What U.S. Cruise Lines Are Up Against. And No Bailout Money

Their megaships turned from a revenue-generating asset into an expensive-to-maintain nightmare.

By MC01, a frequent commenter on WOLF STREET:

On February 1, 2020, a passenger from Hong Kong who had recently disembarked from the cruise ship Diamond Princess tested positive for Covid-19. This initiated a nightmarish experience for the ship passengers and crew, including 712 confirmed infections out of the 3,711 people aboard; it has tragically claimed 12 lives so far.

This was followed by a series of outbreaks on cruise ships, ranging from the extremely serious (Ruby Princess, with 662 testing positive out of 3,800 aboard) to the relatively light (Westerdam, with one testing positive out of 1,500 aboard).

In response to these outbreaks, Viking Cruises – headquartered in tax- and privacy-friendly Basel, Switzerland – was the first cruise line to announce a complete suspension of operations on March 11, followed in close order by operators worldwide big and small.

The cruise industry is in serious trouble: It is estimated at very least 400 of the existing 423 ocean-going cruise ships will spend the whole month of April without generating revenues and costing the industry about $1 billion in layup costs alone for the month. The lost revenue? That’s another matter.

At the moment, the only major cruise line with plans to restart operations is Carnival, in the second half of June. But it remains to be seen how much appetite for cruises there will be then, and much more critically, if port authorities will allow the ships to leave and enter their ports.

To understand why the numbers are so mind-boggling, we need to take a step back and look at how the cruise market has evolved over the past thirty years.

In 1987 Royal Caribbean Cruises launched the first modern cruise ship or “megaship”: the MS Sovereign. Sovereign has Gross Tonnage (GT), a measure of overall internal volume and hence of how “big” a ship is, of 70,000GT. This is over three and a half times larger than the SS Pacific Princess, the cruise ship used to film the soap opera Love Boat which was typical of the pre-megaship era.

Thanks to the enormous success of the Sovereign and her two sister ships, the megaship concept increased in popularity during the 1990s and surged after 2001, when Fincantieri of Italy introduced the Vista-class, 11 behemoths of over 80,000GT which went on to serve with several Carnival subsidiaries. Since then at least 10 brand new megaships have been added every year, and their size has ballooned, so to speak: presently, the record is held by the monstrous Oasis-class ships, all larger than 220,000GT.

A single Oasis-class megaship costs Royal Caribbean $1.35 billion. That’s just for the ship, not counting insurance, maintenance, pay and training for the crew and everything that has to be stocked aboard to keep the passengers happy and the crew fed and well-clothed. And that’s a lot of stuff: An Oasis-class megaship has a crew of 2,200 and a standard passenger capacity of 5,500 (cruise ships rarely, if ever, sail at maximum capacity).

As of March 2020, there were 42 cruise ships over 120,000GT on order or under construction, with prices for each ship ranging from $600 million to $1.8 billion, with the top end being for the yet unnamed Global-class megaship Genting Hong Kong ordered from MV Werften of Rostock. That’s an enormous amount of money right there.

And all the megaships that are already in service are turning from a revenue-generating asset into an expensive-to-maintain nightmare.

Right now all these idled megaships are in a state called “hot layup,” during which the ship has a full deck and engine crew on board to maintain all systems operational; and a “skeleton” hotel crew to keep the interior clean, run the water daily, check and maintain the amenities etc. In this state, a ship can be brought back into service in a matter of days, usually just the time needed to recall the full hotel staff and put the finishing touches on the ship for service.

As can be imagined hot layup is expensive. According to Carnival’s most recent SEC filing, the cost for a hot layup range from $2 million to $3 million per month for each of their vessels. And that’s on top of the lost revenue and other fixed expenses for the cruise line such as debt servicing.

Most of these megaships won’t be back in service anytime soon. At some point, they will have to enter a state called “cold layup” to save money. This means calling in a specialized service provider such as Wilhemsen of Norway, that will first assist the deck and engine crew in shutting down all systems, and that will then install “deactivation equipment,” such as dehumidifiers for sensitive internal areas, additional cathodic protection for the hull, watertight sealing of underwater openings, external diesel generators, etc.

The service company also provides watchmen (usually two per each ship), a team that periodically inspects the ship and updates the log and makes emergency repairs, and a security detail on standby near the layup area.

The costs for a megaship in cold layup are around $1 million per month.

And what will happen when a megaship is needed once again? While the crew is recalled in phases to reactivate more and more systems, the service provider will progressively remove the layup equipment. This procedure takes approximatively 14 days.

After this, the hotel crew is brought back in phases and starts to clean the megaship from top to bottom, and checks everything, from water faucets to the tables in the dining rooms. Repairs are carried out as needed. This phase may take another 14 days, but on the largest megaships it can take around 20 days.

The costs for this procedure are estimated to run in the range of $2 million to $4 million for each megaship.

And there’s one final piece of bad news for cruise lines. Under the terms of the CARES Act to be eligible for a dip at assorted US government funds, a company has to be “created or organized in the United States or under the laws of the United States” and have a majority of their workers “based in the United States.”

The big problem is of course that the major US cruise lines are all incorporated overseas: Carnival in Panama, Royal Caribbean in Liberia, and Norwegian in Bermuda. Coupled with their propensity for hiring foreign nationals to staff their megaships – which in turn fly flags of convenience from the Bahamas to Panama – these companies are at the present ineligible to get even a single dollar of bailout money.

Apparently, this was not an oversight but a bipartisan agreement and there’s little or nothing that can be done short term to rectify it. Cruise lines will just have to weather at least this first phase of the storm on their own. By MC01, a frequent commenter, for WOLF STREET

The situation is very fluid with airlines in China. Read… Preparing for the Aftermath: China’s Airlines Try to Exit Crisis, Alitalia is Nationalized, Qantas Plans 21-Hour Direct Flights

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  192 comments for “What U.S. Cruise Lines Are Up Against. And No Bailout Money

  1. MCH says:

    But there is a ray of hope, a silver lining of sorts according to that font of trusted and verified information, businessinsider:

    [link removed by Wolf … no reason to promote this garbage]

    So, people are booking cruises already for next year. That’s gotta be something, right?

    • Wolf Richter says:


      That article you linked (and that I removed) is total BS. You should have read more than just the clickbait headline. These are NOT ACTUAL BOOKINGS. AT ALL. Some website that hypes cruises for a living told this to the LA Times in order to bring bookings back from the grave. And then there was same cherry-picked survey data too. There was not a single data point about actual bookings by cruise lines.

      • Niky Telsa says:

        Wolf cap’s are not allowed on this website.

        I too saw this article and didn’t think anything of it, what I do know, is that people who like buffet-food, and open-alcohol know that the cruise-companys will front-end advanced sales for cash now, and then simply cancel the cruises later, this is not a problem.

        On the subject of narratives is ‘surprise’ I see that ZH is saying that China&India are hoarding vaccine raw materials.

        It must be understood that over a month ago both India&China said they would no longer ship drugs out of their country, as they needed the supplys for their own people. Largest populations on earth, each have over 1 Billion people. There people first. So now USA, Japan, everybody is surprised they can’t source drug making material. Shocked?

        I posted a month ago about this, and of course it was deleted, as it didn’t fit the narrative, I wonder if now the narrative will fit. The first to go will be paramacetol, ordinary over the counter pain relief is already in short-suppy, and China-India quit shipping it abroad almost a month ago.

        • Wolf Richter says:

          “I see that ZH is saying…”

          Now I’m really scared.

        • MC01 says:

          You may be surprised to learn that India is one of the largest manufacturers of “active ingredients” for the pharma industry worldwide if not the largest: AirBridge Cargo (a wholly owned subsidiary of Volga-Dnepr) made an authentic fortune connecting the Indian pharma industry with the rest of the world.

          If and when a Covid-19 vaccine will be available it will be huge money, so it makes sense for Indian companies to be preparing for the moment they will be greenlighted to start mass production. Given how slowly this virus mutates and the underlying economic interests it’s very likely some countries will authorize the vaccine this Fall already. With supply chains disrupted all over the world and the prospect of huge profits it makes sense to start stocking up on reagents right now.

          China is another thing completely.
          Their leadership is the culprit of this epidemic, plain and simple, and their image won’t improve by merely shipping a few tons of facemasks and hazmat suits around the world.
          I also have the suspicion they bullied/bribed/cajoled the OMS (WHO to you Anglophones): first to help their cover-up and later to keep us locked down for longer and hence help China gain the upper hand in many startegic sectors. It’s no exaggeration to say the world now depends on them.
          So what better way to clean up that tarnished image than giving away millions of vaccine doses for free and as soon as the stuff is cleared for mass use? The production lines are being set up as we speak.

        • nick kelly says:

          ‘On February 1, 2020, a passenger from Hong Kong who had recently disembarked from the cruise ship Diamond Princess tested positive for Covid-19. This initiated a nightmarish experience for the ship passengers and crew, including 712 confirmed infections out of the 3,711 people aboard; it has tragically claimed 12 lives so far.’

          MC 101: how do you square the rapid progress from 1 case to 700 with your repeated comments that the social distancing etc. are not worth the cost to the economy?

