How about a fuel surcharge decrease?????

[Clarea]

No, I am saying that the swings in bunker prices do not correlate to swings in crude prices. Back then, they did not use hedges (futures) to moderate bunker price swings. From mid-2006 to early 2008, crude went from about $65/barrel to near $100/barrel, but bunker prices went from $230/ton to $680/ton. So, while crude only went up 53%, bunkers went up 195%. And, by mid 2008, while crude was just starting it's slide from the $100/barrel mark, and was still around $80-90/barrel, bunkers had crashed back to $200/ton. Go figure. So, having seen this vast rise in bunker price, the lines wanted to insulate themselves from similar swings by imposing a fuel surcharge. Cargo lines did the same. So, yes, the cruise lines saw an increase in fuel expenditure, but it had no linear correlation with crude oil price, and with today's hedges it bears even less linearity with crude price. So, to worry about fuel surcharges just based on crude price is pretty much useless worrying. Bunker hedges have allowed all shipping lines to incorporate fuel price swings into their fares/tariffs as a business model, and don't rely on fuel surcharges much anymore. The last fuel surcharge I saw was this year, in Canada, where the speed restriction zone for right whales in the Gulf of St. Lawrence caused the major container shipper there to impose a surcharge for the additional fuel required, rather than any fuel price change.

Thanks for the detailed explanation, and noted that 2008/2009 was a different situation than now.

[LMaxwell]

First off, as I've said many times, there is no correlation between crude oil price and marine bunker fuel price, or even marine diesel oil price. For example, in 2011, when crude was $111/barrel, IFO380 fuel was $467/metric ton. Today, with $63/barrel crude, IFO380 is at $398/metric ton. And in 2016, when crude was $29/barrel, IFO380 was $367/metric ton. Use of bunker hedges as well as slightly reduced demand (as ECA's require more and more higher priced low sulfur fuels) have kept bunker prices much more stable than crude.

 

 

 

The FL Attorney General did not strike down the fuel surcharge, what they did prohibit was charging the fuel surcharge for a cruise after the surcharge was triggered, but that had been paid in full before the surcharge trigger.

 

I am aware it was not struck down, that is why it still appears in the contract, but I thought it was extended to any deposit/booking and not just paid in full.