World Fuel Services 2011 Annual Report Download - page 27

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The majority of our marine segment activity consists of spot sales. Our cost of fuel is generally tied to
spot pricing or market-based formulas or is government controlled, and our suppliers typically extend
trade credit to us.
We also contract with third parties to provide various services for our customers, including fueling of
vessels in port and at sea, and transportation and delivery of fuel and fuel products.
During each of the years presented in the accompanying consolidated statements of income, none of
our marine customers accounted for more than 10% of total consolidated revenue.
Land Segment
We market fuel and related services to petroleum distributors operating in the land transportation
market, retail petroleum operators and industrial, commercial and government customers and operate a
small number of retail gasoline stations in the U.S. and Gibraltar. Our land-related services include
management services for the procurement of fuel and price risk management. We provide land fuel and
related services throughout most of the United States as well as parts of Brazil and the United Kingdom.
We act as a reseller as we purchase fuel from a supplier, mark it up and contemporaneously resell it to
our customers through spot sales and contract sales. Fuel is delivered to our customers directly or at
designated tanker truck loading terminals commonly referred to as ‘‘racks’’, which are owned and
operated by our suppliers or other third-parties, or directly to customer locations through third party
carriers. We also maintain inventory in certain locations including pipelines and ship inventory via railcar.
Inventory held in storage or being shipped is typically hedged in an effort to protect us against price risk.
Our cost of fuel is generally tied to market-based formulas, and our suppliers typically extend unsecured
trade credit to us. We also enter into derivative contracts in order to mitigate the risk of market price
fluctuations for certain of our transactions and to offer our customers fuel pricing alternatives to meet
their needs.
During each of the years presented in the accompanying consolidated statements of income, none of
our land customers accounted for more than 10% of total consolidated revenue.
Competitors
Our competitors within the highly fragmented world-wide downstream markets of aviation, marine and
land fuel are numerous, ranging from large multinational corporations, principally major oil producers,
which have significantly greater capital resources, to relatively small and specialized firms. We compete
with the major oil producers that market fuel directly to the large commercial airlines, shipping
companies and petroleum distributors operating in the land transportation market as well as fuel
resellers. We believe that our extensive market knowledge, worldwide presence, logistical expertise,
extension of credit and use of derivatives to provide fuel pricing alternatives give us the ability to
compete in the marketplace.
Employees
As of February 15, 2012, we employed 1,798 people worldwide.
Regulation
Our current and past activities are subject to substantial regulation by federal, state and local
government agencies, inside and outside the United States, which enforce laws and regulations
governing the transportation, sale, storage and disposal of fuel and the collection, transportation,
processing, storage, use and disposal of hazardous substances and wastes, including waste oil and
petroleum products. For example, U.S. federal and state environmental laws applicable to us include
statutes that: (i) allocate the cost of remedying contamination among specifically identified parties and
prevent future contamination; (ii) impose national ambient standards and, in some cases, emission
standards, for air pollutants that present a risk to public health or welfare; (iii) govern the management,
treatment, storage and disposal of hazardous wastes; and (iv) regulate the discharge of pollutants into
waterways. International treaties also prohibit the discharge of petroleum products at sea. The penalties
for violations of environmental laws include injunctive relief, recovery of damages for injury to air, water
or property, and fines for non-compliance. See ‘‘Item 1A – Risk Factors,’’ and ‘‘Item 3 – Legal
Proceedings.’’
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