Marine link

Cruise Ship And Ferry Costs In The 90s

The cruise industry, and all vessels carrying fare paying passengers, faced with unprecedented rising costs and slimmer margins, is entering a very radical and expensive phase in its development as it faces up to new safety and pollution control measures, higher insurance premiums, increasingly costly unilateral U.S. legislation and other cost pressures.

As in all other sectors of the shipping industry, the cruise/ferry operator must effectively control costs to survive.

Despite the recent profitability of most cruise operators, many markets are currently near saturation point with substantial discounting becoming the norm. The escalation of costs is inevitable and, therefore, an accurate understanding of the current and future cost structure of the industry is essential, with targeting, costing and pricing policy crucial to success. FIG. 1 Total Revenue Of A Passenger Ship 70% 5% B Net tariff revenue * E3 On-board revenue E3 Interest, misc. *Net tariff revenues = gross less discounts and other dilution. Source: Drewry Shipping Consultants.

At the beginning of 1993 the world fleet of cruise liners and ferries capable of carrying more than 100 passengers stood at about 250 ships with a total lower berth capacity of 170,000. Developments in the cruise business over the past two decades have not only led to a rapid growth in the number of passenger berths available but have transformed the industry from one with a "beef tea" image to an imaginative provider of leisure on a very broad front. Over the period 1990-93 there was growth of over 14 percent in the world lower berth passenger capacity and in excess of five million passengers were carried. It is estimated that the figure will rise to between eight and 10 million by the year 2000. The rapid expansion of the industry has led to the retention of many older ships which do not meet impending safety legislation— hence the recent spate of orders for a new breed of "megaships" costing around $300 million each.

Tonnage built before 1970 accounts for 48 percent of the world cruise fleet, and 45 percent in terms of berths, whilst similar figures for vessels built before 1980 stand at 62 percent in terms of ships and61 percent in terms of berths. These figures show the problems facing the industry in upgrading ships to meet the new safety and comfort standards. The stricter safety requirements resulting from amendments to SOLAS—effective 1997—mean that, for example, more than 40 percent of the current North America-based fleet—i.e. ships built before 1980—will require major, expensive modifications. It is also debatable whether those ships built before 1960 will survive to the end of the decade as the cost of meeting new standards looks prohibitive. If this happens, between 10 and 20 percent of the fleet's total berthage will be lost.

While there have been numerous published studies on the costs of bulk and liner operations, the Drewry Report is the first to analyze in depth the costs of cruise/ferry operations and provides a unique insight into the current and potential economics and costs of the business and, in particular, the impact of impending legislation on future cost levels. Cruise Ship And Ferry Costs addresses the vital issues facing an industry which will have to cope with radical change brought about by factors both within and outside the industry.

The report contains extensive data on costs and revenues and indicates that, on average, 25 percent of total revenue is derived from onboard sales. Cost projections are given for a five year period and break-even positions for vessels of various sizes are given, indicating that there are considerable economies of scale in cruise and ferry operations. As the data for a 2,050 berth vessel shows in Fig. 1, the total operational break-even cost is $112,000/day or $54/ berth.

To put the report in perspective, the cruise ship and ferry markets are described with background details on their development and their position in world tourism and transport. In addition a key section of the report explores how costs may be controlled by the use of modern management systems and techniques.

Ship Electronics History

A Revolution In Cruise Ship Design
Austal Enters Japanese Market With $7.8 Million Sale
Bulker Safety Creeps le The Forefront Again
CCL Unveils Details Of hantiers-Built Legend Of The Seas
Celebrity Cruises Savers Limelight During Galaxy Inaugural
CHINA: Its role in world trade and shipping
Eletson Signs letter Of Intent To Build Tankers At Newport News
European Consortium To Develop A Ship Hull Integrity Program
Hitachi Zosen Delivers Catamaran & 3,800-TEU Containership
Hitachi Zosen Delivers Catamaran & 3,800-TEU Containership
Ingalls Ship Named In Honor Of World War II Hero
Intermarine Launches Fifth Osprey Class Minehunter For U.S. Navy
Launching Ceremony For MCM-14 "Chief" At Peterson Builders, Inc.
M o b i l e Docking A i d System for Ships
NAVY CONTRACTING Cost Growth Continues On Ship Construction Contracts
NEWPORT NEWS: Tackling The Commercial Market With New Product Tanker Design
NNS Wins $65 M Contract For Submarine Work
Non-Metalli( Bearings Handle Big Loads on Self-Unloading Barges
SMI Delivers Shreveport Rose
Stage Set For Newbuilding Activity
Status of U.S. Shipbuilding Assistance Programs
Status of U.S. Shipbuilding Assistance Programs
Tanker Technology:A Look At The Yards
Telecommunications Act Clears Way For GMDSS Implementation
The Outlook For U.S. Shipbuilding
The U.S. Cruise Market
The U.S. Cruise Market
U.S. Navy Christens And Launches Trinity-Built Oceanographic Ships
USCG Rates Classification Societies
Vision And Flexibility — Marks Of A Leader
rss feeds | archive | privacy | history | articles | contributors | top news | contact us | about us | copyright