Semester at Sea, like any company, sets up a yearly budget based largely on estimates of fixed and variable costs with some room for variation. We are directly impacted from time to time just as everyone is in the travel industry and the maritime industry in particular, with periodic and significant overall increases in our fuel prices. Depending on each port’s regulatory and environmental requirements, we have to consider at least two different types and grades of fuel, each with significantly different price points. Political unrest in certain parts of the world, as well as periodic natural disasters, also can contribute to increasing and unpredictable volatility as well, which in turn lends to overall instability and unpredictability in fuel prices. Fuel charges remain a material component of our overall cost structure. We make every effort to contain fuel costs through enhanced itinerary planning (which we conduct one to two years in advance), and through the use of standard advance fuel purchase commitment arrangements when appropriate. However, it is impossible for us to accurately predict what we might pay for fuel per voyage, port-to-port. Like airlines and major shipping companies, we regrettably must offset these higher costs from time to time with additional fuel surcharges.
In order to facilitate your financial planning, we may invoice you with a “fuel fee,” which at the time is our best indication of what our final “fuel surcharge” is expected to be. In advance of sailing, Semester at Sea may enact a fuel supplement surcharge for all participants, in the event that the average price for the blended types of fuel and related costs during the voyage is expected to exceed a certain budgetary threshold in pricing per metric ton, the amount of which will be offset by advance fuel fee billings/payments. These incurred costs include not only what is expected to be paid in various ports, but also include additional costs for fuel contracts entered into. These fuel contracts are intended to cushion the financial impact if future fuel prices became volatile. Such surcharges when enacted are necessary to offset the total excess fuel costs that exceed this budget threshold. For more information please review our fuel surcharge policy.
