Now that OIL prices are low "mum" is the word from the Cruise Industry..HUM..

[takeadip]

Hi All,

It seems like just yesterday(actually 6 yrs ago) that oil prices per barrel were at $130+ and the cruise industry got out in front of these costs by quickly passing "fuel Surcharge" costs right along to the consumer. I remember booking a cruise and reading the disclaimer about if the cost per barrel exceeds a certain amount then we all pitch in with our checkbooks. This practice made me so crazy that I would follow the price of Oil daily after work begging the price to not jump before i set sail...so now i ask:

 

With Light Crude Oil Prices hovering around a mere $30 per barrel which is about $100 cheaper per Barrel now WHERE ARE OUR SAVINGS???? The cruise ship industry hasn't said a peep about the huge fuel savings that are showing up at the bottom of their balance sheet. Cruise Ship employees wages have not gone up substantially over the last 6 years..With Oil prices so low the cruise ships are practically sailing around the oceans for "Free". I wouldn't be surprised if NCL starts to brag about it by hiding this fact into a cheeky slogan like "Free at Sea" or something close to that.

 

Best,

Mark

[TheDougOut]

Egg prices are up. The two offset one another, almost to the penny.

[melk]

Egg prices are up. The two offset one another, almost to the penny.

 

Not really the best parallel.

Cruise lines spend FAR mare on fuel than they do on eggs. In fact fuel is their largest single cost outside of staff wages.

Even if cruise fares do not decrease because of the drop in fuel prices (and they should) it's very difficult for the lines to justify the continued fare increases.

[abe3]

Not really the best parallel.

 

Cruise lines spend FAR mare on fuel than they do on eggs. In fact fuel is their largest single cost outside of staff wages.

 

Even if cruise fares do not decrease because of the drop in fuel prices (and they should) it's very difficult for the lines to justify the continued fare increases.

 

 

They don't reduce the price of UPS, FEDEX, post office because of low fuel costs.

[Warm-Water Diver]

Not really the best parallel.

Cruise lines spend FAR mare on fuel than they do on eggs. In fact fuel is their largest single cost outside of staff wages.

Even if cruise fares do not decrease because of the drop in fuel prices (and they should) it's very difficult for the lines to justify the continued fare increases.

 

I agree completely with your comments :)

[TheDougOut]

Not really the best parallel.

 

Apparently not the best joke, either. :)

[Ranger719]

Apparently not the best joke, either. :)

 

 

Actually someone taking that line seriously was one of the funniest things I've read on CC in quite awhile...

[ColinIllinois]

So, if I'm reading correctly there hasn't been an oil surcharge on your fare even when they could have levied it on your fare, but you are complaining about it anyway? Does that sum it up?

[titangas]

The heck with cruise fares.

 

Just about every everyday consumable has shot up in price the last few years mostly related to the increase in fuel prices, which has a domino effect throughout manufacturing, farming, all the way up to the final shipping costs.

 

Let's see some of that start coming down.

[Moby0215]

Not really the best parallel.

 

Cruise lines spend FAR mare on fuel than they do on eggs. In fact fuel is their largest single cost outside of staff wages.

 

Even if cruise fares do not decrease because of the drop in fuel prices (and they should) it's very difficult for the lines to justify the continued fare increases.

 

 

Not hard at all to justify. It's supply and demand.

 

 

Sent from my iPhone using Tapatalk

[takeadip]

So, if I'm reading correctly there hasn't been an oil surcharge on your fare even when they could have levied it on your fare, but you are complaining about it anyway? Does that sum it up?

 

On one cruise (6 yrs back) with Princess there was a surcharge...but not since then. but prices have skyrocketed especially with all the so called freebies that you get.

I just feel that if one cruise line came out and stated that they would give the customer a break a bit on price based on the Net cost of conducting business a few would start to follow...but it looks like the cruiselines are gonna keep the extra cash...pay down some debt...and reward the shareholders... IMHO.

[takeadip]

The heck with cruise fares.

 

Just about every everyday consumable has shot up in price the last few years mostly related to the increase in fuel prices, which has a domino effect throughout manufacturing, farming, all the way up to the final shipping costs.

 

Let's see some of that start coming down.

