Analysis – Cruise ships businesses face hard challenges. COVID-19 takes business “offline”

Piraeus, Greece (Ports Europe) March 25, 2020 - Royal Caribbean Cruises Ltd. has announced it is to extend the suspension of cruise sailings of its global fleet until May 12, 2020, one of many cruise ship companies announcing suspension of services and drastic changes to itineraries. On March 13, Costa Cruises announced that it would put on hold the global operations of ships, impacting voyages until April 3. It is doubtful whether such dates are realistic. Even if cruises are restarted, it is even more doubtful whether there are going to be many passengers willing to board the ships. The current crisis driven by the coronavirus (COVID-19) has led to customer uncertainty about the health aspects of cruises and negative press coverage against cruise companies. The U.S. Department of State has said, "U.S. citizens, particularly travellers with underlying health conditions, should not travel by cruise ship. CDC (Centres for Disease Control and Prevention) notes increased risk of infection of COVID-19 in a cruise ship environment". Many cruises visit multiple ports in multiple countries, and different rules and travel restrictions for receiving vessels apply, if visits are at all possible. Itineraries will have to be redesigned to meet local conditions. On March 17, the EU closed its borders for 30 days to all non-EU nationals from visiting the bloc, except long-term residents, family members of EU nationals and diplomats, cross-border and healthcare workers, and people transporting goods. In the Mediterranean region, Italy, Montenegro, Portugal, Spain have explicitly banned the visits of cruise ships. Such actions come at a time when Mediterranean port cities are seeking action against the rising number of cruise ships visiting ports, some of which claim that the number of cruise ship visitors is overwhelming their local communities, and in some cases not bringing an equivalent financial benefit. There are also environmental concerns: air pollution from vessels which are often close to city centres and damage to port infrastructure caused by huge water displacement. The Guardian, UK newspaper, reported earlier this week, "The water is blue and clear", Gloria Beggiato, owner of the famous Metropole Hotel, overlooking the Venice lagoon said. "It is calm as a lake, because there are more waves caused by boats and motor boats that carry tourists around every day. And of course, the giant cruise ships have disappeared". Fish can now be seen and some birds have returned to the canals, demonstrating the effects that cruise ships probably contribute to. Last year, the port of Venice set up "The Cruise 2030 Working Group" in order to establish the best possible balance for ports, destinations, and cruise companies, to guarantee the future of the cruise industry in Europe. It represents eight of Europe’s main cruise destinations, including Amsterdam, Bergen, Cannes, Dubrovnik, Malaga, Marseille, Palma de Mallorca, and Venice. The primary aim, over time, is to define the standards of a sustainable cruise industry, which takes into account all the different needs of the various stakeholders involved. Particular attention is to be given to the needs of the ports, and even more to their surrounding environment. Eventually, this will lead to defining and adopting the standards of a vessel-type, a Europax class, with specific characteristics matching the features of European ports. This needs to be balanced with an industry which has created thousands of direct and indirect jobs, and where ports have invested huge sums in cruise ship terminals which house passenger facilities such as hotels, restaurants and duty-free retail outlets, all businesses which are now closed due to an absence of customers. A good example is the Greek port of Piraeus. In 2016, China's COSCO Ports Shipping Ltd acquired the rights to operate Piraeus Port Authority SA (PPA) for 35 years, and initiated an investment plan worth over €600 million, including new facilities for cruise ships. Last month, the inauguration ceremony of the Cruise Terminal Expansion project was held at the cruise terminal of Piraeus, a project with initial budget €120 million, co-funded by the European Regional Development Fund through Priority Axis 7 of the Regional Operational Program Attica 2014-2020. The Cruise Terminal Expansion project will include two berthing positions for the "new generation" cruise ships with a timetable for implementation of 32 months. PPA said that the project would contribute to the increase of the Piraeus port capacity in order to receive big “new generation” cruise ships and the increase in homeporting, which also should result in more revenue for the local economy. Representatives of the major cruise companies (Carnival, Royal Caribbean) and others from local authorities, shipping agencies, chambers and various associations attended the inauguration ceremony. As the travel industry has been hit hard by the crisis, U.S. cruise businesses could call for government financial support. The vast majority of people would like to see massive investment in health facilities, and the cruise industry is probably not seen as a priority at this time. The coronavirus crisis with its medium- and long-term implications is likely to put a substantial dent in revenue projections of both cruise ship companies and investors in cruise ship facilities. In the coming year, at least, local tourism might see an upswing, but few tourists are likely to want, or be able to, venture abroad. Copyright (C) Ports Europe. All Rights Reserved. 2020.

Analysis – Cruise ships businesses face hard challenges. COVID-19 takes business “offline”

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Analysis – Cruise ships businesses face hard challenges. COVID-19 takes business “offline”

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