The Charthouse Group THE GEOGRAPHY OF CRUISE SHIPPING: ITINERARIES, CAPACITY DEPLOYMENT AND PORTS OF CALL THE GEOGRAPHY OF CRUISE SHIPPING: ITINERARIES,

The Charthouse Group

THE GEOGRAPHY OF CRUISE SHIPPING: ITINERARIES, CAPACITY DEPLOYMENT AND PORTS OF CALL

Jean-Paul RodrigueDept. of Global Studies & Geography, Hofstra University, New York, USA

Theo NotteboomITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium

5th Asian Logistics Round Table & ConferenceVancouver, Canada, June 14-15 2012


Ship Happens…

Costa Cruises: -25% bookings (May 2011/12)


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


THE ORIGINS AND GROWTH OF CRUISE SHIPPING


Once Upon a Time…

SS France, 1969


Powered Transatlantic Passenger Modes and the Demise of the Liner

Steamship• 1830s to 1960s (About 6 days; 4 days by the 1930s)

Dirigible• 1931-1937 (About 80 hours)

Sea Plane• 1934-1946 (About 15 hours)

Propeller Plane• 1934-1960 (11 hours)

Jet Plane• 1958- (7-8 hours); Supersonic jet (1976-2003: 3.5 hours)


Liners and Jet Planes: Basic Economics

SS France (1962-1974)4 days

2,000 passengers (one way)

Boeing 747-100 (1970-)8 hours

3,200 passengers (1 roundtrip per day)


MARKET DYNAMICS IN CRUISE SHIPPING


Global Cruise Passengers Carried, 1990-2011

19901992

19941996

19982000

20022004

20062008

20100

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000Recession


Cruise Source Markets, 2010

North America

Continental Europe

UK

Latin America

Asia (w/o Japan)

Australia

Japan

0 2 4 6 8 10 12

10.781

3.409

1.560

0.984

0.890

0.370

0.195

Millions of Customers


$1,286

$208

$76 $38 $57

Revenue ($1,663)

TicketCasino & BarExcursionsSpaOther

$295

$217

$213

$193

$183

$160

$100

$73 $51

Expenses ($1,485)

OtherAgent com-missionShip fuel costsCorporate op-erating costsPayrollAmortizationFood & Bev-eragesOnboard servicesInterest

Revenue and Expenses per Average Cruiser, 2011

On-board services: 20-30% of revenues


The Global Cruise Port System

Caribbean

Europe/Scandinavia

Mexico Pacific/Hawaii

Transatlantic

0 5 10 15 20 25 30 35 40 45

42.723.0

8.56.7

5.75.3

3.12.9

Capacity in million bed-days

70%

A Supply-Based Industry


Full House: Occupancy Level of North American Cruises, 2004-2011

Less than 70%

80% 90% 100% 110% 120% 130% More than 140%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Occupancy Level

Num

ber o

f Cru

ises


Seven is the Magic Number: Duration of North American Cruises (in nights), 2011

2 or less

3 4 5 6 7 8 9 10 11 12 13 14 15 and

more

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Number of Nights

Num

ber o

f Cru

ises

Sweet Spot (47% of all cruises)

Bahamas & Western Caribbean from Florida

South Pacific


Share of Monthly Cruise Passengers by Region of Embarkation, 2012

January

February

March AprilMay

JuneJuly

August

September

October

November

December

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OtherSouth AmericaNorth America - ex. Alaska & Mex-icoMexico & Central AmericaEurope - SouthernEurope - NorthernCaribbean/BahamasAustralia - New ZealandAlaska


Share of Monthly Cruise Passengers by Region of Destination, 2012

January

February

March AprilMay

JuneJuly

August

September

October

November

December

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OtherSouth AmericaNorth America - ex. Alaska & Mex-icoMexico & Central AmericaEurope - SouthernEurope - NorthernCaribbean/BahamasAustralia - New ZealandAlaska


Number of Monthly North American Cruise Passengers by Destination, 2011

Janu

ary

Febr

uary

Mar

ch

April

May

June July

Augu

st

Sept

embe

r

Oct

ober

Nov

embe

r

Dec

embe

r

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

1100000

OtherCanada/New EnglandBermudaAlaskaHawaiiMexico (Pacific)Southern CaribbeanEastern CaribbeanBahamasWestern Caribbean


Market Share of Main Cruise Lines, 2011: Horizontal Integration and the Illusion of Diversity

Carnival Cruise Lines (49.2%)

Carnival (21.1%)Costa Cruises (7.2%)

Princess (6.4%)AIDA (4.4%)

Holland America (3.7%)Other (6.4%)

Royal Caribbean Lines (23.8%)

Royal Caribbean (17.0%)Celebrity (4.7%)

Other (2.1%)

Others (27.0%)Norwegian (7.1%)

MSC Cruises (5.8%)Disney (2.9%)

Star Cruises (1.8%)Other (9.4%)


NETWORK CONFIGURATION AND PORTS OF CALL IN THE CRUISE SHIPPING INDUSTRY


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..


