Debate between leaders of the cruise ship industry and port-cities

Published by  29 May, 2013 9:17 am Leave your thoughts

AIVP followed with much interest the work of the conference organised by the Cruise Europe association, which held a meeting for its members in Le Havre on 23, 24 and 25 April this year.

The port-city as an economic adjustment variable?

More than one hundred delegates involved in the development of the cruise ship business in port-cities, from a score of countries in Northern and Western Europe, took part in the conference. The cruise operators represented among the speakers (Holland America Line, Celebrity, Carnival, AIDA…) testified to the good health of the cruise market in Northern and Western Europe, while stressing the difficulty of ensuring that the business remains profitable economically. The cost of fuel and port costs were mentioned to explain this apparently paradoxical situation. The direct and indirect costs associated with calls at European ports were once again vigorously denounced by the lines’ representatives. The question of the balance sought between passenger expectations of an attractive and comfortable programme of calls on the one hand, and the companies’ demand for maximum profitability on the other, is necessarily delicate. In the search for this financial balance, companies see the choice of the port-cities at which they call as an adjustment variable. These port-cities therefore have a strong incentive to offer conditions for ship calls which meet the companies’ strategic demands. For a start, every port-city must know how to negotiate a win-win partnership, while understanding that it is more and more difficult to make the most of the profits to be earned from their geographical situation in a context of strong competition between ports which are ever better equipped for cruise ship calls.

In search of authenticity

The structure of each cruise and, naturally, the question of the calls and the excursions available, were central issues in the debates. To reduce the variable costs of their operations, the companies look for new circuits which are linear rather than loops; passengers therefore embark and disembark at different ports. Moreover, slow steaming, already extensively used by cargo vessels, is an increasingly common practice among cruise ship operators. Steaming speeds at sea have been falling steadily for several years to save fuel. As a result of this, ports of call cannot be too far apart in order to optimise passage time, which is the least expensive for the operator and can generate the best profits for companies through consumption of the services offered on board. In the port of call, the companies are careful to ensure that the terminal is close to the city centre, and that good road infrastructure exists for day excursions. Failing that, the offer of launches (free of course!) by local players is naturally appreciated.

The quality of the excursions offered, the level of on-shore reception and the interest of each port of call contribute to the reputation and success of the cruise, and therefore of the company. For the cruise ship operator, novelty, authenticity and exclusivity are values which are sure to guarantee a satisfying “repeater” rate among passengers, who are also encouraged to recount their “experience” on the internet and social networks. For European cruises, this indirect marketing strategy is proving particularly successful.

Conclusions

It is hard to say who is winning this game in which port-cities and cruise ship companies try not to be first to blink. The strong market dynamic is sufficient to keep everybody happy for the moment: the companies who are permanently refining their economic model, the port-cities who are polishing their images and can expect substantial economic benefits, and finally the passengers, who every day are offered more, at more competitive prices. However the equilibrium is fragile and the importance of the role played by the industry’s professionals in each port of call should be stressed. In a few years, they have become essential points of contact for the companies and the first to encourage the formation of local “cruise clubs”. A great advantage of meetings like this is that it brings them together and allows them refine the strategies of their own port-cities.

Read: Cruise ships: What future for onshore power supply in Europe?

See also:
http://www.cruise-europe.org/
http://www.cruiseeurope.com/

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