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Joel Wine

Thanks, Matt. Please turn to slide 14 for a review of our financial results. For the first quarter, consolidated operating income increased $45.2 million year-over-year to $82.1 million with Ocean Transportation increasing $46 million and logistics declining $800,000. The increase in Ocean Transportation operating income in the first quarter was primarily due to significantly higher freight rates in China and higher contribution from SSAT partially offset by higher direct cargo expense and operating overhead costs. The decrease in logistics operating income was primarily due to a lower contribution from freight forwarding and transportation brokerage, partially offset by a higher contribution from supply chain management.
We had interest income of $9.4 million in the quarter or $600,000 higher than last year, primarily due to higher balances of cash and cash equivalents. Interest expense in the quarter decreased $500,000 year-over-year due to the decline in outstanding debt. Net income increased 100.3% year-over-year to $72.3 million, and diluted earnings per share increased 109.6% year-over-year to $2.18 per share. Diluted weighted average shares outstanding decreased $0.04 year-over-year. Please turn to the next slide.
This slide shows how we allocated our trailing 12 months of cash flow generation. For the LTM period, we generated cash flow from operations of $820.2 million, from which we used $39.7 million to retire debt, $182.8 million on maintenance and other CapEx, $161.2 million on new vessel CapEx, including capitalized interest and owners' items, $65.5 million in cash deposits and interest income into the CCF, net of withdrawals from milestone payments and $13.5 million on other cash outflows, while returning $263.7 million to shareholders via dividends and share repurchase. Please turn to slide 16 for a summary of our share repurchase program and balance sheet. During the first quarter, we repurchased approximately 500,000 shares for a total cost of $69.2 million. Turning to our debt levels.
Our total debt at the end of the first quarter was $390.8 million, a reduction of $10.1 million from the end of the fourth quarter of 2024. With that, let me now turn to slide 17 and walk through our outlook for the second quarter of 2025 on the left-hand side of the page. Based on the outlooks Matt mentioned earlier, we expect Ocean Transportation operating income to be meaningfully lower than the $109 million achieved in the second quarter of 2024. We expect logistics operating income to be lower than the $15.6 million achieved in the second quarter of 2024. As such, we expect consolidated operating income in the second quarter to be meaningfully lower than the prior year.
On the right-hand side of the slide, we have our expectations for full year 2025, starting with Ocean Transportation. We expect year-over-year operating income to be lower than the level achieved in the prior year with the amount dependent on the impact and timing of the global trade and macroeconomic uncertainties we have discussed on the call. For logistics, we also expect operating income to be lower than the level achieved in the prior year due to a challenging environment of all business lines.
As a result, we now expect consolidated operating income to be lower than the level achieved in the prior year. In addition to this full year operating income outlook, we expect the following for the full year. Depreciation amortization to approximate $200 million, inclusive of [$6 million] for dry-docking amortization, interest income to be approximately $31 million and interest expense to be approximately $7 million, other income to be approximately $9 million, an effective tax rate of approximately 23% and dry-docking payments of approximately $40 million.
Moving to slide 18. The table on the slide shows our CapEx projections for the full year of 2025. Compared to what we previously provided on our fourth quarter call in February, our range from maintenance and other capital expenditures has been lowered by $20 million to $100 million to $120 million for full year 2025. Our estimate for expected new vessel construction milestone payments in 2025 remains unchanged at $305 million.
Again, milestone payments for new vessel construction are expected to be paid from our capital construction fund which already covers approximately 91% of the remaining obligations, excluding future interest income and accretion earned on cash deposits and treasury securities. We currently expect our next cash contribution into the CCF or milestone payments to not be until 2028. In the second quarter, we expect to make approximately $36 million in milestone payments from the CCF. And then in the third and fourth quarters, we expect to make milestone payments of approximately $71 million and approximately $118 million, respectively. With that, let me turn the call back over to Matt for closing remarks.

Matthew Cox

Thanks, Joel. Please turn to slide 19, where I'll go through some closing thoughts. We are navigating like many in an unsettled and rapidly evolving environment. For the last two decades, we've operated our expedited ocean service through significant periods of uncertainty and disruption. And we've come out of those periods better for it as we demonstrate what we do best for our customers, which is to be a trusted supply chain partner with a consistent, reliable and fast service. We believe we are in the early innings of US-China trade negotiations and expected deal to be reached, although timing is unclear.
At some point, the largest and second largest economies will find a way of working together. The stakes are too high for both countries. Despite the current uncertainties, we remain quietly confident in our long-term prospects due to the diversification of our business and cash flows, our focus on serving niche markets where we're an integral part of the supply chain and the strength of our balance sheet. Our businesses are durable and capable of withstanding short-term fluctuations while creating long-term shareholder value. We remain committed to maintaining the reliability of our vessel operations and providing high-quality service to our customers and the communities that rely on us.
Matson has over 140 years of operating street and has historically performed well during periods of supply chain disruption given our competitive advantages and the reliability of our services. We remain committed to looking for growth, either organically or via acquisition, and are prepared to act quickly if an opportunity presents itself during this period of uncertainty. And last, we expect to continue to return capital to shareholders through dividends and our share repurchase program. Our share repurchase program remains a core tenet of our capital allocation strategy, and we continue to expect to be steady buyers of our shares. And with that, I will turn the call back to the operator and ask for your questions.

