Is the Cruise Industry Now a Game of Political Brinkmanship?
The chaotic manner in which the cruise industry is attempting to revive itself seems to be driven by the internal politics of certain governments around the world.
In the USA, the Centre for Disease Control and Prevention (CDC) seems to be deliberately and frustratingly dragging its feet in making a commitment anytime soon to allowing cruise lines to operate out of American ports, except of course if you are an American based company such as the American Cruise Line and the American Queen Steamboat Company, and then it's just fine to operate.
But, since all the major cruise lines are registered in foreign countries (usually for tax and crew pay and conditions reasons) then no amount of pleading by cruise lines and some American states seems to make the CDC give any indication of a potential start date anywhere in the foreseeable future. When pressed at a recent Senate hearing, the CDC ran for cover saying that the decision wasn't just up to them, that the Dept. of Transport was also involved in the delay. This was startling news to the DoT who said they have absolutely no authority in making the No Sail Order and certainly hadn't been consulted. This smells of political and possibly vindictive gamesmanship by the CDC.
As I noted in a previous news article on this website, the New Zealand government literally at the very last minute, turned a Ponant cruise ship around as she arrived to operate a series of cruises for NZ passengers only, around their own country. There was no explanation why, just a set of last-minute self-serving rules which could not have been complied with, and the result was confusion and frustration because permission had been originally given by another NZ government department for the series of cruises to operate. Again, another political game between government departments?
In Australia, the Northern Territory government has just now imposed severe restrictions on any cruise lines operating out of the capital, Darwin. Several small-ship owners had scheduled a series of cruises along the northern half of Australia between the ideal cruising months of April to September, and of course these have all now been cancelled. Apparently only vessels with less than 100 persons onboard, and that includes crew, are permitted. In contrast though, it's OK for 365 passengers to arrive on the popular Ghan train from Adelaide after three days in a congested environment. So what goes on there?
On the positive side, cruise lines are implementing alternative arrangements with countries that have assessed the risk of disease and are now encouraging cruise ships to use their ports, recognising the past financial impact on their tourism industry. The Caribbean islands are one such area, and as a work-around cruise lines are arranging all-inclusive packages that include flights from the USA to join the ships at Caribbean ports. Britain too, is opening up to coastal cruising, the only madate being that every passenger needs to show proof of having been vaccinated before they can board, and strict preventitive measures around the ship are also being enforced in all the above cases.
In other parts of the world, for example Singapore, Taiwan, Greece, Tahiti and Scandinavia, cruise ships have been operating for some time now, with no sign of a Covid incident. As you would expect, strict measures have been enforced, including limiting the number of passengers permitted to travel on each cruise, and to my mind this demonstrates that with a sensible approach, cruising is now certainly viable.
On top of all the other protocols now in place, the global roll-out of the Covid vaccine program now provides a further level of assurance. So why are some countries implementing greater draconian restrictions to the operation of cruise ships from their ports right now, rather than considering how they can work with the current advancements being made in other countries? One can only guess.
Preserving Nautical History
Due to the Covid-19 pandemic many fine passenger ships have sadly wound up on the beaches of ship-breaking nations such as India, Turkey, Bangladesh and Pakistan, collateral damage due to a global disaster that no-one saw coming.
Whilst impossible to preserve all these fine examples of liners and cruise ships of another era, it is sad to think that at least a couple of the better-known ships might have been spared from destruction, even if given a new lease of life in a new career. But financial survival is the main game being played by cruise lines at the moment, and scrap metal prices are bouyant enough to attract them to the less emotional decision to be rid of them forever.
Every time another sleek, beautiful vessel is converted into razor blades and Volkswagens, a little bit of me dies. I long for the days when I could look at the lines of a vessel, not just a liner but any ship, and say that is truly a work of art. The sheer beauty created by talented naval architects of the day was a treasure to behold. And now, its function over form. Yes, there are some smaller luxury vessels still being designed with pleasing lines, but the commercial rule of law now dictates that there is no place for eye-catching cruise ship designs, just layer upon layer of small flats pancaked over each other with a low freeboard hull to support them. One wonders how they stay upright!
The big question now is, given that some rare examples of bygone beauty currently preserved are struggling to survive, who should be responsible for maintaining their continued existence in a world where the mighty dollar is god? Yes, among others I am referring to the Queen Mary, the Duolos and the United States as just a few examples of the stately vessels of yesteryear that seem to live on borrowed time with the Sword of Damocles hanging over their rusting boat decks.
And now I hear of another historic ship, the NS Savannah, the very first nuclear powered commercial vessel, launched in 1959, is to have her fate reviewed. Managed by the US Maritime Administration (MARAD), NS Savannah has up to now been a floating museum ship docked in Baltimore USA ever since her decommissioning in 1970 when her nuclear reactor was removed. Owing to her sleek design she had not been a commercial success up to that point, but had been preserved within the National Defense Reserve Fleet and was registered as a National Historic Landmark in 1991.
Now MARAD have released a public document requesting suggestions for the future of this historic ship. Fortunately there are specific obligations to preserve the vessel as a result of her NHL registration, but several of the suggestions put forward for discussion indicate her future would be very much dependent upon another party throwing the big bucks at her. And we all know where that ends up, sooner or later.
One option suggests NS Savannah could be chartered out and another suggests a public-private partnership between MARAD and a private operator, or alternatively a semi-government entity. A further option suggests she be could be handed over to a statutory authority or not for profit as long as preservation is guaranteed. In either of these scenarios NS Savannah would have to remain static as to re-engine her with conventional options would would be extremely expensive, if not impossible.