        • MC01 says:

          Nick: please don’t twist my words. I have always said that full lockdowns are only useful to free up hospital beds at best and are harmful at worst, not that we should go forgo basic sanitation procedures and precautions. And from what I keep on seeing of our politicians “social distancing” doesn’t apply to them and they seem the picture of perfect health. ;-)
          Given what I’ve seen over the past two months and especially the last week I stand by my ideas more than ever.

          In fact if you go back and read my posts I keep on saying we should go back to work in phases or steps: besides the healthcare considerations our supply chains are simply too strained right now to support a return to full production. And the demand won’t be there for months, if we are lucky.

          To think we can afford to wait for a vaccine is simply wishful thinking: we’ll die of starvation by then, and what if the vaccine is a dud? Do we wait another year for a full development and production cycle?
          And another thing: what if Covid-19 behaves like our healthcare specialists here suspect and there’s no “second wave” but a long tail of isolated cases and highly localized outbreaks until it’s either snuffed by the vaccine or becomes a nuisance at best thorugh a combination of mutation and lack of adequate hosts?

        • c1ue says:

          I think India ships a lot of generics, but the actual active ingredients and precursor chemicals – a majority come from China.

        • char says:

          Ring vaccination does not require a lot of vaccines. And because you give them to fewer, more in danger people they can also be unsafer. They are also a necessity for the economic well-being of a nation so i don’t think the profits will be large. In fact i doubt it will be a billion dollar business or in other words small beer.

        • Thomas Roberts says:


          Ring vaccination won’t work with the coronavirus, because, it’s too contagious. Ring vaccination only works with certain viruses under select conditions such as contagious, but not super contagious. In places like Africa where you may not be able to vaccinate everyone, so you have to be selective. In large parts of Africa most people might not travel far from their village, so just “specific to the virus” vaccinate those who do travel, those who treat infected I.e. doctors or shamans, those who bury bodies, and whoever else needs it.

          Instead though you do have to prioritize who gets it first, healthcare, grocery store, airport/airline, and other mass pubic facing employees get it first, these people get it first, so they don’t spread it around. Those most likely to be killed by CCP19 could get it second, because that would greatly lower death rate. After that it varies, possibly, all the kids get it, because, even though they aren’t effected themselves, they will spread it around. And so on.

          Either way until a vaccine is given to everyone, they shouldn’t allow any large cruise ship bookings period. No exceptions. Zero. Zilch. Nada. Ain’t gonna happen, no way, no how.

      • NY Geezer says:

        One would have to be suicidal to go on a cruise while there is no covid 19 vaccine.

        • timbers says:

          Well, not one in a risk category. You seem to erasing the highly likely probability that many are immune or face no risk.

          So you can call them homicidal.

          But not suicidal.

        • mike says:

          Reports from other countries are that adults of all ages are being intubated and using ventilators. Those that go on a cruise may use ventilators, oxygen, etc., that might have been used by others who needed them more and did not choose to risk their lives.

          Relapse or reinfection risk for persons with weak immune systems, such as persons taking steroids, and the possibility of reinfection mean that these cruise ship businesses are toast. I see no reason to bail them out anymore than we would want to bail out sailing ships or steam ship companies.

          With over $200 trillion in liabilities and climbing, the US is not in a position to make good all of the losses of wealthy, cruise ship owners. That is called capitalism.

          Vaccines might not be easy or possible: reportedly some SARS vaccines caused immune system reactions that were worse than no vaccine. Thus, ho long would we have to bail them out?

        • Anthony says:

          It seems it is very difficult to actually make a vaccine for a caronavirus. They have yet to make one for Sars, we may be waiting years……

        • Thomas Roberts says:


          True, getting on a cruise ship for the time being is, usually a murder, but sometimes a murder suicide.

          But, as for the vaccine, yep there’s no guarantee, but, there is nothing to say that the vaccine for CCP19 would be as dangerous as the one being tested for Sars. It’s very important to note, not many were working on a Sars vaccine. But, there are currently over a 100 potential CCP19 vaccines in progress.

      • MCH says:

        I did say that it was a font of trusted and verified information, didn’t I?


        I mean, it’s BI, I think the last time I saw anything that wasn’t click bait on that site was 1999 when Blodget was still legit and doing his analyst job.

        Seriously, anyone who thinks that cruise industry is coming back in the next year is deluding themselves.

        • OSP says:

          I thought your sarcasm was apparent, MCH.

        • Wolf Richter says:

          “I did say that it was a font of trusted and verified information, didn’t I?”

          Yes you did say that, and I’m giving you credit for it. I still don’t like when this kind of click-bait gets posted here — whether you take it seriously or not. Another commenter here cited this headline a couple of days ago — without having read and understood what was actually going here — to support his theory that everything was just fine. People just read the headlines, and that’s all the info they get and they take this shit seriously.

        • LifeSupportSystem4aVote says:

          “People just read the headlines, and that’s all the info they get and they take this shit seriously.”

          Agreed, and that is why the MSM slants the headlines to further their (corp/masters) directed agenda. I have every confidence that before Labor Day, the sentence fragment “Better Than Expected” (or something equally smarmy) will be blared in headlines ad nauseum as it was from 2009-2012. No opportunity to blow sunshine up the collective asses of the masses will be missed.

        • Wisdom Seeker says:

          It’s hard to write headlines that are both accurate and attention-getting. I actually have a small quibble with saying “US Cruise Lines” for this article. As noted in the article, these are not US companies, they pay little to no US tax, and they have few US employees. Just because a company sells tickets to US residents and has some departures from US ports, does not make it a US Cruise Line. Implying that Carnival is a US cruise line is a tad like calling Air China a US airline just because it has US departures.

        • Wolf Richter says:

          Wisdom Seeker,

          “Our world headquarters are located at: 3655 NW 87th Avenue. Miami, FL.” it says on the Carnival website. The fact that it has a mailbox headquarters somewhere else, and that its ships fly a different flag doesn’t change what it is: an American company, subject to SEC rules; its shares are traded on the NYSE as shares of an American company. The rest is tax avoidance and the search for cheap labor.

        • MCH says:


          As long as the corporation themselves don’t get any bailout from the US government, that’s all that matters. As others have said, let them seek their bail outs elsewhere. In my opinion, they aren’t any different from companies like Pfizer that wanted to do tax inversion by buying out Allergan a few years back and then change their domicile to Ireland.

          Part of this is just Wallstreet gone amok.

      • Tom Stone says:

        Wolf, it is my impression that a lot of customers whose trips were cancelled this year have been offered “Credits” for cruises scheduled for 2021.
        These would, of course, be considered new bookings…

        • Old-school says:

          I have a friend that had two cruises booked for this year and a third for Alaska next year. If I understood her correctly the cruise that was to happen next month has been canceled and they can get their money back or reschedule for next year.

          Second cruise planned for later this year has not be canceled, but she can cancel for a penalty or reschedule for next year. I think this one is carnival.

          Cruise for next year is still a go for her and cruise line.

        • DREW K says:

          I had 9 Cruises booked into 2021. Two that were coming up were canceled and I had the option of taking the money, or 125% to apply for a future cruise.

      • AlbieOK says:

        Business Insider. The anti-Wolf Street. Henry Blodgett? Nuff said.

    • Malthus says:

      A way to get the homeless off the streets.

  2. The Original Colorado Kid says:

    I was visiting my uncle in Alaska a few summers ago – he’s in his 90s -and he told me he’d been on 16 cruises. I was thinking (but keeping my mouth shut) – why would you want to go on even one? Cruises are the antithesis of how I want to travel.

    • MCH says:

      Cruises aren’t so bad if you want to veg and be comatose from food, coming from my only cruise experience…. on the Diamond Princess about 12 years ago no less… cruise can be fun if you just want to hang out and do nothing, like going to Hawaii and sitting there and largely doing nothing and still be moving.

      • The Original Colorado Kid says:

        I like to have a modicum of control over where I go and when – backpacking’s always been my preferred mode of travel (once I get to the trailhead), but now my knees are getting rebellious so I travel in my little 4×4 RV. It’s also lots cheaper.

      • S says:

        >>cruise can be fun if you just want to hang out and do nothing<<

        Do you think a mega billion dollar business has a business model of floating around and doing nothing? Perhaps you must do a little more reading about this business.

    • Pro-Establishment says:

      @ The Original Colorado Kid

      I went on a cruise to see if I’d like it, it was great. Had a balcony to watch the ocean. I went walking on the decks to watch the stars at night after everyone else went to bed. There’s actually tons of healthy food choices if you are into that. Art shows and all kinds of entertainment and activities. Easy to avoid the crowds if you don’t like crowds, plenty of quiet peaceful places on the ship to hang out on. Nice gym with great trainers. Even though we brought our 9 month old baby on board, it’s the first time I have seen my wife relax on a vacation. My wife loved it because the crew took care of all chores for her and a huge variety of high quality food was available any minute she wanted it. What you get for the price was by far the best value of any vacation we’ve ever tried.

