Ocean cruise newbuilding delivery and orderbook updates. Hesitancy and unambiguous slowdown

Cruise ship construction and newbuilding delivery are still relatively sluggish. Hardly any major new orders have been placed for four consecutive years, and deliveries have slowed noticeably. It has been a worrying trend for shipyards. If the situation does not improve soon, it could be disastrous for them and for many of their specialised suppliers. But there are signs suggesting that things might be improving.

Despite its much-improved financial performance in recent months, the cruise sector is still laden with debt. Cruise lines are thinking about adding new capacities because of the unprecedented and sustained increases in demand, but so far no major new orders have been forthcoming except for confirmations of a few existing orders. Nor can we see any definitive signs of them on the immediate horizon.

This hesitancy is understandable under the circumstances. It must also be stressed that preparing for a newbuilding project is usually long and laborious. It requires careful consideration and financial planning even under normal circumstances.

The world’s economy now may be facing a spell of deflationary pressure. Modern cruise business has not yet experienced this. There is no definite indication of how such a depressive economic environment would impact on cruise business, but one thing is certain: cruise lines will be cautious. This could mean fewer or no new orders in the medium term.

Lacking urgency

Several newbuilds were poised for delivery in the second half of 2023. But deliveries have been slower than expected. Production continues to be encumbered by supply-chain issues, and there seems to be a lack of urgency on the part of owners to take delivery, since it would mean a major financial commitment, which, in the current circumstances, is not desirable.

According to the current schedule, eight units still await completion and delivery by the end of this year. But with more delays inevitable, it is unlikely that we will see them all handed over in time. Most of them will be rescheduled to 2024 or beyond.

Construction activities are continuing. Ships are constantly being launched. As of mid-November 2023, a couple of newbuilds, including Carnival Cruise Line’s much-anticipated megaship Carnival Jubilee, were in the final stage of preparation for their delivery journeys.

Ocean cruise newbuildings delivered 1 January – 16 November 2023

Source: CruiseTimes Research

Between 1 January and 16 November 2023, a total of 17 newbuildings were delivered, amounting to 22,065 lower berths.

Since our 20 July update (see CruiseTimes issue 21), a further eight units were handed over to their owners, totalling 12,929 lower berths. Compared with the figures of previous years, especially 2019 and 2022, the slowdown in 2023 has been obvious. This trend is likely to continue at least for the short to medium term because of the absence of new orders. Having said that, the volume of delivery so far this year has not been low compared with a decade ago, when cruise business was already booming.

Source: CruiseTimes Research

On 31 July, the Italian shipbuilder T. Mariotti handed over the ultra-luxury, 23,000-gross-ton Seabourn Pursuit, the sister vessel of the 2022-built Seabourn Venture, to its owner.

A day later, on 1 August, Turkey’s Tersan Shipyard finally delivered the 15,519-gross-ton pair of coastal cruise vessels Havila Polaris and Havila Pollux to their owner, Havila Voyages, after a painful series of financing-related delays. The ships entered service later that month.

On 3 August, Norwegian Cruise Line took delivery of the 143,535-gross-ton Norwegian Viva, the second of six Prima-class newbuilds. From this point on, the series will evolve into Prima Plus class, with ship sizes progressively increasing to 169,000 gross tons. The next two ships will each be 156,000 gross tons.

On 13 November, Celebrity Cruises took delivery of the 140,600-gross-ton Celebrity Ascent, the fourth unit in the Edge-class series, from Chantiers de l’Atlantique. The ship will debut in Fort Lauderdale on 3 December with a seven-night Eastern Caribbean voyage. 

A day later, on 14 November, Fincantieri’s Ancona Shipyard handed over the 55,500-gross-ton Seven Seas Grandeur, the last of the three-ship Explorer-class series, to Regent Seven Seas Cruises.

