Ocean cruise newbuilding orderbook updates. An invincible industry

Having bounced back so quickly and decisively from the recent crisis, the cruise industry could be forgiven for feeling somewhat invincible. This is manifesting in the latest wave of newbuilding investment programmes.

The current cruise ship construction orderbook has been showing signs of dynamism in recent months. After four years of continuous contractions, during which the size of the orderbook shrank by more than 40%, it started to swell again in 2024, driven mainly by a never-ending demand at the mass-market end of the industry. Recent signs indicate that this may be just the beginning of an enduring trend; the orderbook will continue to expand at least in the near term.

As expected, the upscale and expedition segment of the industry is experiencing overcapacity after an almost unrestrained newbuilding boom in the years leading up to 2019. It is unlikely that there will be significant new orders from this segment in the next few years.

DELIVERY

The volume of newbuildings delivered so far this year, in terms of both number and capacity, has not yet reflected the strength of demand. This is hardly surprising, because the ordering activities have just begun to intensify in recent months. But we expect the figures for the next two to three years to be much higher, as more ships come off the production lines.

The types of newbuildings delivered in the first three quarters of 2024 showed that major contemporary vessels once again dominated the scene. This trend is set to continue, as most of the post-pandemic new orders, so far, have been for large units.

Between 1 January and 21 November 2024, only eight newbuildings, totalling 20,200 lower berths, were delivered. Very few newbuilding deliveries took place in the last three months. Delays and financial constraints of both shipyards and cruise lines were among the primary causes.

Newbuildings delivered 1 January – 21 November 2024.

Source: CruiseTimes Research

On 12 September, Fincantieri delivered the 63,900-gross-ton Explora II to Explora Journeys. This was the second of the line’s six-ship order. The next ship in the current series, Explora III,is expected in 2026.

On 24 October, Disney Cruise Line took delivery of the 144,000-gross-ton Disney Treasure, the second Wish-class vessel, from Meyer Werft. The line expects the next ship of the same class, Disney Destiny, in 2025.

Disney’s happy partnership with Meyer Werft started with Disney Dream, which was delivered in 2010, followed by Disney Fantasy in 2012. Ten years later, Meyer Werft handed over Disney Wish, the line’s first LNG-powered ship.

Source: CruiseTimes Research

Source: CruiseTimes Research

If no further delays occur, in the last two months of 2024, there should be a further three ships delivered, totalling about 6,200 lower berths. However, the latest information received by CruiseTimes suggests that not all three will be handed over this year.

FEELING INVINCIBLE

The current momentum has rarely been seen before. Had the cruise lines not been saddled with debt by the pandemic, it would be an even more forceful phenomenon.

On 10 August at D23, Walt Disney’s annual fan event, Josh D’Amaro, chairman of Disney Experiences, officially announced Disney Cruise Line’s planned four-ship order for 2027–2031 deliveries. Ship designs were still under development. This order, plus the units already under construction, will make Disney a 13-ship cruise line by 2031.

The construction contract was awarded to Meyer Werft, which at the time was still building two sister ships for Disney, Disney Treasure and Disney Destiny, for 2024 and 2025 deliveries. Meyer Werft has been Disney’s preferred builder for the past 15 years, building four of its six existing ships: Disney Dream, Disney Fantasy, Disney Treasure, and Disney Wish. This contract committed the partnership to another eight years. It also meant that Disney would more than double its fleet size and capacity during this period.

At the end of August, Royal Caribbean Group (RCG) confirmed with Meyer Turku an order for a fourth Icon-class vessel for 2027 delivery and added two more options – a windfall for the financially troubled Meyer Group.

In October, Viking Holdings signed an order for two more 998-passenger deep-sea cruise newbuilds with Fincantieri for 2030 delivery. The orders also came with four more options for launches in 2031–2032. This means that so far in 2024, the company has ordered four newbuilds, matching the total number and capacity ordered in 2022.

On 8 November, Crystal firmed the order with Fincantieri for a third 61,800-gross-ton vessel, tentatively slated for 2032 delivery. This move seems to have been made with a degree of urgency by the owner of the brand, as the memorandum of agreement for the first two ships was only signed in late June, another indication of strong capacity demand in the market.

Because of recent orders, the size of the orderbook on 21 November 2024 was 13% bigger than a year earlier, but still 35% smaller than it was in 2019 in terms of lower berth capacity. This gap is closing fast.

As the industry continues to feel the invincibility of its business, and its leading players jostle for market share, shipbuilding will be the number one concern in the coming years. We should see the orderbook size swelling further in the near to medium term, driven by mass-market large-scale-ship orders, as the benefit of economies of scale and market appeals of contemporary big ships are felt, both of which are evidenced by the recent success of the Icon-class newbuilds.

Source: CruiseTimes Research

This does not mean that the demand and glamour of smaller ships will fade. Quite the contrary: cruise lines are keenly aware of the limitations of megaships. Most ports and destinations around the world, including high-profile ones like Tampa and Baltimore, cannot host large ships. And there is an increasing tendency for destinations to impose limits on size and number of ship calls in an effort to curtail the flow of overtourism.

In addition, there is a growing hankering among seasoned cruise guests for the more genteel ambience of smaller ships. These passengers seek out independent operators like Ambassador Cruise Lines and Fred. Olsen Cruise Lines for this lost experience, even though these companies operate older ships with fewer modern amenities.

The current fleet of smaller ships is ageing. RCG’s Radiance- and Vision-class ships, for example, were built before 2003. We therefore believe there is a wave of orders for this class of ships on the horizon. Indeed, RCG has already unveiled “Project Discovery”, the group’s latest plan for smaller newbuilds.

Ocean cruise newbuilding orderbook on 21 November 2024 (140,000 gross tons and above)

Source: CruiseTimes Research

Ocean cruise newbuilding orderbook on 21 November 2024 (45,000–139,999 gross tons)

Source: CruiseTimes Research

Ocean cruise newbuilding orderbook on 21 November 2024 (small, upscale, & expedition)

Source: CruiseTimes Research