Damage to Bahamas shipyard leaves cruise lines scrambling

Damage to Bahamas shipyard leaves cruise lines scrambling

Damage to a drydock facility at the Grand Bahama Shipyard in
the Bahamas is proving inconvenient and expensive for the cruise industry, and
it demonstrates how few drydock options exist on the U.S. East Coast.

The damaged drydock, the largest of three at Grand Bahama,
was put out of commission on April 1 when a crane collapsed while raising the
stern of the Oasis of the Seas to repair its propulsion pods.

The accident forced Royal Caribbean Cruises Ltd. (RCCL) to
take the Oasis to a yard in Europe to finish repairing it.

The repairs, plus the cost of three canceled Oasis cruises,
will pare an estimated $52 million from RCCL’s 2019 earnings. 

But Royal is not the only line affected by the loss of the
Bahamas drydock.

In June, Carnival Cruise Line’s 4,000-passenger Carnival
Vista also developed a problem with its Azipod motors that required immediate
replacement of their bearings. Normally, the work would have been done in
drydock at Grand Bahama, a facility jointly owned by RCCL and Carnival Corp. 

But on June 20, Carnival Cruise Line disclosed to investors
that because it was not possible to use Grand Bahama, the ship would go out of
service for 17 days
, and three July cruises from Galveston, Texas, would be
canceled.

The cost was projected at between $50 million and $62 million, partly because it will take
more time to complete than it would have if the ship had been drydocked in the
Bahamas.

Carnival turned to what it said was a “first of its
kind” solution, loading the entire ship onto a semisubmersible, heavy-lift
transport vessel, the Boka Vanguard, built to haul offshore oil and gas
drilling rigs.

The loading and lifting operation was scheduled for the
weekend of July 12 to 14, after which the Vista was to head for the Grand
Bahama yard for the repair work. 

Both situations underscore how dependent cruise lines are on
Grand Bahama Shipyard for drydock space that is within a quick sailing distance
from their headquarters in Florida and from ports on the Eastern Seaboard.

Walter Nadolny, assistant professor of marine
transportation, ship construction and stability at the State University of New
York’s Maritime College, said there are several reasons for the infrastructure
deficit.

One is that costs are low in the Bahamas. 

“The United States is the most expensive place in the
world to build and repair a ship,” Nadolny said. Most U.S. shipyards of
the size needed to work on late-model cruise ships are accustomed to cost-plus
contracts from the U.S. Navy and are too expensive, he said.

The Carnival Vista arrives at night in Grand Bahama after being picked up by the Boka Vanguard.

Second, the specialized gear and materials have been
concentrated in Grand Bahamas and are not easily duplicated.

“If they brought [the Carnival Vista] into Jacksonville
Yard, in Jacksonville, Fla., right now by bringing in all the stuff they need
to do the repair, they’d be incurring duties,” Nadolny said. “The
logistics they need are probably sitting in the Bahamas, which means we’ve got
to bring people in, we’ve got to bring equipment in, [and] it could be stuck in
customs.”

Cruise lines have grown to rely heavily on Grand Bahama
because most of what they do there is routine refurbishments that are
predictable and can be scheduled well in advance, he said. 

But unforeseen situations are posing more of a challenge. “The
intricacies of changing out Azipods make it a little more difficult,”
Nadolny said. 

Carnival had the option of sending the Vista to Europe,
where cruise ship drydocks are more numerous, Nadolny said, but that would have
meant extra transit time. 

“Now, instead of a three-week downtime, it’s going to
be a seven-week downtime, or a 10-week downtime,” he said about the
European alternative.

Before 2000, when the predecessor of Grand Bahama Shipyard
was founded in Freeport, cruise lines were more dependent on U.S. yards. For
example, when the Carnival Ecstasy caught fire leaving Miami in 1998, it was
sent to the giant Newport News Shipbuilding yard in Hampton Roads, Va.

But ships have been growing in size.

“The reason why Grand Bahama came about is specifically
because there were no large drydocks in the southeast part of the U.S. that
could accommodate these megacruise ships,” said Lawrence Rapp, principal
consultant at Seawise Consulting, which focuses on newbuilding and
refurbishment management.

After the previous operator of the Freeport yard went
bankrupt, Carnival and Royal Caribbean invested in it.

“That’s worked reasonably well until this accident,”
Rapp said. “The only real fallback that exists is Newport News, but they’re
committed to Navy contracts. If the Navy ship isn’t finished, then you don’t
get the dock, so it’s just not reliable enough for the cruise industry.”

At the start of the year, Grand Bahama had 25 projects
scheduled for 2019. It is not known how the crane accident will impact that
total or when the damages from the accident will be repaired. Grand Bahama
Shipyard officials have said nothing about the cause or consequences of the
accident.

Phone and email efforts to reach the yard for comment were
unsuccessful. 

Problems with podded propulsion systems continue to dog the
industry, making the need for repair facilities acute. The sister ship of the
Oasis of the Seas, the Allure of the Seas, is currently operating at less than
full speed because of a technical problem with one of its pods.

In May, Royal Caribbean International sent a letter to
passengers booked on the Allure saying that the ship would be leaving some
ports early and substituting some ports for others through October because it
could not sail at full speed.

Nadolny said the only cost-effective drydock alternative to
Grand Bahama for ships needing work along the East Coast would be another
Caribbean facility. 

He said a yard could be built in another offshore location;
Haiti, for example. But it would require that country to say “We want to
do this” and then devoting the necessary resources.

Rapp said that keeping a drydock operation in the black can
be tricky.

“There are a lot of risk factors,” he said. “It’s
hugely capital intensive. There’s all sorts of labor issues. It’s not something
that’s easy to make money with. You look at a drydock bill for a big cruise
ship and you think ‘Look at all that money.’ Most of it is going to
subcontractors for interior refurbishments and so on.”

He added: “The amounts going to the shipyard are
substantial, but they’re not constant, and they’re not reliable.”

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