July 29, 2008

Rising fuel costs have devastating impact on charter fishing industry


It’s an unusual sight. On a sunny July day, with a light breeze blowing, the Oden’s Dock parking lot is all but empty and charter boats, tied securely to their pilings, float idly in their slips. 

Unfortunately, it’s a sight that’s becoming more and more common.

According to the North Carolina Division of Marine Fisheries, the number of trips run by North Carolina’s 700 for-hire vessels has fallen off by about 30 percent.  And that’s just from the first two months of the year. Many captains estimate that their business has decreased by much more.

“I would say that I’m at about 50 percent of where I should be for this time of year,” says Donny Smith, captain of the Big Eye, a charter boat out of Hatteras Harbor. 

“It’s terrible,” echoes Eddie Jack Scarborough, who runs the Nancy-K, also out of Hatteras Harbor. “Nobody’s calling.”
The obvious explanation for such a dramatic decline in business is the ever-rising cost of fuel.

People all across the country have horror stories about the havoc that rising fuel costs have wreaked on their businesses, and perhaps nowhere on the island is that impact more evident than at the docks.

Currently, diesel fuel is at $4.75 per gallon, a jump from $4.60 last month, and an exponential leap from $2.80 this time last year.

Depending on the size of the boat and how far out a captain has to run to find the fish, usually anywhere from 15 to 35 miles one way, a daily fuel bill can range anywhere from $200 to $1,000 per day.

That’s one expensive boat ride.

The alternatives available to others suffering from high fuel costs are almost comically inapplicable to charter captains (Boat pooling to the Gulf Stream, anyone?), so in order to combat the high costs, captains have been forced to raise the price of their trips.

It would be tempting to believe that the often marginal increases in rates, usually around 10 percent or less, would provide a quick and effective solution to the problem—shift the burden onto the consumer. Unfortunately, it’s just not that simple.

“It’s kind of like slapping a band-aid on a broken arm,” explains Capt. Patrick Caton of the Little Clam at Oden’s Dock. “Times are hard for everyone right now, and you have to be careful not to price yourself out of business. It doesn’t matter what diesel costs if your boat never leaves the dock.”

Caton says he struggled with the decision to raise his prices, and with fuel continuing to rise, he is forced to consider raising them again.  And at $975 per day, he’s one of the cheapest rides around.  Larger offshore boats can now cost as much as $1,700 or $1,800 a trip. 

Scarborough and Smith also believe sticker-shock, as well as a generally struggling economy, to be a contributing factor to the decline. 

“People are spending their money elsewhere -- on gas getting down here, rental houses, and food.  They see the price of a charter, and they think they just can’t spend the money,” says Smith. 

Perhaps the sign on the door of the Albatross Fleet, says it best: “We regret the necessity of a fuel surcharge…Diesel continues to increase—just as gasoline.”

Another problem with the price increases is that they are barely covering the extra fuel expenditure, if they cover it at all, which means that not only are fewer people fishing, captains are making less profit per trip.
“If I didn’t have my side job, I’d be broke right now,” says Smith.

Even the inshore boats, which are generally smaller and burn considerably less fuel, are feeling the pinch.  While a lot of inshore captains have not seen the dramatic decline in business that offshore captains have, they are still struggling to cover their fuel costs.

“I was talking to [another captain] the other day, and we figured out that fuel used to be somewhere around 11 percent of our total cost. Now it’s somewhere around 35 percent,” says Tommy Merrill, who runs the Hatterascal, an inshore boat out of Teach’s Lair Marina. “And I probably use the least fuel of anyone around.”

Ken Dempsey, who runs a small outboard and fishes primarily in the sound, says his business is steady—for now, anyway—and he believes “a lot of people are switching to inshore because of costs.”

But Dempsey, like so many other captains, both inshore and offshore, is quick to add that even with the 10 percent price increase he adopted this year, he has not been able to offset his steadily rising fuel bill.

Although it looks like the charter industry is in bad shape now, the worst may be yet to come. With beach closures seriously threatening the influx of summer visitors and fuel prices that seem to know no limit, things may actually get worse before they get better.

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