      Of course, if a person wants to hang out with the crowds and drink booze and eat mass quantities of junk food and listen to loud music- that is one of the options, too. But truly they had a variety of experiences for all kinds of people.

      I don’t think it would be too expensive to bail out the cruise lines, what’s the big deal?

      • NoBailouts says:

        “I don’t think it would be too expensive to bail out the cruise lines, what’s the big deal?”

        What’s the big deal? Really? Serious? They’re registered off-shore in other countries (not the USA), so they don’t pay a dime in taxes to the US. So, no bailouts whatsoever. Let those other countries where they’re registered bail their sorry butts out.

        • char says:

          Main reason is that they don’t employ a lot of Americans*

          *relative to their gross.

        • MaryR says:

          Seriously, the American taxpayer should not bailout any companies that are not US based and do not pay US taxes or employ Americans.

          What…should we bailout Russian oil companies using American Tax dollars? I actually wrote to my Congresswoman to oppose cruise line bailouts and I am a frequent cruiser.

          The cruise lines have set themselves up to avoid paying taxes to the US. Fine, now they have absolutely no basis for bailouts from US taxpayers. As far as your cheap vacation, you can get a hotel here and South Florida, lay on the beach and order takeout.

      • CRV says:

        The big deal is they are sailing under the flags of tax havens for the only reason to not pay taxes (in the US or any other country with higher taxes). Why should they get taxmoney now. Let them beg for it in the countries they are administered. They made a choice and have to live with it.
        And if you let them have that money, make them sign a contract to pay it back and pay taxes in the future by sailing under the flag of who bailed them out.

        • Pro-Establishment says:

          @CRV Why should use of tax havens matter? USA companies use tax havens all the time and they still get bailouts. Some people even say that Delaware is a tax haven. Under your criteria no one gets a bailout. Imagine a world with no bailouts! Think what that would do to the banks and how much chaos that would cause for our politicians with major donors going bankrupt left and right! And no one could have an affordable vacation in your world!

        • BaritoneWoman says:

          Exactly. Which is why I am not shedding any tears for them.

      • paul easton says:

        Don’t bail syberitism. We should bail nothing but necessities. Shrink the economy or we all die. Climate change disaster is already unavoidable, like it or not. Don’t make it even worse.

    • Paulo says:

      I live on Johnstone Strait and see the Alaska cruise ships pass by all summer. Even on a beautiful day, hardly anyone is outside on deck. It was only recently they stopped them from dumping their sewage when they cleared port. I know I’m just a cranky curmudgeon about it, but good riddance if they quit running. Surely there are better ways to make a living for all concerned.

      Oh well, good thing we’re all different. Each to their own, I suppose….but please don’t ask me for any bailout taxes for this industry. When does it end; ski hill corporations, 6 Flags and Disneyland, the movie industry?….. Certainly, let’s help our restaurants and other local businesses, but these amusement corporations? Really?

      • RD Blakeslee says:

        Paulo. I have no use any of the non-local enterprise’s “services” you mention, but I do have knowledge of the cruise ship industry’s affect on Haines Alaska a few years ago, when I went there to stay in my cabin on Chilkat Lake and fish for Dolly Varden char and Sockeye salmon.

        On the days when a cruise ship would disgorge its hoard, the local merchants salivated while the local populace hunkered down for the duration.

        Cruise ship discharging their waste tanks were a problem all along the Lyn Canal and its tributaries.

    • Drew K says:

      That is your opinion. You don’t like it, I get it. It’s not for everyone. If every single person wanted to go snow skiing, can you imagine the nightmare in Colorado? It probably is bad enough already. Be glad people travel differently because if everyone did what you did, the cost would be prohibitive and probably a bit crowded. I’ve done 30 Cruises. I’m glad when I hear people hate it. Keeps the Cruise Lines battling over a smaller pie which leads to decent deals.

  3. Observer says:

    I have no sympathy for the cruise line industry. If their business model isn’t sustainable, they should be liquefied and removed from the market. We have enough zombie businesses as it is.

  4. Mr Wake Up says:

    When covid arrived I looked up which banks issued the credit cards for NCL and Royal, apparently both are Capital one, curious how many people defaulted on that next payment knowing their summer vacation on the floating petri dish went up in smoke which many working families use to pay for the cruise.

  5. Jdog says:

    I used to really like cruises, but over the years they started being populated with more people who you had to wonder how they could possibly afford it. Poor manners and behavior by fellow cruisers makes the experience a lot less enjoyable.
    Now that depression is coming, you have to wonder what they are going to do with all the cruise ships they cannot book…..

    • DR DOOM says:

      Hey hey ho ho ain’t gonna float in a cattle boat.I planned my stop in Kirkwall in the Orkney Islands in order to miss the arrival schedule of one of those human cattle boats. The Lagoon of Venice and the city are rejoicing that those things are not floundering out in their lagoon. On the floor of the ferry terminal in Stromness in the Orkneys is a sweeping tile inscription that reads “A great treasure lies hidden in the north” . That treasure can only be found by getting on the ground and exposing yourself and your culture to the culture of others . It’s actually ,for me ,hard work and at times I look like an idiot but magic flows from this , not on a cattle boat.

      • 2banana says:

        They are rejoicing!!!

        Well, except for the locals who worked in the food, beverage, restaurant, hotel, taxis, farm, transport, etc. jobs.

        But plenty of jobs online…maybe coding.

        And, oh yeah, all those city taxes that won’t be collected. I am sure they can cut back and make work.

        • paul easton says:

          Let the cattle boats stay moored at the dock and connect them to the municipal sewige system. There is no reason for them to move around and make pollution. The customers won’t mind.

        • 2banana says:

          Modern cruse ships have their own modern sewage systems to treat their own waste water. They are fairly green.

          Probably better than 90% of the ancient and decrepit ones I have seen in Italy…but only anecdotal observations.

    • Claud Brahman says:

      I have seen them come on shore at Homer, Alaska for a dozen years. As you say, more and more folks just trying to finish their bucket list. Very few could afford more or have the initiatives to plan their own trip.

    • Robert Hughes says:

      I’ll second that in spades.

      First cruise was in 79 and then fairly consistent in 80’s and 90’s. Most recent last year. Total of 23 now of all types, companies, locations. We have now given up on large, larger and largest ships because of all you mention. “Poor manners and behavior by fellow cruisers makes the experience a lot less enjoyable” are only part of it. Quality of on board shows goes from still very good to walk out terrible. Also bar service has declined to new lows. The ports the cruises go to have been ruined by the thousands being set ashore like unleashed hungry dogs. Venice and the outer islands are but one example that comes to mind.

      Wife gets daily emails on specials, discounts, etc. – no thanks couldn’t induce us to a large ship. Only possibilities we will consider are European river cruises ( 190 people ). Buyer beware.

  6. Stuart says:

    Let the cruise industry die. They are little more than floating toilets with slaves.

    • Shiloh1 says:

      Should include burial-at-sea feature.

      • john vermeer says:

        Hey, Shiloh, my next door neighbor DID die while on a cruise in the Caribbean and they DID bury him at sea! No kidding. He was in his 90’s, figured it was a good way to go. His wife came home without him. No fuss, no muss, no funeral. The Cap’n took care of it all.
        Then he hit the deep!

        • JOHN gerty says:

          I wonder what they charged for that “excursion”?

        • Erle says:

          Did she get to keep the flag when the old guy got dumped, and what national flag was it?

        • Erle says:

          That is an avenue for NYC to get rid of all of those unsightly refrigerated trucks that half of the population is housed in if the TV news reports are accurate.

    • William Smith says:

      You will need the toilets when you get norovirus and are vomiting from both ends at the same time. They are nothing but experiments in communicable disease distribution methodology. If it takes a million a month to mothball such an asset, then something is seriously amiss with the business model. As “cruising” is an ultra-discretionary spending item, many geopolitical things can adversely affect the business quickly. It might be interesting to know comparable pricing (hot/cold layup) for large aircraft (just park ’em in Nevada).

      • MC01 says:

        Cruise lines actually keep (for insurance purposes) very close tabs on mortality aboard their ships. On the average pre-Covid19 figures were one death on board every six months per vessel, with causes ranging from heart failure to folks falling overboard and drowning.

        All assets have layup costs, from cruise ships to steel furnaces. The big problem is these layup costs are estimated using the ordinary costs of a cruise ship during the “off season”. Nobody has a clue on how much it will cost reactivating a megaship after 4/5 months of cold layup: just think of the enormous number amenities these ships carry, including in some cases whole amusement parks.
        The amount of stuff that could, and will, go wrong is simply incredible.

        • MCH says:

          I wonder how many of these ships are going to go straight to the breakers in a year or two. I am curious to see what will happen to them. These mega ships are very specialized overall, but I suppose they could be acquired by governments and converted, but then there are an over abundance of these.

          I looked up the number of cruise liners after reading this, and I was just shocked by how many there were.

          I wonder what’s going to happen to the shipyards that builds these things. Can they switch to cargo carriers? But isn’t that market already saturated as well, I wonder with the economies slowing down, how long are the existing ships going to be needed.