 

its long overdue...lets let the little guy catch a break sometime..maybe they would put a value on goodwill. lol

[ColinIllinois]

On one cruise (6 yrs back) with Princess there was a surcharge...but not since then. but prices have skyrocketed especially with all the so called freebies that you get.

I just feel that if one cruise line came out and stated that they would give the customer a break a bit on price based on the Net cost of conducting business a few would start to follow...but it looks like the cruiselines are gonna keep the extra cash...pay down some debt...and reward the shareholders... IMHO.

 

 

That's what they should do. Simple Business 101.

[chengkp75]

Are the airlines giving discounts? What about consumer goods, have they dropped in price, since most of them are shipped from overseas, and the ships buy the same fuels as cruise ships?

 

Marine fuels are not anywhere near as volatile as crude or gasoline prices. And while crude prices and gasoline are dropping, marine bunker prices are starting upwards the last couple of weeks, due to increased demand.

 

Secondly, since 1 Jan, 2015, when the ships are within 200 miles of the North American (plus Hawaii, P.R. and USVI) coast, they must burn marine diesel oil, not the traditional residual fuel oil they can burn elsewhere. Marine diesel fuel is twice as expensive as residual fuel, so the overall drop in price has been offset by needing to buy a more expensive product.

 

And if you convert past dollars to today's dollars, I don't believe cruise costs have "skyrocketed". Gone up some, sure, but a lot of that is as others say, supply and demand, more cruisers booking a relatively fixed amount of cabins.

[Sizzlechest]

Are the airlines giving discounts?

 

Yes: http://www.hopper.com/research/consumer-airfare-index-predicted-bottom-month/

 

What about consumer goods, have they dropped in price, since most of them are shipped from overseas, and the ships buy the same fuels as cruise ships?

 

Yes. http://www.bls.gov/news.release/pdf/ppi.pdf

 

Marine fuels are not anywhere near as volatile as crude or gasoline prices.

 

Not the point. Still cheaper, but no savings passed on to consumer: http://www.transport.govt.nz/ourwork/tmif/transportpriceindices/ti008/

Edited January 20, 2016 by Sizzlechest

[chengkp75]

Yes: http://www.hopper.com/research/consumer-airfare-index-predicted-bottom-month/

 

"Much of this drop can be attributed to this year’s dramatic decline in oil prices"

 

"Last year we observed a big dip in flight prices due to increased competition, decreased jet fuel prices, and airlines moving into branded, unbundled ticketing with lower base fares and optional fees (such as checked bags)."

 

So, how much is from fuel prices, and how much from the other reasons?

 

 

Yes. http://www.bls.gov/news.release/pdf/ppi.pdf

 

So, oil dropped from $54/barrel to less than $30/barrel over 2015, and consumer prices dropped 1%.

 

 

Not the point. Still cheaper, but no savings passed on to consumer: http://www.transport.govt.nz/ourwork/tmif/transportpriceindices/ti008/

 

Given that the price of marine fuel fluctuates between major bunkering ports, I'll go with the Singapore figures you give. Notice that marine diesel fuel (and this is what is called MDO, or dirty diesel, is $450/mt in Q3 of 2015, which equates to the 2014 Q4 price of IFO 380, which is the fuel traditionally burned by the cruise ships. Further, for the US ECA, MDO is not an acceptable fuel, the ships must use "clean diesel fuel", called MGO (marine gas oil), which runs $100-150/mt more than MDO.

[mianmike]

Yes: http://www.hopper.com/research/consumer-airfare-index-predicted-bottom-month/

 

 

 

Yes. http://www.bls.gov/news.release/pdf/ppi.pdf

 

 

 

Not the point. Still cheaper, but no savings passed on to consumer: http://www.transport.govt.nz/ourwork/tmif/transportpriceindices/ti008/

 

NCL bases its fuel surcharges on the price of the West Texas Intermediate crude oil. Here is a six month chart:

 

Capture by mianmike, on Flickr

[barnacle_boy]

NCL is also working on installing scrubbers on most of their ships to burn HFO and still comply with ECA's sulphur emission standards. Those aren't cheap by any means. Millions of dollars per unit for each individual DG. $$$

[Golfin55]

Hi All,

 

