the geography of cruise shipping

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THE GEOGRAPHY OF CRUISE SHIPPING:
ITINERARIES, CAPACITY DEPLOYMENT AND
PORTS OF CALL
Jean-Paul Rodrigue
Dept. of Global Studies & Geography, Hofstra University, New York, USA
Theo Notteboom
ITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium
IAME 2012 Conference
Taipei, September 6-8 2012
Ship Happens…
Costa Concordia disaster
Costa Cruises: -25% bookings (May 2011/12)
Global Cruise Passengers Carried, 1990-2011
20
18
16
14
12
10
8
6
4
2
0
Recession
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
•
Cruise industry emerged in the late 1960s
Mass market using large vessels and adding more revenue-generating services
onboard.
Symbol of the globalization of the tourism industry (e.g. Weaver, 2005; Wood,
2000).
Millions
•
•
Cruise shipping in literature
• Cruise shipping in literature:
-
Seasonality of the world cruise market (Charlier and McCalla, 2006)
Industrial organization of cruise shipping (Papatheodorou, 2006)
Demand for cruise tourism (Petrick and Li, 2006),
Supply of cruise shipping (see e.g. Wilkinson, 2006 and Wood, 2000)
Economic significance of cruise tourism (Dwyer and Forsyth, 1996; 1998 and
Dwyer, Douglas, and Livaic, 2004)
- Cruise ship passenger spending patterns (Douglas and Douglas, 2004)
- Operational studies:
• Optimal routing of cruise ships (see e.g. Hersh and Ladany, 1989)
• Cruise ship port selection process (Marti, 1990)
• Optimal cruise-liner passenger cabin pricing policy (Ladany and Arbel, 1991).
- The service offerings and locational qualities of cruise ports:
• McCalla (1998): site and situation requirements of cruise ports
• Vagellas and Pallis (2010): different services provided by 20 European passenger ports
• Gui and Russo (2011): structure of cruise value chains and the regional articulation of land-based
cruise services.
• Geography of cruise shipping remains an under-researched academic field in
maritime and tourism studies.
Focus of paper
• This paper focuses on capacity deployment and itineraries in
two major cruise markets: the Caribbean and the
Mediterranean.
• We argue that:
- the cruise industry sells itineraries, not destinations, implying a level
of flexibility in the selection of ports of call
- The two cruise markets are interconnected in an operational
manner
- Cruise ports can be classified based on the role they serve within
their regions.
The Three Fundamentals of Cruise Shipping
Itineraries
• Attractiveness (seasonality)
• Customers availability and preferences
Capacity Deployment
• Type of ship
• Duration
Ports of Call
• Sequence and schedule
• Choice of turn port
Market Share of Main Cruise Lines, 2011:
Horizontal Integration and the Illusion of Diversity
Carnival Cruise Lines
(49.2%)
Royal Caribbean Lines
(23.8%)
Norwegian (7.1%)
Carnival (21.1%)
Royal Caribbean (17.0%)
MSC Cruises (5.8%)
Costa Cruises (7.2%)
Celebrity (4.7%)
Disney (2.9%)
Princess (6.4%)
Other (2.1%)
Star Cruises (1.8%)
AIDA (4.4%)
Holland America (3.7%)
Other (6.4%)
Others (27.0%)
Other (9.4%)
Full House: Occupancy Level of North American
Cruises, 2004-2011
14,000
Number of Cruises
12,000
10,000
8,000
6,000
4,000
2,000
0
Less than
70%
80%
90%
100%
110%
Occupancy Level
120%
130%
More than
140%
Cruise Source Markets, 2010
Japan
0.195
Australia
0.370
Asia (w/o Japan)
0.890
Latin America
0.984
UK
1.560
Continental Europe
3.409
North America
10.781
0
2
4
6
8
Millions of Customers
10
12
The Global Cruise Port System
Oceania / South Pacific
Transatlantic
South America
Mexico Pacific/Hawaii
Alaska
Europe/Scandinavia
Mediterranean
Caribbean
2.9
3.1
5.3
5.7
6.7
8.5
42.7
0
A Supply-Based Industry
70%
23.0
5
10
15
20
25
30
Capacity in million bed-days
35
40
45
Most Active Cruise Ports by Passenger Visits, 2011
Katakolo
Ketchikan
Juneau
Livorno
Roatan
Dubrovnik
Southampton
Piraeus
Venice
San Juan
Grand Cayman
St. Maarten
Barcelona
Port Canaveral
St. Thomas
Civitavecchia
Miami
Fort Lauderdale
Cozumel
Nassau
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Cruise Passengers Visits, Caribbean, 2011
Cruise Passengers Visits, Mediterranean, 2011
Functional Typology of Cruise Ports
Destination Cruise Port
Gateway Cruise Port
Balanced Cruise Port
The cruise port is the sole
destination.