          Right now some airliners are using their passenger planes to act as cargo carriers, but that is only a fraction of their fleet and when the need for the transport of PPE and other medical gear disappears, what will they do? I can’t think of them competing with the likes of Fedex and others… these airlines aren’t really dedicated cargo carriers like the ryes UPS and FedEx and others own.

        • char says:


          I seriously doubt they ever really mothballed such a modern cruise ship and that most of the cost claim is insurance. $1 billion for a new ship means high insurance premiums.

          Everybody expects/hopes that in 2 years everything will be OK again so those ships can be de-mothballed so they are not going to the breakers. If not than we will have bigger problems to worry about than the cruise industry.

          Those megaships are almost all assembled in Italy & Germany from whole parts, like cabins made in Eastern Europe. Highly specialized. And their wage-structure is to high to build cargo ships. Not that there is a demand for new cargo ships. But their workers could be used for new energy projects. I also don’t think that the cruise market is death. Just less profitable as those cruise ships will be filled by locals (Americans in Alaska&Florida,Europeans Baltic&med, East Asians in East Asia)

    • Claud Brahman says:

      There are a lot of non-essential industries that would not be alive last year without too much credit. Take a look at all the venues that are in trouble today. Sports complexes, convention centers, even some airports. We will be finding out what is important.

      Take a guess at how many years it will be, if ever, before jet passenger miles exceed that of 2019? What year will it be before pro sports stars are paid more? What city is going to signup to build the next sports stadium?

      • Old-school says:

        I saw the 60 minutes piece about the $1 billion dollar arena built in San Francisco to move the pro basketball team from Oakland. All private money is my understanding. The two guys that facilitated that must not be sleeping to well unless they have good political connections.

        • char says:

          Silicon valley has to much money. Will be the first arena ever to be build by private money.

    • Phoenix_Ikki says:

      Good riddance to this industry, I wouldn’t shed one tear for their demise if it does happen. I am sure some of the largest player will survive but lets face it, these cruiseships have been pretty much symbolic to excess consumption, environmental popullution, labor exploitation and tax dodgers at its core. They do this world no favor so I for one are glad they are not getting a bailout for now..they are about as far remove from essential as one can imagine

      • Counterpointer says:


      • V8 says:

        “cruiseships have been pretty much symbolic to excess consumption, environmental popullution, labor exploitation and tax dodgers at its core”

        And how does 432 ships compare with Airline Companies and flights to and from holiday destinations….

        • paul easton says:

          Airlines have actual destinations. For cruises the destinations are only a lame excuse for drunken vegetation. Let the animals puke into a treatment plant, not into the fishes habitat.

      • Old-school says:

        The ships have gotten so big that they make an aircraft carrier look small. I always thought this would end when one of them went down at sea. Looks like it might be by rusting away in port.

        Company I worked for got caught up in a lawsuit with one of the big cruise lines. Several people died and / or were made sick by legionnaires disease. It originated in the pool filters which we provided. Our contention was swimming pool was not chemically maintained correctly. Legal decision was that both parties were partially responsible. I believe our payout was in the $10 million range about 20 years ago.

      • Erle says:

        I don’t know if it is all hopeless. A hedge fund could buy a mothballed ship, perhaps not the 220,000 ton variety, but a smaller ship would have no taxes if moored outside of a taxing authority. That might put pressure on the RE market in the Hamptons but I don’t care.
        Some crazed libertarians have been floating this idea for years. It might be a good time to be on the seahunt for a new tax haven scam.

  7. VintageVNvet says:

    Good article MC01. In spite of having been sailing since 1948, I learned a lot of new information, especially re cruise ships and that industry.
    Seems to me that with the very bigly need for housing in many places near enough to various ports, especially those that I know in USA, these ships could be put to use as SRO type housing, and thus at least bring in some measure of income to cover some, perhaps all of the costs of maintenance, etc,
    Some could be of the affordable, with cafeteria level food service, etc., while others could be quite a bit more expensive, maybe combining several smaller ”cabins” and with concierge services of all kinds (and might even make a profit if done well.)
    One of the last projects I estimated in SoCal in late 17 was for an upscale apt bldg in Hollywood, all 300 SF units that were expected to rent for $6000/month; they were very well designed, top quality everything, parking elevator, etc., with that market level in mind, but that does seem to allow a lot of room for these ships to provide similar size/amenities, etc., for a lot less rent.

    • john vermeer says:

      Use them as nursing homes, Vintage, old people love them, they eat well, have complete services while seeing the world for the last time.
      Had an older friend who went on cruises non-stop after his wife died, that way he didn’t have to cook.
      No, this wasn’t the guy who died on there, that was my neighbor.

      • 2banana says:

        There is a subset of older people who retired, sold their house and do just that.

        When you consider the average assisted living facility costs about $50,000 a year – A cruise for year would be higher, but not by much.

        • Drew K says:

          Met Super Mario, as they called him on Royal. He lives on ships 50 weeks out of the year. Think he still has a place in Florida so I guess he’s staying there. He moved onto the ships a number of years ago. Still works. You can see him heading somewhere with his computer during the day.

      • polecat says:

        I have a better idea. Convert these behemoths into floating prisons, to house the near-future fellons of PE, HedgeFund principals, Ferengi Banksters, FedHeads, ALL OF CONGRESS !! .. and their lobbyists too … (add more rakes as needed, to fill to overcapacity) … like the British Hulks of old – decrepit, squalid, lumbering, watery penitentiaries nestled in funky backwaters, whilst their ‘guests’ commiserate, as they rot for their crimes ! – waiting for that final journey’s end down to Davey Jones’s cell.
        Hell, it would take an entire fleet just to accommodate half of D.C. alone … !!

        • VintageVNvet says:

          OK, Polecat, you win this time,,, that’s far shore!! GREAT idea…
          Never actually been on any of these types, the largest non US Navy being the 125′ schooner mentioned elsewhere, but from the comments here, most folks seem to think it would not take much converting at all!

    • MC01 says:

      When Hurricane Kathrina struck, FEMA chartered three cruise ships to provide temporary shelters to displaced residents of New Orleans. It wasn’t a particularly successful experience, and it’s unlikely to be repeated anytime soon.
      The fate of any ship which serves no more purpose is the cutting torch.

      • MCH says:

        Oakland was considering using a cruise ship as a homeless shelter before this occurred.

        Who knows, this could actually happen as those assets sit idle for a while, I wonder if things like that already is happening somewhere in the world.

  8. 2banana says:

    Good question!

    “Despite mass cancellations of voyages, Miami-based Carnival Corporation, Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings — the three largest cruise companies — have raised enough cash to last at least 10 cruise-less months…”

    Cruise industry has enough cash for 10 cruise-less months. But will passengers come back?

    www . miamiherald.com/news/business/tourism-cruises/article242033816.html

  9. brandi says:

    At what point, ever, were megaships a good idea?

    I do like the housing idea… just park them and short term rent rooms to cities directly who in turn rent them to low income.

    • J7915 says:


      Had an uncle on wife side of the family, send him a clipping of an article when the Disney Cruise Line just placed a cruise ship in service out of Genoa in the 1990s. Anyway his reply was he would only take a cruise on a Queen Mary or the USS United States type vessel.

      His rational was having survived Halsey’s Typhoon in 1944 on a DD, barely, these floating hotels were not seaworthy enough.

  10. Iamafan says:

    The Jones Act should be a prerequisite to any bailout. If you don’t know what it means, look it up.

  11. A says:

    The foreign cruise ship companies are globalist corporations that are not Incorporated in the United States. The ships do not fly US flags. The companies don’t pay US taxes.

    It would be an outrage, an assault on our sovereignty, for a dime of US public money to go to foreign companies.

    • Mike Larson says:

      Bingo. This corps are based in other countries specifically to avoid U.S. taxes. No doubt, though, the Republicans will bail them out (Mnuchin probably has already designated $10B or $20B for this).

      My question is: How would bailing them out “rectify” the situation? Are Trump and the Republicans going to bail out every corp in the world?

      • FluffyGato says:

        @MIkeLarson – you may wanna get your facts straight before an irrelevant political rant.

        The CARES Act was authored by Pelosi and structured by the House Ways and Means Committee Chair (the person with the purse strings). Guess what? He’s a D.

        99% of Hedge Fund donations in 2016 went to…Hillary (b/c they assumed she’d win).

        It’s a two-headed monster, and you’ll sleep better at night once this reality sinks in.

        As an aside, I agree that there should be no bailout for these companies, since they incorporated overseas for the sole purpose of evading US taxes.

        There shouldn’t be a bailout for airlines/Boeing either. Chapter 11 is the right fix.

  12. NoName says:

    Just think of the associated lost gambling revenue as well.

  13. Erich says:

    Why there’s only ONE U.S. registered cruise ship –

    They want a bail out? Fine, contact Panama or what ever 3rd world country they’re registered in.

  14. Just Some Random Guy says:

    Democrats have proposed – and Trump has signaled he’s on board – a plan to pay every American making $130K or less $2000/mo for the next 6 months. Plus $500 per kid. So for a family of 4 that’s $5K per month, tax free.

    This isn’t for the unemployed, this is for everyone, whether working or not and in addition to the already very generous UE benefits for the unemployed.

