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Cruise lines are in the midst of a building boom, but the reality is that cruise ship construction is controlled by a small group of companies.
Almost all cruise ship production globally is controlled by four major shipyard holding companies: Fincantieri in Italy, Meyer Werft in Germany, Mitsubishi Heavy Industries of Japan and STX Europe.
The consolidation affects how the multi-billion dollar cruise lines can grow and compete in the global cruise marketplace. Cruise companies are forced to sign deals to build ships years in advance, in order to lock down the shipyard space needed.
“We’re capacity constrained because there’s only so many shipyards,” Carnival Corp. CEO Arnold Donald told Skift. “You can only build so many ships a year. There’s just not the yards to do it. In our case we have 100 ships. We can build one, two, three ships a year. Every now and then we’ll have four or something like that, but you can do the math. That’s three to five percent capacity growth. That by itself is not going to drive your returns to satisfy shareholders.”
Overall industry capacity grew by 18 percent from 2009 to 2013, according to CLIA, and is expected to grow another 18 percent through 2020.
According to Cruise Industry News’ order book, 58 ships totaling just under an estimated $28 billion in investment are on order right now by global cruise lines. Fincantieri is set to produce 26 ships through 2022, while Meyer Werft and Meyer Turku (which Meyer Werft acquired from STX France last year) are set to build 17. STX France is slated to produce eight.
All the shipyards contacted for this story declined to comment on the importance of the growth of the cruise industry to their business.
Smaller lines may be look to take a different path to securing the shipyard space to build their vessels. Smaller ships, obviously, require more modest shipyard facilities when compared to megaships.
Genting Hong Kong, owner of Crystal Cruises and China’s Star Cruises, bought a piece of small shipyard Lloyd Werft last month. It acquired 70 percent of its shipbuilding business along with half of its land for about $20 million.
Genting will acquire the shipyard in fall if certain purchase conditions are met. It already has two big ships for Star Cruises being built at Meyer Werft, and has two luxury “river yachts” and two ocean vessels on order from Lloyd Werft.
“Ownership in Lloyd Werft will enable Genting Hong Kong to leverage on the shipyard’s technical expertise and their well-established and long track record in the shipbuilding industry,” said Tan Sri Lim Kok Thay, chairman and CEO of Genting Hong Kong.