Limited, if any, excursions
outside port area.
The cruise port is not a
destination, but a point of
embarkment (turn port).
Excursions outside port
area.
The cruise port is a
destination and a point of
transit for excursions.
High quality cultural or
physical amenities.
No other significant
amenities in proximity.
Security and safety issues.
No significant cultural or
physical amenities.
Port servicing major
touristic destination.
Various balances between
the amenities offered at the
port and in the region.
Venice, Barcelona, Labadee
(Haiti), Cococay (Bahamas)
Civitavecchia, Livorno
Miami, San Juan, Nassau,
Piraeus, Lisbon
The impact of shoreside power/coldironing
• Large differences in CO2 emissions:
- From 93 to 615 kg of CO2 per passenger-day
- From 199 to 1,314 g CO2 per passenger–km
• Juneau in Alaska was the first (2001)
• Obstacles:
-
Challenges a city’s power grid
Investment costs (also for retro-fitting ships)
the cost of shore power
the absence of international standards for
shore power systems.
• Environmental regulations in urban
areas => move to less urban areas
Is the Future Co-Location? Ensenada Cruiseport
Village (HPH)
Key Cruise Itinerary Design Variables
Customer-related considerations (demand)
• Optimal length of cruise, shore time/sail time balance
• ‘Must see’ destinations, guest satisfaction
• Seasonality
• Synchronization with air transfers
• Spending behavior and budget
Operational considerations (supply)
• Number and order of port calls
• Determination of turn ports (+ synchronization with air transfers)
• Vessel speed and vessel size
• Berth capacity, accessibility of ports
• Distances between ports of call
Strategic considerations
• Demographics of customer base
• Itineraries of competing cruise operators
• Anticipation of growth markets
• Supply push to create new cruise markets
• Revenue-generating potential of daytrips, onboard facilities, etc..
Revenue and Expenses per Average Cruiser, 2011
Revenue ($1,663)
$38
$76
Expenses ($1,485)
Other
$57
$73 $51
$100
Ticket
$208
Casino & Bar
Excursions
$1,286
Spa
Other
On-board services: 20-30% of revenues
$295
$160
$217
$183
$193
$213
Agent
commission
Ship fuel costs
Corporate
operating costs
Payroll
Amortization
Food &
Beverages
Looking for Fuel-Efficient Routes:
17 knots x 14 hours= 200 nm is ideal
The Advantages of Mobile Assets: Types of
Itineraries
Perennial
• Resilient demand (with high/low periods)
• Stable weather conditions
Seasonal
• Periodic market potential
• Usually summer
Repositioning
• Between perennial or seasonal markets
• Mostly between the Caribbean and the Mediterranean
Ship repositioning by Royal Caribbean Cruises
Northern
hemisphere
Winter of 2011
Northern
hemisphere
Summer of 2011
23
8
Mediterranean
3
21
South America
9
0
Asia/Australia
4
1
Alaska
0
5
Baltic
0
4
Bermuda/New England
0
3
Mexico (Pacific)
1
0
Middle East
1
0
Hawaii/Californ.
1
0
42 ships
42 ships
Caribbean
Total
Seven is the Magic Number: Duration of North
American Cruises (in nights), 2011
2000
Sweet Spot (47% of all cruises)
1800
Number of Cruises
1600
1400
1200
Bahamas &
Western
Caribbean from
Florida
1000
800
600
400
South Pacific
200
0
2 or
less
3
4
5
6
7
8
9
10
Number of Nights
11
12
13
14
15
and
more
Selected Cruise Itineraries, Caribbean
3-5 nights / 2-3 port calls
Geography
History / Culture
Market proximity
7 nights / 3-5 port calls
Selected Cruise Itineraries, Mediterranean
World class cultural amenities
Market proximity
Diversified sub-regions
A complex vessel deployment strategy
Silver Wind (Silversea Cruises), LOA = 157m, beam = 21.5m
296 guests in very luxurious conditions
Silver Wind - Silversea Cruises
= West Med
= Adriatic
= East Med
= Middle East
= Southern Africa
= Atlantic
Bar = Barcelona, CT = Capetown, Dub = Dubai, Ist = Istanbul, Lis = Lisbon, LP = Las Palmas, Mau = Mauritius, Mon = Monte Carlo, Pir = Piraeus,
Rom = Rome (Civitavecchia), Saf = Safaga (Red Sea), Ven = Venice
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
April 2012
West-Italy, Adriatic / 6
