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Greece - the Eastern Question revisited

An article in a current affairs magazine in the UK pointed out that although Athens is the birthplace of democracy, you need to look further east to understand the political culture of modern Greece. It has its roots in the Byzantine Empire, where autocracy and nepotism set the pace instead of democracy.

The same article also points out that 70% of Greek companies are family owned, they are not innovative as they employ family members and other close relatives. This certainly is the case in shipping. The Greeks may be the world's largest shipowners, but where is a Greek container shipping major, cruise line, vehicle carrier specialist or LNG carrier company? The Greeks are shining with their absence in these sectors, which demand quite a bit more than a technical office and a broker or two to keep your ships going.

It is no wonder that most Greek shipping comprises dry bulk and tankers, which are relatively simple operations. In all truth, here they excel and they have built a reputation of clever and shrewd businessmen that know exactly when to sell and when to buy.

Athens may have been the birthplace of democracy, but it has now become the birthplace of the most serious crisis that the European Union has met since its creation. It is interesting to notice how politics affect our thinking: as a EU and NATO member, it has become quite natural to think of Greece as a western country.

However, in the 19th century its fortunes were part of what was known as the Eastern Question - what to do with the crumbling Ottoman Empire. It seems that Greece retains far more links to the East than what most of us have tended to believe.

Grand designs and heavy seas

Without a doubt, cruise ship design has progressed by leaps and bounds over the past decade or so. However, while the facilities of offer have improved, something else seems to have received much less attention: seakeeping qualities of these grand designs.

Look at a photograph of any modern cruise liner in dry dock, taken from bow. You will notice that the lines of the underwater hull are fine indeed. Now let your eye move up, above the waterline and a little bit away from the sharp bow: voila! These modern ladies of the sea have very fat cheeks.

The use of modular cabins for both passengers and crew mean that space is needed to accommodate these rectangular modules that arrive on board with curtains hanging and taps plugged on the walls. Hence the need for space in the hull. No longer do we see ships with fine lines above the waterline as was the case in the days of the liner era.

Any practical implications?

Oh yes: modern cruise liners are prone to heavy slamming, which follows from the fat cheeks just above the waterline hitting the bottom of a wave in heavy weather. A good slam will make you wobble on you feet and send unsecured items flying from table to the floor.

Stabilisers that virtually all modern cruise liners are fitted with are of no help against the pitching movement - the alternate up and down movement of bow and stern - although they are very good at eliminating sideway rolling.

In late 2008, I spent five days on a 80,000 gross ton-plus modern vessel in force 9 to 10 from Civitavecchia to Southampton: the ship was slamming badly and speed was reduced to 10 knots, resulting in an 18 hour delay on arrival.

A senior cruise industry official said a few years ago that modrn day naval architects may not quite know the sea as their predecessors did: they come from university to work at shipyards and design offices, without experience from working at sea. This may well be the case.

In any case, only ships change. The sea does not.

Moving the goalpost

In the mid-1990s, everyone seemed to think that Europe was just a summer season destination for cruise ships. Except for a few old and small ships that traded in the Canaries or Eastern Mediterranean, the industry indeed deserted Europe between November and March. The Mediterranean was quiet. A few ships would sail from ports like Southampton or Bremerhaven in January for three month long world voayges, but that was it.

It all started to change in 1996, when Festival Cruises decided to keep ships in the Mediterranean year-round. Gradually, things started to change: Europe started to grow rapidly both as cruise destination as well as a source market for cruises.

Today everything is very different. For several years now, major lines keep top end of the range tonnage in Euroipe throughout the year. And the trend is gathering momentum: on 25 April, Royal Caribbean International's Independence of the Seas will arrive at Southampton again. Whereas in the previous years it has sailed across the Atlantic for the winter, this time it will stay put throughout the winter.

It was Fred. Olsen Cruise Lines that started to keep a ship in the UK year-round - the now decommissioned Black Prince in Liverpool. They still do the same, only now with a bigger ship.

A technical fault on P&O Cruises' Aurora in 2005 forced the company to dry dock the ship in the middle of the summer and quickly fill in the two-week period in December that had been scheduled for dry docking with new cruises. Thus was born Christmas Markets Cruise - heading to Danish, German, Dutch and Belgian ports for pre-Christmas markets. An unexpected, huge success soon prompted others to follow.

So where are we today? Just last month P&O Cruises said they will retain Oceana in Southampton year-round from 2011/12. Saga Cruises new acquisition Saga Pearl II headed for its inaugural voyage in March to Norway rather than south. Cruise & Maritime Voyages' Marco Polo followed suit and will make three Northern Lights cruises next year after just one in 2010.

The cruise industry is moving goalposts and Britain is by no way lacking behind in this development, rather very much the contrary. You can board a cruise ship in Southampton and stay away from home for anything between two nights or more than three months. The range of cruises offered from there is probably one of the widest in any cruise port anywhere in the world.

With the introduction of Northern Lights cruises to Norway, which were pioneered by Saga, a new and exciting product has come to the market.

Easy Cruise may still have had it right

Sir Stelios Haji-Iannou, the Anglo-Greek serial entrepreneur whose claim for fame mainly comes from the budget airline Easy Jet, seems not to have struck gold with Easy Cruise, a company he founded in 2005. A report on CruyiseCritic.com says that Hellenic Seaways that bought the one ship operation from Sir Stelios last year has not confirmed any itineraries for 2010 and refunds are offered for bookings already made.

The venture attracted enormous publicity, which was fuelled by the celebrity status of Sir Stelios himself, both before and after it commenced operations. The initial 4,000 gross ton ship was replaced by one three times that size last year and Gwyn Hughes that had been managing director of P&O Cruises, the British line, had been hired to run the business. However, it seems that the company has not prospered.

