Federal grant with private match to bolster new Honolulu container terminal project

A new state-owned ocean cargo container terminal being built at Honolulu Harbor is slated to receive extra bells and whistles valued at $139 million thanks to a federal grant requiring private matching funds.

The U.S. Department of Transportation’s Maritime Administration awarded a $47.3 million grant to bolster development of the Hawaii Department of Transportation’s Kapalama Container Terminal project, according to U.S. Sen. Mazie Hirono.

Hirono, in announcing the MARAD Port Infrastructure Development Program grant award Wednesday, said the federal funding will be matched by $92 million in private capital and produce enhancements including electric-powered cranes for loading and unloading ships at the 84-acre terminal slated for completion in early 2024.

The special funding also will be used to pay for an electricity microgrid to improve resilience against power outages, for solar panels on terminal buildings and for “smart” gate and security technology.

Kapalama Container Terminal is being built by the state at a cost of $526 million, not including the grant funding, on what was once an Army shipping and warehouse base known as Kapa­lama Military Reservation. The project will address cramped operations and future expansion needs by Hawaii’s two main domestic ocean cargo transportation companies, Matson Inc. and Pasha Hawaii.

Matson and Pasha currently operate on Sand Island where they share 130 acres of pier and terminal space. The adjacent new container terminal will be used by Pasha, leaving Matson more room to operate as well.

Pasha is contributing private capital as part of the grant award that includes upgrading cranes to run on electricity to serve its ships. Matson installed three bigger and more powerful gantry cranes run on electricity three years ago in part to serve new larger ships Matson added to its fleet. Older cranes were powered by diesel fuel.

The need for a new container cargo facility at Honolulu Harbor was identified as early as 1989, though earnest planning for the current project began in 2005. Construction began after a 2017 contract award, but has been set back by delays. The state is using bonds that get paid back through harbor user fees to pay for terminal construction.

When completed, Kapa­lama Container Terminal should expand cargo handling capacity by 40% at the state’s largest commercial port. Hawaii is heavily dependent on shipping, as about 80% of everything consumed in the state is delivered by ship.

In June, Hirono and the rest of Hawaii’s congressional delegation wrote to U.S. Transportation Secretary Pete Buttigieg in support of the grant funding. Hirono also toured the partially built new terminal earlier this month to highlight the importance of federal funding available to bolster the cargo handling expansion project.

“My recent visit to Honolulu Harbor highlighted how critical it is to Hawaii’s economy, handling more than 11 million tons of cargo every year,” Hirono said in a statement. “As work continues to expand the harbor’s capacity, this federal funding will help reduce the harbor’s environmental impact and make it more resilient to threats including climate change, helping more cargo reach families and businesses across the islands quickly and efficiently.”