Seatrade Cruise Connection

June 2006

Optimism Characterized the 2006 Seatrade Cruise Shipping Convention

Despite some concerns about rising fuel costs, an atmosphere of optimism prevailed at the 22nd edition of the Seatrade Cruise Shipping Convention, both on the trade show floor and in the conference halls.

While conference sessions addressed critical issues of fuel costs, ever-increasing ship size and crewing challenges, the exhibition featured an entertainment technology pavilion for the second year in a row and the second edition of the International Super Yacht Symposium proved more popular than the first.

In an industry that changes as quickly as the cruise business, the Seatrade Cruise Shipping Convention manages to stay ahead of the curve.

“It is essential that the event both anticipates and responds to industry developments, virtually as they happen,” said Michael Kazakoff, vice president of CMP Princeton Inc., the convention organizers. “That enables us to bring the freshest content to conference sessions and the latest products and services to the trade show floor.”

Kazakoff admits that the cruise industry presents a challenge to crystal-ball reading.

For instance, in 2005 Finnish shipbuilder Aker Yards was laying off workers, Norwegian Cruise Line was struggling to turn a profit, the euro-to-dollar ratio was stifling shipbuilding and oil prices were skyrocketing.

As of March 2006, though, things were decidedly different. Aker Yards was in the process of acquiring competitor Alstom Marine, including the French shipyard Chantiers de l’Atlantique, and had 16 ships on order totaling approximately $4 billion. NCL announced it turned a $19 million profit in 2005, thanks to its burgeoning Hawaii business. Currently on order worldwide are 28 cruise ships valued at almost $16.5 billion.

About the only thing that had not changed from 2005 to 2006 was the high cost of fuel, a topic that was addressed in a Seatrade Conference panel.

2005 saw Stelios Haji-Ioannou’s easyCruise brand enter the cruise business. And with continuing growth of the mega-yacht, river and coastal products, it is clear that the niche brands are gaining popularity with consumers. A first-time panel — the State of the Industry Beyond the Big Four — explored the perspective of the smaller cruise operators.

There was a time not long ago when the idea of a 150,000-gross-ton, 3,000-plus-passenger cruise ship was deemed preposterous. Then came Queen Mary 2. With Royal Caribbean International’s placement of an order for a 220,000-ton, 6,000-passenger behemoth, the industry’s outer limits and collective imagination have been expanded yet again.

In an era when new premium-segment Celebrity Cruises and Holland America Line ships are being built in the 100,000-ton, 2,000-passenger range, it is clear the rules have changed. The question of what that means for seaports, consumers and cruise lines was tackled in a session called the Age of the Megaship.

With the opening of Grand Turk in February as the newest cruise destination in the Caribbean, and the rise of such purpose-built ports of call as Icy Strait in Alaska, the cruise lines have shown that if they cannot find new places to sail, they are perfectly willing to build them. And with more seaports around the globe seeking to enter the lucrative cruise business, deployment options are becoming as numerous as deployment challenges. A panel of experts examined the complexities of creating satisfying and economically feasible itineraries in the Patterns of Deployment session.

One of the biggest challenges for cruise lines as ships get bigger is finding, training and retaining crew, a topic examined in a Crew Issues panel.

The Procurement Panel addressed a subject near and dear to the hearts of exhibitors, while Dealing with Disruptions looked at how cruise lines handle hurricanes, mechanical failures, rogue waves and other unexpected contingencies.

Of course, all of these trends and developments, as well as issues of sales and distribution, safety, environmental practices and the future of the cruise business were discussed at the annual State of the Industry, which traditionally opens the convention and exhibition.