of the Company or other companies in related industries against efforts by management of the Company or other companies to control labor costs, restrain wage or benefit increases or modify work practices.

For additional information on collective bargaining agreements with unions, see Part I, Item 1, Subheading C.

Employees and Labor Relations of this Annual Report.

Previously, the Company has been adversely affected by actions taken by employees of the Company or other companies in related industries against efforts by management of the Company or other companies to control labor costs, restrain wage or benefit increases or modify work practices.

In the past, strikes, slow-downs and disruptions have occurred as a result of the failure of Matson or other companies in its industry to negotiate collective bargaining agreements with such unions successfully.

Matson and SSAT are members of the PMA, which on behalf of its members negotiates collective bargaining agreements with the ILWU on the U.S.

The PMA/ILWU collective bargaining agreements that cover substantially all U.S.

West Coast longshore labor expired on July 1, 2022.

These collective bargaining agreements are being negotiated, but if such agreements are not renewed, Matson and SSAT could be subject to future slow-downs, strikes, lock-outs or other disruptions that may adversely impact Matson’s or SSAT’s operations.

In addition, any slow-downs, strikes, lock-outs or other disruptions, including limits on the availability of labor through trade union hiring halls, have had and in the future, particularly in years when collective bargaining agreements are being negotiated, could have an adverse impact on Matson’s or SSAT’s operations.

Loss of the Company’s key personnel or failure to adequately manage human capital could adversely affect its business.

The Company’s future success will depend, in significant part, upon the continued services of its key personnel and skilled employees, including its senior management, as well as key personnel at its joint venture partners.

The Company’s future success depends, in significant part, upon the continued services of its key personnel and skilled employees, including its senior management, as well as key personnel at its joint venture partners.

The permanent or temporary loss of the services of key personnel could adversely affect the Company’s future operating results because of such employees’ experience with and knowledge of the Company’s business and customer relationships.

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In the past, disruptions in the Company’s third-party service providers have impacted the Company’s operations, including the Company’s ability to book and manage freight, stow vessels, and process customs declarations.

In the past, some of the Company’s employees worked from home or remotely, increasing the Company’s dependence on its information technology systems and third-party providers during those times.

If the Company’s information technology and communications systems experience reliability issues, integration or compatibility concerns or if the Company’s third-party providers are unable to perform effectively or experience disruptions or failures, there could be an adverse impact on the availability and functioning of the Company’s information technology and communications systems, which could lead to business disruption or inefficiencies, reputational harm or loss of customers.

Some of the Company’s employees work from home or remotely, increasing the Company’s dependence on its information technology systems and third-party providers during those times.

If the Company’s information technology and communications systems experience reliability issues, integration or compatibility concerns or if the Company’s third-party providers are unable to perform effectively or experience disruptions, cyber attacks or failures, there could be an adverse impact on the availability and functioning of the Company’s information technology and communications systems, which could lead to business disruption or inefficiencies, reputational harm or loss of customers.

The Company’s information technology systems have in the past and may in the future be exposed to cybersecurity risks and other disruptions that could impair the Company’s ability to operate and adversely affect its business.

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The Company also collects, stores and transmits sensitive data, including its proprietary business information and that of its customers, and personally identifiable information of its customers and employees.

Despite the Company’s continuous efforts to make investments in the Company’s information technology systems and system-wide data security program, the implementation of security measures to protect the Company’s data and infrastructure against breaches and other cyber threats, and the Company’s use of internal processes and controls designed to protect the security and availability of the Company’s systems, the Company has in the past experienced and may in the future experience cybersecurity incidents, such as computer viruses, hacking, malware, denial of service attacks, cyber terrorism, ransomware, circumvention of security systems, malfeasance, breaches due to employee error, natural disasters, telecommunications failure, or other catastrophic events at the Company’s facilities, aboard its vessels or at third-party locations.

