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Comment: Passenger shipping industry facing deepest disruption since Second World War

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 15 March 2020 15 March 2020

The passenger shipping industry is probably facing the greatest disruption since the Second World War as both the demand and supply sides are equally hit at the same time.

The outbreak of the coronavirus has led to a sharp fall in the demand for cruises, as it has done for any other kind of travel.

At the same time, many governments have closed borders and imposed other kinds of restrictions on travel and movement.

Airlines that also provide connections to and from ports of embarkation and disembarkation for many passengers have been forced to suspend services as a result of the restrictions.

Consequently, many cruise operators have come to the conclusion that they are unable to operate their programmes as scheduled for the immediate future.

This means that the affected passengers will have to be compensated for their canceled holidays. This puts cash flow under strain, even if lines did not offer a cash refund, but an option to book a cruise some time in the future.

Previous challenges the industry has faced have principally affected mainly one side of the supply - demand equation, with the demand being the more frequent part affected.

This was the case with the sinking of Costa Concordia in 2013, the financial crisis five years earlier and e.g. the events of 911 in 2001.

The last named affected the supply side to a degree as well as American passengers did not want to fly abroad to join a cruise and ships had to be repositioned so that they could based in US ports.

The oil crises of 1973 and 1980 hit the supply side very hard as the cost of fuel rocketed. The first one in particular resulted in the removal from service many ships that had been built for liner trades rather than for cruising and had fuel hungry steam turbine machinery. Some ships that never resumed commercial trading were just 10 years old.

Together with a rapid inflation that followed, it also put and end to deliveries of purpose built cruise tonnage, which would only resume early in the following decade.

The present crisis has not affected the cruise industry alone. Many ferry services have been suspended, ranging from ones between Japan and China to several in the Baltic as well.

The last time passenger ship operators faced a similar situation was probably at the start of the Second World War.

But the effects of the coronavirus crisis have, perhaps, been more immediate than that of the war: it reached global scale in a matter of some two months. This made it impossible for the cruise industry to redeploy its mobile assets, as had been the case in several, more limited regional challenges in the past.

As the war started in Europe in the autumn of 1939, among major maritime nations it affected mostly Germany, France and Britain and commercial liner services of passenger ships flying their flags quickly came to an end. Cruising was only an offshoot of liner operations at this time and would remain so until the late 1960s.

However, Italy only joined the war in 1940 and the US and Japan in the following year. Some commercial services of these nations continued until they themselves became involved in the conflict.

The war resulted in massive losses of life and ships. The vessels that survived required major refits, often lasting years rather than months due to the amount of work needed plus material and labour shortages.

This will not be the case with the present coronavirus crisis.

Also, the current predictions indicate that the epidemic would last months, not years. The economic and perhaps even political consequences may be another matter.

CLIA announces voluntary suspension in U.S. cruise operations

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 13 March 2020 13 March 2020

CLIA ocean-going cruise lines will be voluntarily and temporarily suspending cruise ship operations from and to U.S. ports of call for 30 days as public health officials and the U.S. Government continue to address COVID-19.

“CLIA cruise line members are voluntarily and temporarily suspending operations from the U.S. as we work to address this public health crisis,” said Kelly Craighead, President and CEO, CLIA. “This is an unprecedented situation. Our industry has taken responsibility for protecting public health for more than 50 years, working under the guidance of the U.S. Centers for Disease Control and Prevention, and prides itself on its ability to deliver exceptional vacation experiences for guests, as well as meaningful employment opportunities for crew. This has been a challenging time, but we hope that this decision will enable us to focus on the future and a return to normal as soon as possible.”

The temporary suspension will take effect at 12:00AM EST on 14 March 2020. CLIA ocean-going cruise lines are focused on the safe and smooth return of those currently at sea onboard ships that will be affected by this decision.

“We do not take this decision lightly, and we want the traveling public to know in no uncertain terms the commitment of this industry to putting people first,” said Adam Goldstein, CLIA Global Chairman. “During this time, we will continue to work with the CDC and others to prepare for resumption of sailings when it is appropriate. We know the travel industry is a huge economic engine for the United States and when our ships once again sail, our industry will be a significant contributor to fueling the economic recovery.”

