Conveyer belts (inside roofed tunnel) transported sugar to Kahului Terminal.

AN EMPLOYEE CONTRIBUTED NEWSLETTER FEBRUARY 2017

MATSON’S GREEN ISSUE

INSIDE THIS ISSUE• Advanced Ballast Water Technology• Mushing With Purpose• Catch, Release and Recycle• Going Green in Alaska• Royal Hawaiian Celebrates 90 Years of Luxury

Aloha HC&S – Hawaii’s Last Sugar Plantation

On Friday, December 16, 2016, the last link in a 181-year-old chain that tethered Hawaii to the sugar

industry was broken when Hawaiian Commercial & Sugar Company (HC&S), a 145-year operation headquartered in Puunene, Maui and the last operating sugar plantation in the Islands, loaded its final sugar harvest aboard the Moku Pahu for shipment to the mainland.

Sugar cane was first brought to the Islands by Polynesian wayfarers 13 centuries ago as one of the ‘canoe crops.’ However, the first large scale sugar operations in the Islands did not begin until the 1820s on Maui, in the Wailuku and Waikapu areas. Commercial sugar cultivation began on Kauai in 1835 with the founding of the Old Sugar Mill of Koloa, processing cane that was grown nearby. The first export of Hawaiian sugar and molasses was in 1837, and for nearly two centuries sugar production became intrinsically tied to the Islands.

The importance of sugar to the Islands cannot be overstated. The sugar compa-nies were not only some of Matson’s most important customers for more than a century, the crop also played a significant role in our history and the establishment of Matson’s long-standing relationship with Hawaii. Hawaii’s diverse ethnic cul-ture, its economy and future were built on

the foundations of those first sugar fields and mills which, over the next 181 years, would feed, clothe, educate, train and employ generations of residents.

Matson Navigation entered the sugar shipping trade in April of 1882. When Capt. William Matson made his first re-turn trip from Hilo to the mainland aboard the Emma Claudina her cargo included 337 tons of sugar from the Waiakea Sugar Mill, and 66 barrels of molasses. Since that first voyage and for the next 134 years, sugar was a staple of Matson’s eastbound haul, at first carrying the product in sacks and eventually switching to a bulk cargo sys-tem like the integrated tug & barge vessel Moku Pahu, which Matson operated from 1993 to 2015.

Alexander & Baldwin, Inc.’s Hawaiian Commercial & Sugar Company, known in the Islands as HC&S, was established in 1870 when partners Samuel Alexander and Henry Baldwin planted their first

In the early days, sugar was transported to mills via mining carts. HC&S continued on page 2

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HC&S continued from page 1

sugarcane crop on 571 acres in Upcountry Maui. A&B also operated sugar planta-tions for decades on Kauai and, briefly, on Oahu. Having absorbed 21 other sugar plantations by 1948, A&B’s Maui agri-cultural endeavor, grew to be the largest, most productive sugar plantation in the Islands, at 36,000 acres. At its peak, HC&S operated two mills (Paia and Puunene) and employed thousands.

For 60 years, Matson and HC&S shared a parent company (A&B) which would invest in both Matson’s vessels and terminals while also investing in HC&S’s field and factory modernization.

Matson thanks not only HC&S, but the entire sugar industry of Hawaii, for a successful 134-year partnership, and for its nearly 200-year contribution to the Islands and its people. In honoring this long-standing relationship, Matson last month donated $100,000 to the A Hui Hou Fund, a community-based organiza-tion partnered with Maui United Way, that was created to provide emergency relief assistance to workers being laid off as a result of the closure of HC&S.

“Matson’s roots in Hawaii began in the 1880’s with Captain William Matson’s vessels shipping plantation supplies to Hawaii and raw sugar to the US mainland. Our company worked closely with HC&S for more than 60 years,” said Matt Cox, CEO of Matson and president of the Matson Foundation. “All of us at Matson have a deep respect for the workers of HC&S, many of whom represent gener-ations of families who helped build the community on Maui and an industry that shaped Hawaii as we know it.”

The end of an era: molasses pipes capped after last delivery at Kahului Terminal. Recent aerial shot of HC&S.

