Fuel consumption on cruise ships? (math involved!)

We just returned from a 14 day Alaska cruise on the Zaandam. (Great cruise except for the 18' seas crossing Gulf of Alaska) As usual on HAL, we got a cruise log at the end of the cruise. There was some interesting information that I never really paid attention to before.

Fuel Consumption: 85 gallons per mile

Total Distance: 3485 miles

Number of Guests: 1369

Therefore:

3485 X 85 = 296,225 gallons of fuel consumed

296,225/1369 = 216.38 gallons of fuel per passenger

I don't know what HAL is paying now for diesel fuel, but if it is $3.00 a gallon:

216.38 X $3 = $649.14 per passenger for fuel consumption. Our cost for the cruise (not counting taxes, port fees, insurance) was $599 per person, outside, obstructed view. Can this be correct? If so, the cruise lines rely heavily on the higher priced cabins for their profit, because they are losing money on the cheap seats.

I know there must be a flaw in my math here, what is it?

I guess they must be paying a lot less than $3 /gal for bunker fuel ... which is almost a tar, left over after all of the more-volatile gasoline and auto/truck diesel fuel have been extracted.

What's even more confusing is that I've heard from several sources that ships like the QE2 use around 200 gal per n.m.! How in the world are they surviving? :confused:

My understanding is that they purchase fuel per ton, not gallon ... roughly 262 gallons per ton. I'm not sure the current price per ton, but based on when I last hear, I would guess it's at least $700 (USD).

Update: I searched around, and current price per ton of bunker fuel appears to be running between roughly $600-$700, depending on the port.

So continuing with the math ...

216.38 per guest / 262 gallons per ton = 0.826 tons per guest. Multiplying this by the $600-$700 range comes out to $495 to $578 per guest.

No matter what they are paying for the fuel, clearly the cost is going up by a large amount. It is possible, that like Southwest Airlines, the company has a contract with one of the oil companies that guarantees a ceiling for the cost of fuel but one can only wonder what will happen as those contracts terminate. Prices have to rise or we will, once again start to see the dominoes fall -- especially as the cruise lines have committed to lots of new builds.

You forgot one thing.

You are talking propulsion consumption only.

These ships use electricity for everything and the Air Conditioning and general use consumes more fuel than propulsion.....

Fuel is the cost of entertainment...

Ruth & Jim

Not all passengers are paying $599. per cruise, some much higher. Plus one has to add in all the extras, including fuel surcharges.

We have heard that a ship's Casino on a full cruise can bring in as much as one hundred thousand dollars per 7 day cruise. And if a 750ml bottle of vodka can be purchased by the line for less than $3. surely the bar brings in a goodly amount.

The line does not pull up to the pumps as we do. They must purchase their fuel based on futures and certainly do not pay local taxes. Obviously the lines will have to make service adjustments to lower costs to cope with the ever-higher fuel costs but that is to maintain the bottom line. All these ships would not be on the high seas if they were not making a comfortable profit. Our question is how far will they cut and will it be self-defeating in passenger loss.

If so, the cruise lines rely heavily on the higher priced cabins for their profit, because they are losing money on the cheap seats.

I have a feeling they rely more heavily on profit from drinks, shops, photos, excursions, casino, etc. then they do on higher price cabins. JMHO.

John

Probably the cabin rates cover the operating expenses and the drinks, casino, shops, excursions, photos, etc. are where most of the profit is at.

You forgot one thing.

 

You are talking propulsion consumption only.

 

These ships use electricity for everything and the Air Conditioning and general use consumes more fuel than propulsion.....

 

Fuel is the cost of entertainment...

 

Ruth & Jim

I think this was included and not forgotten. My guess is the 85 g/mile stat is total gallons burned on the cruise divided by the mileage. If so, it includes fuel burned sitting in port as well as when they are under way. Since all the electricity, hot water, HVAC, incinerators, etc. directly or indirectly use the same fuel for power, they are included too.

Use to be a Travel Agent and I did hear once from one of the reps, that usually the persons fare pays for the gas and food. And as one of the previous posters said, not everyone paid 500 something for there cruise. Some people paid several thousand for the cruise and were just as happy with the price.

Last year on the Norwegian Pearl the captain said that the ship uses 1 gallon per second!

HAL's Fuel Supplement Press Release from June 12, 2008

Because of the continuing rapid escalation of fuel prices, the North American brands of Carnival Corporation, including Holland America Line, have announced an increase to the current fuel supplement from $7.00 to $9.00 (USD) per passenger per day. The fuel supplement on third, fourth and fifth passengers will increase from $2 to $4 (USD) per person per day. The new fuel supplements will apply to all new bookings effective June 12, 2008.

 

The fuel supplements will not exceed $126 (USD) per person per voyage for the first and second guests and $56 (USD) per person per voyage for the third, fourth and fifth guests in a stateroom.