June
Pir
Ven
August
November
December
Ven
Adriatic, Aegean, Turkey / 7
Aegean, West-Italy / 7
Aegean, Adriatic / 8
Pir
Ven
Ist
Adriatic, Aegean, Turkey / 7
Turkey, Black Sea / 9
Mon
Turkey, Aegean / 9
Pir
Pir
Saf
Aegean, Red Sea / 6
January 2013
CT
Southern Africa / 6
February
CT
Southern Africa, West Africa, Canary Islands / 7
April
Aegean, Near East, Turkey / 11
May
Canary Islands, West-Atlantic / 9
West Italy, Adr. / 7
Number of cruises =
Averate number of nights =
Average number of port calls =
Ist
Turkey, Aegean, Near East / 9
Ven
Turkey, Aegean / 7
Standard deviation =
Standard deviation =
Source: own compilation based on schedules
2.5
1.8
Ist
Rom
Dub
Southern Africa / 8
Southern Africa / 6
Canary Islands / 7
West Italy, Aegean / 9
Aegean, West Italy / 8
Ven
37
9.5
7.6
Aegean, Adriatic / 6
CT
LP
Pir
Adriatic, Aegean / 9
Red Sea, Gulf / 3
Southern Africa / 6
Spain, South France, West Italy / 8
Turkey, Aegean / 8
Pir
Pir
Aegean, Turkey, Near East / 11
Mau
CT
Lis
Ist
Turkey, Aegean / 9
Spain, West-Italy / 7
West-Italy, Adriatic / 7
Ist
Middle East, India, Southern Africa / 8
LP
Ist
Turkey, Black Sea / 7
Dub
Ist
Bar
Ist
Aegean, Turkey, Near East / 11
March
no service
no service
Ven Adriatic, West Italy, South-France / 8
Aegean, Turkey / 7
Middle East / 4
Ist
Rom
Adriatic, Aegean, Turkey / 8
September
October
31
Rom
May
July
30
No. of port calls
Pir
Rom
Simple vessel deployment strategies
Freedom of the Seas - Royal Caribbean Cruises - LOA of 339m, beam of 39m - maximum capacity of 4,370 passengers
Period
Apr 29 to May 6, 2012
May 6-13
May 13-20
May 20-27
Nights Ports of call and order of calls
7
7
7
7
Port Canaveral
Port Canaveral
Port Canaveral
Port Canaveral
- Labadee
- Cococay
- Labadee
- Cococay
- Falmouth - Grand Cayman - Cozumel - Port Canaveral
- Saint Thomas - Saint Maarten (Phillipsburg) - Port Canaveral
- Falmouth - Grand Cayman - Cozumel - Port Canaveral
- Saint Thomas - Saint Maarten (Phillipsburg) - Port Canaveral
Region
Caribbean
Caribbean
Caribbean
Caribbean
………………… same two cruises repeated all year round
Apr 7-14, 2013
Apr 28 to May 5, 2013
7
7
Port Canaveral - Cococay - Saint Thomas - Saint Maarten (Phillipsburg) - Port Canaveral
Port Canaveral - Labadee - Falmouth - Grand Cayman - Cozumel - Port Canaveral
Caribbean
Caribbean
Allure of the Seas - Royal Caribbean Cruises - LOA of 360m, beam of 65m - maximum capacity of 6,360 passengers
Period
Apr 29 to May 6
May 6-13
May 13-20
May 20-27
Nights Ports of call and order of calls
7
7
7
7
Fort Lauderdale
Fort Lauderdale
Fort Lauderdale
Fort Lauderdale
- Nassau - Saint Thomas - Saint Maarten (Phillipsburg) - Fort Lauderdale
- Labadee - Falmouth - Cozumel - Fort Lauderdale
- Nassau - Saint Thomas - Saint Maarten (Phillipsburg) - Fort Lauderdale
- Labadee - Falmouth - Cozumel - Fort Lauderdale
Region
Caribbean
Caribbean
Caribbean
Caribbean
………………… same two cruises repeated all year round
Apr 7-14, 2013
Apr 14-21, 2013
7
7
Fort Lauderdale - Labadee - Falmouth - Cozumel - Fort Lauderdale
Fort Lauderdale - Nassau - Saint Thomas - Saint Maarten (Phillipsburg) - Fort Lauderdale
Caribbean
Caribbean
• Very tight schedules => schedule reliability!
• Stability in the sailing schedule of ships: not only linked to vessel size, but
also to the strategies of the cruise operators and cost and technical
considerations
Conclusion: Live by the Supply, Perish by the
Supply?
• Unique characteristics of the cruise industry:
- Supply push strategy of cruise operators; ‘creating’ demand by
providing new capacity (ships).
- Itineraries, not destinations. Specific regional and cultural
experiences offered through a combination of sailing time and
choice of ports of call.
- Expand and capture revenue streams by offering on board goods
and services as well as shore-based excursions.
- Adapt to seasonal and fundamental changes in the demand;
repositioning ships (seasonal) and changing the configuration of
port calls (fundamental).
Thank you for your attention
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