The current cruise ship orderbook stands at 104 vessels worth a total of $60.3 bill, which accounts for 34% of the overall global orderbook, according to the latest research from VesselsValue (VV).
A flurry of ordering activity seen between 2014 and 2018 was an attempt by cruise shipowners and operators to keep on top of the ever-growing demand for travel. However, this demand currently sits at record lows, due to the COVID-19 travel restrictions.
The graph shows the number of cruise ships delivered and removed from the water each year, plus the overall fleet size during the period 2010-2028. The ‘predicted’ fleet size is based on current orders, assuming that there are no removals (source: VesselsValue).
As cruise companies and shipyards try to mitigate the market effects of COVID-19, ordering has slowed significantly and delivery delays are being experienced. This has resulted in only 12 of the planned 22 Cruise ships being delivered during 2020, VV said.
To save on layup costs and to free up cash flow for forthcoming deliveries, the major operators have chosen to scrap their older less efficient vessels. Thus in 2020, for the first time in many years, the balance between removals and deliveries was progressively more aligned.
Going forward, cruise companies and shipbuilders must now be wary of not oversupplying the market without the increase in demand to match, VV said. By 2028, the fleet is projected to increase in size by 28% with the ability to carry over 925,000 pax at any given time.
As it stands, 2021 is set to be a record-breaking year with 31 vessels due to be delivered, worth a staggering $13.6 bill in total, VV calculated.
A quick and confident return of demand is paramount for the industry to rebound, otherwise further delays and removals should be expected in an attempt to balance supply and demand
Hopefully, the COVID-19 vaccine will be the catalyst that propels the cruise industry back onto its previous positive trajectory.
The stock market is already starting to reflect this with share prices for the major cruise lines over double what they were back in April as at the end of last year, VV concluded.