    Dow 30K by July. Dow 35K by end of year is looking more likely.

    • Wolf Richter says:

      That kind of thing — handing consumers large chunks of money — is going to cause consumer prices to spike (consumer price inflation). But wages are going the opposite way, given the collapse of the labor market (wage deflation). So once that cash is spent on Chinese imports, the economy is in even deeper trouble than now because consumers, even those that have jobs, are getting crushed by the toxic mix of price inflation and wage deflation. Consumer spending (70% of the economy) is going to get hit. That’s not a good scenario.

      • Just Some Random Guy says:

        I agree. I think it’s a dumb idea. But the inflationary aspect of it will be good for stocks.

        I’m buying another car with my $30K. Made in Germany, not China. :)

        A well sorted E39 M5 is right around $30K. Thanks Nancy, I will think of you every time I start that beautiful V8 up.

        Also looks like it will be $260K for married filing jointly. The first stimulus maxed out at $199K. Which is good, because it’s ludicrous to call $200K a year “rich”.

        • RR. says:

          Where does a Long-Term Ex-Pat download the Application! ;-)
          I work at a factory making parts for that German Car you want
          to buy. I was going to take an Early Retirement, but maybe
          I’ll put it off for 6 months. (not offering such a plan to an
          ex-pat should be unconstitutional) ;-)

        • Endeavor says:

          Pay people to work. Clean blighted inner cities, repair long neglected roads, update electric transmission lines and loose less over long distance, rebuild water and sewage systems so we aren’t drinking each others
          urine and a thousand other projects to bring civilization to this thinly disguised third world country.

        • 728huey says:

          To follow up on Endeavor’s comment, that sounds like FDR’s New Deal. Or AOC’s Green New Deal. Do you really believe the GOP senators are going to go along with that?

      • timbers says:

        What you wrote, minus the first sentence, has been the plan of our government since oh I don’t know since when I was born in 1960, so I’ve learned from folks at NC.

      • paul easton says:

        It is a great scenario. We need a maximal depression to stave off climate change disaster.

      • Old-school says:

        Not sure there is a better option in our levered up economy.

        Banks are just starting to take away all the umbrellas since it is starting to rain in order that equity holders don’t get completely wiped out as credit expansion cycle has come to an end. Federal government has got to keep the bathtub full or asset prices crater. Doesn’t seem like a good system, but the first system has been able to keep the world economy at least treading water for a long time.

        For an investor it’s a difficult time. Even Buffet and Munger seem a little unsure how to play it.

    • MCH says:

      So, apparently, Andrew Yang’s idea is now catching on. Once that gravy train gets rolling, good luck stopping it.

      I’ve heard a few podcasts about universal basic income. I guess the fundamental version of it make it sound like something out of Star Trek. I wonder how that ends up incentivizing people in the long run.

      Because all we will end up getting is a drop in productivity, and I’m assuming that has to still be paid for some how, so the usual play book for that is taxes.

      As for the orange headed one, he’ll do anything to keep himself visible.

      • Old-school says:

        This actually is where I think economist miss the boat. It is imperative that incentives be structured correctly at the micro level. Economist seem to model macro systems ignoring personal incentives.

    • Jdog says:

      The government is not going to be able to afford doing anything like this.
      Within a month, at least half the States and Municipalities will be screaming for government bail outs as they go broke from their tax receipts going south. Give it 6 mos. and they all will be screaming for help. The government cannot support all the States, cities, and citizens. It is just not going to happen. It will not be long before the government bean counters tell the elected politicians that the give a way’s have to end. Until then, the vast majority of the money will go to corporations, while the unfulfilled promises go to the tax payers…
      When this is all over, the wealthy will own a much larger portion of the countries assets, and the people will be a whole lot poorer.

  15. Tinky says:

    Thanks MC01.

    An amusing, albeit trivial note: the last – and only – cruise that I took was in the Greek islands in 1973. My father took me, and it was my first trip to Europe. The boat was of course tiny relative to today’s behemoths, though I do remember the food being agreeable. My strongest related memory by far, however, was meeting a young Greek girl who made my equally young heart go pitter-patter.

    • VintageVNvet says:

      Good memory Tinky.
      Reminds me of my only ”cruise” voyage, as deckhand on what was the largest ”staysail” schooner left in the world at the time, SV Polynesia, sailing out of government cut in Miami in summer of 64. (Main halyard was 3/4 inch steel wire rope.)
      The really unfortunate thing was that, including the all male crew, there were twice as many females on board: boy did I learn a lot on that cruise!
      I would still be on that ship except when the steward literally jumped off the ship and swam ashore, as the newby deck hand, I was put in his place, and drank all my pay by the time we got back to USA… but my duty siphoning the 180 proof rum out of the huge wood barrel to make the rum punch each day did help!!
      While I was gone on that voyage, Uncle Sam called and said he was ready for me to join his ”tin can navy”,,, so there I went.

      • BaritoneWoman says:

        Ahhhhh, memories! I sailed on two Windjammer Barefoot Cruises in my lifetime.

        There are several small-ship cruise companies that have arisen from the ashes of Windjammer – one of them called “Island Windjammer”. They’ve picked up where Windjammer left off – with less than 100 people total, local crews, going places where the megaships cannot go, and generally blending in with the local scene.

        As Windjammer used to say: “This Ain’t No Foo-Foo Ship!”

      • Tinky says:

        Good stuff, VintageVNvet – thanks!

  16. Suzie Alcatrez says:

    Cruise lines have done their best to escape US taxation. Looks like they did too good of a job.

  17. R2D2 says:

    People soon forget past terrors. After 9-11, the airline and cruise industries started to rebound within ~3 months. People are greedy and lazy and they just wanna slob out on a floating hotel and stuff their face with free food. Cruise lines will drop prices, handout free masks to passengers, and they will be back in recovery mode by Q4 2020. There is plenty of cheap debt out there to keep the megaboats going until the C19 spread has been squashed.

    • VeryAmused says:

      Yup, an isolated terror attack and a world wide pandemic cause by a fast spreading virus that can make you severely ill or kill you are exactly the same type of event.

      People are totally going to want to stuff them self in to floating and flying tin cans with other suspected vectors in no time flat.

      Party on, Garth!

    • MC01 says:

      I edited out of the final draft I sent Wolf, but Genting Cruise Lines of Hong Kong is actually working on a plan to restart cruises in the Far East in May already.

      While regulators seem to have met Genting’s proposals for “risk abatement” with favor the big problem is the appetite for cruises is just not there. It’s the same thing as happened in China: apart from migrant workers returning to their jobs in the Deltas and people desperate to flee Wuhan appetite for air travel is lackluster at the moment, and that’s not for lack of trying.
      I strongly suspect the Chinese government is doing more harm than good by pushing so much air travel as “completely safe”: the memory of their outright lies back in January is still too fresh in people’s minds. They should just keep their mouths shut and let things go back to normal on their own, even if there’s not the perfect V-shape recovery they want.

  18. Jdog says:

    By Q4 2020 we should be beginning Covid-19 round 2.

  19. Tony says:

    The American taxpayer should definitely bail out the cruise lines in proportion to the port and sales and income taxes they pay here, the number of unionized American sailors and staff they employ and their adherence to American health and safety regulations; in other words give them ten dollars and call it a day. Israel, Norway and Switzerland can bail them out, or perhaps they could appeal to Liberia or the Philippines or other slave pits that they draw their crews from.

    • Iamafan says:

      I believe you can say the same about cargo ships, as they are not American flagged.

      • R U Kiddin says:

        Iamafan, enjoy reading your comments. The big cargo carrier, Maersk, is Danish flagged. I’m trying to think of a U.S. flagged cargo ship, but nothing happens.

        So, the Cruise ship fiasco conversation should cascade right into the cargo ship situation. Guess a lot of the commentators here would want cargo to sink into a toilet bowl until their BMW’s, cell phones and rubber dog _hit from all around the globe dried up. Then…

        Isn’t economics the movement of capital? The sea borne shipping industry is a linchpin of capital.

        • BaritoneWoman says:

          The only US-owned/flagged cargo shipping company I can think of is Matson – HQed in Honolulu and serving the Pacific islands.

  20. A says:

    We’ve known for some time they were destroying the environment, that they were floating incubators of sickness, and that they were often run in a sketchy manner.

    In an ideal world, cruise ships would be a great way to see the world and enjoy a relaxing vacation. In the world we live in…they’ve sucked for a long time now.

    Rumors of murders that would never be investigated, possible slave-labor like conditions, the sketchy loopholes to avoid taxation… I mean c’mon. They don’t deserve a bailout, and I don’t think they deserve customers, either.

    Bon voyage.

    • Tim says:

      Right on all points.

      What I’ve never understood is why this is tolerated – wouldn’t it be easy for the US, EU and others to close their ports to ships flagged in Panama, Liberia and similar, forcing them to re-flag, pay taxes, and treat their employees better?

      • fajensen says:

        Yes. Except ‘the home bois’ are running the exact same scams and they are a protected species, paid a lot for that too.

