Royal Caribbean Sees Bookings Surge

By Reuters 2015-07-31 18:58:51

Royal Caribbean Cruises raised its full-year profit forecast as bookings surge in the Caribbean and the fast-growing Chinese market, sending its shares up 10 percent to a record high.

Royal Caribbean, which had cut its full-year forecast in April, said on Friday cruise bookings for the third and fourth quarters were higher than last year.

In contrast, larger rival Carnival Corp forecast disappointing earnings in June for the third quarter, as a strong dollar hurts revenue from Europe, where it has a large presence.

Royal Caribbean, the world’s second-largest cruise operator by revenue, is more focused in the Caribbean, which accounts for nearly half of its total capacity.

The company has also been focusing on markets outside the Caribbean, particularly on its Asian cruises, as demand in that region has been increasing steadily.

Royal Caribbean was seeing the fastest growth in the Asia Pacific region, particularly in China, where more than 95 percent of the cruises were booked for the year, Chief Financial Officer Jason Liberty said on a conference call.

Net yield, which includes ticket sales and onboard spending, rose 4.2 percent on a constant currency basis in the second quarter ended June 30.

Growth in net yield was driven by fewer discounts on last-minute bookings, the company said.

An improvement in pricing is expected to help the company in the next two quarters, Morningstar analyst Jaime Katz said.

Lower fuel costs also helped the company beat the average profit estimate for the second straight quarter.

Fuel costs accounted for 9.8 percent of total revenue in the second quarter ended June 30, down from 12.2 percent a year earlier.

Royal Caribbean, which owns Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises, raised its profit forecast for the year to $4.65-$4.75 per share from $4.45-$4.65.

Analysts on average were expecting $4.61 per share, according to Thomson Reuters I/B/E/S.

Net income rose 34 percent to $185 million, or 84 cents per share, in the second quarter, beating the average analyst estimate of 73 cents.

Total revenue rose four percent to $2.06 billion, in line with estimates.

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Shipbreaking Deaths Continue

By MarEx 2015-07-31 18:43:40

The NGO Shipbreaking Platform published its sixth South Asia Quarterly Update stating that a spate of recent deaths indicates that there is still a lack of safety equipment being used in the industry.

The report gives an overview of the shipbreaking actives in Bangladesh, India and Pakistan, and the impact of substandard shipbreaking practices. The report also reveals that six Bangladeshi workers were killed during the second quarter 2015 and several more were injured. Five of the workers died in the month of July alone.

The NGO asserts the yards in Bangladesh do not provide the workers with the necessary safety equipment, citing the case of a 40-year-old worker who fell to his death because he wasn’t wearing a safety harness. In another case, a 15-year-old boy was severely injured while working at the yard of the ATL Group. A steel plate fell and crushed his leg, and the yard owner refused to pay for his treatment.

Meanwhile, it is illegal to employ young workers in hazardous industries such as shipbreaking under Bangladesh’s labor laws. The report states that despite the regularity of these accidents, no steps have been taken to address prevention issues. Ziri Subedar and Ferdous steel are two of the yards mentioned in the report.

The Winds of Change

However, positive developments are underway in some scrapping facilities.

Maria Bruun Skipper, Director of the Danish Shipowners’ Association (DR) recently visited Alang Beach in India, where over 40 percent of the world’s ships are dismantled. It is a place which has regularly been subject to harsh international criticism for its lack of safety and environmental consideration.

Skipper visited four of the 175 or so scrapping facilities in the area. One conclusion she made is that some of the scrapping facilities in Alang Beach have undergone a positive development in order to comply with the requirements that will be set by the forthcoming Hong Kong Convention.

India implemented the Ship Recycling Code in 2013, which requires undertakings in relation to the environment and the working environment – especially handling of hazardous waste, sampling of water and soil, training of workers and health care.

“We consequently saw, among other things, workers wearing safety equipment and undergoing six-monthly routine medical check-ups,” says Skipper.

About 213 large commercial vessels were sold for shipbreaking in the second quarter of 2015, including 136 end-of-life ships, which were beached in South Asia mostly Alang and Mumbai india (53), Chittagong in Bangladesh (47 ships), and Gadani in Pakistan (37 ships).

The NGO report is available here.

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Cruise Line Wins Landmark Norovirus Case

By MarEx 2015-07-31 17:57:33

In what is being seen as a landmark decision, Hill Dickinson is the first law firm to have successfully defended a U.K. class action case involving a norovirus outbreak onboard a cruise liner.