The cruise industry is a vital artery for the U.S. economy, supporting over 421,000 American jobs, with every 30 cruisers supporting one U.S. job, and annually contributes nearly $53 billion to the U.S. economy. Cruise activity supports travel agencies, airlines, hotels and a broad supply chain of industries that stretches across the United States.

Guests who are booked on cruise itineraries which will be impacted by this decision are encouraged to contact their travel advisors or reach out to their cruise lines directly.

Canada to defer the start of cruise ship season until July 1

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 13 March 2020 13 March 2020

Prime Minister Justin Trudeau has announced a comprehensive $1 billion COVID-19 Response Fund in response to the pandemic. The Fund will help put in place the plans, infrastructure, and resources needed to protect the health and safety of all Canadians.

Canada’s Chief Public Health Officer has issued a formal health advisory, recommending that Canadians avoid going on cruise ships at this time. The health risk is for all the people touched by the cruise ship industry in Canada.

To further complement these measures, today the Minister of Transport, the Honourable Marc Garneau, announced the implementation of new measures pertaining to cruise ships in Canadian waters.

In 2019, Canada welcomed over 140 cruise ships that came to its shores directly from more than 10 different countries. The cruise industry brings at least 2 million travellers to its coasts annually.

As a response to COVID-19, the Government of Canada will defer the start of the cruise ship season in Canada, from April 2, 2020, to July 1, 2020, at the earliest. This deferral will apply to cruise ships capable of carrying more than 500 passengers and crew members.

Given the limited public health capacity in Canada’s Northern communities, the cruise ship season for vessels with Canadian Arctic stops will be deferred for the entire season this year. This would apply to cruise ships of all sizes.

While this measure does not apply to ferries or smaller vessels at this time, the Government of Canada is also developing an approach to ensure health measures are strengthened in all passenger vessels across Canada.

The Government of Canada recognizes that COVID-19 is having a major impact on the economy and communities across Canada. "We are continually assessing the risks of the COVID-19 based on science and evidence, and consulting with our government, industry and regional health partners. Further decisions on whether the season can resume on July 1, 2020, will be based on science and evidence in the best interests of the health and safety of Canadians," Transport Canada said in a statement.

The Government of Canada will continue to engage with the Tourism sector and regional partners to understand the effects of COVID-19 on local businesses and their employees.

These measures are part of a larger strategy the Government of Canada is implementing that prioritizes the health and safety of Canadians, ensures the capacity of the public health-care system, aligns Canada’s international and domestic approaches, and strives to mitigate the health and economic impacts in Canada.

Canadians who are planning to travel abroad are reminded to consult the Government of Canada’s Travel Advice and Advisories and register with the Registration of Canadians Abroad service.

Seatrade Cruise Global 2020 to be postponed

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 13 March 2020 13 March 2020

A following statement was published today:

"As previously communicated, we have continuously reviewed the situation with regards to Seatrade Cruise Global in April 2020. Up until recently, the majority of industry feedback indicated that we should try to continue with the event as scheduled if possible. It’s clear now, however, that this is not possible due to the numerous globally imposed travel bans and the latest restrictions related to running events within Miami-Dade county, as well as the latest feedback we have received from many of you. We therefore confirm that Seatrade Cruise Global 2020 has been postponed and that we are working with our association partners and you, our customers on alternative options.

You can expect more information from the Seatrade Cruise Global team in the coming week to discuss your full range of options and address any questions you might have. We continue to work diligently to ensure all details are confirmed for our exhibitors, delegates and sponsors – we thank you for your continued support and patience with us through these challenging weeks.

These are unprecedented times as we look to reinvent and reposition our events to adapt accordingly, while still bringing you the dedicated platforms for meetings, collaboration and business generation. We will issue more details shortly as we firm up more information, however at this time there are two logistical areas we would like to mention:

– If you’ve already shipped booth materials or placed orders, we are working with Freeman and the Miami Beach Convention Center on next steps, and will communicate those in the coming days. If you have not yet shipped your booth materials, you should avoid doing so at this time.
– Those who have booked hotel rooms in our block will receive information in the coming days about rescheduled dates and the process to cancel your existing room or make reservations for potential new dates.

As always, we look forward to continuing to work with you as our partners, customers and industry colleagues on Seatrade Cruise events taking place in the second half of 2020, including Seatrade Cruise Med (16-17 September | Malaga, Spain), and we appreciate your patience as we finalise new dates for Seatrade Cruise Global," Informa said in a statement.