 

For bookings made from November 7, 2007 to April, 20, 2008, the initial fuel supplement of $5 (USD) per person per day will apply. For bookings made from April 21, 2008 to June 11, 2008, the fuel supplement of $7 (USD) per person per day will apply, with $2 (USD) per person per day for third, fourth and fifth guests.

 

The fuel supplement is necessitated by significant rises in fuel prices which have dramatically increased Carnival Corporation's operating costs. We regret having to take this action, but fuel prices continue to increase, and we find it necessary to implement a modest increase in the supplement.

Interesting topic. I took a look at Carnival Corp latest quarterly finanical statements (which includes all the brands). Here is some interesting information... Fuel cost per metric ton increased from $301 for the three months (Dec 06, Jan 07, Feb 07) to $499 for the three months (Dec 07, Jan 08, Feb 08). Fuel cost per metic ton is calcuated by dividining the cost of fuel by the number of metic tons consumed. Obviously a large increase.

Some other interest information are passenger tickets for these quarters were 2.4M in Q1 2008 versus 2.1M in Q1 2007. While fuel cost were $392K in Q1 2008 versus $220K in 2007. Onboard revenues were $702K and $626K for Q1 2008 and 2007 respectively.

Last year on the Norwegian Pearl the captain said that the ship uses 1 gallon per second!

I think you are going to see some paring down of long itineraries . . . I notice that the tradition ROTTERDAM repositioning cruise Portugal to Brazil is taking a shorter route with more port stops. I think there is going to be more concern in the planning stages as to the amount of fuel that is going to be consumed between ports. Closer ports, slower speeds, less fuel.

Regards, Richard

I think you are going to see some paring down of long itineraries . . . I notice that the tradition ROTTERDAM repositioning cruise Portugal to Brazil is taking a shorter route with more port stops. I think there is going to be more concern in the planning stages as to the amount of fuel that is going to be consumed between ports. Closer ports, slower speeds, less fuel.

 

Regards, Richard

I wouldn't be surprised by this ... while shopping for an Alaskan itinerary, I noticed that several round trips had less than efficient routes ... first going north, then south, then north again (and sometimes another north/south zig-zag) before heading back to the originating port. I would suspect that where possible, they'll begin putting more effort into streamlining the itineraries to eliminate as much of the zig-zag back-tracking as possible in order to reduce the fuel consumption. I doubt they could completely eliminate it (they need to also balance how many ships are in each port any given day), but there's certainly room for improvement.

 

Is it possible, that like Southwest Airlines, the company has a contract with one of the oil companies that guarantees a ceiling for the cost of fuel but one can only wonder what will happen as those contracts terminate.

CCL does not speculate in risky fuel futures the way SW used to do.

CCL does not speculate in risky fuel futures the way SW used to do.

No, they don't.

HOWEVER, they do have high-volume contracts which probably bring the unit-cost down a little bit over the general market cost.

I think you are going to see some paring down of long itineraries . . . I notice that the tradition ROTTERDAM repositioning cruise Portugal to Brazil is taking a shorter route with more port stops. I think there is going to be more concern in the planning stages as to the amount of fuel that is going to be consumed between ports. Closer ports, slower speeds, less fuel.

 

Regards, Richard

The change in the Rotterdam intinerary is due to the Rotterdam doing the World cruise in 2009. She is making a straight shot from the Canary Islands to FLL and will not winter in South America.

No, they don't.

 

HOWEVER, they do have high-volume contracts which probably bring the unit-cost down a little bit over the general market cost.

Agreed. :)

In the Carnival Corp. earnings call in March, for the quarter ended Feb. 29, Carnival predicted:

"For the full year based on the forward curve, fuel prices are projected to be $525 per metric ton for 2008 versus $361 per metric ton in 2007, costing us an additional $532 million or $0.65 per share."

It will be interesting to see what they have to say tomorrow.

CCL does not speculate in risky fuel futures the way SW used to do.

SW does not "speculate" in fuel, they hedge with great benefit for their bottom line.

Fuel is becoming an acute problem. Last year, on the Regal Princess, we bagged anchoring in Gatun Lake - cancelled the shore excursions -- why ? to return the Balboa to pick up fuel. Word was that they got a great price on a load of bunker fuel. That was last year and now the prices are sky high compared to that. I hope this all levels out but at 86 gallons per mile Stein must have some sleepless nights.

I was always of the understanding that cruise fares were geared to pay for fuel, food, port charges and hotel labour. The other revenue streams paid for mechanical maintentance and the profit. Is this not correct?

And, don't forget that fuel for the ship is not the only thing that increased as a result of the rise in oil prices. As we all know, the cost of food has sky-rocketed almost over night, and plastics and other items that utilize petroleum have also seen dramatic rises in price.