The other option, which sends shivers down my spine, is that she either be sunk as an artificial reef or sold to breakers. This would truly be a tragic end to one of the most remarkable ships of the Post-War era.
So the question is, who should take resonsibility for her? Is it a government entity, such as MARAD itself or one of the semi-government authorities? Or like other ventures that seem to struggle from one drama to the next, should she be the responsibility of some adventurous entrepreneur until eventually there is no-one left to keep her going?
Personally, I hope she remains in the hands of the public sector, otherwise her eventaul fate is already sealed.
When will we be able to cruise again?
It's now five months since the cruise industry was totally shut down, around March 2020. No-one could possibly have imagined this time last year that almost all the cruise ships in the world would be empty soul-less shells at a virtual standstill in either cold or warm lay-up, some alongside empty cruise terminals, many at anchor in a variety of bays offshore, and some just drifting between one country and another.
As cruise companies struggle to remain in survival mode the bean-counters at Head Offices are pointing their poisonous pens at their fleet lists, culling out those to be sent off to an all to early demise at the hands of ship-breaking yards in Turkey and Asia, and others perhaps to find a new owner willing to buy one in the belief that they might make a profit when the industry gets back on its feet. Good luck with that.
In 2019 over 15 million people took a cruise somewhere in the world, but today virtually nobody is at sea except those skeleton crews keeping these ships maintained and ready for the day when the world opens its ports up again, and various government's Centres for Disease Control deem cruise ships safe to venture aboard again.
Sadly, at a time when the world was still coming to grips with the deadly reality of Covid-19 and its impact across global communities, cruise ships came in for special media attention because it made for sensational news, and emotional tags such as floating petrie dishes and harbingers of death were bandied about, showering cruise lines with vitriol at a time when they too were trying to understand what protocols were being expected to contain the spread of the virus. Subsequent investigations have revealed that effective leadership from Government health authorities had been found wanting.
Let me be clear. The above observations are not intended to absolve the cruise lines of any contributing blame; the industry recognises that an enormous amount of work needs to be done in the new world order if their mammoth floating resorts are to generate profits again. They had health protocols in place but these were addressing a pre-Covid world, and more importantly were reliant upon the compliance of passengers, unfortunately many of whom displayed a lack of sanitation discipline beyond potty training. Some people, no matter where they are, are just not empathetic when it comes to protecting the wellbeing of their fellow humans, let alone themselves. OK, to be blunt, some people are just simply disgusting!
The fall-out from all of this is that governments, and indeed a significant percentage of the global population now look on cruise ships as potential death traps and are skittish about boarding one anytime soon.
To combat this, the cruise lines themselves need to show that they are taking this challenge very seriously and being proactive in developing protocols and putting physical preventions in place to make their cruise ships one of the safest places to spend a vacation. And indeed they are. After all, you can't sustain a business that is burning up many millions of dollars a month with enormous non-productive assets and no revenue in-flow to cover the costs.
In partnership with some of the most predigious global health experts, cruise lines are racing to make their assets Covid-safe and a great amount of work has been completed, and in some cases has resulted in the first tentative steps being taken to return to some kind of normal. Yes, there were several immediate issues to start, but right now there are no less than seven cruise ships sailing on European itineraries, and one in Asia. These have paved the way for further vessels to venture to sea with passengers, demonstrating that the new preventions and processes instituted are absolutely successful. These include pre-boarding health checks which continue during the voyage, continuous deep-cleaning all around the ship using new technologies, no self-service buffets and staggered meal times, reduced passenger capacity and supervised shore excursions to name just a few.
But several road-blocks to a complete return to cruising stand very much in the way, and that wonderful time seems still to be in the distant future.
First, the cruise lines themselves do not seem interested in presenting an industry-wide united or coordinated front in implementing a standard set of proceedures. Whilst the industry peak body, the CLIA makes noises that the industry is as one, the reality seems quite the opposite. The three major cruise groups, Carnival, Royal Caribbean and Norwegian have gone their separate ways to engage with health experts to develop policy. This is hardly reassuring for governments or the cruising population.
Second, the ports to which cruise itineries are planned are quite often independent authorities or privately owned, and have a strong influence on which ships can use their ports. Unless there is a coordinated agreement between the authority and government, as is the case with Italy and Greece at the moment, then ports will remain closed until something changes.
Third, federal governments themselves can hold the power to make the decision as to when cruise ships can return to their shores. Examples include America, Canada, New Zealand and Australia who have placed a blanket ban on all cruise ships in their waters for the forseeable future, and probably remain unconvinced that the industry has got its act together. No government wants bad press and will probably remain risk-averse for some time to come yet.
Fourth, the aviation industry is in hibernation with no signs of emerging in the near future. Cruise lines draw their clientele from many cities and regions, not just within the country of origin of advertised sailings but from many parts of the globe as well. Any cruise can have as many as 15 or more nationalities on board. Therefor, to fill their berths they rely on the airlines to a great extent to get passengers to and from the embarkation port, or indeed other ports along the itineraries of longer cruises. Aviation is in no way able to support the cruise industry any time soon.
So, what does this all mean? The crystal ball I'm looking into tells me that a return to cruising in some meaningful and reliable form is a long way off. There will be some limited opportunities to take a cruise in some regions of the world, but I doubt you will see any glossy cruise brochures on the shelves of those travel agencies that survive this catastrophe until at least the middle of 2021. And sadly even that might be ambitious. There are far too many inter-dependent events that need to be implemented before the Good Old Days return!
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.