Question and Answer Session

Operator

Daniel Imbro, Stephens.

Daniel Imbro

Maybe a couple starting on the ocean side. Obviously, a lot of moving pieces here quarter-to-date, Matt. But if we think about Vietnam and the Catch Mid Basin, you've built out, just curious how much capacity is down there? I think you said you set up a second direct service in the quarter? I guess if we think about the infrastructure down there being less familiar, how much volume could you pick up if those two direct services really ramped relative to offsetting maybe what's coming out of China as we just think about what you're building and the ability to maybe expand into new markets to offset the China weakness?

Matthew Cox

Yes. Good question. Thanks, Dan. The first thing I would say today out of Vietnam, approximately 20% of our current volumes week by week with the recent introduction of Ho Chi Minh, is originated in Vietnam. We have the ability to increase that volume to the extent that they're pretty significantly -- we're in regular dialogue with our feeder partners in Asia.
They have the ability to swap out for larger vessels if needed. And meet our requirements for connection over Shanghai. So we have pretty good ability to size that up if that's where the market goes. I think it's interesting as we reflected on it because Vietnam itself, of course, has grown very rapidly in part in my prepared comments, we're talking about the increase on the China Plus One strategy that was implemented under the first Trump administration as people tended to de-risk. And Vietnam has grown rather significantly, but Vietnam has some of the same issues as many fast-growing Asian economies, they've got shortages of power, they have shortages of labor, both in the north and south.
And they're pretty busy before this significant tariff change to begin with. So it's not obvious to what extent the country itself and scale over such a short period of time. But as I said in my comments, we're going to follow our customer. If our customers are able to shift some of their production there, we will be following them. So that maybe I've over-answered your question, but we do have the ability to scale.
The only other thing I would say is Ho Chi Minh, our newly started service also has pretty good connection into Cambodia, where quite a bit of production is -- has been growing rather quickly as well. So as I said, we're going to follow our customers as this evolves.

Daniel Imbro

That's helpful. And these trends shipments that are going through Shanghai show and the China containers. Maybe just to clarify, that down 30% on the quarter-to-date China volumes, is that directly out of China? Or is that including the positive effect of seemingly some probably more growth out of Vietnam?

Matthew Cox

Yes. I think initially, and again, we have so few data points with which to extrapolate. But in Vietnam, initially, we saw actually out of all origins, a reduction of volume in that period as there was some uncertainty with regard to whether tariffs are going to be [rolled back] and even the temporary ones were -- it was not obvious exactly how long those are going to stay in place.
So we didn't -- we saw reductions out of all origins initially. In the weeks that have followed, we've seen volume out of Vietnam grow, again, partly because of the addition of our Ho Chi Minh service. But we've seen them grow back to sort of the general levels that we experienced before the discussion of tariffs.

Daniel Imbro

Great. And then maybe last one for me. Sorry for being more near term here, but I know you not want to quantify maybe pricing movements historically. But given the volatility and also the increased disclosure around 2Q volume so far, can you talk about rates and maybe how those have developed? What kind of rate pressures or actions have you seen in the market in response to these tariffs and subsequent volume drop off?

Matthew Cox

Yes. So I would say it's been a little bit all over the place. I think what you've seen -- and I'll touch on market dynamics. And then I'll comment on Matson. But I think what we've seen is the international ocean carriers have blanked a significant amount of sailings.
In response to the lower -- as they attempt to resize their fleets for the lower shipments and capacity that is in demand. We've seen some ocean carriers hold the line on rates as they have seen their efforts to reduce capacity. I think we've seen, in some cases, ocean carriers have increased their rates in other non-Chinese origins. And we've also seen in some cases where we've seen lower rates in the market, and those are tracked through the SCFI, so you can kind of see, but it's interesting. We kind of -- since it's all happening in real time, the market is still in the early parts of readjusting to whatever the new normal is.
So it's quite disruptive. I would say from Matson's perspective, and we said this in -- or Joel said it in his comments, we expect both lower rate and lower volume out of -- for the second quarter and for the full year. So we expect, again, not to be immune to these we still command a very significant premium to the market, but our rates will move in sympathy with the overall market direction.

