Cruise News and Views

Nov 4, 2007
Author: Terry Hutson



Star Cruises founder dies


The death occurred on 23 October of Lim Goh Tong, founder of Star Cruises, Asia’s best known and most successful cruise operator. He was 90.

Mr Lim was born in China and moved to Malaysia as an almost penniless young man, but went on to found a business empire of international standing not only in the cruise industry but also in power generation, property development, casinos, plantations, oil and gas and general commercial activities. At his death Forbes estimated he was worth US$4.3 Billion, making him Malaysia’s third wealthiest man.

Star Cruises, which he founded in 1993 was listed on the Hong Kong Stock Exchange and is today the world’s third largest cruise operator, having 21 ships and over 32,000 berths and operating as Star Cruises, Norwegian Cruise Lines, NCL America and Orient Lines. In addition the group has another three ships on order which will provide an additional 10,800 berths by 2010.

The company has been run in recent years by Mr Lim’s son, Tan Sri Dato Lim Kok Thay, who is the chairman and Chief Executive Officer.

Cruise and shipping analysts expect that Mr Lim’s death will have little impact on Star Cruises, as he has not had a hands-on involvement in the company since handing over to his son in the 1990s. Nevertheless he was one of the true pioneers of cruising, bringing it to a region where others doubted it would have a future and his death will leave a void.



South Korea moves into cruise ship building

South Korea’s STX Shipbuilding, the world’s seventh largest shipbuilder, has acquired a 39.2 percent stake in Norwegian-based shipyard Aker Yards.

Aker, which builds a variety of specialist ships, is perhaps best known as a builder of cruise ships, and its acquisition by STX provides a Korean shipyard with its first meaningful stake in cruise ship construction.

STX has built more than 500 ships in the past 40 years at the Busan and Jinhae yards in South Korea, ships mostly in the large tanker and bulker or container ship class but including ferries as well and was one of the companies that helped transform South Korea into an industrial powerhouse.

The purchase of an almost 40 percent interest in Aker cost STX a reported US$800 million. Other owners of the Norwegian company include Switzerland’s Union Bank, BNP Paribas, Euroclear Bank, and the Bank of New York Mellon, each with substantially smaller shares than the new shareholder, resulting in STX becoming effectively the principal shareholder.

Although STX says it doesn’t intend ‘taking over’ the company, observers believe the Korean company will gradually impose its own management style. However, STX will rely heavily on the European yard ‘s expertise because unlike cargo ship construction, cruise ships require a far different approach with emphasis on highly sophisticated interior design and finish.

Aker employs about 20,000 workers at 18 separate shipyards in eight countries across Europe and Brazil. Many of the world’s top ferries have been built at an Aker shipyard and the company is the second largest cruise ship builder behind Italy’s Fincantieri.

Korean shipyards are known to have been casting envious eyes at the resurgence of construction among the cruise industry, which has mostly benefited Europe, and it has been only a matter of time before they began encroaching into this preserve. Few people however might have expected them to come in through the back door via acquisitions of otherwise healthy yards and who knows, this may be only the beginning of similar buy-ins.



Cape Town must become a base for cruise liners


CLICK IMAGE TO ENLARGE
RHAPSODY OF THE SEAS in Lyttelton Harbour, New Zealand on Saturday, 3 November 2007. Picture by Alan Calvert. Imagine a procession of ships such as this in Southern and East African ports – see following report


The following article appeared in the Cape Business News (www.cbn.co.za) and although on the lengthy side it is in our opinion a valuable contribution to understanding the opportunities of what southern Africa is missing within the global cruise industry.


The cruise liner industry is the fastest growing global tourism sector. The average growth rate of the sector has been 8 percent per annum since 1980. Some 12 million people went cruising in 2006 and the number is expected to grow to 16 million by 2009. The industry is estimated to be worth some US$29 Billion and it sustains approximately 559,000 jobs.

Councillor Simon Grindrod, Mayoral Committee Member for Economic, Social Development and Tourism says: “Given the importance of the industry it is disappointing that Cape Town and Southern Africa have largely failed to benefit from this growth. Cape Town has a long history of welcoming and saying farewell to passenger liners. Many Capetonians remember the era of the Union Castle mailships and the ‘City’ Line passenger vessels making regular calls in Table Bay Harbour.

The time could be ripe to re-establish Cape Town as one of the great passenger liner destinations of the world by promoting itself and the Southern African region as a base for destination cruises.”

During the dramatic increase in the industry worldwide, the current level of cruising in South and East African waters has remained fairly static. Tourism KwaZulu-Natal has made efforts to develop the market and has achieved some success with Starlight Cruises offering cruises from Durban and Cape Town (not quite the whole picture – Starlight ‘pioneered’ cruising from Durban many years ago largely on their own initiative – ed).