It seems like just yesterday(actually 6 yrs ago) that oil prices per barrel were at $130+ and the cruise industry got out in front of these costs by quickly passing "fuel Surcharge" costs right along to the consumer. I remember booking a cruise and reading the disclaimer about if the cost per barrel exceeds a certain amount then we all pitch in with our checkbooks. This practice made me so crazy that I would follow the price of Oil daily after work begging the price to not jump before i set sail...so now i ask:

 

 

 

With Light Crude Oil Prices hovering around a mere $30 per barrel which is about $100 cheaper per Barrel now WHERE ARE OUR SAVINGS???? The cruise ship industry hasn't said a peep about the huge fuel savings that are showing up at the bottom of their balance sheet. Cruise Ship employees wages have not gone up substantially over the last 6 years..With Oil prices so low the cruise ships are practically sailing around the oceans for "Free". I wouldn't be surprised if NCL starts to brag about it by hiding this fact into a cheeky slogan like "Free at Sea" or something close to that.

 

 

 

Best,

 

Mark

 

 

If you are going to make assumptions, please post factual information.

The disclaimer has been there for years on most cruise lines. It just allows them to charge if oil prices go beyond a particular threshold.

 

However, on ALL of my cruises, not once have I been charged a FSUR. Cruise lines like airlines buy their oil on annual contractual basis. So, what do they owe you? You were not charged additionally for the oil. So, what if any discount do they need to reimburse you for?

 

RIP Glenn Frey - Thanks for the voice 🕯[emoji25]

[Golfin55]

NCL bases its fuel surcharges on the price of the West Texas Intermediate crude oil. Here is a six month chart:

 

 

 

Capture by mianmike, on Flickr

 

 

That chart is meaningless. BTW, it's solely based on Light Sweet Crude Oil. When you purchase oil futures that price is not close to the Wholesale prices on NYMEX.

[chengkp75]

NCL is also working on installing scrubbers on most of their ships to burn HFO and still comply with ECA's sulphur emission standards. Those aren't cheap by any means. Millions of dollars per unit for each individual DG. $$$

 

Yes, they run about $1-1.5 million per engine, times 4-6 engines per ship. They have a payback period of 6-10 years depending on how much time the ship spends in the ECA. So, maybe if oil prices are still low in 6-10 years, you'll see a lowering of cruise prices.

[chengkp75]

NCL bases its fuel surcharges on the price of the West Texas Intermediate crude oil. Here is a six month chart:

 

 

Yes, and the fuel surcharge was instituted prior to the cruise lines developing purchasing derivatives that stabilize fuel costs, so their marketing model has changed completely.

[fshagan]

We have never been charged a fuel surcharge, even when the index NCL uses was quite a bit higher than their threshold.

 

People are trying to nickle and dime NCL's fare prices.

[mianmike]

That chart is meaningless. BTW, it's solely based on Light Sweet Crude Oil. When you purchase oil futures that price is not close to the Wholesale prices on NYMEX.

 

The chart is a historical reference to the price of West Texas Intermediate crude oil, which according to NCL, should the price rise above $65 they have the right to institute a fuel surcharge. The post and chart were nothing more than a visual representation of the recent price history. NCL's $65 threshold does not take into account that they have hedging strategies which lock in delivery of fuel at a certain price in the future. NCL has reduced fuel costs. The Company's fuel price per metric ton, net of hedges, decreased 11.7% to $566 from $641 in 2014.

[littlelulu01]

I'm pretty sure all airlines made profits last year and attribute the profits to low fuel costs. Even United Airlines made a profit last year despite terrible mismanagement and that they hedged oil prices rising.

 

if the worst rated and poorest managed mainstream airline in the country can post profits because of low fuel costs, it would be easy to assume the cruise lines profits last year are due to similar reasons.

 

cruise and flight prices will be what the market bears. They're going to make hay when the sun shines. United's CEO had a heart transplant and the absence of his management and cumulative issues with the line has caused talk of the line in dire need of some changes in order to survive.

 

Should a cruise line reputation deteriorate and people start choosing another line then it won't matter how low fuel costs are, at some point they will be affected.

 

United's reputation went down, they lost much of their lucrative business travel contracts and analysts are saying it will be hard to turn the line around.