Operator

Jacob Lacks, Wolfe Research.

Jacob Lacks

So with China volumes down so dramatically, does it make sense at some point to start temporarily canceling some MAX sailings similar to what we see during Lunar New Year?

Matthew Cox

Yes, it's a very good question. I think our view -- I think there's a duration question here. I think our brand is to not blank any sailing at any point in time because it's our view that in four to eight weeks when a lot of inventory runs out, that our customers had tried to preload or whatever the individual circumstance of our customers, cargo's going to need to move. There's a lot of activity going on right now as we understand between the manufacturers of product, the importers and the retailers about how to cover the cost of these tariffs. Our customers are loath to have empty shelves to the extent that they can help it.
And we think that a significant amount of cargo will be moving at the last minute, and we've seen lots of changing patterns of demand as all of this capacity and supply and demand come into balance. And so it is really our goal to -- when our customers look back at this very disruptive period to know Matson and our franchise stands for on-time arrival, no blank sailings. If economic circumstances come to pass it. We need to evaluate that, then we'll evaluate it. We'll cross that bridge, but that's not at all where our heads are at right now.

Jacob Lacks

Got it. That all makes a lot of sense. And I know it's just been a few days here, but have you seen any changes from the elimination of the mines exemption from last week and any changes you expect to see?

Matthew Cox

Yes. I mean, I think we understood, and you may have seen the announcements of -- with [Timo], who has canceled or discontinued its direct shipments from China. Those that are all -- I guess, their strategy is really to convert itself from outwardly looking in to more of an Amazon-like model where they're going to have cargo that is going to be available in the US and to be shipped from US-based warehouses and distribution centers, different from air freighting. So there's been a significant reduction as we understand it in airfreight demand and carriage associated with (inaudible) change in business model.
So I think we do see more of that air cargo now converting into ocean, and that may be a long-term opportunity for us as e-commerce continues to grow. So that's the most obvious one that we've that we've understood this happened just over the weekend with the ending of the de minimis exemption.

Operator

Omar Nokta, Jefferies.

Omar Nokta

Good discussion and a couple of questions or a couple of follow-ups from my end. And maybe just on this last point of the de minimis exemption. I know it's still very early, but do you think maybe perhaps longer term, indeed, that this could be an opportunity to grab market share, perhaps more permanently from airfreight? Is that kind of the tough process? I know it's, again, still early, but is that kind of the thinking here long term?

Matthew Cox

Yes. I mean I think the de minimis exemption in my personal view, is not going to be negotiated away with an eventual settlement with China. I think that's just -- that's not coming back. And so there will be -- those business models were sort of built on this exemption. And now that they're gone, it necessarily will have the effect of increasing the ocean market through the closure of this loophole.
And a certain portion of that e-commerce, just like our other e-commerce category, we're going to get a shot at a portion of it wants to or needs to move quickly to replenish. And so I do think that's an opportunity. It will be interesting to see exactly how the air freight markets reset because there's going to be, at least in the short term, significant excess capacity for air freight that market itself will need to -- the capacity will need to move and get reoriented. So yes, but I think that change is here to stay and will produce more opportunity for the ocean carrier.

Omar Nokta

Okay. And then just a follow-up. Just back to the 30% decline you've seen in China volumes since the tariffs were announced in April, obviously, everything is moving very quickly. It's only been maybe four or five weeks since that liberation day. From maybe your vantage point, have you noticed any -- I know you're talking about Vietnam in the prior question, but from your perspective, have you noticed any changes from, say, on the China volume specifically for say, the first couple of weeks of April when things seem to have come to a standstill globally maybe over the past week or two, have you noticed any changes specifically on the China US?

Matthew Cox

Well, yes, I can make some general comments, and I want to be careful not to bring my 30% forward. These are just sort of the average two weeks. But what we understand are there are significant activities underway between our retail customers and the importers or manufacturers of this product, as I mentioned earlier, about resetting pricing, what can move at what price, how does the burden get shared between those three actors and ultimately gets passed through to the end consumer.
And as more time has passed, in having these negotiations more cargo will begin to move. We also had noted in the trade press that some of the largest customers in the market, the big box guys who initially just held or shipped nothing are beginning now to direct cargo to move again. So I do think we'll see an eventual -- cargo needs to move. It needs -- there needs to be cargo on shelves to sell.
There -- and so our view is that we will -- I don't think we'll see a normalization until the tariffs are set at a more permanent level, which it's hard to know exactly how long that process is going to take. But there is cargo moving and more cargo is moving for two reasons. One, as we get into the more traditional busier times of year.
I would just give you one example. For example, if you're manufacturer of swimsuits, the swimsuit season is a very short one. And if you don't reach agreement over a very short period of time, whether it's that season or it's back-to-school, cargo moves and it's ordered months in advance. And so people still need to move and try to negotiate between the retailer and the different parties. And that's all going to happen.
It's happening urgently. And some cargo will move, although it will be lower until we get to a normalization of the tariffs, which we hope happens soon.

