September, 2010

ECC Discussion

European Port Costs

John Tercek

September, 2010

Overview of Presentation

• Industry Outlook: New ship construction• Survey of Operating Costs for a Panamax

Ship on a Transit Call (not a Homeport)(Celebrity Millennium Class; 90,000 GRT;

2,000 Pax)• Northern Europe-Baltic• Eastern Mediterranean• Western Mediterranean

• Observations

Port Demand: Growing Fleet of Ships, Expanding Operating Theaters

• Current world fleet 250+ ships built since 1980• 30 ships under construction for delivery thru

2012.• Few ships are retired; most cruise ships ever

built are still sailing; every ship stops in at least four ports weekly plus a homeport.

• Over 50,000 port calls annually, increasing +/-2,500 additional calls annually with new builds

Cruise Industry World Deployment 2010

• Operating Theater % Capacity million bed days

• Caribbean 35% 40.9• Mediterranean 25% 29.5• Asia/Australia/India 10% 11.8• Baltic & UK 9% 10.1• Mexico Pacific/Hawaii 6% 7.2• Alaska 6 % 7.2• South America 5% 5.5• Bermuda/New England 3% 3.1

Port Operators

• Northern Europe almost exclusively government or “quasi government” owned and operated cruise port facilities, “Port Authorities” including Scandinavian, German, Baltic, Benelux and UK ports.

• Southern Europe still predominantly government operated ports, (Port Authorities) with gradual privatization (or “quasi privatization”)

• (“Quasi” means PA still owns significant %, or shareholders include Airport Authority, Chamber of Commerce, etc.)

• Some “privatized” European cruise ports (or cruise operating concessions) include:– Malaga, Barcelona, Marseille, Valletta, Savona, Livorno, Civitavecchia,

Napoli, Venice, Ravenna, & (St Petersburg, Tunis, Kusadasi)

Typical Port Costs Categories & Payees

• Basic “Head Tax” per passenger charge- Terminal Operator (TO)• Harbor Dues per GRT- to Port Authority (PA)• Dockage Fees per Length Overall- PA or TO• Light/Anchorage Dues- sometimes an annual fee per each ship- PA• Lines Fees- paid to stevedores for tying up the ship- TO• Tug Boat Fees- per GRT, rarely compulsory today- direct fee (D)• Pilots Fees- World’s most powerful local monopoly- direct fee (D)• Security Fees per passenger (ISPN add-on)- TO• Customs Fees- Federal Government (FG)• Luggage Movement- stevedores- per passenger charge• Miscellaneous Government taxes and fees (FG)• Service expenses to suppliers:• Agency Fees, Garbage Take Off, Water Supply, Tender Operations

Typical Port Costs Categories & PAYORS

• Basic “Head Tax” per passenger - Individual Customer (Ind Cust)• Harbor Dues per GRT- Cruise Company Maritime Operating Expense

(Cruise CO)• Dockage Fees per Length Overall- Cruise CO• Light/Anchorage Dues- Cruise CO• Lines Fees- paid to stevedores- Cruise CO• Tug Boat Fees- per GRT, Cruise CO • Pilots Fees- Cruise CO • Security Fees per passenger- Indv Cust• Customs Fees- Indv Cust• Luggage Movement- stevedores- Indv Cust• Miscellaneous Government taxes and fees Cruise CO & Indv Cust• Service expenses to suppliers: Cruise Co• Agency Fees, Garbage Take Off, Water Supply, Tender Operations

Typical Port Charges to Each Individual Customer

• Basic “Head Tax” per passenger - Individual Customer (Ind Cust)• Security Fees per passenger- Indv Cust• Customs Fees- Indv Cust• Luggage Movement- stevedores- Indv Cust• Miscellaneous Government taxes and fees Cruise CO & Indv Cust

• Cruise Lines generally wrap these items into a category of:

“Non-Commissionable Government Taxes & Fees”

An add-on to the cruise ticket price.

