Cruise Ships and Ports: What Charleston can Learn from Mobile

Charleston South Carolina DowntownLocal officials in Mobile, Alabama were “shocked” when Carnival Cruise Lines announced it was pulling the Elation from the port and moving it to New Orleans. Carnival at this point hasn’t made any plans to pull the Fantasy out of Charleston, but local groups are putting strain on the line and they may reconsider.

The Carnival Fantasy started docking in Charleston in May of 2010 – the only year-round cruise ship for the port.

Since then, there have been several sources of resistance:

National Trust for Historic Preservation
We know it’s important to preserve important sites in the U.S. that may otherwise not be if it weren’t for this group. However, the NTHP put Charleston on it’s “watch list” at the same time it released its 2011 most endangered sites, and blamed the cruise industry for the rating on the city.

The NTHP says:

In the case of Charleston, expanding cruise ship tourism could jeopardize the historic character of the city, historic downtown Charleston and its surrounding neighborhoods.

Since the cruise ships can’t park in downtown Charleston or “its surrounding neighborhoods,” it’s safe to say the NTHP is worried about an influx of people, and what that would mean for the city.

Other motivations appear to be at play (environmental? anti-cruise industry?) since the cruise industry currently only accounts for under 4% of the city’s 4.4 million annual visitors.

If the NTHP is truly concerned about the number of visitors to the city, perhaps they should be looking at all industries – but regulating 4% of visitors brought in by a single industry is the obvious work of special interests.

Southern Environmental Law Center

With anti-cruise industry mentality growing from the NTHP, the Southern Environmental Law Center decided to strike while the iron is hot by filing a lawsuit saying that the cruise lines aren’t operating within local zoning ordinances, causing traffic problems, and violating state environmental laws.

“Charleston relies on a careful balance between tourism and preservation that cruise ship interests shouldn’t overwhelm,” says Blan Holman, an attorney from the Southern Environmental Law Center.

Local Government
The mayor of Charleston says the lawsuit against Carnival is “bogus” and “rogue,” and cites the fact that cruise traffic is minimal compared to the cities annual tourism figures.

The chairman of the South Carolina Sate port Authority is calling the lawsuit “irresponsible.”

“Their goal is to cripple our port system to satisfy their anti-growth agenda. First it’s cruise ships, then cargo ships. Next it will be trucks and rails. They don’t seem to care that their agenda would irreparably damage economic development and kill jobs all across South Carolina.”

Mobile and Charleston

The local officials get it in Charleston, but it may not matter what they think in the end. Any port operator will tell you that vying to be a home port for a cruise ship is extremely competitive – especially with newer markets opening up and the ability for cruise lines to pack-up and move operations with relative ease.

When special interest groups force cruise ships into lawsuits that even the mayor thinks are bogus, they can increase a cruise line’s cost of operating in that port by millions of dollars.

One of the big reasons Carnival pulled out of Mobile, Alabama was they couldn’t raise profit enough to offset local environmental laws that are set to be in place by 2012, and calculated the ship would be more profitable in nearby New Orleans.

If Carnival decides its not worth the added cost and headache to do business in Charleston, we hope the local officials aren’t “shocked” – because the writing is on the wall today.

$26 Million Still Owed on Mobile Alabama Cruise Terminal

Carnival in Mobile, ALLocal officials in Mobile, Alabama were “shocked” when Carnival Cruise Lines announced it would be pulling the Elation from that port and moving it to New Orleans. Carnival explained that the port hadn’t been as profitable as expected, while locals say the ship was constantly filled. Dealing with a blow to your city’s ego is one thing, but the city still owes $26 million on the terminal that will be empty come October.

Mobile County Commissioner, Connie Hudson, told a local news station that during negotations, Carnival said it would stay as long as business was good – and in her eyes, business was good. The contract gives Carnival the option to break the contract with the city with a 90 day notice, and Carnival is giving much more than that. However, city leaders say that still isn’t enough time to fill the vacancy as cruise itineraries are scheduled years in advance.

Carnival’s Side

One needs to remember that Carnival Cruise Lines is a publicly traded company — one that is responsible to its shareholders and thousands of employees that depend on it to feed their families. As such, it needs to act in the best interest of those parties — not necessarily those of a port city.

There were several reasons Carnival is moving the Elation to New Orleans according to president and CEO Gerry Cahill.

“Although we have consistently filled the ship, it has been at lower relative pricing to the rest of our fleet,” Cahill said. “We have made every effort to drive higher demand and pricing through our sales and marketing initiatives and the deployment of a newer class of ship in 2009. However, we have not been successful in achieving a sustainable level of acceptable pricing.”

Translated into plainer terms – the cruise line may have been at near 100% capacity every time it left port, but if it was only possible to book that level at $100 less per person than it could make in another port – it doesn’t financial sense to stay there.

Relative to other home ports, fuel costs in Mobile were much higher – and scheduled to become even more unfavorable when new, local environmental regulations begin in 2012.

Cruise Ship Forum’s Take

While we feel for the city of Mobile, the decision for Carnival to reposition its ship to a more profitable port is a sound business decision. It is normal for any community that loses a business to feel disappointment, though when money and jobs are at stake, one needs to take emotion out of the equation and look at the facts.

Since the Carnival Cruise Line started operating full time out of Mobile in 2004, the global economy has changed. If in 2004, you would have told someone that giant banks, insurance agencies, and two of the largest car manufacturers in the world would be on the brink of bankruptcy – they would have given you a strange look and continued to pour money into the stock market – because things were great – and no one knew what the future would hold.

The fact Carnival stayed in Mobile as long as they did is impressive. Perhaps the local regulations that are going to increase fuel prices next year were the straw that broke the camel’s back in this case – if that is the case – Alabamians needn’t point the finger at anyone but themselves.

Photo: Press-Register file/Bill Starling