Cruise Shipping Miami 2015: Will China transform the cruise industry?

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 19 March 2015 19 March 2015

Following the publication of CLIA’s latest set State of the Industry figures, which showed another year of impressive growths in Asia and Australasia, a panel discussion was held at CSM to debate whether or not China would transform the cruise industry. Alan Lam reports from Miami.

China is now the biggest source of international travel market; in 2014 the country contributes about 110 million tourists to the world, with only 700,000 of which being cruise passengers. A conservative estimate puts the country on course to achieve three million by 2020; in fact, if this rate of growth continues, it is likely that the Chinese cruise tourist number will reach eight million by then. This will mean becoming the second biggest source market. In any case, China will become a main engine driving the global cruise business.

China represents about one half of the total Asian market. Ann Sherry, CEO of Carnival Australia and Chairman of CLIA SE Asia, urged the industry not to overlook the rest of Asia while all the attentions are on China. A number of other markets are also strong and growing, such as Singapore, Taiwan and Indonesia.

All Asian markets are different; therefore we cannot generalize and regard them as one. However, there is one unique feature that is shared throughout the region; that is, the demographics of cruise tourists are the same as those of other forms of tourism.

Without exception, all the panelists believed in the great potentials of the region, especially China. “We’ll see double-digit growth in the next five to ten years,” said Alan B. Buckelew, COO, Carnival Corp. & plc. “The middle class in China will expand to 225 million people by 2020. More and more ships will be deployed to Asia in response to demand.”

“The potential is almost limitless,” said Dominic Paul, SVP International, Royal Caribbean International, Celebrity Cruises & Azamara Club Cruises, and MD, RCL Cruises Ltd. “China’s domestic market will continue to grow and the rest of the world, particularly Europe and Mediterranean, will also benefit from it.”

However this dynamism is not without its challenges. “China is not an easy market to break into,” warned Dominic Paul. “It is a market that takes a lot of understanding and hard work to succeed. It is not as simple as just putting a ship in and expecting success. In the coming years, we expect a lot of hard works to build up the demand.”

Ann Sherry agreed with this sentiment, “The challenge for the next five to ten years will be to sell and distribute the products effectively in the region.”

Gavin Smith, Regional Vice President, Asia-Pacific, RCL Cruises Ltd., & Chairman, CLIA Australasia, highlighted a very valid challenge the industry would be facing in the next 10 years. Australia is meant to absorb capacities from China during the winter months in the northern hemisphere. “Fifteen percent of the world population live in China,” he said, “and only two percent live in Australia. If Australia were to accommodate ships from China in winter, this would be a challenge.”

In this connection it becomes imperative to develop year-round cruising in China.

“Success in Asia will be a huge benefit to global cruise industry,” said Dominic Paul. “It will drive cruise shipbuilding and improve earnings across the board. I am optimistic about Asia.”

China is transforming the cruise industry.

Cruise Shipping Miami 2015: New aspects of passenger ship operational safety concerns

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 19 March 2015 19 March 2015

At Cruise Shipping Miami 2015, a panel of experts discussed new aspects of safety at sea, security and environmental issues confronting the cruise industry. Alan Lam reports from Miami.

Since the Costa Concordia accident, various safety-related rules and regulations have been tightened up and better implemented.  While IMO seemed to be doing a good deal in introducing new rules, it was clear, from the cruise line’s perspective, the organisation was merely catching up with what cruise lines were already doing.

“What IMO is doing is not a novel idea,” said Bud Darr, SVP, Technical and Regulatory Affairs, CLIA. “The Concordia accident merely brought the issue to fore. We are not going to wait for the regulators to tell us how to operate ships safely. The industry is ahead of the regulatory bodies. Safety features are already built into the ships.”

The panel also highlighted the fact that cruise ships and ferries operated under different safety standards. Cruise ship operators have a more uniformed and generally much higher standard of safety, while ferry operators, especially on domestic routes, were often only subject to national safety requirements, which could be varied in standards.

With the Far East now representing 6% of the global cruise market and continues to grow rapidly, the passenger shipping safety issue in that part of the world was brought under focus. The panel agreed that the industry ought to ensure the safety standard in the Far East matched those of Europe and North America. Andrew Winbow, Assistant Secretary-General & Director, Maritime Safety Division, IMO, suggested that the developed countries should help the underdeveloped ones improving their safety practices, especially in terms of ferry operations,

As the expeditions segment of cruise business expands, cruise ship operational safety and environmental issues in Polar Regions become more pressing. Andrew Winbow confirmed that the Polar Code would enter into force in January 2017, as an extension of the existing SOLAS and MARPOL. The Code will contain both mandatory items and guidelines. “Concern for the environment underlines the Polar Code,” he said. “Global warming is opening up more of the Polar Regions for cruising. Polar Code will become more relevant.”

Cyber threat is another major new safety and security issue of cruise ship operations. Andrew Winbow told the audiance that two documents relating to this subject had been submitted by governments to his organisation and the IMO was already looking at the issue, assessing what could happen in the event of a breach and how to respond to it.

“Equipment on board has a lot of embedded software,” said Philippe Donche-Gay, Chairman, IACS & EVP, Marine & Offshore Division, Bureau Veritas. “We are looking at the safety aspects. You have to be very careful in segregating the networks. It is a very serious issue.”

Cruise ships usually use hardware that is more than five years old. It is therefore important to have the software regularly serviced. And this process itself requires security controls, as access to the ship’s system by an outside technician represents a security risk.

Passenger ship operational safety and security development is an ongoing process that also encompasses shore-side security measures.