Young Brothers testifies union contract wage and benefit increases, overtime patterns weigh on costs

Young Brothers told the Public Utilities Commission that the company’s three collectively bargained contracts are a major driver of higher labor costs included in the 2025 forecast, that a few fringe benefits tied to those contracts have not been historically budgeted, and that the company is actively tracking overtime with new management initiatives.

Director of Finance Kim Kishimoto said the company’s budget reflected wage schedules and multiyear increases negotiated in the three contracts: ILWU Local 142, ILWU Local 100 and the Inland Boatmen’s Union (IBU). She testified the union wage schedules require multi‑year percentage increases (examples cited in testimony included 10% plus signing bonuses for one local and subsequent scheduled increases of several percent on set dates) and that the company includes payroll taxes, pension trust contributions and health/welfare contributions as CBA‑driven costs in its line‑by‑line (“bottoms up”) budgeting process.

Kishimoto told the PUC that some contract provisions impose pay‑related requirements beyond straight hourly increases—minimum call‑out pay, overtime and premium rules, holiday and shift‑scheduling criteria, and minimum‑hours or minimum‑days rules that create built‑in paid time. “All of these are paid amounts of items, which is being paid based on a new higher wage rate that's done annually,” she said; she described holiday pay, overtime and cash‑outs of vacation as elements that increase cash costs when wage rates rise.

Kishimoto also identified two items she described as “fringe benefits” that the company has not historically budgeted with a line‑item forecast: (1) free interisland shipment of personal effects for employees (commonly called gratis shipping) and (2) a leave‑of‑absence provision for an employee elected or appointed to a full‑time union office. On gratis shipping she said: “We have not budgeted historically in the past for fringe benefits, so … specifically, grama [gratis] shipping.” She added the gratis shipping provision is discretionary and space‑available, and that because it is variable the company has not historically included a firm dollar forecast for it.

Commission questioning focused at length on overtime and higher‑cost pay types. Commissioners and counsel reviewed internal reporting the company uses: Kishimoto and other witnesses said the company now runs weekly Power BI dashboards that show hours broken down by straight time, double and triple overtime, by port and by job classification; the dashboard is distributed at a weekly cadence to operations and leadership. Kishimoto said the Board’s “Lead Manage Contain (LMC)” initiative and related scheduling work have produced measurable reductions in double and triple overtime: she testified double‑ and triple‑time hours were down year‑to‑date and that “year to date, it's 38% lower on a combination of DOT and TOT.” She also said triple‑time hours are a small portion of total hours (she recalled triple time near 1.4–1.7% of total hours in prior materials).

On the question of whether overtime decisions are routinely approved by supervisors, Kishimoto and other witnesses described a daily or per‑sailing operational review: dispatchers and port supervisors and the operations leadership review the expected cargo mix and staffing needs and decide whether extra hours are necessary for safe loading and timely sailings. Kishimoto said the company has weekly reporting, and that “there is a reporting mechanism that happens every week that we look at pretty consistently.”

Several commissioners and counsel asked whether the company applies the CBAs’ wage and benefit assumptions when negotiating new contracts and when planning for rate‑case impacts. Kishimoto said the company does conduct bottom‑up modeling for each labor group, working by day, position, holiday and overtime assumptions; she said the company consults external actuarial experts (for example, Willis Towers Watson in the transcript) when valuing OPEB and pension impacts during bargaining.

The testimony also addressed that some CBA benefits—particularly the gratis shipping and a specific leave‑of‑absence provision—are difficult to quantify or forecast because they are discretionary (space‑available shipping) or infrequently used. On the latter, Kishimoto said the company does check expected supervisor headcount when building budgets and that she could not confirm whether the leave‑of‑absence provision was being used at the time; she said the company “budgeted for how many people that we expect to be working based on their shifts.”

Ending: The company told the PUC it has already begun operational and management initiatives to reduce high‑cost overtime (power‑BI dashboards, LMC initiative) and that union wage schedules, pension and health contributions, and contract scheduling rules remain principal drivers of increased labor costs in the 2025 budget.

Clarifying details: Kishimoto described the three CBAs by name and several contract features (paid holidays, minimum call‑out pay, vacation cash‑outs, premium pay for holidays, pension and health contributions and manning criteria by vessel and port). She said the company’s estimate of additional labor cost from CBAs is calculated via a bottoms‑up model that includes day‑by‑day staffing, overtime assumptions and external actuarial valuations when needed.