Originally, Easy Cruise offered an option to buy as many nights as you wished on the seven-night Western Mediterranean circuit of its original ship. Over time, this was abandoned and last year, Easy Cruise Life, the 12,000 gross ton newcomer, operated three and four bight cruises in the Greek islands. Prior to the launch of the venture, Sir Stelios highlighted the fact that cruising remained the most tightly packaged form of holiday, which he intended to change.

Assuming that Easy Cruise does not resume trading, its tumbling block was possibly the fact that fairly low prices and one, rather small ship are factors that struggle to result in a good financial outcome. Established lines, such as Costa Crociere and MSC Cruises, cater for the contemporary market in Europe with large ships of which both of them have many.

Still, Sir Stelios may have been right in that the tight packaging of cruise holidays is a concept that has exceeded its shelf life. A ship operating a seven-night Western Mediterranean rotation, as an example, has several ports where to board and disembark passengers. Instead of selling a package, a line selling its product on per-night basis would have to look at its business from the point of view of a hotel: they do not force you to stay a week if that is not what you want.

The future success of cruising depends to a great extent on its ability to innovate.

Headwind in the horizon for Windstar

Ambassadors International, the US based company that owns Windstar, has tried hard to sort out its house and exit all other businesses save for Windstar itself. Until recently, the listed company owned US flagged coastal cruising vessels, designed marinas and was involved in the event organisation business as well – hardly a mix that one could say offers obvious synergies.

This was understood by the Ambassadors management as well, but while focusing on Windstar may be the right way in the short term, in years to come Windstar itself is likely to face a problem that is common to many an operator of small, niche vessels: ageing fleet.

Windstar has three ships, the 5,350 gross ton Wind Spirit and Wind Star were built in 1988 and 1986 respectively, while larger 14,745 gross ton Wind Surf was originally built for club Med in France in 1990 and acquired second hand by Windstar. The two first-named shiop cost $34.2 million to build, while the larger vessel was also much dearer, costing $140 million to construct.

All these ships should have a fair bit of life in them. As a rule of the thumb, cruise liners are depreciated roughly over 30 years, but in fact their life cycle tends to extend well beyond that. Nevertheless, at some point all ships become due for recycling.

It is difficult to think that Windstar would be able to find a yard that can deliver adequate quality at an acceptable price should it want to replace the three vessels with anything similar. Capital expenditure tends to rise faster than revenue when a small company enters the newbuilding sector: this was shown in the case of Celebrity Cruises and Costa Crociere in the latter half of the 1990s.

So, is Windstar a lost case? At least for quite some time into the future it should not be. However, in the long term it faces a problem that many small operators of niche cruise vessels are facing too yet none of which appears to have found a solution and that is the economic dilemma of fleet renewal.

Perhaps Yachts of Seabourn, the luxury brand owned by Carnival Corp & PLC offers an indication which way to go: their latest trio of ships carry 450 passengers, more than twice the figure of their original threesome, while their 30,000 gross ton size is three times that of the older ships.

So far so good – but then arises the question if the product remains the same if you increase the size of your ships by so much. And the answer is that it most likely does not.

A new dimension in Somali piracy

If I had to pick one area where the international comminuty has failed to act, my number one choice would be the issue of Somali pirates. Oh yes, there are warships of various nations there pretending to protect shipping. However, due to the impotence of politicians in Europe in particular, these patrols are little more than a joke.

And yet, this whole issue could be assuming a new dimension. Media reports say that a Chinese admiral has aired the thought that the country acquire a naval base in the region as its warships have had to spend up to four months at sea to provide protection for merchant vessels flying the Chinese flag in the absence of a base.

But let us look at the European Union's deplorable failure first. A Dutch warship captured a number of Somali pirates, but nobody wants to take them for a trial, so they may have to be released. The German navy, whose actions seem have been the most lethargic, does not even chase pirates, but only take action if alerted to do so.

No wonder the pirates feel free to roam the north western part of the Indian Ocean as they please. The worse that seems to happen if captured by an European warship is that their weapons are dumped in the water and they are allowed to go. Things might be very different if the rules of erngagement were relaxed to allow captains opf wartships to seek and destroy pirate vessels and send the pirates themselves to the depth with their vessels.

Of course, in this age of quangos backed by the soft political left, this would be unthinkable: the human rights of the pirates come first. As usual, the left seems to pay little attention to the sufferings of victims of crime, in this case piracy, as it lavishes understanding on criminals themselves.

But let us not forget the Chinese admiral. This is not the first time that China is reported to be looking for a naval base in the region and Pakistan has been cited as a candidate country that might provide it with one. If this were to happen, eyebrows would certainly be raised in the corridors of power in New Delhi.

At the moment, the US, UK and France have permanent naval presence in the Arabian Gulf and Gulf of Aden, the two first-named countries have bases in Bahrain, while the French have one in Djibouti. In addition, the Western Fleet of India, which is based in Mumbai, is a force to be reckoned with. In the next few years, the Indian navy will receive two new aircraft carriers to replace a single, ageing vessel of this type, in addition to other types of ships.

If Somali pirates prompt China to obtain a naval base in the Gulf of Aden or Arabian Sea, the issue that has so far worried merchant shipping will assume an aspect of far wider, political context. The pirates would give China a perfect excuse to seek permanent presence in the region, which would certainly raise concerns in India and perhaps elsewhere too. At the moment, the Chinese navy does not possess overseas bases.

As far as the pirates are concerned, the time has come to blast them from the waves by gunfire and accept that there will be even a high number of casualties amongst them as a result. When the Royal Navy cleared the seas from this peril in the 19th century, it was not done by lectures about human race but by pure force.