Seatrade Cruise Connection

December 2004

Forward Thinking

2005 will bring changes and challenges for the cruise sector. Mary Bond focuses on a few key issues.

Environmental challenges

Legislators continue to have the cruise industry in their sights concerning a whole raft of issues including air emissions and waste water discharging. The cruise lines and suppliers, working closely with the shipyards, are constantly rising to the challenges imposed by changing regulations to try and keep one step ahead in developing highly efficient and environmentally friendly ships and ship operating systems.

Emerging markets

Asia and Australia may be the next major growth area for the cruise industry.

Star Cruises from a standing start has shown in ten years how to create a product for the Asian consumer. For now the company has the Asian market largely to itself but the massive potential of the region as a source market means it cannot and will not be ignored by the other majors for much longer. Carnival has made it clear that it intends to become a significant player in Asia whilst Royal Caribbean has said it expects to be in Asia in three to five years time.

The region is gearing up for a cruise expansion. Singapore, Japan, Malaysia and Thailand are ready already. Chinese ports are starting to build new terminals and further west Indian ports are investing too.

In the last two years business has boomed in Australasia with more new products and ports coming on line. The arrival of P&O Cruises Australia’s second resident ship, Pacific Sun (Carnival’s former Jubilee) has allowed the company to develop ex-Brisbane product with Pacific Sky and expand its 2005 New Zealand programme.

The 113,000gt Sapphire Princess is the largest passenger ship to visit Australasia and is currently sailing an extended season of trans-Tasman cruising before departing Sydney in March for Bangkok.

In 2005, Diamond Princess’ first Asia season, between late September and late December, will include a 17-day Alaska/Far East cruise (including Petropavlovsk), an Australia/Asia cruise between Singapore and Sydney and three Southeast Asia/China cruises between Beijing. and Bangkok or Singapore. Diamond will also operate sailings to Osaka and Beijing.

The region is not just luring the large ships either. Next year sees Cairns-based Coral Princess Cruises take delivery of Oceanic Princess, a 76-passenger mono-hull under construction in North Queensland and Sarina Bratton’s five-star luxury adventure ship Orion takes up residence in Australia in April.

Port development

Cruise line investment in port facilities continues to gather pace across the world. In Europe, Costa paid a third of the building cost of Savona’s Palacrociere terminal inaugurated last year in return for a 22-year operating lease. The line is also close to signing the final agreement with Barcelona to build and manage a new terminal giving Costa and other Carnival Corp brands preferential use of the facility.

Berthing rights, inadequate facilities, ports’ inability to perform, opportunities for privatization and strategic or competitive advantage are some of the criteria, which may come into play when lines are evaluating port investment.

In an industry first MSC, Costa and Royal Caribbean are all taking a stake in the newly privatized Terminal Napoli ( pictured ) in Italy, whilst the three lines are also joining forces to manage the new cruise terminal at Civitavecchia.

Orderbook

After a sustained period of slow activity in the newbuild market the last quarter saw six new orders placed by Carnival Corp. A total of 10 new ships have been ordered in 2004, including a second Ultra Voyager for RCCL, bringing the orderbook to 22 ships of 58,528 $10.5bn.

With forward orders booked into 2009 and a refurbishment boom in full swing, business is brisk for cruiseship builders, suppliers, contractors, designers, and architects.