Just over a week earlier, China’s first domestically built cruise ship was delivered, the 135,550-gross-ton Adora Magic City, signalling the country’s definitive entry into the major cruise ship construction league. China thus becomes the fifth country in the modern world capable of such an undertaking.

This event may have changed the dynamics not only in the cruise ship building business but also in the entire cruise industry. As China plans a coordinated development of cruise business and promotes the manufacture of high-end products, Adora Magic City is expected to be the first of many cruise newbuilds coming out of the country in the coming years.

The ship was the result of a collaboration of suppliers and experts from more than 30 countries, and Shanghai Waigaoqiao Shipyard has shown the world its cruise ship building capability. With the support of the Chinese government, the shipyard will quickly become a formidable force in the cruise ship building market.

It must also be noted that many other shipyards in China have already built very advanced cruise ferries for demanding international clients. From these platforms, it requires only a relatively small step to building major cruise ships. European builders should take this development seriously, especially when European equipment suppliers and ship designers are all too keen to cooperate with Chinese builders, both commercially and technologically, in realising their cruise ship construction ambitions. In as little as 10 years, Chinese shipyards have pushed European large-scale ferry builders to the brink of extinction.

Source: CruiseTimes Research

Delay issue

Delays are still a key reason for reduced deliveries so far this year. Several units are expected to be delivered months after the scheduled dates. This will be costly for both shipyards and shipowners.

In September, Virgin Voyages said that its next newbuild, Brilliant Lady, which was due to enter service in 2023, would be delayed because of the persistent supply-chain issues. The company was evaluating a new delivery date. It is unlikely that the ship will be finished this year.

While all builders are plagued by this problem, the situation should improve as the global supply-chain issues gradually ease.

The drivers

What is most worrying, especially for shipbuilders, is the shrinking orderbook. The situation is exacerbated by the cruise lines’ hesitancy to place new orders. However, the light at the end of tunnel may be getting brighter, as the sector’s financial performance rapidly improves. We are beginning to see sustained reductions in quarterly debt, as reported by major cruise groups. These factors should drive investment.

In a way, this is already happening. On 21 September, MSC Cruises confirmed with Fincantieri the orders for Explora V and Explora VI, scheduled for deliveries in 2027 and 2028. This sealed the total investment of €3.5 billion for six luxury ships built for the Explora Journeys brand.  

MSC seems to be leading the next wave for its mass-market MSC Cruises brand. On 13 November the group announced that it had firmed the orders with Chantiers de l’Atlantique for two more 205,700-gross-ton World-class newbuilds for deliveries in 2026 and 2027.

MSC’s leadership here is hardly surprising. It has always had a stronger newbuilding programme than its contemporaries. One of the reasons for this is that, being a subsidiary of a huge and successful shipping conglomerate, the company is far less constrained by debt issues.

In the absence of a significant number of major new orders, it is hoped that this development signifies the beginning of the next wave of ocean cruise ship building. Already, several newbuilding programmes are under consideration, especially in the luxury and expedition segment.

There may be another powerful driver behind this emerging new wave. The delivery of Adora Magic City is not just a milestone for China’s cruise ship construction ambitions, it also starts a new chapter in cruise business development in the Far East, which will have global significance. The planned cruise business collaborations among major ports in Greater China may be the next key driver for shipbuilding.

But there are risks; it could all end in nothing. China’s economy is perceived to be stalling, not to mention all the geopolitical issues associated with the country. The rising costs could also make Chinese shipbuilders less competitive in the longer term.

In the end, cruise ship building could still depend on the dynamism of traditional markets in North America and Europe as its main pillars.

Ocean cruise newbuilding orderbook on 16 November 2023 (140,000 gross tons and above)

Source: CruiseTimes Research

Ocean cruise newbuilding orderbook on 16 November 2023 (45,000–139,999 gross tons)

Source: CruiseTimes Research

Ocean cruise newbuilding orderbook on 16 November 2023 (small, upscale, & expedition)

Source: CruiseTimes Research