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Cruise lines plan 36 new ships

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Mar 14, 2008

MIAMI BEACH — With 36 new ships scheduled for delivery from 2008 through 2012, the cruise industry is betting worldwide demand will grow despite economic challenges in the dominant American cruise market.

The 36 ships represent a $22 billion investment by the industry at a time when U.S.-based cruise lines have decreased buying power with European shipyards because of the weakened dollar.

"Let's hope the world economy will absorb these ships, or there will be a problem in the shipping industry," said Jean-Bernard Raoust, president of ship broker Barry Rogliano Salles.

Raoust was among several panelists in a discussion on cruise ship building Wednesday at the annual Seatrade cruise industry convention at the Miami Beach Convention Center.

The 36 new ships the cruise lines have ordered will be large, averaging about 110,000 tons each. In comparison, the largest cruise ships a decade ago were about 75,000 tons.

At Port Canaveral, where officials have been in negotiations with cruise lines for new contracts to secure ships for the future, the Canaveral Port Authority plans to widen the port's western turning basin to make room for the larger ships.

Yet this push toward bigger vessels is not indefinite.

The industry will eventually focus more on "right-sizing" and "efficiency" for ships of the future, said panelist Bill Hamlin, executive vice president for new building and global strategic sourcing for Norwegian Cruise Line Corp.

Fuel costs, environmental regulations and maintaining "the guest experience" will come into play when cruise lines decide "how big is too big," Hamlin said.

As for where the ships on order will be built, European shipyards currently dominate the cruise ship construction market, but Asian shipyards may compete for construction contracts in the future, Raoust said.

Already, South Korea, China and Japan are the world leaders in construction of all types of ships, and the weakness of the dollar may prompt cruise lines to look at shipyards outside Europe where they may get more for their money, the panelists said.

The problem is whether Asian shipyards will be ready and willing to take on cruise ship projects.

"I think we might see a slowdown in the pre-ordering (of cruise ships) in the next few months, especially if there's a recession," Raoust said. "The huge monster ships have great limitations in the ports" because of their size. "I think there is a limit to that game."

While Asia could soon be building the ships, it is also expected to be the next significant growth market for the cruise industry, although it could take many years for that market to develop, said Corrado Antonini, chairman of Italian shipyard giant Fincantieri, another panelist.

"I don't see significant increases in demand for cruise ships in the future, with the possible exception of the Asian market. But we know how long it took to develop a market in Europe," Antonini said.

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Cruise lines plan 36 new ships
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