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


A complex vessel deployment strategySilver Wind (Silversea Cruises), LOA = 157m, beam = 21.5m

296 guests in very luxurious conditions

No. of port calls

Source: own compilation based on schedules

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 30 31

April 2012 Rom

May West-Italy, Adriatic / 6 Ven Adriatic, Aegean, Turkey / 7 Ist no service Ist Turkey, Aegean / 9

June Pir Aegean, West-Italy / 7 Rom no service Bar Spain, West-Italy / 7

July Ven Adriatic, Aegean, Turkey / 8 Ist Turkey, Black Sea / 9 Ist Turkey, Aegean, Near East / 9 Pir

August Aegean, Adriatic / 8 Ven Adriatic, West Italy, South-France / 8 Mon West-Italy, Adriatic / 7 Ven Adriatic, Aegean / 9

September Pir Aegean, Turkey / 7 Ist Turkey, Black Sea / 7 Ist Turkey, Aegean / 7 Pir Aegean, Adriatic / 6

October Ven Adriatic, Aegean, Turkey / 7 Ist Turkey, Aegean / 9 Pir Aegean, Turkey, Near East / 11 Ist

November Aegean, Turkey, Near East / 11 Pir Aegean, Red Sea / 6 Saf Red Sea, Gulf / 3 Dub

December Middle East / 4 Dub Middle East, India, Southern Africa / 8 Mau Southern Africa / 8

January 2013 CT Southern Africa / 6 CT Southern Africa / 6 CT Southern Africa / 6

February CT Southern Africa, West Africa, Canary Islands / 7 LP Canary Islands / 7

March LP Canary Islands, West-Atlantic / 9 Lis Spain, South France, West Italy / 8 Rom West Italy, Aegean / 9 Pir

April Aegean, Near East, Turkey / 11 Ist Turkey, Aegean / 8 Pir Aegean, West Italy / 8 Rom

May West Italy, Adr. / 7 Ven

Number of cruises = 37Averate number of nights = 9.5 Standard deviation = 2.5Average number of port calls = 7.6 Standard deviation = 1.8


Simple vessel deployment strategies

Freedom of the Seas - Royal Caribbean Cruises - LOA of 339m, beam of 39m - maximum capacity of 4,370 passengers

Period Nights Ports of call and order of calls RegionApr 29 to May 6, 2012 7 Port Canaveral - Labadee - Falmouth - Grand Cayman - Cozumel - Port Canaveral CaribbeanMay 6-13 7 Port Canaveral - Cococay - Saint Thomas - Saint Maarten (Phillipsburg) - Port Canaveral CaribbeanMay 13-20 7 Port Canaveral - Labadee - Falmouth - Grand Cayman - Cozumel - Port Canaveral CaribbeanMay 20-27 7 Port Canaveral - Cococay - Saint Thomas - Saint Maarten (Phillipsburg) - Port Canaveral Caribbean

………………… same two cruises repeated all year roundApr 7-14, 2013 7 Port Canaveral - Cococay - Saint Thomas - Saint Maarten (Phillipsburg) - Port Canaveral CaribbeanApr 28 to May 5, 2013 7 Port Canaveral - Labadee - Falmouth - Grand Cayman - Cozumel - Port Canaveral Caribbean

Allure of the Seas - Royal Caribbean Cruises - LOA of 360m, beam of 65m - maximum capacity of 6,360 passengers

Period Nights Ports of call and order of calls RegionApr 29 to May 6 7 Fort Lauderdale - Nassau - Saint Thomas - Saint Maarten (Phillipsburg) - Fort Lauderdale CaribbeanMay 6-13 7 Fort Lauderdale - Labadee - Falmouth - Cozumel - Fort Lauderdale CaribbeanMay 13-20 7 Fort Lauderdale - Nassau - Saint Thomas - Saint Maarten (Phillipsburg) - Fort Lauderdale CaribbeanMay 20-27 7 Fort Lauderdale - Labadee - Falmouth - Cozumel - Fort Lauderdale Caribbean

………………… same two cruises repeated all year roundApr 7-14, 2013 7 Fort Lauderdale - Labadee - Falmouth - Cozumel - Fort Lauderdale CaribbeanApr 14-21, 2013 7 Fort Lauderdale - Nassau - Saint Thomas - Saint Maarten (Phillipsburg) - Fort Lauderdale Caribbean


Cruise Passengers Visits, Caribbean, 2011


Selected Cruise Itineraries, Caribbean

GeographyHistory / CultureMarket proximity

7 nights / 3-5 port calls

3-5 nights / 2-3 port calls


Cruise Passengers Visits, Mediterranean, 2011


Selected Cruise Itineraries, Mediterranean

World class cultural amenitiesMarket proximityDiversified sub-regions


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


Most Active Cruise Ports by Passenger Visits, 2011

NassauCozumel

Fort LauderdaleMiami

CivitavecchiaSt. Thomas

Port CanaveralBarcelona

St. MaartenGrand Cayman

San JuanVenice

PiraeusSouthampton

DubrovnikRoatanLivornoJuneau

KetchikanKatakolo

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000


Is the Future Co-Location? Ensenada Cruiseport Village (HPH)


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

The Charthouse Group THE GEOGRAPHY OF CRUISE SHIPPING: ITINERARIES, CAPACITY DEPLOYMENT AND PORTS OF CALL THE GEOGRAPHY OF CRUISE SHIPPING: ITINERARIES,

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