The state Department of Transportation and 12 of Hawai'i's major harbor users will ask the Legislature for at least $800 million to get nearly 20 years of work on the Islands' neglected harbors completed in the next five to six years.

At stake, they say, is nothing less than the future of Hawai'i's economic growth.

Eighty percent of everything consumed in the state is imported — and 98 percent of everything imported arrives by ship. Simply put, if goods can't make their way quickly through the harbors, the whole economy backs up.

While the improvements may be necessary, they won't come cheap.

The tab for the $800 million to $900 million worth of improvements — the bulk of which will probably come through some form of bonds — will ultimately be paid by every consumer.

"It is a huge ticket item," said Rep. Kirk Caldwell, the House majority leader and a member of the House Transportation Committee. "It would increase the fees for those who use our harbors, who in turn would pass on the costs to the people who use their services, who in turn will pass it on to the consumers in our state."

If fees do go up, it will be the first time in at least 12 years. Shipping tariffs — roughly $129 for every 20-foot container heading into Honolulu and out to a Neighbor Island — haven't changed since 1995, according to Michael Formby, deputy director of harbors for the state Department of Transportation.

Hawai'i lags the Mainland in tariff rates, Formby said, so some form of tariff increase to help pay for harbor improvements is long overdue.

The exact amount of the tariff increase is still being worked out. The DOT and the Hawaii Harbor Users Group, made up of several companies that use Island harbors, will make recommendations to the Legislature.

But companies are already facing severe problems.

Ameron Hawai'i, one of Hawai'i's two major suppliers of the concrete needed for the Islands' critical construction industry, had to move out of Honolulu Harbor's Pier 19 to make room for Hawaii Superferry's vessel, Alakai.

At the same time, Ameron is running out of harbor space to store the aggregate, crushed basalt and sand needed to make concrete, said George West, Ameron Hawaii's vice president of operations for O'ahu.

"The harbors have been getting crowded for 10 years," West said. "We've been bumped along, bumped along, bumped along from one pier to the other."

So West fully expects to have to pay higher fees to fix up the harbors.

"We're just the middle guy," West said. "Ultimately, it will get passed on to our customer and to his customer, the guy who builds the hotel or builds the road or builds the house. In one way or another, everyone in the economy is going to pay for it."

LIMITED SPACE

Harbor users have long worried about the limited space and lack of improvements on every island, especially Maui and O'ahu.

Their concerns only grew as Hawai'i came out of the economic bad times of the late 1990s and saw an explosion in interisland shipping and the rapid growth of Hawai'i's cruiseline business.

"These adjustments should have been made years ago," said state Rep. Joe Souki, D-8th (Wailuku, Waihe'e, Waiehu), chairman of the House Transportation Committee. "It's much overdue. I've been pushing it for years."

Glenn Hong, president and CEO of Young Brothers/Hawaiian Tug & Barge, stood at the window of his second-story office at Honolulu Harbor's Pier 39 and 40 recently and looked through a pair of binoculars at the gridlock formed by big rigs hauling in shipping containers, smaller trucks carrying odd-sized loads that have to be placed inside containers, fork- lifts hoisting cargo and customers walking among all of the traffic.

"The truck with the blue tag has a load going to Kawaihae and the one behind it with the yellow tag is going to Nawiliwili on Kaua'i," Hong said, sweeping his binoculars over the traffic jam. "The red tags are going to Hilo. The purple tag over there is going to Moloka'i. ..."

From 2000 to 2006, the volume of container loads carried by Young Brothers jumped 26 percent, Hong said.

"We're operating at or above our capacity," he said. "You get to the point where you reach diminishing returns in your economies of scale. We need more space to be more efficient. Otherwise, we won't be relevant in the next five years."

Until now, companies such as Young Brothers would ask the DOT for more space or changes to Hawai'i's harbors that often came at the expense of someone else, Hong said.

"Everybody was going in separately to the Harbors Division saying, 'We need this, we need this and we need this.' As a result nothing really got done to the overall satisfaction of the harbor," Hong said.

So in 2005, Matson Navigation Co., Horizon-Lines, Young Brothers/Hawaiian Tug & Barge, Norwegian Cruise Line, McCabe, Hamilton & Renny Co. Ltd. and Hawaii Stevedores Inc. organized all of the major harbor users into the Hawaii Harbor Users Group, known as HHUGS, said Matson senior vice president Gary North, who chairs the group.

The key rule was that all of the group's recommendations had to be unanimous among the users.

"We're all in sync relative to moving forward to make sure that the lack of development doesn't impede the growth of this economy," North said. "This is the first time that we've all been together. And we have to stay together to move this thing forward."

Rep. Caldwell called the cooperation among the major harbor users "extremely critical. I can't think of any other time that the users of such a large public facility came together in agreement."

STUDY COMMISSIONED

HHUGS commissioned a study in 2005 that concluded Honolulu Harbor was running out of space that year for international cargo and will run out of space for domestic cargo in 2010.

Among its more urgent recommendations, the study advocates developing a terminal at Kapalama Military Reservation at an estimated cost of at least $300 million, developing the west harbor at Kahului for more than $150 million and building a new pier at Kalaeloa Harbor for $50 million.

Thirteen less urgent short-term projects for harbors on all islands add up to another $110 million to $125 million, in addition to several long-term projects costing millions of dollars more.

"The harbor capacity situation on Maui is considered the most critical of all the Neighbor Islands," according to the study by Mercator Transport Group of Bellevue, Wash. "... When major service disruptions occur, which could be sometime in the next several years if timely improvements are not made, the impact on the economic life of the island will likely be significant.

"These impacts may include shortages of gasoline and/or higher costs, a lack of coal and fuel oil for power generation; loss of off-island markets due to the inability to get local products to market in a timely and efficient manner, disruption in the supply of construction material and resulting impact to the construction sector, shortages of basic necessities and the loss of cruise ship calls."

Statewide cruise line passenger counts grew 29.1 percent in 2006 — to 408,535 passengers, according to the state Department of Business, Economic Development and Tourism.

At the same time, the Mercator study points out dangerous conditions on Maui and Hilo in which cruise line passengers mingle with heavy equipment and walk beneath shipping containers swinging through the air.

"It's an accident waiting to happen," Rep. Souki said. "You want passengers arriving in Hawai'i to come into something nice and not be watching out for some crane and trying to duck a bloody container right over your head."

Jim Tollefson, president and CEO of the Chamber of Commerce of Hawaii, said the experience for cruise line passengers on some Neighbor Islands amounts to " 'Welcome to Hawai'i. And by the way, don't trip over that cargo container by the docks.' It's the impression. But it's also the reality."

Like Tollefson, Souki believes enough momentum has developed among harbor users, the Lingle administration, Hawai'i businesses and key members of the Legislature to finally find a way to pay the hundreds of millions of dollars necessary to upgrade the state's harbors.

"It looks very promising at this point," Souki said. "It's about time, don't you think? This is going to be the time that the governor is in sync and I believe the legislators are in sync and, very importantly, the harbor users are in sync to get the improvements that are necessary. We're finally all together."

But Caldwell, the House majority leader, is also cautious.

Although key legislators and others want to see something significant happen this session, Caldwell expects that such massive spending on so many projects carries the potential "for quibbling."

"The devil," he said, "will be in the details."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com.