The Company’s practices, policies and other efforts, including as described in Part I, Item 1C of this Annual Report on Form 10-K, may not be sufficient to prevent, detect or remediate all cybersecurity risks or other disruptions, and the Company and its service providers have in the past experienced and may in the future experience cybersecurity incidents, disruptions, threats and vulnerabilities such as malware (including computer viruses and ransomware), software bugs, denial-of-service (“DoS”) attacks, phishing, spoofing, identity-based attacks, code injection attacks, cyber terrorism, sabotage, circumvention of security systems (whether physical or virtual), malfeasance, breaches due to employee error, natural disasters, accidents, power disruptions or loss, telecommunications failure, unauthorized access or other catastrophic events or failures at the Company’s facilities, aboard its vessels or at third-party locations.

Any failure, breach or unauthorized access to the Company’s systems or those of third parties on which the Company relies could result in the loss of confidential, sensitive or proprietary information, interruptions in its service or production or otherwise impact the Company’s ability to conduct business operations, and could result in potential reductions in revenue and profits, damage to its reputation or liability.

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Floating rate debt creates higher debt service requirements if market interest rates increase, as has been the case in connection with the U.S.

Federal Reserve’s interest rate increases in 2022, which could adversely affect the Company’s cash flow and results of operations.

Federal Reserve’s interest rate increases in 2022 and 2023, which could adversely affect the Company’s cash flow and results of operations.

Disruptions to the credit markets as a result of macroeconomic, geopolitical, or financial market developments could increase the Company’s cost of capital and limit the Company’s access to capital.

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management of storm water;

the transportation, handling and disposal of solid and hazardous materials, oil and oil related products, hazardous substances and wastes;

the investigation and remediation of contamination;

the storage, transportation, handling, emission and disposal of solid and hazardous materials, oil and oil related products, hazardous substances and wastes;

the investigation and remediation of contamination and liability for damages to the environment;

health, safety and the protection of the environment and natural resources;

and climate change, including any regulations, mandates or restrictions related to GHG emissions, such as a “cap and trade” system of allowances and credits, and energy use.

Any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that results in more stringent requirements

than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on the Company’s ability to operate.

and climate change, including any regulations, mandates or restrictions related to GHG emissions, such as a potential carbon tax, and energy use.

Any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that results in more stringent requirements than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on the Company’s ability to operate.

Mitigation strategies or contingency plans to remain in compliance with applicable laws and regulations may be unsuccessful, result in additional costs or experience delays.

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The EPA also requires vessels to obtain coverage under a general permit and to comply with inspection, monitoring, discharge, recordkeeping and reporting requirements.

These laws and regulations provide for substantial fines, as well as criminal and civil penalties, in the event of any violations of, or non-compliance with, their requirements (including any waivers, permits or recordkeeping and other reporting requirements).

These laws and regulations provide for substantial fines, sanctions, as well as criminal and civil penalties and significant environmental liabilities, in the event of any violations of, or non-compliance with, their requirements (including any waivers, permits or recordkeeping and other reporting requirements).

Any vessel-generated pollution from incidents in U.S.

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The Company is subject to, and may in the future be subject to, disputes, legal or other proceedings, and government inquiries or investigations that could have an adverse effect on the Company.

The nature of the Company’s business exposes it to the potential for disputes, legal or other proceedings, and government inquiries or investigations relating to antitrust matters, labor and employment matters, personal injury and property damage, environmental, shore power and other matters, as discussed in the other risk factors disclosed in this section or in other Company filings with the SEC.

The nature of the Company’s business exposes it to the potential for disputes, legal or other proceedings, and government inquiries or investigations relating to antitrust matters, labor and employment matters, personal injury, loss of life and property damage, environmental, shore power and other matters, as discussed in the other risk factors disclosed in this section or in other Company filings with the SEC.

For example, Matson is a common carrier, whose tariffs, rates, rules and practices in dealing with its customers are governed by extensive and complex foreign, federal, state and local regulations, which may be the subject of disputes or administrative or judicial proceedings.

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The Company may incur losses related to such assumed Hawaii liabilities and obligations.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors