{"id":340,"date":"2021-03-25T08:10:03","date_gmt":"2021-03-25T08:10:03","guid":{"rendered":"https:\/\/hosting.uantwerpen.be\/transportnet\/?p=340"},"modified":"2021-03-25T10:59:14","modified_gmt":"2021-03-25T10:59:14","slug":"maritime-passenger-transport-the-covid-effect","status":"publish","type":"post","link":"https:\/\/hosting.uantwerpen.be\/transportnet\/maritime-passenger-transport-the-covid-effect\/","title":{"rendered":"Maritime passenger transport: The Covid effect"},"content":{"rendered":"

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Ferrari Claudio, Musso Enrico & Tei Alessio (University of Genoa)<\/em><\/strong><\/h3>\n

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\u00a0<\/em><\/p>\n

The Covid Impact<\/strong><\/h2>\n

Looking at the spread of the Covid-19 pandemic, starting from March 2020, several shipping sectors have recorded slowdowns and demand shocks. While cargo trade was capable of adapting to the contraction of demand, either through blank sailings or through a redistribution of vessels \/ calls, passenger traffic has been severely impacted, with a series of restrictions that nearly completely stopped the cruise industry and generated several limitations for the ferry industry.<\/p>\n

The cruise industry was the first to be hit by the diffusion of the virus. Almost all newspapers around the world reported the news about the Diamond Princess ship stranded in the port of Yokohama without allowing most passengers to disembark (about 700 passengers tested positive to the virus, highlighting the difficulties in managing quarantine rules on board of the ship). Other ships – such as the MSC Magnifica, the Pacific Princess, Costa Luminosa, and the Costa Victoria – had to stop cruises due to the refusal of most ports to allow the ships to be called at, while others did not get permission to disembark passengers. In the first half of 2020, an 85% reduction in port calls was recorded in respect with 2019.<\/p>\n

All this has not only resulted in huge economic losses for the sector but also raised serious questions about the ability to recover even when the containment measures should be loosened or hopefully eliminated. The Cruise Lines International Association (CLIA) recorded about 200 sailings in the period July-December 2020 despite most international markets (e.g. Europe, US) were still either closed or heavily limited in terms of itineraries, pax capacity, and services. This partial reopening of some markets generated an overall passenger amount of 7.5 million passenger, equal to an annual reduction of more than 2\/3 of the overall market in respect with the previous year. It is worth noticing that at the beginning of 2020 most market reports were estimating an overall market growth of about 7% at 32 million passengers. This discrepancy heavily impacted on the balance sheet of major companies, with several market players forced to sell parts of their fleet (e.g. in July 2020, Carnival announced that 13 ships were taken out from its fleet, either selling, laying up, or scrapping them; similarly, CMV cruises scrapped most of its ships). The ongoing situation also impacted the orderbook of many companies, postponing, whenever possible, delivery dates of newbuilt ships.<\/p>\n

Given the long-term positive performance of the industry, while traditional cruise companies recorded financial difficulties, other market players tried to speculatively enter into the market, purchasing old vessels sold out by main cruise groups. That was the attempt pursued by ferry operator Seajet, with the supposed acquisition of 4 vessels in between 2020 and 2021.<\/p>\n

In fact, while cruise shipping nearly stopped completely during the covid-19 pandemic, the ferry sector was limited in capacity but fully operational for most of the first and second waves of the pandemic due to its use as public service to connect islands.\u00a0 As such, the vocational use of ferry as means for transport against the idea of cruise as a touristic solution generated the differentiated impact of the pandemic recorded by the two above mentioned segments.<\/p>\n

The future of the industry<\/strong><\/h2>\n

The 2021 has started with great challenges for most of the marine passenger companies. The cruise market is expected to resume some of its activities. Despite this, an overall amount of 15 million passengers \u2013 i.e., a half of the 2019 figure \u2013 is today considered still optimistic. Considering the main cruise regional markets, to date, the two major European competitors (i.e. Mediterranean Shipping Company [MSC] and Costa Crociere) have only partially resumed cruises after reviewing their routes and choosing to embark only passengers from the same country. In the meanwhile, the biggest United States (US) Cruise companies announced delays in resuming their activities in the Caribbean.<\/p>\n

Nevertheless, most Asian markets resumed most of the services, especially in the South East region, demonstrating how novel solutions could be used in order to attract passengers and convince authorities to allow operations.<\/p>\n

Similar considerations also apply to the ferry segment, with the flexibility recorded in 2020 that could still impact on the capability of most companies to provide the service, even if at reduced capacity. A key difference is the size of the ship that impact on the overall costs and the needed crew\/passenger ratio, higher for the cruise sector and impacting, again, on the profitability of the ongoing services. Within this scenario, niche markets \u2013 such as luxury cruises \u2013 recorded a lower negative impact and less difficulties in performing as in the past, thanks to the market characteristics (i.e., demand, smaller size of the ship, reduced calls) that allowed operators to be more effective in mitigating the pandemic effects.<\/p>\n

Given the negative scenario highlighted above, most companies used the scrapping of old ships as a way to accelerate the renewal of their fleet, with orders that were not cancelled but only postponed with the aim of recording a fast recovering once most of the pandemic related restrictions will be over. In fact, while the short-term outlook looks dramatic, long term forecasts still predict a strong growth for the next years with companies that use new technologies (e.g. propulsion systems) and new onboard services as marketing tools to attract passengers. Obviously, the above-mentioned strategy increases risks if short term mitigating actions are not taken. As such, a rethinking of the itineraries might be needed, with shorter national routings and with passengers that would need to book pre-organised tours in order to reduce the risk of contracting the virus or of being rejected by ports, as happened during the Spring 2020.<\/p>\n

As a matter of fact, only the ongoing immunisation programs might normalise the market but, given the status of such process, the success of the 2021 business is strictly related to the\u00a0 introduction of immunisation certificates (e.g., \u201chealth passports\u201d) that could improve current situation, slowly releasing the main constraints (i.e., routes, capacity) that are stopping passengers to come onboard more than the fear of being onboard of a cruise ship.<\/p>\n

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Ferrari Claudio, Musso Enrico & Tei Alessio (University of Genoa)\u00a0 The Covid Impact Looking at the spread of the Covid-19 pandemic, starting from March 2020, several shipping sectors have recorded slowdowns and demand shocks. 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