This is a normal day on St.Maarten when 3 or 4 mega ships drop 20,000 visitors for a day of shopping and sightseeing. It helps the economy, but the price tag is huge.

The headline on a recent travel industry article announced: Many U.S. cruise ports in a funk. Many ships are leaving US homeports for Europe and Australia. The story took me back to the 1990’s when  an old high school friend of mine down on the island of St.Maarten was caught up in orchestrating the financing for the island’s cruise port expansion.  I remember lengthy discussions St.Maarten style at Boardwalk Cafés overlooking Great Bay beach, arguing about shopping opportunities, restaurant and entertainment facilities and security arrangements. We were putting numbers together on Heineken Beer coasters and calculated that with a doubling of cruise ship arrivals in 8 years, the debt load could be paid off in 8-10 years.

It was easy in the early days as security was not a real consideration and the industry was growing by leaps and bounds. Then 911 happened and we allowed the world to change beyond the realistic need for safety and security.  After 911 it became a different story as no-one without a triple checked clearing had access to what used to be a quaint, good-natured and uncontrolled cruise port where local crafts were sold on the pier and natives danced and drank with visitors until the ships horn announced departure.

When the first $40 million port was built, additional expansion plans were already on the table and consecutively realized. Even St.Maarten’s $100 million plus new airport found an important motive in the cruise industry, called Homeporting. Build a big enough facility to become one or more cruiselines’ homeport. Of course that only works if the combination of air and cruise price is a feasible proposition in any economy. After 911 St.Maarten rapidly adopted American Security standards both in cruise port and airport requirements and this year’s arrival projection is 1.4 million visitors. Project an average of 46 cruise ships per month on an island the size of Amelia Island and you know that life is never going to be the same.

As a result of 911 the cruise industry in the US also changed dramatically.

For years Americans were afraid to go to foreign destinations and consequently a lot of coastal cities with some type of a port facility, scrambled to become part of the growing home porting phenomenon.
I remember being part of a Sunday afternoon conversation in the now (disgracefully) defunct Wicked Davy’s Saloon about two and a half years ago, where several local politicians were discussing readying the Port of Fernandina for homeporting, as if there were no paper mills to relocate and historic downtowns to protect.
I saw first hand how an idyllic, picturesque island in the Caribbean exchanged short term prosperity for long term misery, I have seen how Key West changed dramatically in the past 15 years through the arrival of megaships and became a mecca of hardnosed commerce instead of old laid back Cuban Conch Village we called heaven.

In 2007, Norfolk, VA opened its glassy, modern, $36 million Half Moon cruise terminal to great fanfare. 

In December, San Diego is planning to open a $21 million cruise terminal. 

A little to the north, the Port of Los Angeles is investing $10 million in improvements to its cruise facility, even though cruise ship arrival will be few and far in between. 
Despite making significant investments, each of these ports will host its lowest number of cruise vessels and passengers in more than five years.

Brandnew Halfmoon Terminal in Norfolk, VA is waiting for better times.

The drop in San Diego is a hefty 45% in cruise ship traffic this year. In 2011 Los Angeles will drop a staggering 121 arrivals compared to its 265 arrivals in 2008. And yet, those numbers would be heaven in the ears of Norfolk’s Half Moon terminal, where a total of 11 ships will call this year, with only six calls on the books for 2011. 

What happened?

Cruise Ships are Mobile and Flexible

The extended economic downturn left cruise ship operators with clearcut options and at this time European and other faraway ports are again beacons for cruise lines. Besides the economy, cruise lines have also been balking at constant increases in security fees that are making cruising too cumbersome and expensive for many.

So, in a move that could mirror the exodus of drilling platforms from the Gulf to Africa and Brazil, Celebrity Cruises earlier this summer said it was canceling its departures out of Baltimore and would instead move operations to Australia and New Zealand next year, typically reversing a 2008 decision to leave the Down Under market and put a ship in Baltimore. 
That kind of mobility enables cruise lines to tap new markets and create new itineraries with relative ease, while the ports they serve enjoy no such flexibility. 

In addition to Celebrity, Royal Caribbean International, Holland America and Princess have also committed additional capacity to Australia over the next few years, increase the cruise capacity Down Under with as much as 20%. 

Princess recently announced it was putting an unprecedented four ships in Australia in 2011 as the result of increased demand from Australians, while Princess’ sister company, Cunard Line, recently said that the Queen Mary 2 would be based in Australia in 2012 for a circumnavigation of the continent, a first for Cunard. Royal Caribbean will deploy two ships to Australia in 2011, adding the Radiance of the Seas out of Sydney. The Radiance will join the Rhapsody of the Seas, already sailing its third Australian summer season.

Remember Dubai with the tallest building in the world; it’s rapidly becoming a homeport

Dubai, that much discussed Emirate in the Desert is yet again witnessing a major increase in cruise traffic and consequently Royal Caribbean will lengthen the 2,500 passenger Brilliance of the Seas’ Dubai season during winter 2011-12. 