Example: 7 day Med Cruise out of Barcelona Ticket: E799

Non-commissionable Govt Taxes & Fees E65

Total Ticket Cost E864

EUROPEAN Transit Call Head Tax Tariffs 2010

• MED PORTS BALTIC PORTS• Barcelona 4,35€ Bergen 2,88€ • Toulon 1,50€ Warnemunde 5,26€

• Villefranche 4,68€ Helsinki 0 €• Livorno 4,73€ Stockholm 3,03€

• Civitavecchia 4,90€ Tallinn 1,72€

• Naples 2,38€ Oslo 2,50€

• Ajaccio 3,08€ Amsterdam 5,80€

• Malta 5,98€ Copenhagen 1,50€

• Messina 1,14€ Brugges 1,02€

• Venice 5,93€ • Athens 0,92€ • Santorini 0,40€

Brugges, Belgium

Bergen, Norway

Warnemunde, Germany

Copenhagen, Denmark

Oslo, Norway

Amsterdam, Holland

Helsinki, FinlandStockholm,Sweden

Tallinn, Estonia

Northern European Port Call Costs

Northern European Port Call Costs: Millennium (Panamax) Ship (90,000 GRT,

2,000 pax)

Port of Call Head Tax Transit Call

Dockage Fees & Security Fees

Harbor Dues & Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs Total

Fees per Call

Bergen, Norway

5.770€ 7.250€ 2.270€ 14.420€ 29.710€

Warnemunde, Germany

10.530€ 7.690€ 10.200€ 2.070€ 5.600€ 36.080€

Helsinki,

Finland

2.080€ 6.110€ 41.110€ 3.460€ 52.760€

Stockholm, Sweden

6.080€ 19.980€ 19.440€ 8.680€ 54.180€

Tallinn, Estonia

3.450€ 6.180€ 3.540€ 5.560€ 18.730€

Northern European Port Call Costs: Millennium (Panamax) Ship (90,000

GRT, 2,000 pax)

Port of Call Head Tax

Transit

Call

Dockage Fees & Security Fees

Harbor Dues

& Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs Total

Fees per Call

Oslo, Norway

4.990€ 5.490€ 1.920€ 33.000€ 45.400€

Amsterdam, Holland

11.620€ 2.010€ 8.090€ 4.020€ 4.650€ 30.370€

CopenhagenDenmark

2.960€ 350€ 37.650€ 1.870€ 2.100€ 44.930€

Brugges, Belgium

2.040€ 16.750€

1.110€ 6.590€ 26.490€

AVERAGE of 9 Northern ports

5.222€ 2.555€ 11.555€ 8.440€ 9.330€ 37.250€

Pilots Charges !!

• Oslo: E33,000 per call. Even if the pilot stayed on the ship for the entire 9 hour visit (which he doesn’t), if he works only the summer cruise season of about 100 days, that works out to E3,000,000 for the season!

• Northern Europe average daily pilot fee is E9,300, or nearly E1,000,000 for a 100 day season.

Ajaccio, Corsica

Venice, Italy

Livorno, ItalyVillefranche, France

Lisbon, Portugal

Barcelona, Spain

Valletta, Malta

Messina, Italy

Toulon, France

Naples, Italy

Civitavecchia, Italy

Western Mediterranean Port Call Costs

Western Mediterranean Port Call Costs: Millennium (Panamax) Ship (90,000 GRT,

2,000 pax)

Port of Call Head Tax

Transit

Call

Dockage Fees & Security Fees

Harbor Dues & Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs Total

Fees per Call

Barcelona 8.690€ 6.790€ 2.270€ 2.140€ 19.980€

Toulon 3.000€ 2.890€ 5.080€ 2.380€ 5.050€ 85€ 18.570€

Villefranche 9.370€ 2.080€ 11.450€

Civitavecchia 9.180€ 120€ 890€ 1.980€ 3.420€ 16.220€

Naples 4.770€ 4.010€ 370€ 2.600€ 11.760€

Mediterranean Port Call Costs: Millennium (Panamax) Ship (90,000

GRT, 2,000 pax)

