Damage to Bahamas shipyard leaves cruise lines scrambling

The aft end of the Carnival Vista on the Boka Vanguard at the Grand Bahama Shipyard.
The aft end of the Carnival Vista on the Boka Vanguard at the Grand Bahama Shipyard.

Damage to a drydock facility at the Grand Bahama Shipyard in the Bahamas is proving inconvenient and expensive for the cruise industry, and it demonstrates how few drydock options exist on the U.S. East Coast.

The damaged drydock, the largest of three at Grand Bahama, was put out of commission on April 1 when a crane collapsed while raising the stern of the Oasis of the Seas to repair its propulsion pods.

The accident forced Royal Caribbean Cruises Ltd. (RCCL) to take the Oasis to a yard in Europe to finish repairing it.

The repairs, plus the cost of three canceled Oasis cruises, will pare an estimated $52 million from RCCL’s 2019 earnings.

But Royal is not the only line affected by the loss of the Bahamas drydock.

In June, Carnival Cruise Line’s 4,000-passenger Carnival Vista also developed a problem with its Azipod motors that required immediate replacement of their bearings. Normally, the work would have been done in drydock at Grand Bahama, a facility jointly owned by RCCL and Carnival Corp.

But on June 20, Carnival Cruise Line disclosed to investors that because it was not possible to use Grand Bahama, the ship would go out of service for 17 days, and three July cruises from Galveston, Texas, would be canceled.

The cost was projected at between $50 million and $62 million, partly because it will take more time to complete than it would have if the ship had been drydocked in the Bahamas.

Carnival turned to what it said was a “first of its kind” solution, loading the entire ship onto a semi-submersible, heavy-lift transport vessel, the Boka Vanguard, built to haul offshore oil and gas drilling rigs.

The loading and lifting operation was scheduled for the weekend of July 12 to 14, after which the Vista was to head for the Grand Bahama yard for the repair work.

Both situations underscore how dependent cruise lines are on Grand Bahama Shipyard for drydock space that is within a quick sailing distance from their headquarters in Florida and from ports on the Eastern Seaboard.

Walter Nadolny, assistant professor of marine transportation, ship construction and stability at the State University of New York’s Maritime College, said there are several reasons for the infrastructure deficit.

One is that costs are low in the Bahamas.

“The United States is the most expensive place in the world to build and repair a ship,” Nadolny said. Most U.S. shipyards of the size needed to work on late-model cruise ships are accustomed to cost-plus contracts from the U.S. Navy and are too expensive, he said.

The Carnival Vista arrives at night in Grand Bahama after being picked up by the Boka Vanguard.

The Carnival Vista arrives at night in Grand Bahama after being picked up by the Boka Vanguard.

Second, the specialized gear and materials have been concentrated in Grand Bahamas and are not easily duplicated.

“If they brought [the Carnival Vista] into Jacksonville Yard, in Jacksonville, Fla., right now by bringing in all the stuff they need to do the repair, they’d be incurring duties,” Nadolny said. “The logistics they need are probably sitting in the Bahamas, which means we’ve got to bring people in, we’ve got to bring equipment in, [and] it could be stuck in customs.”

Cruise lines have grown to rely heavily on Grand Bahama because most of what they do there is routine refurbishments that are predictable and can be scheduled well in advance, he said.

But unforeseen situations are posing more of a challenge. “The intricacies of changing out Azipods make it a little more difficult,” Nadolny said.

Carnival had the option of sending the Vista to Europe, where cruise ship drydocks are more numerous, Nadolny said, but that would have meant extra transit time.

“Now, instead of a three-week downtime, it’s going to be a seven-week downtime or a 10-week downtime,” he said about the European alternative.

Before 2000, when the predecessor of Grand Bahama Shipyard was founded in Freeport, cruise lines were more dependent on U.S. yards. For example, when the Carnival Ecstasy caught fire leaving Miami in 1998, it was sent to the giant Newport News Shipbuilding yard in Hampton Roads, Va.

