Review of CSSC Carnival China Cruise Shipping
CSSC Carnival Cruise Shipping is a new cruise company (founded October 2015) with scheduled operations starting in 2019. The company was established as a joint venture between Carnival Corporation (world's largest passenger shipping operator) and China Merchants Group (Hong Kong-headquartered Chinese state-owned corporation). Most of CSSC Carnival China is owned by the Chinese shareholders (60%), and the remainder by Carnival (40%). The Chinese shareholders include CIC (China Investment Corporation) and CSSC (China State Shipbuilding Corporation).
In February 2015, Carnival Corporation signed a MoU with China Merchants Group for 2 joint ventures. The MoU outlined an eventual partnership that could result in a new cruise brand (joint shipowner company), as well as joint development plans for Chinese seaports and destination.
MoU's joint venture port plans included the development of transit and turnaround/homeports within China. Currently, Carnival Corporation serves the Chinese market through the brands Princess and Costa. China Merchants Group (founded 1872) is a state-owned company focusing on infrastructure and transportation, also real estate development and financial services. The Chinese corporation is a major shareholder in China Merchants Holdings (55,4%) and China Merchants Bank (18%).
In October 2015, Carnival Corporation signed an agreement with the Chinese companies SWS (Shanghai Waigaoqiao Shipbuilding Co Ltd, a subsidiary of CSSC) and China Investment Corporation. The USD 3,88 billion deal established the Hong Kong-based Carnival China joint venture to place ship orders with SWS. The company initially planned to build up to 5 vessels per year for the next 15-20 years. All ships will be China-made and China-homeported, with technical support and design plans provided by Fincantieri (Italy). SWS builds some of the world's largest box-ships (capacity up to 21000 TEUs) for CSCL (China Shipping Container Lines).
CSSC Carnival China ships
In February 2017, Carnival Corp and CSSC announced an agreement to build 2 new liners for the joint venture "CSSC Carnival Cruise Shipping Ltd". The deal was officially signed on November 6, 2018. The deal was signed by Michael Thamm (Carnival Asia's and Costa Group's CEO) and Yang Jincheng (CSSC's President). The ceremony was attended by Arnold Donald (Carnival Corporation's CEO), Michele Geraci (Undersecretary of State for Italy's Ministry of Economic Development) and Lei Fanpei (CSSC chairman), among other VIP guests and industry representatives.
The shipbuilding project has total value around USD 1,5 billion (2 newbuilds by SWS, GT 133,500 tons each), not including the options for 4 more same-class liners. Additionally, CSSC Carnival Cruise Shipping will purchase 2 existing liners from Costa Group - the 2210-passenger Costa Atlantica (scheduled transfer by 2019-Q3) and the 2114-passenger Costa Mediterranea (2020).
The shipbuilder is SWS. Another joint venture - "CSSC Cruise Technology Development Co Ltd" (SWS plus Fincantieri) will grant shipbuilding technology licenses and provide technical services to SWS, including supply chain and project management, components, fundamental marine systems. New liner's design will be specifically tailored for Chinese cruisers. First ship's delivery was scheduled for 2023, a second follows in 2024. Vessel design is based on Vista-Class, with passenger capacity around 4700.
China is currently ranked the world's largest outbound tourism market. For 2017, UNWTO (UN World Tourism Organization) reported that around 142 million outbound Chinese travelers spent around USD 258 billion on international vacations. China's cruising industry in 2017 served about 2,5 million passengers or less than 2% of all outbound travelers.
Itinerary of CSSC Carnival China Cruise Shipping
In December 2018, CLIA (Cruise Lines International Association) announced that China is expected to become world's largest cruise market over the next 20 years (by 2040) due to moves designed to strengthen cruise travel tourism and optimize public travel in the country. According to CLIA, by the year 2025, the number of Chinese cruisers is expected to grow to 8-10 million, in comparison to around 2,5 million reported in 2017.
On a government level, China started to take measures to modernize seaports for China-built vessels, to develop multi-modal transport networks, to purchase international ocean liners, to approve longer visa-free stays to certain mainland areas near major cruise ports, to introduce links between airlines, trains, buses, and cruises.
Shanghai City intends to build a huge cruise terminal complex integrated with duty-free shops - similar to the world's largest airport terminals. In 2018, China's southernmost island province (Hainan) introduced a 15-day visa-free policy for international tourists entering China by sea. And in November Carnival Corporation and CSSC established "CSSC Carnival Cruise Shipping", with planned operations starting in 2019-Q4.
For China, two large Costa ships will be launched in 2019-Q2 (Costa Venezia) and 2020-Q3 (TBN) - both specifically designed for the local market. As of 2019, Carnival Corporation has combined fleet of over 100 liners (operational) plus 22 vessels on order (with scheduled deliveries through 2025).
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