        Kinda like some of the nuttier anti-immigrant parties here that want legislation against ‘religious schools’ teaching stupid stuff (which I.M.O. makes sense) but they can’t do it because ‘christian religious schools’ teaching stupid stuff would also be regulated under such regulation!

      • MCH says:

        The second any of these governments do that, they will have the R word thrown at them, because the impact will be felt disproportionately on the poorly paid service workers… yes, the path to get that impact from
        Corporations to worker will be more convoluted than an Escher, but that’s what will happen.

  21. WES says:


    I would think as a 100% non taxable business they could also be very profitable too. Employees pay no taxes on their salaries either so lower wages paid.

    It can be the only reason why so many new cruise ships were/are being built.

    Wonder what kind of profits they were making?

    They will weather this crisis just fine without taxpayer help.

    • MC01 says:

      Carnival closed 2019 with a “GAAP net income” (Total revenues – cost of goods/services sold – administrative expenses – income tax expenses = net income) of $3 billion, so they were doing pretty well.

      Problem is their “GAAP gross revenues” have gone from $20.4 billion in 2019 to whatever they were able to make in January and February: for all purposes Carnival is now a company without a business and some pretty hefty fixed expenses.
      Even if Carnival is somehow able to resume sailing in the Caribbean on June 27 as they now estimate, there’s still the big question of their once profitable European subsidiaries like Costa Crociere and let’s not forget the big problem: will enough people have the stomach for a cruise mere months after the Diamond Princess outbreak?

      In a nutshell that’s the problem right now: uncertainty, not the virus.
      If Carnival knew they could restart their Caribbean cruises, say, on July 15 with a certain set of restrictions and European operations on July 22 with another set of restrictions they would get to work right now to try and squeeze as much money from them as possible.
      But politicians right now look like the proverbial duck hit on the head: they are not merely contributing to the uncertainty by contradicting themselves continously, but many have joined the media to cheerlead for the second Covid-19 outbreak or for longer and longer lockdowns.

      In the meantime China is laughing behind my back, but that’s another story for another day.

    • Icanwalk says:

      Unless things have changed, foreign registry avoids having a costly, union, US Coastguard licensed crew.

      It may also avoid the ship being inspected by, and compliance to US Coastguard regulations.

      There used to be a law that foreign registered ships could not travel between consecutive US ports. They had to visit a foreign port in between.

      This was in the early 80’s.

      • char says:

        AFAIK it is still there. You can´t move cargo between US ports. It says nothing about passengers.

    • J7915 says:

      Enough to survive a ten month shut down apparently. Per comment above.

  22. Cobalt Programmer says:

    Just as investors looking for stocks during a recession, a lot of people of daily looking for cheap cruise ship vacation packages even now. Only a matter of time, sooner like three months from now on, cruise ships will have full booking, the usual problems, fights, norovirus infection, and baby falling form the balcony. Economy may or may not recover but cruise ships will up and running soon.

    • Paulo says:

      Wanna bet? 3 months?

    • Ed says:

      That’s too soon.

      But you do have a point. People were still going on cruises long after the first cruise ships famously became filled with Covid-19 victims. If they are willing to do that, why not go the minute someone in “Authority” says the coast is clear?

      All I can think is these people have lots of trust. They must be thinking, “if the authorities are letting the ships sail, it must be okay!” They’re like cars with no one at the wheel.

      • Paulo says:

        I was betting against them. I think they’ll go under and I won’t shed one tear.

    • MC01 says:

      Cobalt: right now there are only two major cruise lines with plans for reopening. Genting of Hong Kong and Carnival.

      Genting would love to restart cruises in the Far East next month already but they have a serious problem: the demand is just not there. Part of the reason is their ships would have nowhere to sail but China and Korea, but part of the reason is that in spite of their “risk abatement” program the appetite is just not there. Remember: the Diamond Princess tragedy is still too fresh in people’s minds, especially in Asia.

      Since I wrote this piece Carnival has already slipped their “back in business” date from June 15 to June 27, or almost two weeks later.
      A big part of the problem is Carnival would have no way to bring back to the US the thousands of crew members from Bangladesh, Malaysia, The Philippines etc that are presently stuck in their home countries, often after a struggle to get there in the first place.
      Another big part of the problem is nobody has a clue if port authorities in the Caribbean will let cruise ships moor there: apart from a handful of countries most of the world has zero plans to get back to a semblance of sanity and normality.

      Uncertainty is now the biggest threat to the world, not the virus itself.

      • Gerrard White says:


        ‘Uncertainty is now the biggest threat to the world, not the virus itself’

        You could say that the virus itself is the uncertainty principle made manifest

        ? How many waves? How many asymptomatic cases? How many mutations? A vaccine, vaccines, or none? In one two or three years?

        What seemed to be the products of a more or less rational capitalistic ind-ag and health care turned to be designed to the uncertainty principle, their production to result in bad health and perhaps catastrophe

      • Iamafan says:

        Isn’t Genting a Malaysian Gambling Empire?

        • MC01 says:

          Yes, they belong to the same group. Genting also own the MV Werften shipyards in Germany.

        • Stephen C. says:

          As far as I know it’s a locale in Malaysia that has golf resorts with casinos, not far from the capital city of Kuala Lumpur. But yes, it could very well be the name of a cruise line.

      • paul easton says:

        The former normality was insanity. Refusal to face the truth is also insanity. Climate change.

      • Old-school says:

        I think a lot of business is so global that it’s going to be challenge to smoothly restart. Maybe air travel and border controls are the first problems to be solved.

  23. John Beech says:

    I won’t shed a tear due to this hard luck story. Why not? Simple, it’s because the Congress was right to leave them out of the trough. Also, because the companies will go bankrupt and someone else will buy assets for cheap. The point is, these ships aren’t going to the breakers. Instead, they’ll get new owners holding less debt. As for whether the old people will come back? You betcha because you can’t cure stupid – just look at the folks marching in MI. As for me? Cue the world’s smallest violin playing my heart bleeds for the rat finks that used flags of convenience and hired people for little more than slave wages for receiving their just deserts. Bwahahahahaha!

  24. timbers says:

    MC01 said the CARESless Act says:

    Under the terms of the CARES Act to be eligible for a dip at assorted US government funds, a company has to be “created or organized in the United States or under the laws of the United States” and have a majority of their workers “based in the United States.”

    State Street is a company created or organized in the United States or the laws of the United States, but employees more Indians and foreigners in the United States than U.S. citizens.

    So why does State Street benefit from the CARESless Act and Fed largess?

    • Synergy says:

      Because the owners are part of the financial class and are protected by their crony status.

  25. makruger says:

    While certainly not for everyone, cruising can be a great way to quickly and rather inexpensively see multiple countries for “a taste” of their culture and beauty. And with so many passengers on board, it’s a great way to make new friends as well. I may be an exception but I hope the industry survives.

  26. DR DOOM says:

    Moooooooooo…….The native call of the cattle boat. Kinda piled on a little , too many heck mug refills . Its Wolfs fault.

  27. abi says:

    this article ( 5th paragraph … ‘at the moment … ) is not correct. ALL MAJOR cruise lines are planning restart of operations. article states ‘ only Carnival … is planning on restart.

  28. Josh says:

    I always heard that the people working on cruises make very little but if you have a crew of 2,200 and it only costs $3 million a month for a hot layup, then the crew is making max $1,364 a month. It will be even lower because the $3 million includes fuel and food and other things. You have to give the cruise industry credit for figuring out how to lower labor costs…

    • MC01 says:

      Josh: only the deck and engine crew of a cruise ship is kept at full complement during a hot layup. The hotel crew, which is 75% or so of the total, is reduced to the absolute bare mimimum, mostly maintenance and cleaning people.
      You also have to consider that while on layup many wages and especially benefits are slashed: you don’t earn the same money when riding at the anchor as when you are steaming.

      • Stephen C. says:

        These cruise ships are not much different than microcosms of entire nations in the Middle East and Southeast Asia. I was recently living in a condo in Kuala Lumpur, Malaysia, and I often imagined it was like a stationary cruise ship. When it was time to eat you go down the elevator to the mall, which was 90% junk food restaurants and bars. Rest of my time was spent lounging in my apartment or on the rooftop pool/gym. Workers “below deck” were from Pakistan, Bangladesh, Philippines and so many other places, with just enough English to hold the place together. The workers throughout the metropolis, made up largely of these same kind of stationary cruise ships, are sequestered in restricted quarters (no visitors, curfews, 4-5 to an apartment, etc.,etc.)

        Being a Westerner, I was one of the lucky ones who could afford to live above decks in my nice bachelors pad, and I liked being there. It is where I learned not to criticize people who like cruises. Well, at least not with such relish as I previously did.

  29. Tim says:

    These things aren’t popular at destination ports.

    Venice is a case in point. The wash damages the canals, against which the average passenger spends less that 10 euros ashore. There’s been a temporary agreement, I understand, where they anchor offshore and use ferries. People in other destinations have started complaining, too.

    And that was even before they got the tag ‘floating petri-dishes’…..

    Other uses were found for the great Ocean Liners – Queen Elizabeth, United States and so on. Cruise liners could become care homes or hospitals.

