Wanna know why everything is cheaper at the Commissary and the Exchange?

By Troy Torres

troy@kanditnews.com



People of the Marianas, and of greater Micronesia, how did your weekend grocery shopping go? You can't hear me from the other side of that hole in your pocket?


If you can, I suggest you buy your groceries from one of the military commissaries on Guam. As a matter of fact, it will be well worth your while to purchase whatever it is you need on one of the military bases on Guam, whether that be groceries, goods at the Exchange, furniture, cars, parts, or gas.


Everything. Is. Cheaper. On. Base.


This is not news. But what you may not have known is why this is so. And it should piss off Guamanians without base access, and other islanders, who don't have a base on their islands with commissaries and exchanges.


Shipping accounts for the single-largest markup of the cost of 95 percent of the products sold in every island of Micronesia. It is more expensive than taxes; and that says something, considering the government of Guam takes five percent of every business's gross receipts.


Let's localize this to accentuate this point. Today it costs $2.49 a pound for regular mango at Payless Supermarkets; not the Manila mango, the regular one shipped to Guam. That same mango yesterday in Whiteman, Missouri cost 58 cents at Walmart. Mango. It grows on Guam, and not Missouri, yet it costs more than 500 percent more here than there. Please consider that in Missouri, stores have to pay federal income tax and state income tax; customers have to pay a sales tax. Their tax burden is greater than ours; but our price burden far exceeds theirs. Shipping is the culprit.


People with military base access, however, know that they can fill up a shopping cart at the commissary and expect to pay about $200, when those same products will cost $500 at really any grocery store off base.


There is a very big misconception on Guam that the reason everything is cheaper on base is because the U.S. Navy uses its ships to move produce and products from California to Guam for sale at the Exchange and the commissary. It doesn't. Matson and APL - the two main shipping lines serving the Marianas and greater Micronesia - lug those products into Apra Harbor for sale at Andersen Air Force Base and Big Navy. And they do it for a cost.


Matson loves to tell us, here in Micronesia, that they're the hometown carrier; that what they do and how they operate is for the betterment of our community, as a whole. Their prices tell a totally different story.


Matson began increasing its per-container shipping prices, when it achieved a monopoly in 2012. Generally unbeknownst to most islanders, there was a price per container for civilian shipping through the Port Authority of Guam, and then a separate price for containers that are meant for the military bases. The rates were generally the same, and increased together throughout the monopoly period, until APL came onto the scene.


Effective September 1, 2014, Matson was charging $5,490 per 40-foot non-refrigerated container to the military. APL undercut their price in both the civilian and military market, charging the military only $4,500 for the same container at the time.


That is where the competition started, at least in the military market. Despite the competition from APL in the civilian market, Matson has used its influence in the community to justify its increasing prices, despite years of data tracking increased poverty and hardship for the people of this region. Container prices for the Guam civilian market now are between $7,000 and $9,000 from Matson, while APL has maintained prices at between $4,000 and $6,000.


What is most disturbing is that while Matson has refused to lower prices in the civilian community, its competition with APL inside the military fence has forced it to cut its prices to the military by 50 percent. In real terms, the reason everything is cheaper at the commissary and the exchange, is because the military pays only $2,715 per container to Matson, and $2,725 to APL. Matson is charging the civilian people of Guam three times what it is charging the military for goods that are shipped to the same darn harbor, and from the same darn places.


Matson is NOT the hometown carrier. It is a Hawaii-based shipping company that has made billions in the Guam-based trade. It enjoyed a monopoly in our islands for three years - sinking our incomes with price increase after price increase - after it muscled out Horizon, then was forced to lower prices, when APL came onto the scene in late 2014. Since then, Matson has tried three times to have APL removed from the market by taking the U.S. Maritime Administration to federal court in Washington, D.C., far from the eyes of a public growing poorer by the shipping price increases.


Defenders of Matson have claimed economies of scale dictate that Matson cannot lower its prices. If that is so, how do they explain APL's lower prices? If Matson cannot lower its prices on the everyday people of Guam, the Marianas, and Micronesia, how the hell did they lower prices for the U.S. military?


And if Matson truly was the hometown carrier, why is it charging the civilian populations of the Marianas and Micronesia 300 percent more for shipping than it is charging the United States military?


The Guam military rates prove one very important factor, that should be shouted to the hilt by the Guam Chamber of Commerce, and every chamber of commerce in Micronesia: competition works. Matson should be called out for trying to use the government to remove its only true competitor. And the governments of the islands should join against Matson in the federal court case in Washington.

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