China Cruising: Carnival Corp Launches China JV
Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK), has announced that its cruise joint venture with China State Shipbuilding Corporation (CSSC) will launch this week under the name CSSC Carnival Cruise Shipping Limited. The new China-based cruise company plans to operate its own fleet to serve Chinese cruise guests by the end of 2019.
CSSC Carnival Cruise Shipping Limited announced an agreement to purchase two existing ships from Carnival Corporation’s Costa Group, the leading cruise operator in Europe and Asia. The first of these ships, the 85,861-ton, 2,210-passenger Costa Atlantica, is scheduled to be transferred to the new Chinese cruise line by the end of 2019. Costa Atlantica’s sister ship, the 2,114-passenger Costa Mediterranea, will be transferred at a date still to be announced.
Additionally, CSSC Carnival Cruise Shipping Limited announced it has signed a contract to finalize its previously announced agreement to order two new cruise ships that will be built in China and serve the Chinese cruise market. The two new cruise ships will be constructed by Shanghai Waigaoqiao Shipbuilding Co., Ltd. (SWS), a leading Chinese-owned shipyard in Shanghai, with the first ship expected to be delivered in 2023. The agreement also gives CSSC Carnival Cruise Shipping Limited the option to order four additional China-built cruise ships to serve growing demand from Chinese consumers.
CSSC, one of China's largest shipbuilders, and leading global shipbuilder Fincantieri S.p.A. have established a separate joint venture to grant a technology license of the ship model platform and to provide technical and project service support to SWS throughout the shipbuilding process. The two new ships will be built with a design tailored for the new joint venture and the specific tastes of Chinese travelers. As the largest cruise company in the world with over 100 ships in its fleet and 22 ships on order through 2025, Carnival Corporation will utilize its deep industry expertise to provide onsite supervision and support during ship construction.
These agreements were signed on behalf of CSSC Carnival Cruise Shipping Limited by Costa Group’s Michael Thamm and Yang Jincheng, president of CSSC, at a signing ceremony held today at the China International Import Expo (CIIE) in Shanghai. Also in attendance were Carnival Corporation CEO Arnold Donald and Chairman Lei Fanpei of CSSC, among other important representatives.
CSSC Carnival Cruise Shipping Limited – a joint venture partnership announced in 2015 with CSSC in which Carnival Corporation holds a minority interest – was formed with the goal to launch the first multi-ship cruise brand in China specifically designed to serve the Chinese cruise market.
CSSC Carnival Cruise Shipping Limited also supports China’s larger efforts to prioritize cruise industry growth in its five-year economic development plan.
As previously announced in June 2018, Costa Group will also introduce two new cruise vessels specifically designed for the Chinese market – Costa Venezia in spring 2019 and its sister ship in fall 2020.
As the world’s top outbound tourism market, China’s 142 million outbound travelers spent an estimated $258 billion traveling abroad in 2017, according to the United Nations World Tourism Organization (UNWTO). By comparison, the Chinese cruise industry served only about 2.5 million cruise passengers last year, representing less than two percent of China’s outbound global travelers.
As a large, embryonic and underpenetrated cruise market with continued long-term projections for outbound tourism growth, China represents a significant opportunity for the cruise industry to raise awareness, consideration and demand for cruise vacations in coming years. As the industry continues to grow and develop in the region, China is widely expected to eventually become the largest cruise market in the world.