But ships have been growing in size.

“The reason why Grand Bahama came about is specifically that there were no large drydocks in the southeast part of the U.S. that could accommodate these mega-cruise ships,” said Lawrence Rapp, principal consultant at Seawise Consulting, which focuses on new building and refurbishment management.

After the previous operator of the Freeport yard went bankrupt, Carnival and Royal Caribbean invested in it.

“That’s worked reasonably well until this accident,” Rapp said. “The only real fallback that exists is Newport News, but they’re committed to Navy contracts. If the Navy ship isn’t finished, then you don’t get the dock, so it’s just not reliable enough for the cruise industry.”

At the start of the year, Grand Bahama had 25 projects scheduled for 2019. It is not known how the crane accident will impact that total or when the damages from the accident will be repaired. Grand Bahama Shipyard officials have said nothing about the cause or consequences of the accident.

Phone and email efforts to reach the yard for comment were unsuccessful.

Problems with podded propulsion systems continue to dog the industry, making the need for repair facilities acute. The sister ship of the Oasis of the Seas, the Allure of the Seas, is currently operating at less than full speed because of a technical problem with one of its pods.

In May, Royal Caribbean International sent a letter to passengers booked on the Allure saying that the ship would be leaving some ports early and substituting some ports for others through October because it could not sail at full speed.

Nadolny said the only cost-effective drydock alternative to Grand Bahama for ships needing work along the East Coast would be another Caribbean facility.

He said a yard could be built in another offshore location; Haiti, for example. But it would require that country to say “We want to do this” and then devoting the necessary resources.

Rapp said that keeping a drydock operation in the black can be tricky.

“There are a lot of risk factors,” he said. “It’s hugely capital intensive. There are all sorts of labor issues. It’s not something that’s easy to make money with. You look at a drydock bill for a big cruise ship and you think ‘Look at all that money.’ Most of it is going to subcontractors for interior refurbishments and so on.”

He added: “The amounts going to the shipyard are substantial, but they’re not constant, and they’re not reliable.”

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Royal Caribbean voyages to double the fun at the private island

CocoCay's waterpark opened earlier this year.
CocoCay’s waterpark opened earlier this year.

Royal Caribbean International has added nearly 40 sailings in the coming year that will feature two stops at its Perfect Day at CocoCay private island.

The four-day cruises on Navigator of the Seas from Port Canaveral and Mariner of the Seas generally sandwich a stop in Nassau between the two visits to nearby CocoCay.

Royal Caribbean will sail three Navigator cruises that stay at CocoCay late into the night.

Entertainment will include traditional Bahamian-inspired activities, including a Junkanoo Jam Up Party, an island barbecue and performances by a calypso band and fire dancers, topped off with fireworks.

Both Virgin Voyages and MSC Cruises are preparing to offer private beach attractions in the Bahamas that provide evening activities.

Norwegian Cruise Line boss nets $1.3m in the share sale

Image result for andy stewart nCL

Norwegian Cruise Line boss Andy Stuart netted $1.3 million from the sale of shares.

He sold 25,000 shares in parent company Norwegian Cruise Line Holdings in two tranches last week, according to a filing with the US Securities and Exchange Commission.

The sale at $50 per share came after the company reported record second-quarter financial results with earnings of $240.2 million for the three months to June 30.

The lift in profits came despite the impact of the abrupt US government ban on cruise ships calling into Cuba and a technical problem with the ship Norwegian Pearl which forced one cruise to be amended and another to be canceled.

Company president and CEO Frank Del Rio said at the time: “The underlying fundamentals of our business remain strong across all core markets, and we continue to expect record financial results in 2019, despite the impact from the change in federal regulations which resulted in the cessation of premium-priced Cuba sailings.”

NCLH has a market capitalization of $10.88 billion and controls NCL alongside Oceania and Regent Seven Seas Cruises.