Are Cruise Ships getting too big?

  • Oct 25, 2005

Extracted from Seatrade Cruise Review June 2005

Are cruise ships getting too big? Anne Kalosh reports

Sunward's deployment from Miami in 1966 signaled the start of the modern cruising industry That vessel measured 8,000 gt and carried 400 passengers. Thirty years later, Carnival Cruise Lines launched Carnival Destiny, the first passenger ship to exceed 100,000 gt. It carries 3,400 passengers. Today, no fewer than 19 post-Panamax cruise ships are in service, with 11 others contracted.
Next year, Royal Caribbean International will introduce the 158,000 gt Freedom of the Seas, with capacity for 4,370 passengers. And Carnival is developing an even larger 'Pinnacle project' design of at least 180,000 gt.


The race to super-size is on as, more and more, people ask: Are ships getting too big?

'I have been 30 years in shipbuilding and have heard that question with every new ship coming,' says Harri Kulovaara, evp maritime and new buildings for Royal Caribbean Cruises Ltd. 'I don't personally believe that designing a larger ship is an end in itself. Bigger real estate benefits passengers overall because they have more facilities.'

Proponents say larger vessels expand the market by hooking people who have never cruised with amenities for children, teens, sports lovers, spa enthusiasts, etc. while economies of scale drive juicier profits .But is there a limit? Super-sizing has potential downsides. Perhaps the biggest is the impact on destinations.

In a new study, Peter Wild of U.K.-based consultants G. P. Wild (International) Ltd .refers to 'staggering growth in megaship development.' Vessels have been getting larger for years, but their size will substantially increase in the next decade, Wild asserts.

As a result, almost 300 ports around the globe will need access or facilities upgrades, requiring an investment of at least $3.5 bn. That figure does not include Asia or India and should be viewed as conservative

'The cruise ports are now facing the same challenges that airports faced in the late 1960s with the introduction of jumbo jets that carried more than twice as many passengers as previous airplanes,' observes Jim Lida, assistant director of cruise marketing for Port Everglades.

Everglades is gearing up by adding roadways and parking, doubling the baggage areas of some terminals, investing in new loading bridges and considering lengthening a pier. So far, the expansion has been cost-efficient because many terminals are converted warehouses, and space is still available inside those buildings.

Not every port is so lucky. Many scramble to fund costly improvements and, unlike Everglades and a handful of other key ports, do not enjoy the security of long-term agreements with Super-sized cruise operators.

Just a few years ago, Antigua invested $22m to dredge St. John's Harbor, build a new pier at Nevis Street and extend Heritage Quay to handle the largest ships. Cameron Fraser, director of Antigua Pier Group Ltd, believes the facility can handle Royal Caribbean's Freedom class, but he's concerned about how or if the island would fund expansion for a future generation of much larger vessels.

The mechanism for funding comes from head taxes. 'Cruise lines argue there's incremental tax from other sources but that's not how it works,' Fraser says. 'Our tax rate now was signed to handle $22m and that is a 15-year debt.

'Fraser doesn't believe it's sustainable for shipowners to tell destinations 'If you want to be in the race, you've got to build.' He believes vessels in the 80,000-90,000 gt range will remain critical to the industry's success, as will smaller destinations that offer a distinctive experience.

As a larger island with multiple ports, Jamaica is 'easily able' to absorb capacity increases as it continues to grow its attractions and dispatches tours in a manner that the town centers do not get overwhelmed, says William Tatham, vp cruise shipping and marina operations for the Port Authority of Jamaica. An expansion will enable Montego Bay to serve both Freedom and Pinnacle ships, he adds .Tatham's concern is that lines focus on berth sizes without taking into account overall operations such as tour dispatching and security. 'They only look at these issues when they have already started to call and things are not going as smooth as they would like,' Tatham says.

'In Copenhagen big ships are so far nota problem for the port or the city,' says Anette Jensen, marketing director for Cruise Copenhagen Network.? 'We haven't experienced any problems with people pollution even though Copenhagen is some days called upon by five or six major ships at the same time. We still have enough busses and guides, etc., to cope. But we would like to continue to see a good mix of various cruise ships and sizes and thus receiving different segments of visitors.'

Meanwhile at the Port of Miami, the leading stevedoring firm works hard to turn a big ship around in 10 hours. That's 7,000 passengers disembarking and embarking a single Voyager ship and at least 17,000 pieces of luggage, says Fernando Alvarez, operations manager for Eller-ITO. His team also loads 30 45-foot trailers of provisions per Voyager ship.

'It's a tremendous task,' Alvarez says. 'Plus, after 9/11, they make our life miserable with all the immigration and Coast Guard regulations. But we still do it in 10 hours.' Ships must sail by 5 p.m. because captains are pressed to keep fuel costs down.

