0. THE GEOGRAPHY OF CRUISE SHIPPING: ITINERARIES, CAPACITY DEPLOYMENT AND PORTS OF CALL Jean-Paul Rodrigue Dept. of Global Studies & Geography, Hofstra University, New York, USA Theo Notteboom ITMMA - University of Antwerp and Antwerp Maritime Academy, Belgium 5th Asian Logistics Round Table & Conference Vancouver, Canada, June
TIMEFRAME: 25 minutes

1. Ship Happens… Costa Cruises: -25% bookings (May 2011/12)
Costa Concordia: A lesson that hubris can derail the safest structures.
Costa Cruises: -25% bookings (May 2011/12)

2. 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

3. THE ORIGINS AND GROWTH OF CRUISE SHIPPING

4. Once Upon a Time…
SS France, 1969

5. Powered Transatlantic Passenger Modes and the Demise of the Liner
Steamship
1830s to 1960s (About 6 days; 4 days by the 1930s)
Dirigible
(About 80 hours)
Sea Plane
(About 15 hours)
Propeller Plane
(11 hours)
Jet Plane
1958- (7-8 hours); Supersonic jet ( : 3.5 hours)

6. Liners and Jet Planes: Basic Economics
SS France ( )
4 days
2,000 passengers (one way)
Boeing (1970-)
8 hours
3,200 passengers (1 roundtrip per day)

7. MARKET DYNAMICS IN CRUISE SHIPPING

8. Global Cruise Passengers Carried, 1990-2011
Recession
Source: adapted from Cruise Market Watch.

9. Cruise Source Markets, 2010
Source: adapted from Cruise Lines International Association (CLIA),

10. Revenue and Expenses per Average Cruiser, 2011
Source: Cruise Market Watch.
Note: Excursions only cover those organized by the cruise line.
On-board services: 20-30% of revenues

11. The Global Cruise Port System
Source: data adapted from Cruise Market Watch. Source: adapted from Cruise Lines International Association (CLIA),
70%
A Supply-Based Industry

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

13. Seven is the Magic Number: Duration of North American Cruises (in nights), 2011
Sweet Spot (47% of all cruises)
Bahamas & Western Caribbean from Florida
South Pacific

14. Share of Monthly Cruise Passengers by Region of Embarkation, 2012
Source: Cruise Market Watch.

15. Share of Monthly Cruise Passengers by Region of Destination, 2012
Source: Cruise Market Watch.

16. Number of Monthly North American Cruise Passengers by Destination, 2011

17. Carnival Cruise Lines (49.2%) Royal Caribbean Lines (23.8%)
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%)
Source: adapted from Cruise Market Watch.

18. NETWORK CONFIGURATION AND PORTS OF CALL IN THE CRUISE SHIPPING INDUSTRY

19. 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..

20. 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

21. A complex vessel deployment strategy Silver Wind (Silversea Cruises), LOA = 157m, beam = 21.5m 296 guests in very luxurious conditions
Source: data adapted from Cruise Market Watch.
No. of port calls
Source: own compilation based on schedules

22. Simple vessel deployment strategies
Source: data adapted from Cruise Market Watch.

23. Cruise Passengers Visits, Caribbean, 2011
Source: data adapted from Cruise Market Watch.

24. Selected Cruise Itineraries, Caribbean
3-5 nights / 2-3 port calls
Geography
History / Culture
Market proximity
7 nights / 3-5 port calls

25. Cruise Passengers Visits, Mediterranean, 2011

26. Selected Cruise Itineraries, Mediterranean
World class cultural amenities
Market proximity
Diversified sub-regions

27. 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
Source: typology expanded from Gui, L. and A.P. Russo (2011) “Cruise ports: a strategic nexus between regions and global lines—evidence from the Mediterranean”, Maritime Policy & Management, Vol. 38, No. 2, pp

28. Most Active Cruise Ports by Passenger Visits, 2011
Source: data adapted from Cruise Market Watch.

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

30. 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).

31. Thank you for your attention