L-r: Makana Rosete, A Hui Hou Fund committee (AHHF); Laks Abraham, president & CPO, Maui United Way (MUW); Stephen Kealoha, MUW board Chair; Thelma Akita Kealoha, AHHF; Buzz Fernandez, Matson Inc.; Gary Nakamatsu, Matson Inc.; Alice Lee, A Hui Hou Fund committee Chair; Ashley Takitani, AHHF

Bulk raw sugar was scooped by clamshell crane to waiting conveyer belts.

Raw sugar being funneled into warehouse silos

Longshore employee working in the cargo hold. Conveyor belts transported sugar from the warehouse to the port and the cargo holds of bulk carriers.

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FEBRUARY 2017

Maunalei’s Optimarin ballast water treatment system

Maunalei Leads the Way in Advanced Ballast Water Technology

T he term “ballast” in the shipping transportation industry traditionally means a heavy

material used to help a vessel obtain a desired trim or draft (the vertical distance between the waterline and the bottom of the hull), typically a heavy material like rock, cement or, in the modern era, water. For more than 100 years, steel-hulled vessels have used water as ballast so as to stabilize vessels on the open sea. Ships can take on or discharge ballast water as needed in rough seas or when loading or unloading cargo. According to the International Maritime Organization (IMO), ballast water “reduces stress on the hull, provides transverse stability, improves propulsion and maneuverability, and compensates for weight changes in various cargo load levels and due to fuel and water consumption.”

Cruise ships, large tankers, and bulk cargo carriers all use large amounts of ballast water, which is often taken on in the coastal waters in one region and discharged in another. Ballast water discharge, in some cases, has been found to contain a variety of biological mate-

rials, including plants, animals, viruses, and bacteria, which can have a negative impact on the marine environment. In response and in order to control any environmental damage from ballast water, in 2004 the IMO adopted the “International Convention for the Control and Management of Ships’ Ballast Water and Sediments” (BWM Convention). These conventions require all ships to im-plement a ballast water management plan in order to “manage their ballast water to remove, render harmless, or avoid the uptake or discharge of aquatic organisms and pathogens within ballast water and sediments.” After a very lengthy ratifica-tion process, the BWM Convention will enter in force on September 8, 2017.

Setting the barConsistent with its corporate Vision

and Values, Matson is committed to being a leader in environmental stewardship. That’s why our Environmental Policy incorporates the latest ballast water man-agement practices to minimize potential introductions of aquatic invasive species. Our vessels always exchange coastal bal-

last water taken on early each voyage for clean, deep sea water before entering port.

In addition, earlier this year Matson installed a filtration/ultraviolet ballast water management system created by Norwegian manufacturer Optimarin AS on Maunalei. “It was a bit of a gamble because the system had not yet been approved by the United States Coast Guard (USCG),” said Lisa Swanson, director, environmental affairs. “However on December 2, 2016 the Optimarin system actually became the first treatment method to receive the USCG’s official approval.”

According to Capt. John Mauger, commanding officer of the Marine Safety Center, “The USCG’s testing requirements set strong standards for the performance and validation of ballast water manage-ment systems under a range of conditions. The issuance (of this approval) documents the ability of the Optimarin Ballast System to meet the U.S. Coast Guard’s standards.”

As far back as 2002 Matson was leading the way in environmental protection when RJ Pfeiffer participated in an experimental ballast water program, a forerunner to the

MAUNALEI continued on page 4

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current Optimarin system and the first of its kind on the West Coast. In 2006, Matson partnered with the California State Lands Commission (CSLC) and

Ecochlor, Inc., obtaining the first approval nationwide to participate in the USCG’s Shipboard Technology Evaluation Program (STEP) aboard Moku Pahu, a program designed to demonstrate innovative ballast water treatment technology.

“Matson is always cognizant of its duty as a leader in environmental safety and protection and will continue to look for ways to exceed environmental safety standards in all areas of our business,” said Matt Cox, president and CEO.

Mushing With Purpose

As Matson-sponsored professional dog sled musher, Aliy Zirkle, gears up for Iditarod 2017, she has two

goals in mind. As always, the first is to win the Last Great Race. The second is to inspire Alaskans to join the fight against domestic abuse and recruit teens from the remote villages along the race course to participate in the 2017 Lead On youth conference in Anchorage.

Lead On, an annual event presented by the Alaska Network on Domestic Violence and Sexual Assault (ANDVSA), is a confer-ence designed to empower Alaska’s youth to become actively involved in strength-ening their communities, preventing vio-lence, and promoting respect for self and others. This past November at Lead On 2016, Zirkle spoke about the importance of discovering who you are and being true to that person.

Getting Involved“Matson is my primary sponsor. They

support the Iditarod and even sponsor the ‘Most Improved Musher’ Award given at the banquet in Nome. Matson continually demonstrates its commitment to support-ing organizations that seek to improve the quality of life in the communities where their employees live and work. So when Matson decided to invest in Alaska’s youth by supporting the ANDVSA I wanted to become involved.

“I am not a counselor, teacher or pro-fessional motivator, but it turns out that I am a ‘draw,’” said Zirkle talking about her experience at Lead On 2016. “Kids came to my workshop in a large herd – many

more than the coordinators anticipated based on the small classroom I was as-signed. We had kids sitting everywhere.

“I’m straightforward and sincere when I talk to kids and I think that makes them very receptive to what I have to say. My message to them was that like me, not everyone fits a conventional mold, and that’s OK. They are allowed and encour-aged to find and follow their own unique paths in life.

“It was a great experience, being able to make a connection with these kids, to meet them ‘where they are’ in life,” Aliy said of her involvement in Lead On. “ANDVSA is doing some great things in Alaska and not just in the larger cities. Helping to empower kids from the villages to stand up and speak up about what’s taking place in their communities is the

goal, and I’m honored to be a part of it. Giving back to the village communities that have supported me all these years is important to me and I’m grateful that Lead On is providing me the opportunity.”

Spreading the word“At this point, getting an invite to Lead

On sort of depends on knowing the right people or being in the right place at the right time,” Aliy continued. “I’d like to make it easier for more and different kids to hear about this program and become involved, and that means spreading the word.”

To that end, Aliy has partnered with ANDVSA to spread the word about Lead On 2017 and raise funds to send more kids to the conference, promoting the event through the Iditarod and personal appearances. As part of a statewide aware-ness and fundraising campaign supported by Matson, ANDVSA, along with local partners and schools, will lead a social media contest with posts following Aliy and her team during the Great Race as they approach and pass through the many villages. Post-Iditarod, Aliy and ANDVSA representatives plan to visit select Iditarod villages and award the fundraising pro-ceeds as scholarships to Lead On 2017.

“I’m really excited about the campaign and the opportunity to interact with young race fans from the villages,” said Zirkle. “Being able to offer some of them the opportunity to attend Lead On is going to be awesome, and hopefully it will generate enough excitement that NEXT year will be even better.”

Aliy Zirkle, gearing up for Iditarod and to spread the word about Lead On 2017.

MAUNALEI continued from page 3

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FEBRUARY 2017

I n 2001 Matson launched Ka Ipu ‘Aina, its longstanding environmental community partnership with

Hawaii. Ka Ipu ‘Aina, which translates to “container for the land,” recently celebrated 15 years of providing containers to community groups to be used for both inland and coastal clean-up projects throughout the state.

“We’re tremendously proud of what we’ve accomplished with Ka Ipu ‘Aina,” said Keahi Birch, manager, environmen-tal affairs, Honolulu and steward of the program. “The program has grown at least ten-fold since its inception and has led to a similar program on Guam (Adahi I Tano). In addition to assisting in the beautification of our island home, it has also helped us to develop some wonderful relationships with many local charities.”

The Hawaii-focused Ka Ipu ‘Aina pro-gram expanded its presence during 2016, with an average of eleven cleanups con-ducted each month: 135 Hawaii charities on four different islands participated.

As a committed steward of the environ-ment, Matson continues to support organi-zations that contribute to the restoration and beautification of our planet, orga-nizations like Nets-to-Energy – a multi- assemblage of both public and private companies that together make up a marine debris removal partnership. Since 2002, Hawaii-based longline fishermen have been voluntarily collecting abandoned fishing nets encountered in their travels and bringing them back to Honolulu Harbor for disposal. These nets and other fishing gear represent a safety hazard not only to marine life, but also to coral reefs and vessels.

Today, thanks to Nets-to-Energy partner organizations, there’s a better alternative to simply dumping these “ghost nets” in Oahu’s already over- burdened landfills. Matson recently provided in-kind support to transport a new bin in which to store derelict nets at Pier 38. By partnering with the National Oceanic and Atmospheric Administration

(NOAA) and companies like Matson and Kapolei-based Schnitzer Steel, derelict nets are chopped up and delivered to Honolulu’s HPower waste-to-energy facility where they are used to generate electricity. Burning the nets produces steam, which drives a turbine that creates usable electricity. Last year Schnitzer transported more than 24,000 pounds of nets to HPower. Since the program’s inception, 832 tons of nets have been con-verted to electricity through this program, enough electricity to power over 300 homes for a year.

“This unique public private partnership clearly demonstrates the need for collab-oration among all levels (Federal, State, Local and Private) to successfully deal with the detrimental impact of marine debris,” said Mark Manuel, Pacific Islands Marine Debris Regional Coordinator, NOAA. “It’s important to note that this program was instrumental in the establishment of the Fishing for Energy Program that is operat-ed throughout the continental U.S.”

Catch, Release and Recycle

Schnitzer Steel breaks up collected abandoned fishing nets for recycling.

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I n December, Matson Anchorage became the third and final vessel among Matson’s recently acquired

D7s (diesel) to complete installation of an exhaust gas cleaning system (EGCS) (aka “scrubber”), following Matson Tacoma and Matson Kodiak earlier this year. With this final scrubber installment, all of Matson’s Alaska D7s now exceed the newest EPA emissions regulations and Alaska’s strict environmental laws.

Matson vessels navigate some of the most pristine and environmentally sensi-tive waters in the world including those around the Hawaiian Islands, the Califor-nia coast, Puget Sound and New Zealand; locales that depend on the marine envi-ronment for their livelihood. As stewards of the environment Matson is committed to being an environmental leader in its industry, and endeavors to limit its carbon

footprint wherever and whenever possible. That includes a commitment to meet or exceed regulations implemented by the U.S. Environmental Protection Agency (EPA), state and other agencies charged with protecting the environment.

EGCS technology removes toxic and corrosive compounds from exhaust gas, “scrubbing” the engine exhaust so as to reduce the sulfur oxide (SOx) emissions. Matson Anchorage underwent its EGCS modification upon entering dry-dock at the COSCO Nantong Shipyard in Septem-ber 2016. Over the course of 97 days and nearly 400,000 shipyard labor hours, Anchorage received numerous other repairs and improvements.

“I congratulate the dry-dock port en-gineers, Dale Johnston, Gartz Gould, and Dan Moylan, as well as the Matson Site Team, Captain Brad Goodwin, the crew of

the Anchorage, and the support provided by Matson’s engineering, purchasing and operations teams in Oakland, Tacoma and Shanghai,” said Scott Hauck, director, marine engineering. “In particular I would recognize Al Bozzuffi, engineering and technical manager, for his tireless efforts behind the scenes on the design and technical support for this complicated and cutting edge engineering project. This was a challenging assignment with an aggres-sive timeline and ultimately its success was the result of a tremendous team effort.”

Matson Anchorage completed a success-ful sea trial before reporting for duty at Shanghai’s Waigaoqiao Terminal, where she served as an extra loader on the CLX return to Long Beach before returning to the Alaska trade in early January.

Going Green in Alaska

Matson Anchorage berthed at Port of Tacoma.

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FEBRUARY 2017

Guest automobiles line the Royal Hawaiian's driveway late 1920s early 30s

O n February 1, 1927, The Royal Hawaiian Hotel officially opened its doors, hosting a black tie

affair attended by 1,200 guests, including Hawaiian royalty, Princess Abigail Kawananakoa, in honor of its grand opening. The event included a $10 a plate dinner, dancing to the Royal Hawaiian Band and a pageant depicting the landing of King Kamehameha on Oahu, directed by the Princess herself. This month, The Royal Hawaiian celebrates 90 years of offering guests the best in aloha luxury, tradition and history.

The Royal’s story began in 1925. Matson president, Edward Tenney and vice president and general manager, William P. Roth, secured a fifty-year lease on more than fifteen acres of pristine, Waikiki shorefront property. Once the private haven of King Kamehameha I,

Roth and Tenney believed it to be the perfect location to build the Island’s first true luxury resort. A first-class hotel that would allow Matson “to offer luxury both afloat and ashore,” to its White Ship passengers. Thus began the “grand manner of Matson” hotel years.

Over the years the Royal played host to numerous dignitaries. Amelia Earhart was a guest in 1935 while preparing to become the first aviator to fly solo from Honolulu to Oakland, California. Franklin D. Roosevelt and many of Hollywood’s top stars of the day. During WWII, the Royal opened its doors exclusively to U.S. military personnel, operating as an R&R center. The hotel and its beaches were the stomping grounds of Waikiki’s famous Beachboys, including Duke ‘The Big Kahuna’ Kahanamoku.

Designed by world-renowned architectural firm Warren & Wetmore, construction of The Royal Hawaiian took sixteen months at a cost of just under $5 million. With its now famous coral-pink stucco façade, The Royal quickly earned the moniker of “the Pink Palace,” a name that continues to this day.

Matson-Built Royal Hawaiian Celebrates 90 Years of Luxury

Late 40s to early 50s. To the right of the Pink Palace is The Outrigger Canoe Club.

Early aerial shot of the Royal. Late 40s. Waikiki Beach Royal Hawaiian and The Moana late 1930s,

early 40s

Opening night. February 1, 1927.

Royal Hawaiian Surf Lanai Overlooking Diamond Head late 1940s or 50s

Under construction, November 27, 1926

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Born to Andrea Wong-Cheng and Malvin Cheng, a son, Naythan Ze Hong Cheng, on July 11, 2016. Andrea is an administrative assistant III at Oakland Corp.

Jayne Hare passed away on January 4, 2017 at the age of 69. Jayne was hired in 2003 as a legal assistant, a position she held until her retirement in 2015.

Milestones

FEBRUARY 2017

5 YEARSRick Calsby

Matson Terminals, Tacoma

Nina DavisFinance, Oakland Corp.

Shireen EstavilloMatson Terminals, HQ

Edward HammondSafety & Security,

Dutch Harbor

Kimberly Lewis-LandisOperations, Tualatin

Matson Logistics

Miguel Martinez-ToscanoMatson Logistics

Warehousing, Oakland

Lorena MontoyaFinance, Oakbrook Terrace

Matson Logistics

Birute PuleikyteHighway Division, Oakbrook Terrace Matson Logistics

Siva ShanmugasundararjIT Services, Oakland Corp.

Steven Stanford-ReisingerMarine Operations,

Anchorage

10 YEARSJoy Borbo

Operations, HQ

Gartzmann GouldPort Engineer,

Tacoma Old Town

Kedrick HooksOperations, Phoenix

Marie MartinezOperation, Oakbrook Terrace

Matson Logistics

Deborah PaciFinance, Phoenix

Dana ParkerFinance, Oakbrook Terrace

Matson Logistics

Allan PimentelMaintenance, Anchorage

Randall ReynoldsPricing/Equipment, Oakbrook Terrace Matson Logistics

Eric YeeMatson Terminals, HQ

Meeleenae YooOcean Services, Phoenix

15 YEARSLinda Buday

Operations, Oakland Corp.

Jorge GutmanOffshore, Kodiak

Robert PotterPacific, Draper City

Sonia WellsFinance, Phoenix

Billy YovinoMatson Terminals, Kodiak

20 YEARSGayle Moravecek

Operations, Oakbrook Terrace Matson Logistics

Patrick OnoOcean Services, Nawiliwili

25 YEARSJohn Earnshaw

Matson Terminals, Dutch Harbor

Steven SleadOffshore, Maunawili

30 YEARSBrenda Austin

Ocean Services, Phoenix

Peter KaapuniMatson Terminals, HQ

Gina MussoOperations, Seattle

35 YEARSCharles Fragas

Matson Terminals, HQ

40 YEARSBrian Morgan

Operations, Oakland Terminals

Service Awards Congratulations to everyone who celebrated milestone anniversaries with Matson in January and February!