Covid-19: Can the Mega-Cruise Ship Survive?
First let me say that I am really disappointing that the cruise industry has been the target of such a beating in the press over the past few months since the then named "Coronavirus" broke out of China and it dawned on the world that we now faced a lethal pandemic.
It might be argued by some that cruise lines had only themselves to blame for the consequences of not having their finger on the pulse and become proactive much sooner, but that is a discussion for another day, but personally I think that to some extent they have just served as a target for media beatup.
No-one disputes that when people are confined in close proximity, anyone with a virus will rapidly spread it to the remainder, regardless of the location be it a room, aircraft, train carriage, office etc.
So applied to the cruise industry, the larger the capacity of a cruise ship the more likelihood of mass infection from any disease going around. You squeeze more people into a relatively confined space, and the flame becomes a fire.
Pre-covid, you could readily blame the spread of such diseases as the common flu and Norovirus on a small percentage of the passengers themselves, not the ship or the cruise line. It prompts me to remember that prior to the advent of the super-sized cruise ship, no-one on any voyage I took ever contracted much more than a cold. In fact, to support that observation very recently I returned from a ship that had around 600 passengers onboard and had travelled half way round the world for over 50 days with not so much as a cold among them. Good luck? No, just good hygiene practices.
It prompts me at this point to add that I am continually disgusted by the appalling personal hygiene of a number of those onboard the larger ships I travel on who refuse to wash their hands after going to the toilet, or consider it quite acceptable to cough or sneeze in someone's face, or indeed over their food at the table. This, the ship's crew have absolutely no control over, you can only make so many public announcements and print warnings so many times in the ship's daily newspaper. As far as I am aware, you can't throw the culprits overboard for poor personal hygiene. In the case of a flu virus, most likely brought onboard by a passenger determined not to waste a moment of their holiday by self-imposed isolation, the thought that their selfish behavior might ruin the cruise for a significant number of their fellow passengers is the very last thing they care about.
But I digress (as I so often seem to do), here right now we have a very different and more serious problem because it can very well be lethal.
The cruise line peak body, the CLIA has drawn up a code of practice to be adhered to as the industry claws its way back to some form of new normality. That includes a fundamental new approach to the embarkation day process, the manner in which guests are served at meal times, safe distancing practices, and medical procedures and processes if a passenger falls ill during the cruise.
One interesting aspect of the proposed CLIA approach is a percentage reduction in the carrying capacity of cruise ships, although no number from the maximum the vessel is licensed to carry has been formulated as far as I'm aware. But the stand-out here is - reduced capacity, and therefor by logical extension, reduced revenues not just from fares, but by the never-endingly critical onboard revenue. (When will the cruise line's thirst be quenched I ask myself?).
I'm certainly no naval architect or bean counter, but taking a simplistic view I assume that the size of the investment in a new vessel is somehow linked to the projected amount of revenue it will generate over a pre-determined period of ownership, with the average passenger load factor and average onboard spend therefor derived per passenger. Of course there are many other variables to be taken into account, but let's keep it simple eh?
So, to my way of thinking, the bigger the vessel the higher the overall cost, both fixed and variable. The larger the vessel, the higher operational expenses become, for example fuel, pilotage and channel fees, wharfage fees, maintenance and so on, all based on the size of the ship. So, if the percentage reduction to be enforced in passenger numbers post-covid is a constant across all sizes of vessels, then the losses are far greater at the higher end of the vessel size employed in cruising. In other words, the larger the ship the larger the profit gap if you have to reduce passenger capacity.
So, if this the new reality for cruise lines, it seems logical that the larger vessels in the fleet would be a liability, and smaller capacity ships the better option. What that looks like I am not qualified to say, but a capacity of around 1,500 to 1,900 passengers seems to me like a place to start. It could be more, it could be less.
A quick look at the list of planned ship orders over the next 7 years reveals an increasing trend towards smaller capacity cruise ships, particularly by boutique operators intentionally distinguishing their brands from the major mass market cruise lines with their ever-increasing vessel sizes.
Maybe it's time for the larger cruise lines with their floating Hyatt Hotel clones cross-pollinated with Disneyland rides to rethink their strategy?
