Newbuilding delivery and orderbook updates. Falling volumes and fewer new orders

Although the industry’s demand recovery has been vigorous and, some would say, miraculous, hardly any significant newbuilding orders have been added to the diminishing list so far this year.

In the first six months of 2023, only three small, upscale vessel orders were confirmed, totalling just over 600 lower berths; there were no orders for any other category of cruise ships.

This is somewhat worrying. With rapidly rising demand, if the industry is unable or unwilling to order more substantial new capacities, growth and recovery will be halted sooner or later. There seems to be a wait-and-see strategy at play. Having just emerged from the biggest crisis in the sector’s history, this is hardly surprising. Besides, with sky-high debt levels, rising interest rates, and as-yet absent profitability, financing newbuildings is still a challenge.

Nevertheless, as cruise lines’ balance sheets continue to strengthen, the hope is that conditions will improve very soon to such a level that leading cruise lines will be placing orders and the orderbook will begin to swell again.

The next generation of ships will be greener and more costly to build. This too will be a serious consideration when planning newbuildings. We believe, in the quick march towards the goal of net-zero emissions, that the sizes of future cruise ships will moderate. Although the need for economies of scale and demand for larger ships will remain a powerful commercial force, the need to reduce the industry’s environmental footprint will compel it to reign in the ship size inflation and modify its current business model.

Slower pace

After two consecutive years of accelerated recovery, the pace of newbuilding delivery seems to have slowed dramatically in the first half of 2023. Between 1 January and 30 June, only 7,606 lower berths were delivered, compared to 16,140 in the same period in 2022. This in turn suggests a temporarily slower speed of fleet expansion.

Source: CruiseTimes Research

In the second half of the year, however, 23 newbuildings totalling about 38,580 lower berths are scheduled for inauguration. They consist of seven megaships, four mid-size units, and twelve upscale expedition vessels. The situation is therefore set to improve in the coming months, if it is not derailed by major delays and unexpected events. It is likely that not all these vessels will be delivered in time; some will inevitably be rescheduled to next year and beyond because of the supply chain and other issues.

No newbuilds were delivered in the first three months of this year, a clear indication of the faltering dynamics of the cruise ship construction business.

The first new ship came off the production line in early April, when Finland’s Helsinki Shipyard delivered the 192-passenger SH Diana, the third of four Swan Hellenic orders. The ship – built to Polar Class 6, down from the Polar Class 5 of the first two units – was the largest of the quartet and the first to be fitted with tender boats and expedition Zodiacs.

In the same month, the 228-passenger ultra-luxury Scenic Eclipse II, a near-identical sister vessel of the 2019-built Scenic Eclipse, of Scenic Luxury Cruises & Tours, left the shipyard in Croatia and headed for her home port in Portugal. The ship welcomed her first passengers on 13 April.

On 20 April, SunStone Ships’ sixth Infinity-class vessel, the 200-passenger Ocean Albatros, was delivered by its Chinese builder, CMHI Shipyard in Haimen, to Albatros Expeditions on a year-round charter. The seventh and final unit of the class will be delivered in 2025. SunStone has successfully found charterers for all these newbuilds.

On 26 April, Viking Cruises took delivery from Fincantieri of the 946-passenger Viking Saturn, the eleventh vessel in the line’s rapidly expanding fleet. At this point, Viking had another six similar units on order, including four vessels powered by hydrogen fuel cells.

A few days later, Fincantieri’s shipyard in Genoa handed over the 67,000-gross-ton Vista to Oceania Cruises. The second ship of this new class, Allura, will be delivered in 2025.

On 2 June, MSC Cruises took delivery of the much-anticipated, 183,500-gross-ton MSC Euribia from Chantiers de l’Atlantique. The ship then went on her industry-first net-zero-GHG-emissions voyage from Saint-Nazaire to Copenhagen for her naming ceremony [see our feature on MSC Euribia on page 31].

On 19 July, after a delay caused by supply-chain disruptions, Meyer Werft finally handed over the 728-passenger Silver Nova to Silversea Cruises, the 12th vessel in the luxury brand’s fleet. This was Meyer Group’s first newbuilding delivery of the year.

With the size of the orderbook having shrunk so dramatically in the last three years and continuing to do so, we expect to see much-reduced delivery volumes in the next two to three years at least. This situation will not change until a couple of years after the orderbook begins to swell again.

Elsewhere, in early July, MSC Group’s Explora Journeys cancelled the scheduled delivery ceremony due to take place on 6 July at Fincantieri’s Monfalcone shipyard for its first ship, Explora I, citing further enhancement work required for the newbuild, having already cancelled an earlier media shakedown sailing and inaugural cruise because of supply chain issues. The ship was eventually delivered on 20 July.

Ocean cruise newbuildings delivered 1 Jan. – 20 July 2023

Source: CruiseTimes Research

Continuing delays

Delays may be partially blamed for the sluggish pace of newbuilding deliveries so far this year. This problem is continuing to plague the construction of cruise ships.

Havila Voyages’ next two newbuilds are delayed because of complex financial arrangements. Having previously experienced trouble with licensing and the impacts of the earthquake in Turkey, the inaugural operations for Havila Polaris and Havila Pollux have been pushed back further. The start date for the former was originally set for 12 June and for the latter 18 June.

The company has now been issued a licence by Central Bank of Ireland, which should enable the financing and delivery of the ships, as well as settling all outstanding debts with the original lenders. The Irish licence and the one previously issued by the Norwegian government ensure legal financing from EU and Scandinavian lenders. Havila has also applied for licences in the UK and the US in an effort to ensure the participation of British and American investors in the venture. 

Through no fault of its own, Havila has suffered a series of unpalatable and costly setbacks to its carefully planned newbuilding programme. The company went to court in London in 2022 in a payment dispute with subsidiaries of Russian leasing company GTLK over the two new ships being built at Tersan Shipyard in Turkey.

Fewer orders

The recent deliveries and the absence of any new orders mean that the size of the orderbook has shrunk further.

Source: CruiseTimes Research

Between mid-2021 and the end of 2022, the orderbook in terms of lower berth capacity shrank by more than 38%; in the first half of 2023 it shrank by a further 10%. The sharp decline may be partly attributed to the large number of newbuildings delivered in 2022. We expect a further substantial shrinkage in the second half of 2023, as more newbuilds are delivered.

There are hopeful signs that this downward trend may be halting. Major cruise brands are hinting at imminent plans to expand capacity. Improved financial performance and record bookings will drive new orders.

The next wave of new orders will probably mark the beginning of an entirely new generation of “green” ships, as we march towards a new emissions-control horizon. The orderbook may be on the threshold of a new era.

But we believe the orderbook will continue to shrink in the near term. This is inevitable, as cruise lines focus on getting their financial health back on track.

For the moment, the industry has to be content with a very small number of orders trickling in. In June, Fincantieri confirmed that Four Seasons Yachts had exercised its first of two options and ordered a second ship for 2026 delivery. The company could soon exercise its third option and order a ship for 2027.

Although the demand for capacity is strong, the new orders will be slow in coming. This is to be expected, as the industry is still in recovery and, more importantly, it is neck deep in debt. CruiseTimes believes that this situation may change quickly if the sector’s recent robust performance is sustained.

Ocean cruise newbuilding orderbook on 20 July 2023 (140,000 gross tons and above)

Source: CruiseTimes Research

Ocean cruise newbuilding orderbook on 20 July 2023 (45,000–139,999 gross tons)

Source: CruiseTimes Research

Ocean cruise newbuilding orderbook on 20 July 2023 (small, upscale, & expedition)

Source: CruiseTimes Research