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 IAME 2012 Conference Taipei, September
TIMEFRAME: 25 minutes

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

2. Global Cruise Passengers Carried, 1990-2011
Cruise industry emerged in the late 1960s
Mass market using large vessels and adding more revenue-generating services onboard.
Symbol of the globalization of the tourism industry (e.g. Weaver, 2005; Wood, 2000).
Recession
Source: adapted from Cruise Market Watch.

3. Cruise shipping in literature
Seasonality of the world cruise market (Charlier and McCalla, 2006)
Industrial organization of cruise shipping (Papatheodorou, 2006)
Demand for cruise tourism (Petrick and Li, 2006),
Supply of cruise shipping (see e.g. Wilkinson, 2006 and Wood, 2000)
Economic significance of cruise tourism (Dwyer and Forsyth, 1996; 1998 and Dwyer, Douglas, and Livaic, 2004)
Cruise ship passenger spending patterns (Douglas and Douglas, 2004)
Operational studies:
Optimal routing of cruise ships (see e.g. Hersh and Ladany, 1989)
Cruise ship port selection process (Marti, 1990)
Optimal cruise-liner passenger cabin pricing policy (Ladany and Arbel, 1991).
The service offerings and locational qualities of cruise ports:
McCalla (1998): site and situation requirements of cruise ports
Vagellas and Pallis (2010): different services provided by 20 European passenger ports
Gui and Russo (2011): structure of cruise value chains and the regional articulation of land-based cruise services.
Geography of cruise shipping remains an under-researched academic field in maritime and tourism studies.

4. Focus of paper
This paper focuses on capacity deployment and itineraries in two major cruise markets: the Caribbean and the Mediterranean.
We argue that:
the cruise industry sells itineraries, not destinations, implying a level of flexibility in the selection of ports of call
The two cruise markets are interconnected in an operational manner
Cruise ports can be classified based on the role they serve within their regions.

5. 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

6. 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.

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

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

9. 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

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

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

12. Cruise Passengers Visits, Mediterranean, 2011

13. 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

14. The impact of shoreside power/coldironing
Large differences in CO2 emissions:
From 93 to 615 kg of CO2 per passenger-day
From 199 to 1,314 g CO2 per passenger–km
Juneau in Alaska was the first (2001)
Obstacles:
Challenges a city’s power grid
Investment costs (also for retro-fitting ships)
the cost of shore power
the absence of international standards for shore power systems.
Environmental regulations in urban areas => move to less urban areas

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

16. 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..

17. Revenue and Expenses per Average Cruiser, 2011
On-board services: 20-30% of revenues
Source: Cruise Market Watch.
Note: Excursions only cover those organized by the cruise line.
Looking for Fuel-Efficient Routes:
17 knots x 14 hours= 200 nm is ideal

18. 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

19. Ship repositioning by Royal Caribbean Cruises
Northern hemisphere
Winter of 2011
Summer of 2011
Caribbean 23 8
Mediterranean 3 21
South America 9
Asia/Australia 4 1
Alaska 5
Baltic
Bermuda/New England
Mexico (Pacific)
Middle East
Hawaii/Californ.
Total
42 ships

20. 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

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

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

23. 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

24. Simple vessel deployment strategies
Source: data adapted from Cruise Market Watch.
Very tight schedules => schedule reliability!
Stability in the sailing schedule of ships: not only linked to vessel size, but also to the strategies of the cruise operators and cost and technical considerations

25. 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).

26. Thank you for your attention