When mainland logistics teams start doing business in Hawaii, it can be easy to underestimate how challenging it will be. The lane has a lot of potential — it’s estimated that more than 90% of all goods consumed in Hawaii are imported from the mainland. At the outset, shippers may see Hawaiian shipping as an extension of their mainland operations, to which they can apply the same strategies and the same playbook. These assumptions quickly receive a reality check.

Jones Act regulations, limited carrier options, capacity constraints, inter-island transfers and price rigidity all make Hawaii a challenging edge case for shippers that requires bespoke strategies and careful thinking.

Building an effective shipping strategy for Hawaii is a moving target. The landscape is shaped by a complex lattice of variables. Success in this environment requires real-time visibility, strong carrier relationships and a strategy that balances cost, reliability and flexibility.

Though Hawaii presents exceptional complexity, it serves as a valuable stress test for global shippers. With its tight regulatory environment, evolving infrastructure and exposure to climate shocks, Hawaii reflects the kind of unpredictable, high-cost market that growing numbers of shippers are facing every day. Successfully navigating this environment requires not just operational discipline, but also agility, strong local partnerships and resilient supply chain design.

Imagine shipping to Hawaii as an obstacle course. Every hurdle introduces strain and slows momentum. To succeed in Hawaii, shippers need a clear map and strategy for navigating each of the following challenges:

The Jones Act and a two-player carrier market. The Merchant Marine Act of 1920 requires that goods transported between U.S. ports be carried on ships that are built in America, and owned and crewed by Americans.

This law is meant to protect the domestic maritime industry, but it carries additional considerations for shippers. In the case of shipping to non-contiguous U.S. states like Hawaii, the Jones Act limits the pool of eligible carriers to capital-intensive players that can meet the Act’s criteria. For Hawaii, the options are Matson and Pasha Hawaii. With a two-player market, ocean rates are less flexible, requiring shippers to find other ways in their supply chain to negotiate lower costs.

A second layer of pricing. Once goods arrive in Honolulu, this marks the start of the real complexity. Hawaii comprises eight main islands, and shipping between them depends on regulated barge carriers who routinely request rate hikes from the Hawaii Public Utilities Commission — and these hikes are often approved.

Understanding and negotiating with these inter-island carriers introduces another layer of cost complexity that shippers must understand and attend to.

Negotiating the final mile. Drayage is another complication. With mainland shipping, final-mile pricing is dynamic and generally set by competition in the market. In Hawaii, the state fixes drayage prices, which are updated annually. This state-set pricing model creates additional constraints for shippers trying to get goods over the hump of the final mile.

These constraints become especially intense during peak periods. When demand chokes existing carrier capacity, a typical response is to raise rates, which then attracts additional carriers. Fixed drayage prices make this impossible in Hawaii, once again calling for additional creativity and bespoke strategy on the part of shippers.

These are just a few examples of the constraints under which shippers work to bring much-needed goods from the mainland into Hawaii. To thrive under these constraints, shippers need a playbook designed specifically for them — or they need to partner with a logistics provider that has thought them through.

It takes profound creativity to navigate this lane effectively. Strategies to reduce friction have to go well beyond superficial cost-cutting tactics. Instead, shippers need to rethink the foundational elements of their supply chains, optimize for efficiency at every possible point, and search carefully for partners that can work within the constraints.

While every supply chain is different, a strong Hawaii playbook will feature at least a couple of the following strategies.

Negotiating with two carriers. Shippers first need to account for the smaller carrier pool caused by the Jones Act. Some may find it useful to limit themselves to a single carrier to simplify their supply chain. Others find it more advantageous to work with both, comparing possibilities at every turn and avoiding over-reliance on a single option.

In either case, shippers should prioritize building strong partnerships with maritime carriers, working closely with them on volume commitments, long-term contracts, forecasting and scheduling.

Owning infrastructure. In addition to building good relationships with existing carriers (from maritime shipping to the final mile), another way of limiting obstacles is to own some shipping infrastructure. In Hawaii, these opportunities are most readily available for drayage trucking and warehousing.

Though capital-intensive on the front end, owning infrastructure can cut costs across the board. The control it affords is also helpful for ensuring visibility and a high level of customer satisfaction at every stage of the supply chain. This control is particularly useful if you’re shipping specialized freight. Cold-chain shipping, for example, is extremely complicated in Hawaii, subject to climate concerns as well as intense regulation. Owning your cold chain (or finding a partner that does) is one way to reduce the complexity and make shipping more manageable.

Prioritizing trust. The strategic considerations of negotiation and owning infrastructure are important. Ultimately, however, what’s more important is building trust with the local people. Hawaiian culture, including business culture, values deeply rooted personal relationships. In building this trust, there are no shortcuts.

Trust from the Hawaiians hinges on a demonstrated commitment that while your company is a business with prerogatives, it’s also genuinely interested in supporting the islands — their local economies and way of life. Hawaiians won’t do business with companies they consider exploitative or uncaring about the islands’ prosperity, nor should they. 

How can your company show this commitment to the islands? The answer has many moving parts. At heart, it’s about ensuring that every touchpoint between your company and the local population is positive, building a sense of mutual support and shared interest. Practically, this could include employing Hawaiians to help manage your supply chain. It also means taking sustainability extremely seriously. If you’re partnering with a logistics provider, you want to carefully vet their operations and reputation. They should be known among the Hawaiians as excellent solutions providers who care about the islands—not just about logistics.

To succeed in the Hawaiian lane, shippers need to avoid critical mistakes. They can’t underestimate complexity, and they can’t forget about the importance of trust. Hawaii’s combination of geographic isolation, regulatory complexity, cultural history and high shipping needs make it one of the most complex lanes in U.S. logistics. This complexity, however, shouldn’t cause shippers to avoid the lane entirely.

With disruptions and increasingly complex regulations unfolding across the global supply chain, success in Hawaii becomes even more telling. If you can navigate the lane, chances are you’re building a logistics team that’s ready for whatever the world throws at it next.Gerald Hofmann is president of the Integrated Marine Logistics division of Odyssey Logistics.