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Cruise Shipping

In an attempt to prepare for the eight million passengers per year projected by the turn of the century, cruise ship owners have been placing orders at a steady pace at the outset of 1993.

With rosy market potential estimates like the Cruise Line International Association (CLIA) (New York) recently released, it is no wonder owners are signing today for ships tomorrow.

Based on the association's best estimate, which takes into account factors such as total population by age, probability of that population taking a cruise, and cruise prices, CLIA estimates that there is more than $50 billion in revenues to be made in the cruise market.

Another positive indicator is the ten-year trend of capacity increases and the projected continuance of this through 1997.

According to CLIA, in order to keep capacity in line with North American (including Canada and the U.S.) demand, average capacity rose at a rate of 8.2 percent from 1981 to 1992.

Based on current information, the association projects a 4.4 percent capacity increase through the year 1997.

While all of the facts, figures and projections are subjective to uncontrollable forces such as the world economy, probably the best bottomline indicator of the cruise ship market are recent orders and deliveries. And the beginning of the year to date has seen the signing of some landmark deals.

For example, Carnival Cruise Lines Inc. (CCL) of Miami signed a contract with Italian builder Fincantieri Cantieri Navali Italiani SPA for the construction of the largest passenger cruise ship ever, a 95,000-gt vessel with 1,300 cabins, for delivery in late 1996.

Additionally, Royal Caribbean Cruise Line (RCCL) signed contracts with Chantiers de l'Atlantique of France, for the construction of up to three ships with a potential value of approximately $1 billion.

Each vessel is scheduled to be 65,000-gt with the capacity to carry 1,800 passengers double occupancy. The first ship is scheduled for delivery in April 1995, and the second and third, should the options be exercised, will be delivered in 1996 and 1997 respectively.

Chantiers has delivered four cruise ships to RCCL since 1987. Finnish builder Kvaerner Masa- Yards got into the act also, and was recently tapped by Japan's NYK Line to build the 50,000-gt Crystal Symphony, scheduled for delivery in the spring of 1995.

The vessel is planned to be nearly 778 feet long with a capacity for 960 passengers, and will be built at the company's Turku New Shipyard.

Rounding out the more recent action was an order placed by Celebr i ty Cruise Lines Inc. with Germany's Meyerwerft for the construction of a 1,740-passenger, $317.5-million vessel. In addition, CCLI has options for two sisterships at approximately the same price. All vessels will be for the Celebrity fleet, which serves the premium segment of the cruise market. The first ship is scheduled for delivery in late 1995.

Two award winning Celebrity ships, Horizon and Zenith, were built by Meyerwerft in 1990 and 1992 respectively.

Perhaps a portion of the reasoning for the relative steady nature of cruise ship orders is the consumer's demand for more diversity. Over the past 10 years, according to the CLIA survey, the industry has responded to extensive market and consumer research, research with has guided the addition of new destination, new ship design concepts, new onboard/onshore activities, new themes and new cruise lengths. And as illustrated by the chart to the right, there is a steady stream of vessels either contracted or planned for construction in the coming years. The Caribbean continues to be the number one destination for capacity placement, as this market (which is comprised of Caribbean, Bahamas, and Western Caribbean) accounts for a 50.4 percent share of capacity placement.

Other leading markets include: Western Mexico (9.6 percent); The Mediterranean (9 percent); Alaska (6.7 percent); Trans Cana Cruises (4.9 percent); Europe (4.1 percent); Bermuda (2.8 percent) and Hawaii (1.8 percent).

A final good omen from the North American cruise industry comes from a recent study by Price Waterhouse, which was underwritten by the International Council of Cruise Lines (ICCL).

The study revealed that the cruise industry plans to add 134,712 full time jobs to the U.S. economy in the next four years, this on top of the 450,166 U.S. jobs it currently provides.

 
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