Fuel surcharges

[Toofarfromthesea]

With fuel surcharges starting to pop up in a variety of places, what do you think the likelihood is of them coming back on cruises?

[navybankerteacher]

4 hours ago, Toofarfromthesea said:

With fuel surcharges starting to pop up in a variety of places, what do you think the likelihood is of them coming back on cruises?

I am surprised that they have not become evident already.  In fact, there is the possibility that provision for surcharges already exists in the fine print of cruise current contracts.

[leaveitallbehind]

RCCL, for one, already announced that they have no plans for any fuel surcharges to be implemented near term.

Edited March 27, 2022 by leaveitallbehind

[navybankerteacher]

6 hours ago, leaveitallbehind said:

RCCL, for one, already announced that they have no plans for any fuel surcharges to be implemented near term.

Of course, “no plans” means no plans as of today -  and how far does “near term” extend?

[leaveitallbehind]

2 hours ago, navybankerteacher said:

Of course, “no plans” means no plans as of today -  and how far does “near term” extend?

Obviously that's impossible to say, but the information I saw said the RCI had hedged more than half of this years fuel requirements coming into '22 at favorable pricing as reported by them to the SEC. This would help mitigate fuel increases during the year. 

 

And this is with regards only to RCI.  Other cruise lines may be different based on their individual fuel contracts.  For instance that same article indicated that Carnival had no hedges in place for '22.  I guess its all a matter of timing with each line's fuel contracts.

 

I am certainly no authority on the subject - just passing on what I had read a couple of weeks ago.

Edited March 27, 2022 by leaveitallbehind

[DirtyDawg]

RCL is about 50% hedged for 2022 so there is no need right now to react to the current spot prices. Early in Q2 they will be publishing and update so if you want, you can track what the fuel price is for the new hedges. The price will likely be up significantly from Q4 '21 and I'm sure they will be reconsidering any fuel surcharge decision at that time.  Stay tuned!

[DirtyDawg]

1 hour ago, leaveitallbehind said:

Obviously that's impossible to say, but the information I saw said the RCI had hedged more than half of this years fuel requirements coming into '22 at favorable pricing as reported by them to the SEC. This would help mitigate fuel increases during the year. 

 

And this is with regards only to RCI.  Other cruise lines may be different based on their individual fuel contracts.  For instance that same article indicated that Carnival had no hedges in place for '22.  I guess its all a matter of timing with each line's fuel contracts.

 

I am certainly no authority on the subject - just passing on what I had read a couple of weeks ago.

Wow, CCL doesn't have any fuel hedges for 2022. I recall they lost a lot of money in 2015 (ish) when they had hedges in place and the fuel price dropped significantly. I guess they decided to abandon hedging after that. Talk about a whipsaw. 

[leaveitallbehind]

12 minutes ago, DirtyDawg said:

Wow, CCL doesn't have any fuel hedges for 2022. I recall they lost a lot of money in 2015 (ish) when they had hedges in place and the fuel price dropped significantly. I guess they decided to abandon hedging after that. Talk about a whipsaw. 

Yeah what I read said coming into 2022, that of the big three, RCI had hedged more than half of their volume, NCL reported 42%, but CCL had nothing hedged for the year.  Again I guess it all has to do with ongoing contract timing. And as they are #1 with a lot of lines under there corporate family that, at least to me, has some rather significant implications given the oil situation since January.  But again, I am certainly no authority and am only passing this on. 

Edited March 27, 2022 by leaveitallbehind

[Joebucks]

I haven't been paying attention. Who is implementing fuel surcharges?

[cruisemom42]

I'd rather they institute a fuel surcharge than cut port hours. HAL seem to be doing the latter, at least for some cruises....

[ColeThornton]

18 hours ago, Toofarfromthesea said:

With fuel surcharges starting to pop up in a variety of places, what do you think the likelihood is of them coming back on cruises?

 

 

Where are fuel surcharges "popping up" at?   I don't recall seeing any.

[leaveitallbehind]

13 minutes ago, cruisemom42 said:

I'd rather they institute a fuel surcharge than cut port hours. HAL seem to be doing the latter, at least for some cruises....

Not sure I understand how potentially cutting port hours relates to possible fuel surcharges?

Edited March 27, 2022 by leaveitallbehind

[cruisemom42]

27 minutes ago, leaveitallbehind said:

Not sure I understand how potentially cutting port hours relates to possible fuel surcharges?

 

The faster a ship travels, the less fuel-efficient it is. Sailing at, say 12 knots versus 18 knots can save a lot in fuel costs. But ships take longer to get point-to-point, so port times are often shortened by an hour or two.

[cruisemom42]

58 minutes ago, ColeThornton said:

 

 

Where are fuel surcharges "popping up" at?   I don't recall seeing any.

 

Definitely on Uber Eats and other food delivery services.

[njhorseman]

46 minutes ago, cruisemom42 said:

 

Definitely on Uber Eats and other food delivery services.

And Uber itself, not just Uber eats.

[leaveitallbehind]

1 hour ago, cruisemom42 said:

 

The faster a ship travels, the less fuel-efficient it is. Sailing at, say 12 knots versus 18 knots can save a lot in fuel costs. But ships take longer to get point-to-point, so port times are often shortened by an hour or two.

