Cruise and Ferry Review - Summer/Spring 2020

1 4 4 V IEWPOINT The future of cruise fleets The number of cruise ships being sold second-hand and scrapped may rise over the next few years as major operators look for new ways to manage capacity A total of 104 cruise ships are due for delivery between 2020 and 2027, 51% of which will be operated by the world’s four major operators – Carnival Corporation, Norwegian Cruise Lines Holdings, MSC Cruises and Royal Caribbean Cruises Ltd. However, Maritime Strategies International (MSI) predicts that newbuild contracting will drop off over the next four years before picking up again in 2024. This assumption stems partly from the fact that the industry will take time to absorb the ships scheduled to arrive over the next four years, as well as the rising newbuild prices that will likely peak in 2023. The scale of ordering in recent years has been somewhat distorted by companies ordering ships for delivery up to eight years in the future. In part, this has been driven by cruise operators trying to secure slots at the limited number of shipyards. In addition, cruise companies are increasingly looking to Chinese shipyards to construct vessels geared for the Asian market. The industry’s expansion through newbuilds is having significant impacts on other key areas of the sector. For example, the second-hand ship market has always been limited by the understandable reluctance of companies to sell ships (made surplus to requirements by age or arriving newbuilds) to an existing or potential rival operator. However, the fear of offloading older assets to potential competitors will lessen as major cruise operators carry out multimillion-dollar refurbishments to transform the onboard experience for passengers. This will place them beyond the threat of smaller companies unable to match such investment. Though vessels are rarely sold for scrap in the current cruise sector, MSI also expects to see an increase in cuts from the fleet to allow the new capacity to be absorbed. Expedition vessels built before 1980 will be particularly vulnerable as they are replaced by the new purpose-built luxury vessels starting to hit the water. CFR Niklas Carlen is research director at Maritime Strategies International Carnival 41.0% Royal Caribbean 21.4% Norwegian 9.3% MSC 8.3% TUI 5.0% Genting 2.5% Disney 1.5% Viking 1.0% Other 10.2% *TUI Cruises is 50 50 JV with Royal Caribbean Carnival Other Princess Royal Caribbean Norwegian MSC TUI* Costa Crociere AIDA Holland America P&O UK/Australia Cunard/Seabourn Celebrity Pullmantur Silversea/Azamara Oceania/Regent Marella/Hapag-Lloyd Dream Star Crystal Disney Viking Niklas Carlen: Maritime Strategies International