The River Cruise Debacle 2020 - river cruising is in for a long winter
Grow and low - without an end in sight
River Cruising became so popular in the last ten years that the site of River cruise ships sailing and docking en masse became normal. The price difference from cheap, affordable to expensive attracted guest from all continents and all layers of society. In the last years many ships were even specially used on the European Market for Chinese travelers with everything except the ships name on the bow in Chinese. The majority were still the Americans as in Ocean cruising but all nationalities - British,Germans, Swiss, Spanish, French , South Americans, Australians - started filling the river cruise ships.
The times were ships were full are over
It was not a problem to fill a ship with guest - it started to become a problem to find a docking place ( especially in ports like Amsterdam, Vienna and Budapest).
Now Amsterdam is empty. Where 40 river ships were lying, docking, leaving and arriving every day, mixing with Hugh ocean-liners and harbour tours - its empty - its dead. Some companies never started in 2020 - Viking (the biggest with more then 60 ships), Scenic, Uniworld etc. are still in Winter storage 2019. A few operated on 50% occupancy.
The times when transport of passengers from the ship and to the ship were logistical nightmares are dreams of the past.
“Today the Airline industry in their most optimistic look out predicts a recovery not before 2024.
Global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.”
(IATA official Statement July 2020)
The times when shipyards were fully booked are gone
No problem to build new ships - but with so many new ships on order it became a problem to find a shipyard that was having space to build one more.
Now Bernd Meyer ( Meyer shipyards Papenburg, Germany) predicts a future that applies to all shipyards:
“Never before has the complete cruise fleet with over 400 ships stopped operating,' he said. Meyer predicts recovery is a long way off — he thinks it will be 2030 before the cruise shipbuilding market equals that of last year.
Throughout his address ( to his employees), Meyer cited earlier crises, particularly the 1973 oil crisis, which triggered a tanker market crisis and structural crisis for Germany's shipbuilding industry. 'We needed 20 years to return to where we had been in 1973,' he said.”
This statement was made in April but since then five cruise line companies went bankrupt and alone Carnival (the biggest Cruise line operator) got rid of 18 ships up to today. The picture starts looking worse.
The times when supplying a ship became a challenge have past
Suppliers were happy to deliver food, beverage, housekeeping articles, maintenance materials and everything else a ship needs all over Europe. Some ports started to ban loading of ships in their ports as the mass of busses transporting guest to ships and excursions and the amount of trucks needed to supply ships became a traffic nightmare.
When the Corona Panic hit in March all warehouses were full to supply the fleet of river cruise ships ready to start, fully booked until November. The orders never came. Some suppliers started even selling directly out of their warehouses to minimize losses. The rest went into the bin. And the rest was a lot!
River cruise ships in storage - Germany
The times when we complaint about over tourism are a fading memory
Over tourism became a problem when small towns like Duernstein and Cochem were seeing more guest on one day than they had citizens in the last 500 years. (Cochem has 5.000 citizen and approx. 5.000.000 day and overnight Tourist each year).
The streets are empty now, the tour guides desperate and the few wine merchants have never been so friendly and confused. As one Tour manager mentioned it was an eye opener to see the empty pubs and wine stores but it also showed that they haven't invested or renovated or changed the furnitures since the 70th. They never had to. Why change a chair when somebody is sitting on it? Now its time.
The sky was the limit
Twenty years ago in 2000 the ocean liners were counting 7 Million guest. For 2020 the number of booked guest was up to 32 Million. River cruise ships were expending the same speed and the first ducks were walking ashore because the rivers filled up with new ships every year. The ducks are back on the river!
Crew from everywhere - no more!
When at the start of the River Cruise boom the crew came mainly from Western Europe it changed to Eastern Europe and to the hiring from Filipinos and Indonesians to fill the demand each year. Conditions and benefits also went down as profits were just to tempting and saving on masses of employees saves en mass.
Nautical staff from captain to sailor were promoted faster then they could learn and thus overall quality did not improve. Lucky that there was enough traffic to gain experience but the faster the industry grew the thiner the layer of qualified staff became also here.
During Corona the staff was fast disposted of. Some companies like Viking still paid but also - with the prolonged problems - this had to stop at one point. The few employees hired had only a few cruises with almost no tips and unannounced salary cuts up to 30%. The same work, the same hours, the same being away from home - just no income that justified the way to work. Most river cruise employees never made it to the rivers this year. It will pay back as people will not fall for the same trap twice and will warn others. Qualified staff - as rare as it was in the past - will be the past!
Return to normal?
We will not return to normal as it was before. Considering the airlines with their most optimistic outlook not expecting a return to normal before 2024 the river cruise industry might be looking at a normal - return to 2019 numbers - not before 2024 - 2025. Taking into account that 75% of the market is still American and english speaking ( UK, Australia, etc.) and thus requires long distance travel. The bancruptcy of many travel agents big and small will have an effect as well. The number of ships will be reduced.
Salaries in Germany alone have dropped by 11% - 17% percent during Corona .(statista.com 18.09.2020)
The richest country in Europe? And this applies only for the lucky people who still have a job. How can they afford cruising in the future? Costs like rent, utilities,loans, interest rates and basic food supplies have not decreased and many even increased.
Considering the lenght of time for recovery (2024 - 2026) all of them will have to look for other income sources and new jobs. How difficult this might be - most of the really qualified ones will succeed. The river cruising industry and their HR will have to change their attitude and improve tremendously their approach to attract employees that will be able to do at least the basic jobs. It’s easy to get rid of them - it will take up to date - adjusted HR to get them back. HR has to start at zero! A chance to re - organize HR and change drastically.
River Cruising as such?
Its a great way to travel and was rightfully booming giving visitors a unique way to learn and discover new and very old places in comfort. It has a purpose and will continue to exist. Hopefully recovering faster then we might believe right now. It has to improve and change a lot . The companies willing to change, improve and re think the buisness and the conditions they set for guest and staff will succeed. Re-organization - re - thinking whole companies is a must right now. The other might and will vanish.
Predictions are assumptions so however negative it might look right now we should keep the glimmer of hope that we will get surprised and it changes to the better.
Author: Stephan Busch, Academic Director at the State University for the Humanities Moscow RGGU, Faculty of Tourism & Hospitality and the Swiss International University earned his Master Certificate in Hospitality Management from Cornell University, USA. He has a diverse experience in launching operations, business development and service training- for hotel and cruise companies in Asia, Europe, Canada and Russia.