Shipping fees for Alaska-bound products are increasing. Store prices will barely rise but could add up.

The cost of shipping milk, bread, vehicles and many other products over the ocean to Alaska will likely go up in response to increased fees.

Customers probably won’t notice much of a change in store prices, with individual items generally rising by pennies or fractions of pennies, according to officials with the Municipality of Anchorage and the shipping industry.

But the extra costs could add up over a year’s time, purchase by purchase, exceeding more than $100 a year annually for a typical family, a port official said.

The shipping costs are rising in two areas.

The municipality is increasing a special fee that it launched this year to help pay for long-sought upgrades to the aging port. The Port of Alaska Modernization Program tariff surcharge, as the fee is called, is part of the overall tariff that’s applied to products moving through the Don Young Port of Alaska in Anchorage.

In a separate action, the major oceangoing carriers that bring products to the port, TOTE and Matson, are boosting their general rates to deal with their rising costs, a step they typically take each year.

The port is the main gateway for products arriving in the state, and nearly every Alaskan buys items that cross its docks, according to the port. That means the extra costs will be spread among many Alaskans.

How will the surcharge impact prices?

The surcharge increase will lead to very slight increases in the cost of individual items at stores such as Fred Meyer, Carrs-Safeway stores or Home Depot, city and port officials say.

The surcharge starts in January, following approval by the Anchorage Assembly early this month.

The surcharge will rise to $4.80 a ton for cargo, from 59 cents a ton.

That’s an eightfold increase.

But the surcharge started at a very small amount, said Bill Falsey, chief administrative officer for the city. And it remains a small amount, so it will have a limited impact on prices, he said.

Also, the port’s tariff is a sliver of the overall cost of moving goods to Alaska from ports in the state of Washington, where most goods to the port originate.

Consider a loaf of bread, he said. Or rather, consider 2,000 of them.

Together, they’d weigh about a ton.

So the $4.80 fee will be spread across 2,000 loaves.

As a result, the price for a 1-pound loaf of bread will rise by a fraction of a penny, he said.

“And on a gallon of milk, you’re talking two cents (more),” he said.

Gasoline gets a per-barrel fee under the surcharge. That will cost one extra cent for every four gallons, according to a chart estimating potential price increases released by the city.

A brand-new 5,000-pound truck, because it’s so heavy, will cost an extra $12 after the surcharge increases. But even that will be relatively small, with new trucks often going for more than $40,000.

Another increase in 2026

Jim Jager, port spokesman, said that over a year’s time, the surcharge will likely cost a typical Southcentral Alaska family more than $100, and probably less than $200, he said.

But the cost of letting the port decay could be far more expensive, he said.

If damage at the port reduces its capacity by half, then costs to bring goods to Alaska would increase by $39 million weekly, according to an economic review for the port.

“So this is sort of like, ‘I’ve got one car in my family and the tires are worn out,’ ” Jager said of the tariff surcharge. “It’s going to be expensive to replace those tires. But is it more cost-effective to change the tires or drive the car until they fail, and then I won’t have a car anymore?”

“Most of us are going to say, you know, ‘I think I should change my tires,’ ” he said.

The Assembly also approved a further increase in 2026 to the special tariff surcharge, to $8.28 for each ton of cargo, according to the chart.

But even in 2026, prices on individual items will still largely rise by pennies, or fractions of pennies.

The tariff surcharge is designed to provide $180 million for the port’s modernization, Falsey said.

The port began operating more than six decades ago. The modernization project is estimated at around $2 billion, using a variety of funding sources.

The carriers’ increase

TOTE and Matson have issued statements saying they’re adjusting their fees in response to the tariff surcharge. Span Alaska, a subsidiary of Matson with service that includes shipments within Alaska, issued a similar statement.

The companies said they also are implementing a 7.5% general rate increase to deal with rising costs for labor, equipment and other expenses.

That increase is separate from the city’s tariff surcharge.

This year’s general-rate increase is similar to previous years’ increases, officials with TOTE and Matson said.

Dylan Faber, community and government affairs manager in Alaska for Matson, said he could not estimate potential increases in store prices that might result from the general rate increase. Those are decisions that retailers make.

But he said the general-rate increases in years past did not really generate attention, unlike this year, he said.

That may be because it’s coming around the time the port is also increasing the tariff surcharge, he said.

Matson has to cover its rising costs, but it’s also conscious about the effect on customers, such as retail stores hiring the company to move product to Alaska, he said.

“Shippers are always mindful of impacts on consumers and our goal is to keep prices affordable while continuing to deliver reliable service,” Faber said.

___

© 2024 Anchorage Daily News

Distributed by Tribune Content Agency, LLC.