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MSC Cruises nails agreement with Galveston on fourth cruise terminal (updated)

MSC Seascape is scheduled to sail from Galveston's new fourth cruise terminal starting in November 2024
Galveston Wharves and MSC Cruises finalized an operating agreement for the fourth cruise terminal complex at the Port of Galveston. It has some novel elements.

Under the 20-year agreement, which includes four five-year extension options, MSC will have a set cruise schedule beginning in late 2025 when the terminal opens. The port also can negotiate with other cruise lines to use the facility based on availability.

It was already announced that MSC Seascape will begin to sail from Galveston in November 2025; now it's confirmed the ship will sail from the new terminal, as expected. 

The 2022-built MSC Seascape can accommodate 5,632 passengers and 1,648 crew. 

$142m cruise terminal and parking project

The port will develop the $100m facility, $42m parking garage, internal roadway and other improvements at Pier 16 beginning in early 2024. The estimated $142m project will be funded with port cash reserves and revenue bonds. An existing cargo warehouse will be converted into the 165,000-square-foot cruise terminal.

Mutual benefits

'Adding MSC to our family of cruise lines offers our cruise guests an elegant, European-style family cruise experience,' Galveston Port Director/CEO Rodger Rees said. The agreement also 'elevates our status as a top US cruise home port and moves us up to the eighth largest cruise port in the global market, while paving the way for MSC to reach millions of cruise passengers in the Central US.'

MSC Cruises USA President Rubén Rodríguez said: 'A great cruise starts with a top-notch terminal, and we’re excited to partner with the Galveston Wharves to ensure our guests enjoy the experience from end to end. We think it’s important to support the communities we serve and look forward to working with leaders in Galveston to make this project a reality.'

Preferential days and a 200,000 passenger minimum for another line

The preferential days of the week given to MSC include one weekend day that accommodates the line's announced plan for seven-day cruises and allows the flexibility for a five-five-four cruise rotation.

According to the agreement, any other cruise line using the terminal would have to provide at least 200,000 passengers per year. This potentially could provide leverage for another line with the port —  if the line could provide, for example, only 150,000 passengers, would the port find a way to make it commercially viable in a way that meets the requirements of the MSC agreement?

Without another line, the port would have just one ship, MSC's, at an expensive new facility.

As earlier reported here, Norwegian Cruise Line has been talking with Galveston, and Princess Cruises has expressed interest in the terminal.

Novel benefits for MSC

The agreement contains a lot of novel benefits for MSC Cruises.

For example, if the facility isn't substantially completed by May 2026, MSC has the right to walk away with no financial obligations. Furthermore, any fees that are paid by the construction company because of a terminal delay would go to MSC, not the port.

Also, under a unique performance incentive, during any year when the aggregate number of passenger movements at the terminal — from MSC and any other line(s) — exceeds 600,000, Galveston Wharves will pay MSC $1 for each passenger movement it produces. If the aggregate number exceeds 850,000 in a year, the pay to MSC would go up to $1.50 for each passenger movement MSC produces.

MSC's fourth US homeport

Much of MSC Cruises' growth is focused on expanding the North American market. Galveston will become the line’s fourth homeport in the US — following PortMiami, Port Canaveral and New York (Brooklyn) — upon completion of the terminal project.

The space for the new Galveston terminal is being freed because Del Monte Fresh Produce Co. has outgrown its facilities there and is relocating 30 miles to the south in Freeport. 

Bermello Ajamil & Partners is providing the engineering and architecture services for the terminal, with 30% of the work completed.

Galveston hosted 1.49m cruise passengers in 2023, a 43% increase over 2022. The port has 388 calls booked for 2024 with the potential for more than 1.6m passengers.

Update details some specifics and benefits to MSC Cruises in the operating agreement