Sovereign and the Monarch in Turkish scrapyard
In early February, outbreaks of the coronavirus began to occur on cruise ships. On one quarantined ship, the Diamond Princess, one infection spread to over 700 cases and seven deaths from COVID-19. In March of 2020, the cruise industry was effectively shut down by a Center for Disease Control (CDC) “No Sail Order.” Recent attempts to restart even limited cruising have not been notably successful.
Not surprisingly, several cruise lines have ceased operations and at least 11 cruise ships have been sent to the scrapyards. Nevertheless, 16 new cruise ships were delivered in 2020, most of which sailed directly to layup. Now in 2021, an additional 30 cruise ships are scheduled to be delivered from shipyards around the world. Incredibly, another 31 ships are scheduled for delivery in 2022.
The multibillion-dollar question is whether this new fleet of cruise ships will find gainful employment? Will people be willing to return to cruising? Will the advent of new vaccines make cruising safe again? As is so often the case in these challenging times, there appear to be no easy answers.
Thanks to Alaric Bond for contributing to this post.
There was enough disease on these cruise ships before this pandemic that stopped the wife and I from ever boarding. Doubly so with the present situation.
People who love them, really love them though. A co-worker has taken his family of 5 on trips three years in a row, Not last year thank gawd, and three years in a row they get some big that lays them low for another week
If a price war is started in order to try and boost passenger numbers it is not going to help the profits needed to pay for all the new ships. There is going to have to be some creative marketing. What haven’t they already tried?
Judt a hunch. These new ships were paid in cash. Companies would not be so wreckless as to buy with a loan. With the smaller companies having folded. These mega owners are probably taking the gamble that they will be in higher demand whne covid is not what it is now. Mind you I am only speculating that the mega owners pockets are still very deep with resources.
No cruise line could afford to fund their ships with cash. Cruise ships are the most expensive commercial ships to build and are financed through a mix of debt and equity.
Given the long led time necessary to build a cruise ship, I am sure all the new deliveries were ordered well before the onset of the pandemic.
For more than you may wish to know about cruise ship financing:
https://www.researchgate.net/publication/318395676_Methods_of_Raising_Funds_for_Purchasing_of_New_Cruise_Ships_by_International_Corporations