Operator

(Operator Instructions) Ben Nolan, Stifel.

Benjamin Nolan

I appreciate it. And I also appreciate you guys being forthright with respect to sort of how this is happening. So first of all, can you maybe talk through, are there anything that you can do to sort of help mitigate. I mean, obviously, there's the catchment basin thing and picking up volumes from Vietnam, and it doesn't sound like you're going to be doing any blank sailings. But are there other things on the cost side or just anything else that can maybe a toggle that can be pulled to help offset the impact of what's going on here?

Matthew Cox

Yes. I think, Ben, the question for us is what's the duration of this and what does it look like when we get back. So we've done what I think every company in the United States has done, which is we've looked at our capital spending to see which can be deferred. We've put a head count freeze in place. We've curtailed our spending levels.
We're doing everything we can. And while we determine where the new -- once things settle out, the hope here is that the US economy can avoid a recession. If we find ourselves in when there are other changes in costs that we could undertake. And certainly, having done this for a long time, we know how to do it.
Our view now is to do those things which are obvious but allow us to retain the optionality to recover. And you'll recall from the pandemic that when the normalization occurs, there's likely to be a snapback of activity, and we want to be ready with our deployments to be able to take advantage of that when it occurs. And the bigger the snapback will be the longer that this goes on. So I think we don't want to downsize and reduce our ability if we can't put it back in place relatively quickly. And I think we get brand points for having looked back and said we didn't blank any sailings.
We were there as a trusted partner. And I think that for the long-term value creation is there. So we'll watch this as it goes. We're not making any permanent decisions. Everybody is kind of flexing and we're -- obviously, every company, including ours, has been doing a lot of planning and strategic planning and scenario planning. So we're not going to -- we're going to act when it's appropriate, and it's obvious that we need to do something and are not afraid to do that.

Benjamin Nolan

Okay. And I think I know the answer, but is it possible. I know you said 30% volume decline in April. Is it possible to contextualize what that might -- would mean with respect to your operating income in the Marine Transportation business?

Joel Wine

Ben, it's Joel. I'll take that one. So we won't give anything specific, but the 30% decline, you can look at our numbers, that's a year-over-year phenomenon that we quoted in April. So the best way I can contextualize it for you is to say, look at our second quarter numbers last year, assume April is down 30% year-over-year.
And then and then make your own estimates of what we think the rest of the quarter will be for our China business. And then, of course, layer on what you think the incremental contribution would be, and that would be the consolidated operating income impact of it. So that's the best way to think through it and conceptualize it.

Matthew Cox

But the only other thing, Ben, this is Matt, that I would say is at this point, we don't know if this 30% won't gradually get better. We don't know if China and the US may pause these tariffs or take a big step backwards or to some other level before the end of the quarter. And that may cause some changes. So it's frankly, everyone's crystal ball is a little out cloudy at this point. But as Joel mentioned, that's the approach that you should take algebraically to try to figure out how you might -- how we might look.

Benjamin Nolan

Right. Okay. And then if I could sneak one last in. You talked about 20% of the volume that's running through China, originating in Vietnam. Is there any thinking about maybe running a direct shipment from Vietnam?

Matthew Cox

Yes. I think, Ben, we think that the feeder strategy with our trusted partners, feeder partners in the region, give us the ability out of Hai Phong and Ho Chi Minh to have the fastest service to the US West Coast even with the feeder connections because the feeder connections in Shanghai arrive immediately before our departure. So do we have the ability to move ships around, certainly, we do, by definition, we do. But I think we have -- we can have our cake and eat it too in the sense that we still will have the fastest connections in Hai Phong and Ho Chi Minh through our feeder network and still retain the capacity to depart from those ports on which we have very long-standing relationships, and they provide us simply outstanding service.
Let me answer it a different way too. There is significant congestion at the large ports in Vietnam. And we have -- we don't have long-standing relationships. So our own vessels may go there, and we may not be able to move as effectively or as reliably as we do these smaller ports for the feeder vessels that we're currently operating. So that's just another way to say the same thing.

Operator

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to management for any further remarks.

Matthew Cox

Okay. Well, thanks for your attention today. We look forward to connecting with you at the end of the next quarter. Thank you.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.