Brillance of the Seas
99,090 gt, blt 2002 by Meyer Werft, operated by RCC

For the second consecutive year, the orderbook has hardly expanded, with the exception of two ships ordered by the Carnival group with Fincantieri, one unit of 85,000 tons, 1,848 lower berths, for Holland America Lines, with delivery in mid-2006, and one unit of 110,000 tons, 3,000 lower berths, for Carnival, for delivery at the end of 2005, at the respective prices of some 380 and 460 million euros. Fincantieri thus confirms its lead position amongst European shipbuilders.

Also worth noting is the order by the Scandinavian company Birka for a vessel of 700 cabins with Aker Finnyards, at a price of $155 million, destined primarily for cruise seminars.

At the end of the year, the firm orderbook stands at 27 ships with a capacity of 57,164 lower berths, with delivery to be spread out over the next three years, which will increase berth capacity in service respectively by 10.8 % in 2003, 9.5 % in 2004, and 2.5 % in 2005.

Confronted with a demand which most probably will increase at the rate of some 8 % per year, the threat of surplus capacity seems to be receding, which will reassure bankers and financial analysts who have been concerned at the rapid rise in the number of ships joining the market these last years. However this brutal reduction in new orders puts the future of the large European shipyards specialised in the cruise industry into jeopardy. Converting towards other types of ships, such as ferries, ro-ros, LNG carriers and military or specialised craft, although a logical solution, is not always obvious in such a generally sluggish market. The first victim of this reduced activity has been the small Norwegian shipyard Fosen, builder of the ship 'The World' for Residensea, which had to ask for creditors' protection.

Several projects are currently under discussions, namely for Star Cruises, Saga, Aida Cruises, Radisson, Disney Cruises, etc. but are slow to get confirmed. RCC has not placed any new order in 2002 and is questioning the size of future ships, in view of the success of the 'Voyager' series, 137,000 tons. It is also a fact that decisions were on hold awaiting the outcome of the merger with P&O Princess. RCC has extended its option until September 2003 that it has with Meyer Werft for two ships of the 'Serenade' class (85,000 gt, 2,000 lower berths), for delivery in 2005 and 2006, whereas P&O were unable to postpone any further its two options with Chantiers de l'Atlantique.
The market will from now be obliged to follow the development pace of the new giant CCL/P&O Princess. It is very unlikely that the year 1999, which had 25 new orders will be repeated, but one can reasonably hope that some new orders will be placed in 2003 by the big groups who will pursue a more modest rhythm for their expansion in 2005 and beyond. Carnival should logically show the way and be followed by its competitors, but the number of new orders risks being insufficient for the appetites of the European shipyards.

Europe has a total construction capacity of about fifteen ships of 90,000 gross tons per year, certainly greatly oversized relative to the needs for a reasonable growth of the cruise industry in the coming years. A reduction in capacity will consequently have to take place, resulting in a shrinking of orders and in the number of owners, and of a greater sensitivity from financial institutions and investors towards this sector - always hungry for funds. The depreciation of the dollar against the euro will also act as a brake, despite the historically low levels of interest rates.

In this situation competition between shipyards is fierce, and since national subsidies have been banned by Brussels, and the negotiating margins on prices remain very slim, it is more on financing know-how and means of tax leverage developed by some E.U. countries, that efforts will be concentrated.

The only satisfaction is that the construction of cruise ships should remain an European speciality for numerous years to come, since Asian shipyards have no interest to break into this high risk and very restrictive market, whilst they are experiencing healthy orders of standard ships. The dramatic and costly fire of the 'Diamond Princess' under construction with Mitsubishi should also be a dampener.
 

• For Carnival Cruise Lines, the 'Carnival Conquest', (110,000 gt, 2,974 lower berths) built by Fincantieri, the 'Carnival Legend', (88,500 gt, 2,114 lower berths) built by Kvaerner Masa.
  u For Holland America Line, the 'Zuiderdam' (85,000 gt, 1,848 lower berths) built by Fincantieri.
• For Royal Caribbean Cruises, the 'Brilliance of the Seas', (90,090 gt, 2,100 lower berths) built by Meyer Werft, the 'Navigator of the Seas', (137,300 gt, 3,138 lower berths) built by Kvaerner Masa.
• For Celebrity Cruises, the 'Constellation', (91,000 gt, 1,950 lower berths) built by Chantiers de l'Atlantique.
• For P&O Princess Cruises, the 'Star Princess' (108,806 gt, 2,600 lower berths) built by Fincantieri, the 'Coral Princess', (88,000 gt, 1,950 lower berths) built by Chantiers de l'Atlantique.
• For Aida Cruises, 'Aida Vita', (42,289 gt, 1,266 lower berths) built by Aker MTW.
  u For Norwegian Cruise Line, the 'Norwegian Dawn', (91,000 gt, 2,244 lower berths) built by Meyer Werft.
• For Festival Cruises, the 'European Stars', (58,600 gt, 1,506 lower berths) built by Chantiers de l'Atlantique.
• For Residensea, 'The World' (40,000 gt, 616 lower berths, 110 apartments, 88 suites) built by Fosen.
• For Royal Olympic, 'Olympia Explorer', (25,000 gt, 836 lower berths) built by Blohm + Voss.