Cruise Ship Construction

Cruise lines and shipyards continue slower growth in cruise ship construction By: Marilyn Green
 Ships under construction // © 2011 Meyer Werft
 Ships under construction // © 2011 Meyer Werft

Orders for new cruise ships, which were sharply reduced with the drop in the economy, remain slow, and the shipyards are becoming more and more aggressive in seeking new contracts. At the recent Cruise Shipping Miami conference, Frank Del Rio, chairman and CEO of Prestige Cruise Holdings (Oceania Cruises and Regent Seven Seas Cruises), explained that Oceania did not pick up its option for a third ship because the initial order had been placed at the height of pricing and much more advantageous terms can be negotiated now.

Del Rio stressed that he felt that ships should only be ordered when a brand has demonstrated that it can fill its existing ones; however, he added, “The shipyards are making it very hard not to build a new ship with their offers.”

At the three major cruise-ship builders — Fincantieri in Italy, Meyer Werft in Germany and STX Europe AS in France and Finland — there have been substantial layoffs and there was deep concern at Cruise Shipping Miami that the reduction in ship orders could mean the loss of crucial skilled workers, important suppliers and subcontractors, if the yards are even able to stay in business.

All three of the biggest shipyards do have orders on tap, but not in the volume they need to maintain their systems and not as far ahead as they need to see. Help may come from the European Union, which is said to be on the verge of ordering a series of new, greener ships to replace aging ferries (often as elaborate as cruise vessels).

Robin Farley, UBS cruise analyst, expects the aggressive sales policies of the shipyards to stimulate orders, but not up to the pre-2008 levels. Capacity growth in 2011 and 2012 is placed around 5 percent, below the 10-year average of more than 7 percent. Five new seagoing cruise ships will be delivered this year.

There are certainly signs of light: companies like Norwegian Cruise Line advocate new ships to bring renewed interest and more first-time cruisers into the industry, and the company has two ships on order for 2013 and 2014. Costa Cruises and MSC Cruises continue a formidable building program and, last year, Princess Cruises was allocated two new ships — the largest ever for the brand at 3,600 passengers each — for 2013 and 2014. These are Princess’ first newbuilds since 2008, and such an order at this time is certainly promising for the shipyards and the industry.

In addition, technical evolutions in construction continue, moving from ships lengthened by dropping in a segment to creating complete outdoor environments and bringing in whole prefabricated sections of the ship. Brad Anderson, co-president of Avoya Travel/America’s Vacation Center, sees the whole process of cruise-ship building changing even more rapidly in the future.

“Our world will see more innovation and technological change in the next decade than in the previous thousand years,” Anderson said. “The way ships are made is changing: We are now building radically different prefabricated sections, which may be constructed at different yards, as in the case of Oceania.”

Although the recently launched Marina was built in a three-year period in one shipyard, her sister, Riviera, which debuts in 2012, has sections being built in other Italian yards. These are being towed to Genoa, where the ship will be finished by the same team that created Marina. Del Rio commented that this procedure was done to ensure the delivery on schedule, and Anderson believes this is only the beginning of different approaches to constructing cruise vessels.

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