This lack of growth in the Southern African market is all the more surprising given the fact that cruise liner operators are seeking new destinations. It is interesting to note that cities against which Cape Town benchmarks itself such as Miami, Vancouver, Sydney, Melbourne, Singapore and even Auckland have all been developed as cruise liner destinations. In fact the East Coast of Australia and New Zealand have become popular cruise liner destination bases experiencing 28 percent per annum growth during 2000-2003.

Southern Africa has a wide range of attractions for cruise liners. Cape Town and its surrounds, the Winelands, Addo Elephant Park and the growing number of private game reserves close to Port Elizabeth/Coega, the Wild Coast, Durban from which trips to the Ukhlahamba Drakensberg range is achievable, Hluhluwe-Imfilosi, Isimangiliso/Greater St Lucia Park are close to Richards Bay, the Mozambique coast and islands, Zanzibar, Mombasa not forgetting the stark attractions of the Namibian coast are just some of the attractions on offer. There is so much potential and so much that we could show visitors.

An advantage of cruise liners is that they can berth at ports with limited landside facilities. Modern cruise liners are after all floating resorts. Given this position, areas which have previously been fairly inaccessible to this type of tourist, as well as the traditional tourism nodes, could benefit.

There are three basic segments of the cruise liner industry namely:

* Round-the-World or classic cruises;
* Repositioning cruises, where a cruise vessel is relocating from one home port of a destination and offers a cruise to another destination;
* Destination or area based cruises, where a cruise ship is located within a specific area and is based at a ‘home-port’ in close proximity to the area of its cruise itinerary and returns to the home-port at the end of the voyage.

Fly/cruise tourism is usually available for each of the above categories. This situation limits home-ports to those that have international flight connections. So in the case of South Africa only Cape Town or Durban would qualify as potential home-ports.

At present Cape Town and Durban feature on the schedule of round-the-world cruises and vessels on appropriate repositioning cruises but this is a limited market.

Destination based cruises are by far the largest component of the market and it is this sector that Cape Town should seek to develop. As stated earlier only Starlight Cruises offer destination-based cruises from Durban and Cape Town.

What needs to happen to develop our region for destination-based cruises? Cruise liner passengers are high spending, generally mature in age and importantly often influential in their community. It is therefore unrealistic to expect these visitors to be accommodated in an antiquated cargo shed converted for use as a cruise liner terminal. All of the destination-based cruise liner harbours have state-of-the-art multi-use cruise liner terminals. At present small vessels can be berthed in the V & A Waterfront but if we are serious about developing the market then a custom designed facility needs to be built in Duncan Dock. This is particularly important given that the trend is for cruise ships to be getting longer, wider and taller in order to accommodate more people and generate more revenue for the cruise lines.

Cruise liner terminals are not profitable investments on their own. Given this position the trend worldwide is to construct a multi-use facility that can be used as a cruise liner terminal as well as for other uses. Cape Town has the perfect opportunity at present to develop a stunning multi-use cruise liner terminal by linking this project to the proposed expansion of the Cape Town International Convention Centre. The design of the expansion of the Convention Centre needs to include provision for a multi-purpose cruise liner terminal to be added at a later date. It is quite possible to construct the terminal so that it does not unduly affect cargo operations in the harbour by straddling the gangway across the wharf to meet the point where the passengers disembark. Just imagine how spectacular and convenient for all concerned it will be having these beautiful vessels berthed adjacent to the Convention Centre.

Durban is planning to build a cruise liner terminal as part of the re-development of the Point. If destination-based cruise liner business is to expand in this region then terminals at the potential home-ports of Cape Town and Durban is probably essential. As happened with the construction of the Cape Town International Convention Centre some form of special purpose organisation may be required to access finance for the venture. This is an issue which needs greater research.
In addition, in investigating the provision of better facilities the Southern African region needs to combine its marketing efforts to attract the major cruise liner operators to our shores. We need to find out how the areas such as Australia and New Zealand managed to establish themselves in the industry.

According to research commissioned by Tourism KwaZulu-Natal, North America provides the largest number of cruisers followed by the United Kingdom. Germany is third and is one of the fastest growing markets, so links with Namibia could provide a competitive advantage for the region.

It is also stated in the KwaZulu-Natal commissioned work, that more than 85 percent of cruise passengers believe that cruising is an important vehicle for sampling destinations to which they may return. Approximately 50 percent of passengers expect to return to the places that they visited while on a cruise.