Pre-9/11, disembarkation was completed by 9:30 or 10 a.m. Now, it's noon -- if all goes smoothly. That puts pressure on the ship's crew, who have a much shorter time to prepare for embarking guests. Immigration officials now check all passengers. Alvarez thinks the process will speed up in December when U.S. citizens will be required to carry machine readable passports.

By the time Freedom of the Seas starts sailing next May, Alvarez hopes new procedures will be in place. Even so, 'if we continue to operate with the way the authorities are now, I don't think we can get the ship out by 5,' he warns. Vessels may arrive earlier than 7 a.m. but even if
passengers could be persuaded to begin disembarking at 6, immigration officials would not be there. It's an overtime issue, Alvarez says. Officials start at 7.

'We have to work around challenges, but that's normal in this business,' says Adam Goldstein, president of Royal Caribbean International. Every time the rules have changed or there's a new procedure, 'we have been able to reconfigure our approach for getting people on or off the ships, and it works.' Guest satisfaction scores prove that. Goldstein notes that from a deployment standpoint, his company's post-Panamax ships have turned out to be far more flexible than ever dreamed. That's true for all lines.

Princess Cruises initiated Grand-class cruising in the Mediterranean in 1998 and has been there ever since. Last year Princess sent a 109,000 gt ship to North Europe . During 2005, three Grands are in Continental waters. Costa went year-round with its first post-Panamax ship, Costa Fortuna, and had two 105,000 gt vessels in Europe last winter. Carnival will launch its first-ever Med season with the 110,000 gt Carnival Liberty this summer. Meanwhile, post-Panamax vessels are sailing in Australasia , Alaska, Bermuda, Canada and South America.

'There are some destinations that can't take 3,000-passenger ships. But there's so many places in the world and even in North America that we haven' t saturated,' says Rick Sasso, president and ceo of MSC Cruises USA. 'We've barely gone to most of the ports ... We haven't gotten close to this becoming an issue.

'Itineraries aside, do people like cruising on big ships? Some travel sellers are starting to hear negative comments. Recent customer surveys revealed 'a fair number of Baby Boomers who were not interested in going on larger vessels,' says Walter Littlejohn, president of Great Vacations/Chartwell Travel in Union, N.J. 'There's a segment that doesn't want big ships. There's a segment that loves them.'

Cruise Holidays' Skinner sees megaships as ideal for first-timers, families with children and singles, but not experienced travelers. And seniors find them 'daunting.'

Cruise executives like Carnival president and CEO Bob Dickinson think the industry can absorb megaships because sizes have increased incrementally over time. The 110,000 gt Conquest class is not that different from the 101,000 gt Destiny class he says, and Royal Caribbean's Freedom series is 'basically a stretch Voyager.

'Sasso marvels that today's super-sized ships are 'able to manage the number of people we manage and still provide the kind of service we provide as an industry ... There isn't a hotel in the world that could seat 1,500 or 2,000 people for an a la carte menu within two hours.'

What about safety? With ships carrying so many people, the International Maritime Organization sounded the alarm in 1999, forming a large passenger vessel safety group. Ultimately, the IMO scrapped the 'large' differentiation in favour of continuing efforts to improve safety on ships of all sizes .'I'm still of the opinion that very large cruise ships are safer because they have more main vertical fire zones and more watertight integrity. The newer ships have more sophisticated ,more advanced technology so as the years go on, they just get safer,' says Ted Thompson, EVP of the International Council of Cruise Lines.

'In terms of where ships can call, that's going to be problematic,' he adds. 'The bigger the ship you build, the fewer the ports that have facilities to handle it.' Thompson predicts that 'more and more, ships will be built as a destination.'

When it comes to the construction aspect, Thompson concurs with Juha Heikinheimo, SVP sales and marketing for Aker Finnyards, that theoretically, there are no limitations .Theoretically, we could build way over 300,000 tons,' Heikinheimo says. 'Yo could build a big ship in two pieces and put it together,' he adds. Such a vessel could remain offshore and ferry passengers to port.

In 10 years, Heikinheimo believes there will there be multiple ships over 200,000 gt. 'There will be owners interested in ships bigger than Freedom class because of the value to the customers,' he says. 'With big ships, you can have imagination and creativity and innovation, much more than with smaller ships.'

In the early 1980s, shipowner Knut Utstein Kloster envisioned the Phoenix, a 250,000 gt ship for 6,200 passengers. More recently, engineer Norman Nixon has developed plans for the Freedom Ship, which he stresses is 'not a cruise ship' but a community at sea which would be assembled in pieces like a barge stretching 4,500 ft, with capacity for 100,000 people.

At Royal Caribbean, the strategy seems clear. 'People are expressing a very strong preference for Voyager-class ships,' Goldstein says. 'They are a source of competitive advantage for our brand. We expect Freedom of the Seas to carry our business forward.'

How big can ships go? In Goldstein's opinion, 'the guests will get what they want.

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