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Soaring cost of supplies and lack of manpower among key cruise industry challenges

‘Ultimately, we have to remember that going forward the cost of living will bite,’ said Cruise Saudi’s executive director asset management & port operations, Barbara Buczek at ICS in Madrid
Cruise industry representatives looked to find ways to tackle price hikes for goods, lack of ground handling staff and the expense of moving crew members around the world, during a conference session called ‘Overcoming Cost Pressures’ at the International Cruise Summit (ICS) in Madrid.

Providing adequate stock for the brands serviced by hospitality management company The Apollo Group, for instance, has been ‘an uphill battle’ according to its SVP Philippe Faucher, with the price of oil doubling and some cuts of meat becoming more difficult to source. Describing the process of obtaining certain supplies as ‘arduous’ and ‘tedious,’ he nonetheless predicted better times around the corner: ‘Somehow, we’re getting through it. We are seeing relaxation in acquiring products.’

He continued, ‘There are shortages, absolutely no doubt. But what you can’t do with one, you can substitute for something else.

‘Pricing is still not really in our favour, but I think eventually we’ll get back to times when, along with inflation relaxing a little bit, we should see some things more available than they are today.’

Sourcing crew and ground handling staff

Matthew Jaenicke, group MD at Viking Maritime Group and Alexander Napp, MD, PWL Port Services instead pointed at manpower as a pressure point. Explained Jaenicke, ‘Our biggest problem now is moving officers and crew to ships and around the world is becoming very expensive… What we're trying to focus on more is how to employ people and how to look after people.’ He asserted that the topic deserves greater attention and hinted at one cruise line’s cooperation with an airline ‘to see what can be done with costings.’ He continued, ‘How do they live on board? What do they have? Can they go back ashore again? These are things that don't necessarily cost a lot of money but keeping having to replace officers and crew regularly does cost, and that's an area that we're focusing on with our partners: retention.'

The solution he put forward was 'giving more options [to crew] and working together with the ship owner to get people to and from the ship.’ He added, ‘We have to look at longer term employment, annual contracts... most people on ships only get paid for the days they work. It's quite an old school way of employing people... no medical insurance, no pensions.'

For Napp, a big concern has been trying to find ground handling staff with money failing to act as an  incentive. ‘I believe that what I'm saying is something all agents face at the moment, worldwide: we simply don't have staff.

‘This summer, we sometimes increased our hourly rate for students or retired people that we needed by 100%, and we didn't find people. So the solution of [increasing] the price is not always the solution.’

He continued, ‘At the moment, we do not know where people are. We try to find them, we try to please them, we try to give them incentives just to get all the staff together. And still on some calls, you expect 70 staff members to be on the ground for a huge turnout and when you count them it's only 40 or 50 that show up. So it is a crazy time at the moment.

‘The problem really is: where are these people? And nobody can tell me the real reason.’

Passengers absorbing rising costs?

Richard Vogel, industry consultant and former Cruise Line CEO, put it to the panellists whether higher tickets prices were inevitable to absorb the costs. Responded Napp, ‘We can get smarter, we do get smarter; this is of course a must. But when it comes to the human factor, when it comes to the buying power that you need for coaches, for tour guides, for ground operations, for all these factors, the cost increase... we get to a limit. You reach limits where you have to realise, and cruise lines also have to realise, that there is a bottom line.’

He added, ‘Tendering prices went down for the last 20 years [pre-pandemic]. Now, every tendering I assume will go in the other direction; it will get higher and higher because we all are forced to. Otherwise, we are out of business.'

It prompted Marcus Puttich, senior head of port management & operations, fleet operations & newbuild, TUI Cruises to respond, ‘It might depend on the brand and the target market that you're sourcing from: there might be markets not that price sensitive, where they would rather enjoy a very good high quality vacation. There might be other source markets where we'll see that we can't simply get the price achieved in regards to the costs that we have.

In different parts of Europe, we see different increases. Take a look at the Baltic; certain countries there we see increases of 30%. Obviously, we are not able, as a cruise line, to pass this on to the guest. It's impossible. So we have to find ways internally... [and] you can't make too many changes to the product, because then you change it in a way you don’t want it to be changed.’

Cruise Saudi

Added to the mix was the predicted impact of the rising cost of living on otherwise would-be cruisers. ‘Ultimately, we have to remember that going forward the cost of living will bite,’ said Cruise Saudi’s executive director asset management & port operations, Barbara Buczek.  ‘There are tough times to come and people will be looking at where they will have to save their money and some of the niceties like holidays will probably be something that they will be reconsidering...’. Making sure Cruise Saudi’s vendors and partners also understand what the suitable costs for the cruise industry are, contrasted with the quality of the service that is expected from the cruise lines was also mentioned: ‘We need to have a product appropriately priced at the right quality. And work with every level of vendors, officials, partners on delivering the right product that is required to building the industry [in Saudi Arabia].’

While the Kingdom may have been little impacted by a rise in oil prices, it is affected by construction costs, of which, it has 5,000 projects worth $800b. ‘We are working with our partners on implementing operational efficiencies to offset those high construction costs,’ noted Buczek.

Cruise Saudi recently altered its entry process, allowing tourists to generate a visa either online or while in the country.

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