It is important to realise that cruise tourists wish to see the same attractions as every other visitor to the region. Cruising would therefore need to become integrated within other packages offered by the region and marketed accordingly. For example, a popular package offered in Canada is to fly to Calgary to join the Rocky Mountaineer train over the Canadian Rockies. The train journey ends in Vancouver where the tour continues by joining a cruise to Alaska. The cruise returns to Vancouver where the cruiser disembarks and flies back home. As this example shows, with a bit of ingenuity the development of the cruise liner industry can benefit more than just the coastal ports.

Mansoor Mohamed, the (Cape Town) City’s Executive Director for Economic, Social Development and Tourism says: “The industry is dominated by a few major operators. If we can attract one of these major players then perhaps market forces may result in the others needing to follow suit. We need to contact the cruise liner operators to market the region to them and to assess what is required to induce them to include Southern Africa on their list of cruise destinations. Our marketing bodies also need to be prominent at the relevant trade shows around the world to promote the region as a cruise liner destination. Developing Cape Town as a home-port for destination-based cruises will have a major positive impact on the growth of the tourism industry and therefore jobs in the city. However, although Cape Town can play a key role, it is unlikely that one city or region can develop the market alone. It is therefore essential that all appropriate organisations in the region work together to help devise a strategy that will ensure the success of this venture.”


Do you have a view on this subject? Is enough being done to encourage cruise ship tourism to Southern Africa, and if not, who should be doing it? We invite your comment. Send your comments to info@ports.co.za




Another two ships for Costa

Italian cruise operator Costa Crociere has confirmed placing orders for two new ships with Fincantieri at a combined cost of US$1.45 Billion. Costa Crociere SpA is the Italian subsidiary of US Carnival Corporation.

In keeping with trends, the ships will be of the ‘large ship’ variety of 114,200-gt and a capacity of 3,780 passengers utilising upper berths or 3,012 in double occupancy. Delivery will take place in 2011 and 2012 from the Italian Marghera shipyard.

The new ships whose names have not been identified are intended as sister ships to two other newbuilds, COSTA CONCORDIA, COSTA SERENA and a third under still construction, COSTA PACIFICA.

Costa has a total of 13 ships in an expansion programme which will be completed in 2012 and will give the company a fleet of 17 ships with a capacity of 36,700 passengers.

“By ordering two additional ships for our fleet of twelve, plus three ordered previously, we are not only reinforcing our position as the market leader in Italy and Europe, but also responding to the increasing demand for our product from our customers across the globe," said Pier Luigi Foschi, Chairman and CEO of Costa Crociere SpA

He said Costa was very pleased to have Fincantieri build these two new Concordia class ships and to enjoy a continued successful relationship with the shipyard.

Costa ships fly the Italian flag and are deployed in the Mediterranean, Northern Europe, the Baltic Sea, the Caribbean, South America, Dubai, the Far East and the Indian Ocean.



Star Cruises pull plug on India

Star Cruises is withdrawing its SUPERSATR LIBRA from India, where the ship has been operating out of Mumbai for the past two seasons.

The reason? India has extended its territorial waters from 20 to 200 nautical miles (for ‘security’ reasons) and this has had a negative impact on certain shipboard activities, including the all-important casino and most of the (duty-free) shopping activities.

In almost all cases these activities are ‘closed’ while a ship is in port in deference to the country’s laws but as soon as the ship has cleared harbour limits, say half an hour after sailing, the facilities are usually opened, even is a ship operates along a coastline and stays within the territorial limit. However by extending those limits tenfold India has now made things impossible for the Malaysian cruise operator, which would have to sail for at least five hours before reaching so-called international waters where it can legally open onboard activities.

SUPERSTAR LIBRA has been operating cruise from Mumbai to Goa, Cochin and Lakshadweep.



What’s cruising this way?


CLICK IMAGE TO ENLARGE
DELPHIN VOYAGER – one of a number of cruise ships coming this way during the summer season

It’s almost summertime in southern Africa, which means the arrival of cruise ships and opportunities for local holidaymakers to enjoy a cruise without having to fly long distances.

Ports & Ships hopes to publish its long-awaited Schedule of Cruise Ship calls in the very near future (yes, I know we’ve been saying that for a while, but it is now nearing completion). In the meantime however here is a list of most of the ships expected in South African waters between December 2007 and April 2008. They are not in any order of arrival nor do they indicate which ports will be called at – that information will be revealed with our scheduling.


MSC Melody – multiple cruises
Razzmatazz – multiple cruises
Royal Star
C Columbus
Silver Cloud – multiple cruises
Island Sky
The World
Van Gogh
Delphin Voyager
Oriana
Corinthian II
Silver Wind
Topaz
Black Watch
Prinsendam



That's all for now. Hopefully not too long a gap before the next cruise news column appears
cheers
Terry
info@ports.co.za


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