I know you said that HAL has had some recent ports of call with shortened hours, but are you sure that this is as a result of increased fuel costs and an effort to avoid a fuel surcharge?  While there is some basis for logic in your comments, have your heard anything that would confirm this as the reason for the reduced port hours or is this or it something you are surmising?

 

I am not challenging you on this, but just curious as there are a lot of reasons why port hours can be shortened and I've not heard of cruise lines doing this to mitigate the need for a fuel surcharge. 

Edited March 27, 2022 by leaveitallbehind

[cruisemom42]

27 minutes ago, leaveitallbehind said:

I know you said that HAL has had some recent ports of call with shortened hours, but are you sure that this is as a result of increased fuel costs and an effort to avoid a fuel surcharge?  While there is some basis for logic in your comments, have your heard anything that would confirm this as the reason for the reduced port hours or is this or it something you are surmising?

 

I am not challenging you on this, but just curious as there are a lot of reasons why port hours can be shortened and I've not heard of cruise lines doing this to mitigate the need for a fuel surcharge. 

 

I doubt HAL plans to acknowledge it, but they have done the same thing in the past when fuel costs spiked. I don't know for sure (hence my use of the word "seem"), but can you provide another plausible explanation for shortening port times (either arrival or departure) by an hour or two for not just one port but all of the ports on a specific itinerary?

[leaveitallbehind]

34 minutes ago, cruisemom42 said:

 

I doubt HAL plans to acknowledge it, but they have done the same thing in the past when fuel costs spiked. I don't know for sure (hence my use of the word "seem"), but can you provide another plausible explanation for shortening port times (either arrival or departure) by an hour or two for not just one port but all of the ports on a specific itinerary?

No I can not, but there could be other reasons.  One or two hours on several ports of call doesn't seem to add up to too many nautical miles of fuel savings, but who knows?   I don't know why they wouldn't acknowledge it, but then again I don't have any history with HAL, so if you say they've done this in the past I have to accept you at your word on that. 

 

But even then, if it was never acknowledged as such in the past, then it cannot be known if that is why it is being done now.  Could just be coincidence.  As you say, you don't know for sure. Be curious to see if this continues or if it occurs with other cruise lines.  But it would seem easier and less mysterious to just add a surcharge if that is the driving force.  Certainly would be understandable in today's environment. 🙂

Edited March 27, 2022 by leaveitallbehind

[chengkp75]

1 hour ago, leaveitallbehind said:

One or two hours on several ports of call doesn't seem to add up to too many nautical miles of fuel savings, but who knows?

The fuel savings could be considerable.  Power required (and therefore fuel consumption) is a parabolic relation to speed, meaning that the last couple of knots requires a whole lot of fuel.  For a ship that is rated for 20 knots, dropping from 18 knots to 16 knots can result in a 20-25% fuel savings.

[leaveitallbehind]

12 minutes ago, chengkp75 said:

The fuel savings could be considerable.  Power required (and therefore fuel consumption) is a parabolic relation to speed, meaning that the last couple of knots requires a whole lot of fuel.  For a ship that is rated for 20 knots, dropping from 18 knots to 16 knots can result in a 20-25% fuel savings.

Thanks and understood. I guess my thinking was that an hour or two difference for several ports did not seem like a dramatic reduction.  I also was wondering if that, as a way to avoid a fuel surcharge, would be the reasoning. 

 

Appreciate the clarification as always!

Edited March 27, 2022 by leaveitallbehind

[navybankerteacher]

7 hours ago, leaveitallbehind said:

Obviously that's impossible to say, but the information I saw said the RCI had hedged more than half of this years fuel requirements coming into '22 at favorable pricing as reported by them to the SEC. This would help mitigate fuel increases during the year. 

…

Having  most of their fuel requirement hedged does not mean that the bean counters would not consider applying a surcharge if they had the option— the fact remains they are still burning fuel which needs to be replaced at a significantly higher cost

[leaveitallbehind]

1 hour ago, navybankerteacher said:

Having  most of their fuel requirement hedged does not mean that the bean counters would not consider applying a surcharge if they had the option— the fact remains they are still burning fuel which needs to be replaced at a significantly higher cost

I am making no predictions and have no idea what the bean counters would do.  I'm just posting the information I read.

[Joebucks]

23 hours ago, cruisemom42 said:

 

Definitely on Uber Eats and other food delivery services.

 

Uber imposes a fee almost every time there is some sort of market challenge. I don't know that this has any correlation to cruising.

[leaveitallbehind]

15 minutes ago, Joebucks said:

 

Uber imposes a fee almost every time there is some sort of market challenge. I don't know that this has any correlation to cruising.

I think it would only if Uber hedged fuel costs in conjunction with long term supplier contracts for their independent drivers when refueling their vehicles. And then only because they would face the same cost influences.   😁

Edited March 28, 2022 by leaveitallbehind

[Toofarfromthesea]

On 3/27/2022 at 9:40 AM, ColeThornton said:

 

 

Where are fuel surcharges "popping up" at?   I don't recall seeing any.

FedEx, ups, DHL, Uber, Lyft, just to name a few.  Google 2022 fuel surcharges.