    As somebody once said about mobile homes – ‘they’re ugly and square, they don’t belong here, they’d look better as beer cans’.

    Good riddance.

    • Counterpointer says:

      I have real sympathy with such a big tourism player suddenly being put out of business by a viral outbreak when they were doing so well pfffsshhhht bwhahahahaa, sorry, couldn’t help it.

      Good riddance indeed to these floating petri-dishes, sh!t-encrusted hellholes, run by serial tax dodgers and labor rights violators.

      If demand ever returns, beyond the function of death barges, it will be as an identification function for the self-selected criminally insane.

      Someone. please tell me a cruise line CLO series that I can short before Moody’s does its downgrades next week.


    • MC01 says:

      Tim, technically speaking the Queen Elizabeth II and the SS United States are not cruise ships but ocean liners. This means they are designed to cross the Atlantic Ocean as fast as possible and in all weather conditions.
      Speed was so important the Blue Riband was awarded to those who made the Transatlantic crossing faster than the previous holder: the United States still holds it for both the Westbound and Eastbound routes.
      The United States was, and still is, an absolute engineering marvel: just think the only two things made of wood aboard are the butcher’s blocks in the kitchen and the grand piano in the ballroom. Everything else is metal, glass and fireproof glass-fiber.

      Cruise ships by comparison are slow and plodding: due to the need for limited draught (to enter as many ports as possible) their seaworthness is rather limited. They are designed from the ground up to be floating cities or, to be more specific, floating resorts, meaning they have to carry as many passengers as possible and keeping them happy with waterslides, buffet eateries, game arcades etc.

      Totally different beasts. The former have outlived their usefulness while the jury is still out on the latter.

      • Tim says:

        Thanks, and I did say Ocean Liners in my comment, to emphasise the difference. My late father used to travel on them quite a lot.

        I learned a bit about SS United States, many years ago, when a friend was part of consortium considering buying her, ironically for conversion to a cruise ship (which wasn’t feasible). Engines took up a very large proportion of internal volume, and I heard that she even had countersunk rivets, unheard of in any other ship to my knowledge.

        Modern cruise liners are floating hotels. This might make them suitable for functions like accommodation, care homes or hospitals – even, though improbably, mobile hospitals.

        We see them quite a lot where I live. When they dock, they take up huge space in our harbours, and flood the place with (mostly elderly) people who seem to spend, per capita, sod all.

        The average age of their passengers might be their only lifeline – the elderly might be the likeliest demographic still able to afford discretionary expenditures after the crisis!

        • Xabier says:

          ‘Cruise ships’ simply reeks of the dreary and commonplace; but romance somehow still lingers around the words ‘ocean liner’, so long after their heyday.

          Democratisation is so depressing.

      • Wolf Richter says:


        I was going to insert into your article a photo I took of the Queen Mary 2, as seen from our place, as it was passing by with Alcatraz and Angel Island in the background. Apparently, they had to wait for low tide to get this ship under the Golden Gate Bridge. And even then, it barely fit through. This photo has been posted for years under the Wolf Richter tab. But I refrained from inserting it into your article because of the very distinctions you pointed out, with the Queen Mary 2 being an Ocean Liner (I suspected that distinction and googled it for confirmation… you should be proud of me for not having inserted the pic and thus having averted a shitstorm over it in the comments :-]

        So now that we have cleared the air, here it is, the Queen Mary 2 in San Francisco Bay (click on the pic to enlarge):

    • Old-school says:

      I was a big critic of mobile homes until I lived in one for a couple of years. It gives you about 95% of what a house does at a cheaper cost. Maintenance is probably less than a house.

      Will last at least a person’s adult lifetime and can be recycled and/or demolished for about $3000. Some people get ripped off buying them new. Sometimes you can buy them used cheap because it’s a cash market for the most part. They are pretty good for a vacation home on a lake or close to the beach.

    • paul easton says:

      Mobile homes may be ugly but they are useful. Those floating garbage heaps are only good for drunken f*kking. You could do it at home with the right dating service. They are useless as well as ugly.

  30. Just Some Random Guy says:

    People are fed up with the lock ups and are starting to ignore them. I see people where I live going about their daily lives. Nobody’s wearing masks, parks are packed with people as are stores. And 6 feet apart? LOL. That lasted a week or two. I drove by a park this afternoon and saw a group of 20-30 people, having what looked like a birthday party. Kids in my ‘nabe are playing together again.

    The govt and MSM may think ‘rona is still a thing. But the people are done with it. Yesterday’s news.

    So yes, cruises ships will be packed in no time.

  31. Realist says:

    It will be interesting to see how the shipyards specialized in building cruise ships will manage. If demand for cruises will be down, cruise lines financial state weakened etc, will there be orders for new ships if it is difficult to get enough passengers for current ships ? If the shipyards building these ships take a hit, then all their subcontractors and suppliers will take a similar hit and a lot of people will loose their jobs throughout entire regions due to this.

    • MC01 says:

      Shipyards are a complete mess right now: to give an example the Enchanted Princess is stuck almost finished in Italy because Fincantieri has shut down. The State-owned shipyard was supposed to start reopening on May 4 and start working on the ship right away so it can be delivered (and paid for) but yesterday our Dear Leader threw the mother of all hissy fits and we are basically done for.

      • char says:

        Has Princess money to pay for it? I bet they were the ones who ratted the shipyard out to your dear leader.

  32. Brant Lee says:

    I can’t imagine the next time I want to go to a local food buffet sharing serving spoons with others much less snuggle up on a cruise ship. Public restrooms anyone? Maybe we all are being conditioned to be Howard Hughes paranoid germaphobes.

    • VintageVNvet says:

      Hey Brant, ”just because I’m paranoid doesn’t mean this virus is not out to get me.”
      Seriously, I couldn’t agree with you more, to the point of when my mil wants to go to the buffet restaurant, I stay away, though I do love my regular restaurant faves, and can hardly wait to get back out there. (White pizza with garlic pesto comes immediately to mind!)
      Germaphobia is one thing, reasonable precautions about eating anywhere is another, including places that consistently have multiple failures at regularly scheduled health department inspections, ( that is when they know in advance when the inspector is coming) ,,, no way in ‘heck’ is this old boy going there.
      If nothing else, I really hope that everyone starts paying attention to the reports from these inspections, now usually available on line, as they should be.

      • Brant Lee says:

        LOL. I’m actually losing weight due to my lack of cooking creativity, so it’s not all bad results being home mostly. Yes, I suspect future visits to our eating institutions will be under much more scrutiny by everyone involved. However, visions of the waiter/waitress wearing gloves and facemask (with scrubs?) don’t feel quite right at this point.

    • MC01 says:

      Brant, we are seeing soon about public restrooms: Germany will start reopening on May 3 and schools will be among the very first things to restart.
      School restrooms are school restrooms everywhere so we will find out soon enough.

  33. MD says:

    “The big problem is of course that the major US cruise lines are all incorporated overseas: Carnival in Panama, Royal Caribbean in Liberia, and Norwegian in Bermuda. Coupled with their propensity for hiring foreign nationals to staff their megaships – which in turn fly flags of convenience from the Bahamas to Panama – these companies are at the present ineligible to get even a single dollar of bailout money.”

    Reap what you sow…don’t pay in, don’t expect to take out! Should’ve used the untaxed profits to take out the requisite insurance, or build a fighting fund for events such as this.

    “We provide jobs” isn’t an acceptable reason to get hand outs/breaks/perks either, because those jobs are provided in order to generate profits, not as a social service…

    • Ed says:

      Almost all of their direct hires are from low wage countries but definitely non-American.

      Those entertainment Dollars would almost certainly create more American jobs if spent in some other way by American customers. Some would go to U.S. beaches. I’d hazard the cruise lines provide negative “marginal” U.S. jobs.

  34. timbers says:

    Maybe the cruise ship biz should sue China?

    The internets say China made the Covid and gave it to the world because it’s mean. And now, it’s all China’s fault they won’t sell us their medical supplies so we can get better.

    When I look at worldometer, one nations stands out as being the very most exceptional in have the mostest Covid.

    It’s not even close.

    A new distraction needs to be invented to distract the sheeple lest they become upset.

    • Iamafan says:

      The same idiots that eat cats and dogs. Yuck.

      • The Original Colorado Kid says:

        OK, I agree, but keep in mind that lots of Americans eat bacon and such and pigs test out smarter than dogs by quite a bunch, or so I’ve heard, never had one myself.

    • timbers says:

      China might well rephrase you’re “let’s not give China a free pass” as “Lets not give the U.S. a free pass or ignore it’s hands down the worst offender.’

      • Tim says:

        But the US isn’t the worst offender.

        This thing began in Wuhan, not Wisconsin. Americans don’t eat pangolins. America has no “wet markets”. American medics and others aren’t punished for exposing the facts. If Americans think their governing party has screwed up over this, they can vote them out.

      • char says:


        The Chinese discovered it in Wuhan, That does not mean it comes from Wuhan. new diseases are also a numbers game. It is just more likely that a new disease will come from a connected country with a billion people than a small Island state with a not even 100.000.

        ps. Didn’t Spanish flu come from America?

