Shipbuilding: The Economy Will Drive Future Orders

Carnival's latest delivery: The Carnival DreamWhile prices on raw materials, machinery and furnishings have come down since last fall, affordable access to capital has also become more limited, so shipowners are basically not able to take advantage of what may be lower building prices, according to Enrico Buschi, COO at Fincantieri’s cruise ship business unit.

Shipowners are facing two challenges, according to Buschi: “With softer demand, they have been forced to reduce ticket prices to fill the ships, and once onboard, passengers are spending less. At the same time, access to capital has become more expensive or dried up all together.”

At STX Europe, President of Cruise and Ferries in Finland, Martin Landtman, said: “We see cruise as an extremely sound business, and we are confident it (the business) will return. The cruise market will bounce back once people regain their confidence. Until then, we have to adjust our operations.”

New safety and environmental rules are also challenging the shipowners. “The ships we are building are not complying with future rules, but have the potential to comply,” Buschi said. “It is up to the owners whether they want to invest in the extra cost. The lower decks are designed to meet the needs of the owners for efficient operation. The new rules also call for different partition of vessels, which, in some cases, may disrupt the efficiencies.”

Meanwhile, Fincantieri is working on new ideas and concepts for ships, focusing both on the small- to medium-sized luxury ships, where it has carved out a niche with Oceania and Silversea, and for the big ships it is building for the different Carnival brands.

Landtman said STX is working on energy-saving concepts , green ships and more. “I can assure you that we have new concepts and ideas on the drawing board, and several new and interesting designs in the pipeline.”

In Saint Nazaire, Jacques Hardelay, president of STX France, said the next ships will be prototypes, adding that the yard is also working on ways to reduce the cost of production and the cost of  ship operations for the owners. New orders need to be placed by mid-2010 for 2013 deliveries, according to Hardelay. He is positive that new orders will trickle in, because cruising is the strongest aspect of the leisure industry and is doing well despite the obstacles.

Excerpt from the Cruise Industry News Quarterly Magazine: Fall 2009 

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