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Cruise Ships Facing Accelerated Retirement

The biggest assets for any cruise line are their glorious ships. During tough economic times such as what we are experiencing now as a result of the COVID-19 pandemic, these assets can be money pits, forcing some lines to commit to long-term lay-ups for these idle ships. This can either be a “hot layup” or a “cold layup.” A hot layup is the short-term solution as ships can return to service relatively quickly.  With the COVID pandemic, the situation is so fluid that short term has become long term for many. A cold layup is when the ship is largely shut down and is intended to be so for months or a year, with only a reduced crew on board. This seems to be the more appropriate solution, but no one ever thought, back in March 2020, that we would be in this situation. In addition to ships being suspended with unknown return dates, there are billion-dollar new build ships that are getting ready or have plans to start sailing in the near future.

Ships being laid-up can become costly, and that is something cruise lines may find difficult to do at this point. We are seeing this with companies going out of business such as Cruise and Maritime Voyages (CMV) as one of the most recent victims. Other larger companies like Carnival Corporation who reported a loss of $4.37 billion in the second quarter of 2020, are looking at ways to cut costs by reducing their fleet size by 13 ships this year (9 more than they had planned). Now the question is, where do these ships go?

In the past, when one brand sold a ship, it became part of another brand’s fleet, but in today’s world that is not necessarily the case. Holland America Line announced that Amsterdam, Maasdam, Rotterdam, and Veendam will be leaving the fleet and transferring to undisclosed buyers. Cruise lines are all moving towards becoming leaner, which means not many are taking on older ships and making them new additions to their fleet. “I don’t know that many cruise lines in the world are looking to buy ships right now,” Bill Miller, a prolific cruise ship historian, told CNN Travel. “I would say that would be very unlikely. The next best buyer would be the scrappers.” Most likely many of these ships will end up in scrapyards such as Gadani, near Karachi port or Alang, India. The ships will be taken apart and their parts, from chandeliers to toilets, must be sold for repurposing or as memorabilia. Even the ship’s superstructure gets dismantled for steel to be melted and reused in other construction projects. Peter Knego, a freelance journalist has visited a number of scrapyards and said “On the 10-mile stretch of beach, up to 200 ships can be demolished at one time, making it look like Armageddon or something out of a science fiction movie”. Knego said,”Tankers share the sands with cruise ships, ferries, container ships and even outmoded oil derricks.” Photographing the contrast between the beach, industry and nature is of particular interest for Knego; he says “To see such large objects on a beach being demolished in an otherwise natural setting is both fascinating and heartbreaking.”

In the wake of the pandemic, ships are being reimagined to accommodate COVID-induced lockdowns, but as we have been witnessing, many ships are simply being scrapped leaving memories and memorabilia. The cruise industry had unprecedented growth with many newbuilds on order before the COVID pandemic, but post-COVID will look very different and the remaining cruise lines will come out on the other side much leaner and stronger.

This post was written by cruise industry expert, Shannon Mckee, founder of Access Cruise Inc. Access Cruise Inc is a Miami based cruise marketing and sales consulting group, specializing in product and business development within the cruise industry.

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