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Odo-CBR Commentary: Carnival’s nascent Chinese brand may acquire reported CSSC-Fincantieri newbuildings after completion

A joint venture cruise brand that Carnival plc, the British holding company in the Carnival Corporation & plc group, China Investment Corporation (CIC) and China State Shipbuilding Company (CSSC) agreed to set up last year could acquire the five cruise ship newbuildings on completion from a joint venture set up by CSSC and Fincantieri.

China Daily reported on 8 July that a joint venture ship owning company 60% controlled by the China State Shipbuilding Company (CSSC) and 40% by Fincantieri, the Italian shipbuilder, would build five 133,500 gross ton cruise ships at CSSC’s Shanghai Waigaoqiao Shipbuilding Company (SWS) unit, the first of which is due to enter service in 2021, the newspaper reported on its English language website.

By allowing the joint venture company set up between the two shipbuilders to take the risk of successfully completing the planned ships and acquiring them, either outright or e.g. through a bareboat charter agreement, Carnival group could insulate itself against the risk of problems with the construction of the planned ships.

A project to build two cruise liners for its AIDA Cruises unit in Germany at Mitsubishi Heavy Industries in Japan, which has not built cruise ships for more than a decade, run into serious delays due to problems at the yard. SWS has not built cruise ships before.

The gross tonnage of the planned SWS built vessels, 133,500, suggests that these could be based on the same design as Carnival Vista, Costa Diadema and a yet unnamed newbuilding for P&O Cruises Australia, all Carnival group units, from Fincantieri in Italy.


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Executive summary 8

Cruise industry in context 13

Tonnage supply 15

A bird’s eye view 15 

Fleet capacity analysis 16 

Space ratio analysis 17 

Vessel size segmental analysis 21 

Fleet age analysis 22 

Small operators 25 

Newbuilding prices analysis 26 

Shipyards & newbuilding prices comparison 28 

Orderbook 32 

Newbuilding capacity delivery trend 37 

Record orderbook & its implications 38

Deployment patterns 40

Cruise brands & market shares 45

Main ocean cruise brands 45 

New & emerging brands 47 

Mergers & acquisitions 48 

Market shares 49

Port development & traffic analysis 55

Port development projects 55 

Port traffic analysis 60

Source markets analysis 70 

Business performances 76

The majors – Carnival Corp. & plc, RCCL, NCLH 76

Volume growth 76 

Development of revenues 77 

Development of net results 78 

Development of revenue & net result per passenger 79 

Development of total & onboard revenue 81 

Development of onboard revenues’ share of total 82 

Return on capital employed 83 

Net yield & net cruise costs 85 

Relative development of operating expenses – illustrations 87 

Development of shareholders’ equity & debt 91 

Earnings estimates by three listed majors 93

Smaller companies 94

Genting Hong Kong 94 

Fred. Olsen Cruise Lines, Ltd. 96 

Lindblad Expeditions Holdings, Inc. 97

Key observations on business performance 99

Risks & opportunities 100 

Risks 100 

Opportunities 102 

Other considerations 102

Conclusion 104