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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
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Ship Happens…
Costa Cruises: -25% bookings (May 2011/12)
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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
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THE ORIGINS AND GROWTH OF CRUISE SHIPPING
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Once Upon a Time…
SS France, 1969
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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)
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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)
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MARKET DYNAMICS IN CRUISE SHIPPING
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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
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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
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$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
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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
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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
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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
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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
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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
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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
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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%)
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NETWORK CONFIGURATION AND PORTS OF CALL IN THE CRUISE SHIPPING INDUSTRY
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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..
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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
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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
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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
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Cruise Passengers Visits, Caribbean, 2011
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Selected Cruise Itineraries, Caribbean
GeographyHistory / CultureMarket proximity
7 nights / 3-5 port calls
3-5 nights / 2-3 port calls
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Cruise Passengers Visits, Mediterranean, 2011
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Selected Cruise Itineraries, Mediterranean
World class cultural amenitiesMarket proximityDiversified sub-regions
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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
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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
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Is the Future Co-Location? Ensenada Cruiseport Village (HPH)
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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).
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Thank you for your attention