Global Trade • March/April 2022 • CRUISE CONTROL

The global pandemic has focused attention on cargo movements, port congestion and container ships. There are challenges with getting enough containers and finding enough berths at major ports for the mega ships that keep getting bigger. Supply chain issues caused by the marine cargo challenges are also a constant media target.

In the background, the cruise sector struggles with its own issues. Billions of dollars have been lost by cruise lines as ships have been idled for nearly two years, their decks, pools and lounges silent as the industry was basically shut down.

But cruise ships are beginning to break waves again, employing health and safety protocols in efforts to ensure a healthy environment for passengers and crew. It hasn’t all been successful as cruise ships have suffered COVID-19 outbreaks and forced to return to ports of departure—or destination ports have blocked ships from docking with as little as a single case of the virus.

Cruise Lines International Association (CLIA), the global voice of the cruise industry, presented a tone of optimism in its recent 2022 State of the Cruise Industry Outlook.

“While our focus on health and safety remains absolute, our industry is also leading the way in environmental sustainability and destination stewardship.”

She continues: “Coastal and maritime tourism is an important economic driver and we continue to work in partnership with cruise destinations so that communities thrive from responsible tourism.”

Cruise ports realize the value of cruise tourism and are investing in cruise infrastructure. However, the pandemic did impact some ongoing projects and Port Canaveral can attest to that.

Named the “Best Cruise Homeport” in the U.S. in 2021 in the Cruise Ship Awards, Port Canaveral depends heavily on the cruise industry, “with approximately 80% of our total operating revenue generated by cruise and cruise-related businesses,” says Capt. John Murray, the port’s CEO.

Cruise revenues, however, are not dedicated to cruiserelated projects. Revenues earned from all operations are used to support a range of projects in the capital improvement program. So, obviously with that much dependence on cruise revenues, the pandemic hit hard.

“The last ship sailed from Port Canaveral on March 12, 2020, following the CDC’s [Centers for Disease Control & Prevention] shutdown of cruising,” Murray says. “In an effort to preserve cash to sustain the port’s operations, all capital improvement projects were halted and deferred to future dates. A total of $47.9 million in capital improvements were put on hold for more than 18 months.”

The Cruise Terminal 3 project, the largest single project in the history of Port Canaveral at $155 million, did reach completion in June 2020. However, the terminal, which homeports the Carnival Mardi Gras and Carnival Liberty, sat idle for more than a year before Mardi Gras sailed out of Port Canaveral on its maiden voyage on July 31, 2021.

“Additionally, a $46-million project to expand Cruise Terminal 8, used by Disney Cruise Line, had been financed just prior to the shutdown,” Murray says. “However, the project included $11 million in port funding. The scope of the project was reduced to help the port conserve cash and the project was completed in April 2021.”

He added that, “During the cruising shutdown, some critical projects related to port operations or maintenance and repair for cruise terminals continued.”

In a typical year, prior to the pandemic, when Port Everglades, one of the busiest cruise ports in the world, hosted nearly 4 million passengers annually, cruise would account for about 35% to 40% of the port’s total revenue, according to Ellen Kennedy of the port’s Office of External Affairs and Cruise Service. She said the cruise revenue is moved into a general fund and not specifically designated for cruise projects, but the cruise business does contribute to capital improvements.

“Throughout the pandemic we continued to make improvements in both the cruise and cargo sectors,” Kennedy says. “Our most exciting current project is remodeling Cruise Terminal 4 with Disney Cruise Line, which is scheduled to begin sailing from Port Everglades in November 2023.”

The first cruise ship to begin sailing in the U.S. since the pandemic began in March 2020 was the Celebrity Edge on June 26, 2021, out of Port Everglades. Cruises began ramping up after that sailing with several scheduled departures from Everglades.

Other cruise projects at Everglades include the recently opened new 1,818-car Heron Parking Garage to serve Cruise Terminals 2 and 4. Guests going to Terminal 2, Princess Cruises’ prototype Ocean Medallion terminal, travel along an airconditioned bridge with moving walkways. The state-of the-art garage also features solar energy, nine elevators, touchless smart parking entry and payment, a dedicated level for drop off and pick up and a 70-foot tall optical illusion mural of a Florida Great White Heron.

While the Port of Milwaukee doesn’t host the large ocean liners or the hundreds of thousands of passengers welcomed by seaports, the Great Lakes facility does recognize the value of cruise and the economic spin-off that comes with it.

“The percentage of overall port revenues that comes from cruise is minimal at this point but why we are really enthusiastic about cruise is because of that broader economic impact related to tourism for Milwaukee and the state,” says Milwaukee Port Director Adam Tindall-Schlicht.

In 2018, Milwaukee saw less than 1,000 cruise passengers but this year it expects upwards of 11,000. With a cruise season that starts usually in May and ends in mid-to-late fall, Milwaukee has positioned itself as a turnaround port for itineraries on the Great Lakes for cruise lines such as Pearl Seas Cruises and Viking Cruises, which operate the smaller, expedition-class cruise ships. The Pearl Mist carries approximately 210 passengers and the Viking Octantis maxes out at 378 folks.

The cruise business “has brought great economic impact” for hotels, lodging, restaurants and cultural amenities, says Tindall-Schlicht, and Milwaukee is “really thrilled we will see a return to cruise activity following two years of COVID-related problems.”

Jazmine Jurkiewicz, Milwaukee’s Trade Development representative and cruise specialist, anticipates additional lines coming to the Great Lakes and Milwaukee such as the French line Ponant Luxury Cruises, American Queen Voyages, Ritz-Carlton and others. That explains why Port Milwaukee plans to spend $6.4 million, which includes a state grant of $3.5 million, on upgrades to its cruise infrastructure.

Port Tampa Bay (PTB) took a hit on cruise revenues because of the pandemic with just 9% of the port’s budgeted revenues this year forecast to come from cruise. Prior to the pandemic, it was 17%, says Wade Elliott, the port’s vice president, Business Development.

“Cruise homeport activities remain a very important part of our portfolio,” Elliott says. “The diversification across our multiple lines of business is the key to PTB’s continued success and financial performance.”

Port Tampa Bay took advantage of the COVID downtime “to make several improvements at the terminals, including the addition of new escalators,” Elliott said, adding that for now, cruise facilities “are in good shape capacity-wise with three modern, updated terminals, so it’s primarily just ongoing maintenance and repair. We are looking at potential additional cruise terminal expansion a few years from now.”

In a brief glimpse at international cruise, the Port of Hamburg says it doesn’t provide information on the percentage of port revenues generated by cruise but Managing Director of Cruise Gate Hamburg Simone Maraschi, says, “After payment of all operating costs, the revenue generated by passengers and ships fees is used to refinance the terminals.”

In pre-COVID times, Port Hamburg had seen a strong increase in cruise calls and passenger numbers. In 2019, it had 209 calls and 815.000 passengers. Any dip during the height of pandemic was accompanied by other complications for cruise operations, Maraschi concedes. “The pandemic has certainly led to shortages in certain areas of the cruise-ship sector and has also affected the availability of certain products and services.”

“In 2020, thanks to the early and successful restart of the cruise business in Hamburg in July, 81 calls took place with 77,000 passengers in total,” Maraschi says. “Last year, 2021, we had 108 calls and 112,000 passengers due to an extension of the season and strong business in the winter months. Over 300 calls are scheduled for the 2022 season.”