By
David Mott |
There is always an element of bravado in predictions for the New Year. So, perhaps, we should treat with some caution – not to say scepticism – a forecast from leading Wall Street cruise analyst, UBS Research, that there may be no orders for new ships this year from the industry’s 16 leading brands operated by Carnival Corporation & plc, Royal Caribbean Cruises Ltd and Norwegian Cruise Line. Certainly, there are not likely to be new classes of vessel contracted, though there may be some follow-on orders.
But it is an indication of the tougher times being experienced by shipyards that UBS should say it at all. The truth is that the cruise industry the shipyards serve is still consolidating after a global recession. The expansionist phase has still to come and we shall know when it has when industry leader Carnival Corporation reverts to ordering five or six new ships a year for its brands after a period of only committing to half that number.
There is also keen interest from Carnival watchers around the world to see how the top-level management shake-out, which saw Princess chief executive, Alan Buckelew, put in charge of all matters maritime, including shipbuilding and refurbishment, will change ordering policy. But company insiders point out that group head, Micky Arison, has long played a lone hand in contracting new ships and that is not likely to change very much, especially as he has now given up the chief executive role to concentrate on the wider perspective from the chairman’s seat.
But the tailing off of orders will not reflect in the shipyard figures for a few years, by which time the industry’s vital signs may be stronger again. So industry expert, GP Wild (International) is able to report that the order book, with a net loss of two ships over 2013, still has a forward position of 22 ships, totalling almost 60,000 new berths and worth just over US$13 billion. There was also a late order for Star Cruises in Hong Kong.
But if 2014 does prove to be bleak for newbuilding contracts, there is no shortage of new ships coming on stream with six new vessels – five of them major, adding almost 18,200 berths and costing the best part of US$4 billion – due to make their debut. First off the blocks this year was the Norwegian Cruise Line ship, Norwegian Getaway, which will be positioned year-round in Miami. She follows the successful Norwegian Breakaway sister ship, at 143,500gt and 4,000 passengers. In 2015 and 2017 they will be followed by two Breakaway-Plus vessels which each will have 200 more berths.
Together the four vessels are costing more than US$3.5 billion, which must make Norwegian currently the most adventurous investor of the big three quoted companies. All the ships incorporate the Safe Return to Port (SRtP) features, the latest gold standard in ship safety, and are contracted with Meyer Werft in Germany. Another with this innovation is Princess Cruises’ Regal Princess, the 3,600-berth sister of the much-vaunted Royal Princess launched last year. The US$754 million Regal Princess comes out in the second quarter from the Monfalcone yard of Fincantieri. She will initially sail in Europe, but switch to Miami for the winter.
In confirming a third 5,400-berth Oasis-class ship, being built by STX in France, Royal Caribbean International’s president, Adam Goldstein, said it will differ from the second vessel, Allure of the Seas, because of a six-year gap between the second and third ships. This third ship is due out in 2016, but no mention was made of the ambition of the STX parent in South Korea to sell off its European shipyards in Finland – where the first two Oasis ships were built – and France, where there was an option for a fourth vessel in the series which expired in December. But there was no action and Royal Caribbean said it had decided not to take up the option.
At this stage there is a reverse situation with the rather smaller Quantum ships, 4,180 berths, where Royal Caribbean ordered three vessels in fairly short order for delivery between the last quarter of this year and mid-2016. The company said the third ship will be a similar price to each of the first two at US$940 million.
News that financing problems between TUI Cruises and the Finnish Government over two ships built at STX have been resolved, has led to talk of another vessel being contracted. The latest vessel, Mein Schiff 3, is due to be delivered in May and another of these 2,500-berth vessels is scheduled for 12 months later. A fifth ship would cost in the region of US$530 million.
Two contracts hanging over from the end of last year included a letter of intent from Seabourn for a new ship with delivery in the second half of 2016. This vessel will replace older tonnage – Seabourn Pride, Spirit and Legend, which are due to be sold off. Pundits believe the cost could be lower than the US$294 million paid for the line’s most recent delivery, Seabourn Quest. The luxury line has gone to Fincantieri for the first time and was warmly welcomed as a new customer. Also, Star Cruises, owned by Genting in Hong Kong, has booked a 3,364-berth vessel, costing US$962 million, with Meyer Werft. Delivery is in October, 2016, but the whole deal is subject to financing.
With orders for new ships not flowing as freely as they once did, it is not surprising that the market is seeing more rebuilds of older tonnage. Under the style Renaissance, MSC Cruises is to lengthen and refurbish its four Lirica-class vessels at Fincantieri in Palermo at a total cost of US$270 million. They will be lengthened by 79ft to give almost 200 extra cabins to each ship. Each will spend up to 9.5 weeks in drydock starting with the Armonia in August in a programme continuing up to August next year.
This article appeared in the Spring/Summer 2014 edition of International Cruise & Ferry Review. To read the full article, you can subscribe to the magazine in printed or digital formats.