Port of Call Head Tax

Transit

Call

Dockage Fees & Security Fees

Harbor Dues & Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs Total

Fees per Call

Ajaccio 6.160€ 1.500€ 7.660€

Valetta 11.960€ 420€ 1.230€ 1.980€ 15.590€

Messina 2.270€ 1.880€ 3.490€ 200€ 7.840€

Livorno 9.470€ 470€ 4.400€ 4.150€ 18.500€

Lisbon 6.890€ 6.790€ 1.750€ 4.150€ 19.580€

Venice, Italy

Istanbul, Turkey

Kusadasi, Turkey

Dubrovnik, Croatia

Athens, Greece

Valletta, Malta Santorini, Greece

Messina, Italy

Civitavecchia,Italy

Naples, Italy

Eastern Mediterranean Port Call Costs

Eastern Mediterranean Port Call Costs: Millennium (Panamax) Ship (90,000 GRT,

2,000 pax)

Port of Call

Head Tax

Transit

Call

Dockage Fees & Security

Harbor Dues & Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs/ Total

Fees per Call

Venice 11.870€ 3.590€ 450€ 2.850€ 4.020€ 11.770€ 34.550€

Dubrovnik 8.230€ 5.770€ 1.080€ 15.080€

Athens 1.850€ 360€ 4.090€ 380€ 1.820€ 920€ 9.410€

Santorini 780€ 360€ 170€ 1.310€

AVERAGE of 14 Med Ports

6.140€ 1.360€ 1.860€ 1.640€ 2.570€ 1.240€ 14.850€

Comparison Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax)

Port of Call

Head Tax

Transit

Call

Dockage Fees & Security

Harbor Dues & Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs/ Total

Fees per Call

AVERAGE of 9 Northern ports

5.222€ 2.555€ 11.555€ 8.440€ 9.330€ 37.250€

AVERAGE of 14 Med Ports

6.140€ 1.360€ 1.860€ 1.640€ 2.570€ 1.240€ 14.850€

Comparison Port Call Costs: Millennium (Panamax) Ship (90,000 GRT, 2,000 pax)

Port of Call Head Tax

Transit

Call

Dockage Fees & Security

Harbor Dues & Govt Fees

Light Dues Anchorage,Navigation, Lines, Dues

Pilots Fees

Tugs/ Total

Fees per Call

AVERAGE of 9 Northern ports

5.222€ 2.555€ 11.555€ 8.440€ 9.330€ 37.250€

AVERAGE of 14 Med Ports

6.140€ 1.360€ 1.860€ 1.640€ 2.570€ 1.240€ 14.850€

St. Martin, Caribbean

11.540 € 160 € 3.090 € 195 € 912 € 15,900 €

St. Thomas, Caribbean

17.990 € 3.120 € 340 € 20,450 €

Euro Port Issues: Who is Responsible for What?

• Port Costs are generally very local: Port Authority, Terminal operator, Stevedores, Pilots, Tugboats.

• Customs & Immigration Issues appear to be Federal (insufficient agents or inconvenient logistics)- mostly affects international crew movements.

• Port Regulations are generally EU mandated (Low Sulfur Fuel)

• Services costs such as garbage or water are competitive between ports.

• Congestion Issues are local and Federal: managing the process of creating more and larger facilities. Associations could possibly manage bookings calendar.

Euro Port Costs: How can we manage costs?

• “Head Tax” per pax- Negotiate w/Terminal Operator (TO) Volume incentives, seasonal variances; tariffs must be public & standard

• Harbor Dues per GRT- Neg w Port Authority (PA); cruise ship tonnage debate

• Dockage Fees per Length Overall- PA or TO, generally standard for all vessel classes

• Light/Anchorage Dues- neg w/ PA or Ministry- is GRT the correct formula? • Lines Fees- Neg w TO or stevedores; volume incentives• Tug Boat Fees- per GRT, rarely compulsory today- insurance style?• Pilots Fees- World’s most powerful local monopoly- ask gov't help• Security Fees per passenger (ISPN add-on)- TO typically per pax fee• Customs Fees- Federal Government (FG)- arbitrary government fiat• Miscellaneous Government taxes and fees (FG)- arbitrary• Service expenses to suppliers:• Agency Fees, Garbage Take Off, Water Supply, Tender Operations

Euro Port Costs: How can we manage costs?

Panel Discussion!

September, 2010

ECC Discussion

European Port Costs

John Tercek

September, 2010