    • Bet says:

      I went to Shenzhen about ten years ago. While there I visited a museum
      Filled with school children. Exhibits of
      Modern technologies. The environment. Nature. Then there was the second half. All on potions. Animal parts and the explanations on why they should be eaten. Voodoo .It was a bit shocking And very depressing. If this virus does anything
      I hope it gives voice and power to the powerless creatures consumed as magic potions for virility, ect Bear gall bladders tiger penis pangolins scales. China needs to be dragged into modern times. And yes so do many Americans for which there is no excuse for their chosen ignorance

    • VintageVNvet says:

      Agree with almost all your comment except for the first sentence; of course there is some doubt, as is always the case with any such situation until extensive research following precise scientific and rigorous protocols has been completed and peer reviewed, etc. This has started, but clearly is not complete.
      I have read reports of a strange and very virulent virus in Italy in early November, and there are now serious investigations showing this virus, albeit likely a more benign mutation, has been around for quite a bit longer than originally thought.
      As to the cover ups, any such thing is clearly criminal, and those should be investigated and people responsible should be held accountable at all levels.
      I think a lot of folks looking at the likely source of the transmission to humans will be re-evaluating their diet, especially the concept of eating any other mammal, (except in ”Donner Party” circumstances, and most people are aware that that situation did not turn out so well long term, eh)

    • char says:

      It is standard practice of every state. Why do you think the CDC didn’t allow others to test and why hospitals fired whistle-blowers about missing protection. In reality China was very open and the WHO was warning hard. But the WHO are dependent on the states. It is like a stock analyst Hold means sell.

      Mistakes have been made in the West is the understatement of the century. China closed the country at an unbelievable cost. That is not something you do for a simple flu. The deaths in New York are due to the incompetence of the state and local governments. Not China or Italy

  35. Michael Engel says:

    For free : SPX daily : the last 3 bars are the smallest in the last 20 days.
    They are also the smallest in the last 38 days.
    2) Fri(C), an UT > Jan 26 2018(H) @ 2872.86.
    3) Input : higher volume // output : tiny bar.
    4) Market makers are resting on the bench, they are not participating in the game

  36. breamrod says:

    we can blame the love boat. What a corny show. My mother loved it bless her heart. I think it will take a long time for this industry to recover if ever. I have no desire to ever go on one and I’m in the right demographic age wise.

    • timbers says:

      On the other hand, there are gobs of horror flicks that told us this would happen it only we would have listened: Virus with Jamie Lee Curtis and Death Ship to mention just a few.

  37. Baypoor says:

    So we have family friends who cruise 4-5 times a year. Both in their late 70s and have various risk factors for coronavirus. They can’t wait to get back out there and were disappointed that their June cruise is likely to be canceled. They are raring to go in August.

    I took a cruise in 2001 with my mom, when I was in my late 20s. It was fun, we got to visit a bunch of Caribbean islands, but I still feel bad, because I came on the cruise with a nasty cold, which didn’t really bother me too much because I was young and indestructible, but the people who had dinner with us the first night and were in their 80s we later learned ended up being flat on their back for most of the cruise. Oh yes, and my mom‘s jewelry got stolen out of the safe, which did not seem to surprise anybody on the cruise line and they gave us some insurance payment without batting an eye. and the exportation of their workers was also obvious. Never been back.

  38. Short_Seller_Blake says:

    To summarize, short RCL and stay short for two months. They are clearly FAR from bottoming and are only in inning 2

  39. raxadian says:

    The only bookings for next year that are happening are people having their bookings moved to next year or they lose the money they already paid for the trip. Despite the fact that next year they will also have to pay extra money due to next year trips being more expensive due to inflation and cost rising.

    Or maybe next year it will be way cheaper because they will be desperate to have people to travel in Cruises.

    What’s a sure thing is that there will be less Cruise companies left even after things start to improve.

  40. Jdog says:

    The real issue for cruise lines and most other businesses going forward is going to be debt ratios. Many of these businesses survived to the extent they did because of their ability to get credit and roll over their debts at low interest rates. The credit market is drying up and is going to get worse, especially for companies that have falling stock prices and credit ratings.
    I may be wrong, but I see credit tightening up dramatically.

    • MC01 says:

      Jdog, I’ll repeat what I keep on repeating: as long as creditors are fine with it a company can pile debt to the sky and beyond and pay peanuts for interests. But the instant creditors get cold feet, it’s all over.

      Just look at Norwegian Air Shuttle (NAS): for years it piled debt higher and higher but it didn’t matter. Their bonds were downgraded to deep junk by Moody’s in 2017 already. It didn’t matter. Standard & Poor’s warned time and time again that “Norwegian’s rapid growth is wholly propelled by debt” and that “Norwegian’s financial ratios are among the worst in the industry”. It didnt matter. NAS, a
      Then it suddenly mattered and bondholders are suddenly running around with their hair on fire: at last check NAS bonds coming due in 2022 had collapsed to 33 cents to the dollar. A $250 million bailout package promised by the Norwegian government was shrugged off as once complacent bondholders are scrambling for the lifeboats.

      Too many people are betting that central banks will step in and start buying junk bonds like there’s no tomorrow. It won’t happen: even big Wall Street investment firms are starting to fret about “the excessive size of stimulus packages”, and for good reason. Everybody loves financial asset inflation but everybody hates garden variety inflation and that enormous amount of liquidity thrown around without care threatens to spill over into the real world instead of being contained in the FIRE industry.

  41. Upstate says:

    The cruise lines saved tons of cash registering in The Bahamas/Panama/ Somewhere Else. What are they complaining about?
    And if these cruises are as wonderful as described, they should be a bargain at twice the price.

  42. Department Zero says:

    I don’t think that the shipping companies will go bankrupt anytime soon. There will be some pain and restructuring, but the cruise business model that has worked for 40 years is not going away. They may downsize and even lay up for a while but they will be around after we are all in the ground. There is a lot of revulsion in the comments here; I want to point out that cruise companies can not build and staff cruise ships with American workers due to government laws on ship building and carriage. Shipping companies comply with very strict international laws on emissions and wastewater discharge. There is a lot of misinformation out there (and in the comments here). If you hate cruise ships so much; that’s fine, good for you. Why would you want to prevent people who have limited mobility and who love travel and camaraderie from enjoying their passion? The ruise companies employ mainly emerging economy workers on the ships, that’s true. They also employ about 100k within the USA managing the operations. Someone quoted 50k USD to cruise for a whole year; it would be about half that amount (and lots of people do it). Just want to put a few % on the other side of the negative comments here.

    • char says:

      The cruise companies don’t staff their ships with Americans because Ethiopians are cheaper. And to be honest ticket prices are to low to pay for Americans.

    • Icanwalk says:

      “I want to point out that cruise companies can not build and staff cruise ships with American workers due to government laws on ship building and carriage. Shipping companies comply with very strict international laws on emissions and wastewater discharge. “

      Is that a bad thing?

    • MC01 says:

      While I do not support the manmade virus idea, it does seem certain that Chinese authorities sent us incomplete or even doctored data about the speed at which Covid-19 mutates and what loci are the most affected by mutations. I am just a humble chemist but I did read my biochemistry textbook. It has a very nice section on virology. ;-)
      They also hid (claiming no knowledge… right) the wealth of epidemiological data they had gathered in the two/three months they had been keeping the disease under wrap. This data would have helped us save many lives by focusing all our energies on protecting the most vulnerable instead of panicking. Keeping people from trail running hasn’t saved a single life… shameful.

      As the emergency here in Italy dies down, and is long dead in the South, the reality is emerging and it’s nastier than anybody feared.
      The Chinese government and their chums at the OMS/WHO did not merely hide the truth: they willingly and knowingly lied for months and may have even provided us with doctored data that cost us thousands of lives and endless misery.
      And after the truth came out they are now trying to keep us locked down for longer to damage our economies even further and give China an even bigger advantage in many sectors.
      There’s no need to believe a manmade virus to be really mad right now.

  43. Kansas Sunflower says:

    Hey Wolf, not related to this topic but something I have noticed on your site is that most comments have a Reply button next to them but some don’t. Do you know why this is? It doesn’t seem to be browser specific?

    • Wolf Richter says:

      Threaded (nested) comments go four levels deep. And then the reply button disappears. Nesting makes comments very difficult to read on smartphones. The column gets so narrow that it breaks up individual words. Hence the limit on nesting to four levels.

      When this happens, use the nearest reply button above where you want to reply and insert the name of the commenter you wish to reply to.

  44. Joe Crews says:

    Most cruise ships are financed by the cruise lines, not owned by them. Which means the ones that should really be worried are those that provided the loans, many of which are export-credit backed in Europe.
    Debt deferrals are actively being sought and some have been secured by the cruise lines. See https://www.seatrade-cruise.com/news/april-13-updates-carnival-cancels-more-cruises-wells-fargo-expects-further-linescountries-defer

    It’s not like you can repossess a ship and easily re-sell it to another cruise line. I suspect we will see more amended loans until the virus issues pass.

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