Costa Cruises also signaled its dedication to Dubai last February by choosing this ‘Disneyworld of the Middle East’ the naming ceremony location for its newest ship, the 2,286-passenger Costa Deliziosa. 
Costa, Carnival Corp.’s Italian cruise brand, says it will carry 140,000 passengers on three ships from Dubai this year, triple the number when it began in 2006. And as a result of this continued growth, Costa decided to reduce its ships out of Florida next year from two to one.

But the hardest-hit of U.S. cruise markets are on the West Coast, where Royal Caribbean pulled the Mariner of the Seas from the Mexican Riviera in favor of a move to the Mediterranean beginning in January; Norwegian Cruise Lines pulled the Norwegian Sun from the Mexican Riviera in 2011, at the same time that it will be homeporting a ship in Copenhagen, Denmark, for the first time. 

Carnival Cruise Lines took the 2,052-passenger Carnival Elation from its year-round perch in San Diego this past spring and instead is sailing the ship out of Mobile, Ala.; its newest ship, the 3,690-passenger Carnival Magic, will mark the line’s return to Europe next year after a two-year hiatus, sailing the Mediterranean from Barcelona.

Alaska keeps its charges up

Princess Cruises and Holland America Line, Alaska’s two largest cruise operators, have significantly reduced their Alaska capacity: Princess by 16% this year and HAL by 7% in 2011. 
Much of the loss for U.S. ports is Europe’s gain. Holland America will base seven ships in Europe this summer, including its newest vessel, the Nieuw Amsterdam, while Princess will have its largest-ever Europe deployment this year and next. 

In explaining these moves, those lines’ parent company, Carnival Corp., cited the “astronomical” costs Alaska puts on the cruise industry in taxes and fees.

With the mobility of the ships, global marketing structures in place and ground handling operations available almost anywhere these days it pays to pull a ship from Alaska and put it in Europe or Australia or Vietnam or Scandinavia. Operators are constantly going through those reviews as vessels move around to meet its best market potential.
Is it all a result of cyclical trends? 

Not really. U.S. homeports are by no means out of the game; in fact, several are doing well and some are doing extremely well.

Port of Everglades, homeport to some of the largest ships on the 7 Seas

Florida obviously has the huge advantage of being a stone’s throw away from the Caribbean Islands and it helps especially south Florida that the world’s largest cruise line, Carnival, has underscored its faith in homeport cruising, while most new ships in the cruise fleets begin life in a Florida port. Fort Lauderdale’s Port Everglades is homeport to the world’s largest cruise ship, the Oasis of the Seas and Miami is home base for the Norwegian Epic.

Baltimore is serving a huge market place

Newcomer Baltimore has seen a tremendous growth and will host 91 cruise ship visits this year, up from 27 in 2008.
 Baltimore will welcome a record 190,00 cruise passengers coming through its port this year, only four years after opening. The success is often attributed to the fact that the Baltimore cruise port lies in the center of a vastly populated megalopolis, that does not have to go through the hassle of flying and security issues to get on a cruise ship.
 The growth has been called fantastic and stunning, but frankly is really a natural progression from 911 fall-out.

Even though industry experts claim that this latest shift is the result of improved consumer confidence — Americans are traveling abroad again — and because some nations’ economies, such as Australia’s, did not suffer as much as that of the U.S., I am convinced that the fear factor is still as strong as ever, coupled with the inconvenience of airline traveling to a homeport destination. 

Industry experts point at a variety of reasons why certain homeports work and others don’t and mostly they point out the the shift to mega ships versus older, midsize vessels and the fact that the recession has caused a lull in shipbuilding, which means there are fewer new vessels to go around. 

In addition, as new cruise ships have gotten larger, and as the older, smaller ships are increasingly sold to Old traditional brands, there are fewer U.S. ports with the market size required to fill the mammoth ships.
Ports like Galveston and New Orleans do well because of the market size they claim, experts claim.
If that were exclusively the case however, San Diego, Los Angeles and even Norfolk Virginia would be able to pull impressive numbers in terms of accessible markets. And New Orleans has not really an affluent market size available either.

Marketing a homeport is the exclusive power that rests with the cruise ships. The industry dictates both the homeport and the destination how and when to play ball. The only reason why Alaska can demand high fees from the cruise operators is because Alaska is rich, pristine, with a relatively small population that lives there by choice and over time have formed a sense of stubborness, not even a powerful cruise line can penetrate. The same story is already an issue on the island of Bermuda for decades. Some upscale islands in the Caribbean will (hopefully) not fall for cruise ship pressures and promises and build homeports of cultural alienation.

Personally I am glad that the talk about turning the Port of Fernandina into a cruise home port never materialized into something serious and was just a Sunday afternoon’s exchange of thoughts, better left inside a pub or at the bottom of a glass of beer.