A Tour of the Port of Brisbane
I recently had the opportunity to undertake a tour of the ever-expanding Port of Brisbane, which reinforced my long-held belief that at some stage in the foreseeable future, Brisbane will be a viable contender for Australia's premier port.
Unlike other East Coast ports, Brisbane has the luxury to grow unimpeded by the issues that constrain port expansion elsewhere, such as room to build more berth length and growing criticism from various pressure groups.
Brisbane's capacity to meet growing demand for box lifts and dry bulk cargoes is easily achieved through developing more berth length and allied infrastructure further out into Moreton Bay with reclamation projects, a luxury that other major capital city-based Australian ports do not have. Ecological offsets are also easily achieved by incorporating sanctuaries within the port boundaries.
Current channel depth is 15metres, and the PBPL has the ability to deepen the channel to meet future needs as vessel size increases. This is a challenge in particular for the Port of Melbourne, currently Australia's premier handling port. Opposition to port growth is also a burning issue in both Sydney, Botany Bay and Melbourne.
A further opportunity is looming with the possible construction of an "Inland Rail" route between Brisbane, Sydney and directly to Melbourne. Box cargoes in particular would benefit from much quicker transit times to southern destinations, and save shipping lines the added cost of having to steam around the Australian coast.
Whilst other Australian ports are struggling to meet growing demand for current and future cruise ship berths, a new cruise terminal to meet that demand is currently under construction via a private venture with capital invested by both Carnival Corporation and Royal Caribbean Cruise Lines. The first berth and 2 story state of the art terminal will be completed by October 2020, with ability to extend to an additional berth when necessary. This facitity will be able to accommodate the largest cruise ships currently servicing the market. Proximity to the nearly completed expansion of Brisbane Airport will provide an extra attraction for cruise ships to hub-port in Brisbane, with the added benefit of being closer to the popular cruising destinations of the South Pacific and Asia.
There is increasing noise from various local government authorities and Green activists in regard to the increase in cruise ship calls to various ports around the world, but most particularly in Europe which they say is not only degrading the atmosphere with SO2 - sulphur particles- but with the increasing number of passengers crowding the city streets.
Some cities, such as Amsterdam have imposed a head tax on each passenger aboard a visiting cruise ship, a trend that is likely to find further favour with other destinations, although in Amsterdam's case, the move resulted in most cruise ship companies deleting the city from future itineraries.
As an alternative Santorini and Dubrovnik, amongst several other destinations, has imposed a limit on the number of passenger ship calls on any given day
In response to the growing problem, shipowners are adopting a number of sulphur-reducing strategies:
1- retro-fitting "emission scrubbers" inside the vessel's engine exhaust systems to remove pollutants
2- converting or ordering new vessels engines to run on LNG and other bio-fuels
3- fitting equipment on vessels to accommodate "cold ironing", the technique by which ships shut down their engines in port and connect to the local electricity grid
4- preparing vessels engines to run on a soon-to-be-introduced mandate that all vessels must only use marine fuel with a sulphur content of 0.5%, as opposed to the current maximum level of 3.5% content. This International Maritime Organisation order comes into effect in 2020.
It is worth noting that the Australian Maritime Safety Authority (AMSA) mandated immediate compliance with points 1-3 within Sydney Harbour for all cruise vessels with over 100 passengers in 2018, but imposed a further sulphur reduction to 0.10%.
Hopefully the combination of strategies listed above will go a long way to meet the expectations of critics, however the issue of large passenger numbers is a double-edge sword for those who would complain of overcrowding as a large number of these ports rely heavily on the economic benefit derived from visitors and ancillary port and supplier charges, and in the majority of cases the income-generating season only lasts for 6 months of the year in each hemisphere.
The latest forward orders for new cruise ships as of 2019
The statistics demonstrate a very high level of confidence by cruise lines for the future for the industry, at least over the next five years to end 2023.
It is interesting to note that of the 112 due during that period, 47 are designated as "Expedition Ships" indicating a strengthening market for "off the beaten track" cruises, no doubt driven by both young adventurers looking for a different cruising experience, and the seniors market who have tired of the usual cruise port circuit.
46 vesels will be well over 100,000GRT, and 41 will come in under 20,000GRT - that expedition market referred to above.
25 vessels will rely principally on LNG fuel, an indicater of a shift towards "clean cruising" by shipowners.