Matson (NYSE:MATX) expects fourth-quarter operating income to rise approximately 50% from a year earlier as strong demand and elevated freight rates in its China service extend beyond the usual peak shipping season.
The outlook follows a third quarter in which consolidated operating income rose $94.2 million year over year to $255.2 million. Net income increased 55.5% to $209.4 million, while diluted earnings per share climbed 64.2% to $6.96.
Chairman and Chief Executive Officer Matt Cox said the company’s China service benefited from demand for e-commerce, garments and electronic goods, alongside capacity constraints caused by weather disruptions, blank sailings and congestion at Asian ports. China service container volume rose 16% from a year earlier, when the peak season was more muted.
China demand expected to remain strong
Cox said peak-season strength continued through October, supported by cargo flows after Golden Week and late inventory builds ahead of Black Friday and Cyber Monday. He expects strong demand and elevated freight rates to persist through year-end and into early 2027, with Matson’s China service ships full or nearly full throughout the fourth quarter.
Air freight capacity was also tight entering the fourth quarter, Cox said, citing demand for artificial intelligence-related products and shipments recovering from ocean disruptions. He expects the air cargo market to remain tight through year-end.
During the question-and-answer session, Cox said most AI and data center demand still moves by air, but that demand has displaced some other commodities, including e-commerce, into ocean shipping. He described data center-related cargo as an important but measured part of Matson’s electronics business.
Cox acknowledged that some favorable capacity constraints could prove temporary. New vessels entering the international fleet and a potential normalization of Red Sea shipping are among the factors that could affect supply and demand, he said. Matson plans to provide more detail on its 2027 outlook on its fourth-quarter earnings call.
Domestic trades and logistics
Matson reported mixed container volumes across its domestic services in the third quarter. Hawaii volume slipped 0.3%, Guam volume rose 4.3%, and Alaska volume fell 4.8%. Cox attributed the Alaska decline primarily to lower southbound seafood shipments and an additional northbound sailing in the prior-year period.
For 2026, the company expects Hawaii and Alaska volumes to be modestly below 2025 levels and Guam volume to be modestly higher.
Logistics operating income rose $2.5 million to $16.1 million, driven by higher contributions from transportation brokerage and freight forwarding, partly offset by a lower warehousing contribution. Matson expects fourth-quarter logistics operating income to be modestly above the $7.7 million recorded a year earlier.
The SSAT terminal joint venture contributed $7.4 million in the third quarter, down $1.9 million primarily because of lower lift volume. Matson expects its full-year contribution to be below the $32.5 million recorded in 2025.
Fleet spending and capacity plans
Executive Vice President and Chief Financial Officer Joel Wine said Matson expects approximately $505 million in total capital expenditures for 2026, including $375 million in vessel construction milestone payments and related costs. The company lowered its expected maintenance and other capital expenditures to $130 million as some project spending and equipment deliveries shifted into 2027.
Matson expects approximately $332 million in remaining vessel milestone payments: $110 million in the fourth quarter of 2026, $197 million in 2027 and $25 million in 2028 and beyond. At Sept. 30, it had approximately $299 million in its Capital Construction Fund and $222 million in cash and cash equivalents.
The first new Aloha-class vessel, Makua, remains on track for delivery in the first quarter of 2027 and is expected to be in service during that year’s peak season. The second vessel is scheduled for delivery in the third quarter of 2027 and the third in the second quarter of 2028.
Wine said the three vessels are now expected to add approximately 12,000 containers of annual capacity in the China service, down from an earlier estimate of 15,000. He attributed the revision to Matson’s earlier deployment of larger Kanaloa-class vessels in the CLX service, which expanded existing weekly capacity.
Matson repurchased approximately 300,000 shares for $59.8 million during the third quarter. Total debt at quarter-end was $331.2 million, down $10.1 million from the end of the second quarter.
About Matson (NYSE:MATX)
Matson, Inc is a transportation and logistics company that provides ocean shipping and supply chain services. Through its Matson Navigation subsidiary, the company transports containerized and bulk cargo, automobiles and other goods between the U.S. mainland and Hawaii, Alaska, Guam, Micronesia and selected South Pacific destinations. Matson also operates services linking the U.S. West Coast with China, Japan and South Korea.
The company serves a broad range of customers, including retailers, manufacturers, wholesalers, government agencies and individual consumers.
