In mid May an interesting article appeared in China Daily, an English language paper published in China for foreigners and high-end citizens, and which tends to portray the official policy of Chinese government. It provided detail about how China aims to become a cruise ship owner and operator, initially in its own waters. By extension it could also be taken to mean that, in time, Chinese cruise ships will operate globally and maybe even come to challenge the pervasive influence of the largely US-operated cruise ship companies that sail the region out of South Florida and a few Caribbean home ports. It suggests too, a possible additional reason for China’s growing commercial interest in Caribbean ports, their construction and their operation.
The article, after reporting that the Carnival Cruise line owned Costa Victoria had arrived at the Shanghai International Cruise Port, which will be its homeport for Asian routes, quotes Chinese officials on their future thinking about a Chinese cruise industry.
The story makes clear that the number of cruise ships entering Chinese waters is rising and that global players in the cruise sector are focusing on the country. According to the story, the number of such vessels received at ports on the Chinese mainland increased from 223 in 2010 to 262 in 2011. It also pointed out that the world’s four leading cruise companies have established China-based routes and that they are increasingly selecting Chinese harbours to be their homeports. The objective is to offer the increasingly wealthy segment of the Chinese market and foreigners the opportunity to cruise in Chinese waters and to neighbouring countries including Japan and Korea.
This in itself suggests that the trend in recent years of cruise companies relocate vessels away from the Caribbean to other destinations will continue.
But more significantly the article went on to indicate that China’s long term objective is likely to be a deepening of its engagement with cruising and that the attraction of US cruise ships is a first step towards having an integrated industry of its own.
China Daily, quoting experts, makes clear that China is at the primary stage of its cruise economy. In this phase, it notes, the country is building homeports to provide comprehensive services, including berthing, replenishment and maintenance for large cruise liners. Several cities, including Shanghai, Tianjin, Xiamen and Qingdao, have been equipped with international homeports to attract major cruise liners to locate there for the long term.
Quoting an interview with the Shanghai government-owned news website Eastday.com the article refers to an interview with Wang Hong, head of Shanghai’s Baoshan district who notes: “We will build an industrial chain, including logistics, purchasing and ticket business, to promote the development of modern services that integrate the cruise economy.”
However, the article goes further. According to Cheng Juehao, the Deputy Director of the Research Institute of Cruise Economy under the control of the Shanghai International Shipping Institute, Chinese enterprises and government agencies started to consider establishing a cruise industry two years ago and that within five years China will have its own cruise ship companies.
“Cruise liners have brought new concepts and patterns of consumption to China, but they won’t produce obvious benefits if we are only involved in selling tickets and ship supplies…The Ministry of Industry and Information Technology is encouraging the research and development of cruise ship building technologies,” Mr Cheng is quoted as saying.
At the moment the idea of Chinese cruise ships with Chinese visitors sailing the Caribbean is a straw in the wind, but a decade from now, it is possible that Cuba, Jamaica or Barbados could in time become China’s first home cruise ports in the Caribbean. This possibility, if coupled with the majority of Caribbean nations’ desire to deepen their economic as well as their political relationship with China, could revolutionise the way in which the Caribbean benefits from cruise tourism. Not only would it provide a platform for China’s rapidly growing numbers of global travellers to experience the region, but could also enable the region’s governments to begin to address the many difficulties associated with the US cruise lines.
These include cruise companies playing off one destination against another to reduce levels of taxation on cruise visitors; their ability to permanently undercut the fixed costs, high levels of taxation and other constraints that the land based industry faces; and the little long term interest in the environmental impact they have on destinations.
Although the cruise industry is expected to continue to grow globally over the next decade – industry forecasts suggest that by 2020 cruise lines will be carrying around 30 million passengers per year – as matters stand much of this growth is likely to bypass the Caribbean.
In 2011 cruise passenger arrivals in the Caribbean grew only marginally by 0.3 per cent to reach 20.6 million, in contrast to an increase of around 6.5 per cent worldwide and sailing schedules for the Caribbean suggest that this year is not going to be much brighter. And, according to the Caribbean Tourism Organisation cruise arrivals to the region in 2012 are unlikely to rise by more than two to three per cent and that onshore cruise visitor expenditure is expected to remain weak.
Some of the reasons why this is happening are beyond the Caribbean’s control. Economic recovery is weak in the key North American and European markets that feed visitors to the region; high energy prices are causing cruise lines to choose home ports closer to populous centres; and significant increases in air fares are causing passengers to look at destinations for cruise vacations departing closer to home. The effect, over the last two years, has been for destinations in the Southern and Eastern Caribbean to be severely affected as vessels that sail the Caribbean in winter months are re-deployed to the Mediterranean and other locations in summer months.
With only about 3 per cent of people in the United States ever having taken a cruise, Europeans looking for safe, cost controlled vacations to ‘exotic’ destinations at a time of economic austerity, and new feeder markets for cruising such as China beginning to open, the Caribbean potentially ought to have abundant prospects for growth.
Finding ways to introduce sustainable Chinese tourism into the current North American, European and Latin America visitor mix ought, as economic relations with Beijing broaden, to become a Caribbean priority.
Previous columns can be found at www.caribbean-council.org