The case, which involved an outbreak of gastroenteritis onboard the Thomson Spirit, chartered by TUI UK limited and operated by Louis Cruise, was a 43-claimant class action, 28 of whom had alleged bacterial illness with the balance claiming breach of contract. The case was brought against TUI UK Limited who as contracting carrier would have been liable for the fault or neglect of the performing carrier, Louis, pursuant to the Athens Convention 1974.

Lawyers acting for the claimants had alleged that the outbreak was bacterial and caused by negligence on the part of the cruise line and poor adherence by the crew to the ship’s established outbreak response plan. In the alternative, if it was norovirus, then the ship itself was the source of the outbreak and the crew then failed to implement its gastrointestinal (GI) outbreak procedures.

However, the performing carriers, Celestyal Cruises (Louis Cruise Lines) produced test results showing that this was a norovirus attack rather than campylobacter as alleged.

“The court accepted that the systems on board had been fully implemented by the officers and the crew to bring the virus under control and was influenced by the documentation produced to support the case, the fact that Louis tested for pathogens and the deployment of systems beyond the levels that were required for the numbers of illness. This was a great example of team work between owners, charterers, external health hygiene auditors, the authorities and lawyers,” said Maria Pittordis, Head of Marine, Trade and Energy and a partner at Hill Dickinson.

Judge David Mitchell, sitting in the Central London County Court, found in favor of the cruise line, saying that it was a very well-controlled outbreak and that the cruise line applied and implemented its systems well and that the cruise line was not negligent.

Pittordis added: “The judgement is the first claim of its type to be successfully defended at trial in the U.K. It is of great importance to the cruise industry in recognizing that norovirus is not caused by the ship and that even with high levels of implementation of industry procedures, outbreaks of norovirus do occur.”

In coming to his decision, the judge took into account not only the evidence taken from the ship but also evidence from the passengers. This included passenger complaints about not being able to have self-service food, being given paper napkins and being confined to their cabins. The judge found, however, that these complaints were deemed to be evidence of compliance with the ships’ outbreak plan.

There were two issues of law decided in favor of the cruise line. The first, was that the Claimants argued that the ship was contaminated with norovirus and therefore this was a “Defect in the Ship” giving rise to a presumption of liability in favor of the claimants pursuant to Article 3 (3) of the Athens Convention.

This was rejected and the cruise line’s argument that this could only be applied to navigational and marine perils rather than to hotel services onboard was accepted. As a matter of fact the judge ruled the ship was not contaminated in any event when the claimants commenced their cruise.

The judge also decided that in accordance with the case of Sidhu v British Airways, 1997 AC p 430, which applies to carriage by air, the 1974 Athens Convention 1974 is the exclusive remedy to claimants travelling by sea for personal injury and therefore the allegations regarding a duty to warn of both historic and potential illness did not, as a matter of law, fall within the Athens Convention because the alleged failure did not occur during the carriage.

The judge held as a matter of fact that there was no such duty to warn as there could be no criticism of the handling of illness involving 16 passengers on the previous cruise. Those cases he said had been contained and given the numbers involved and the measures in place when the previous cruise came to an end, there was no need to warn or indeed provide another ship as alleged. The judge found that the enhanced housekeeping measures and the other measures required by the outbreak control plan had been put into effect and the defendant had discharged the duty of care to the claimants.

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Smooth Sailing For Seaspan Profits

By MarEx 2015-07-31 16:40:53

Seaspan, which is one of the largest independent charter owners and managers of box ships, has reported stronger net profit earnings of $102 million in the first half of 2015, which is 170 percent more than revenues from 2014 YTD.

Seaspan credits its increased revenues to the expansion of its fleet expansion. Seaspan took delivery of four newbuilds in the second quarter and has more in development. The company’s owned and operated fleet, with a total capacity of over 935,000 TEUs, is comprised of 118 containerships, including 29 newbuilding eco-class containerships scheduled for delivery to Seaspan by the end of 2017.

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High Speed Ferries Collide

By Reuters 2015-07-31 16:29:46

The Hellenic Coast Guard reports that two high-speed ferries collided while exiting the Piraeus Port in Greece. The two ferries have been identified as the Champion Jet-1 and Athina. The Jet-1 was carrying 297 passengers and the Athina had 60 onboard. None of the passengers were injured, but both vessels sustained damage.

Both ships were detained by the Port Authority until it was confirmed that no fluids were leaking from either ship. The Athina was bound for Agistiri and Aigina and the Jet-1 was enroute for the islands of Sifnos, Milos, Los and Thira. Refunds for tickets were issued to passengers on both ships.

On the same day, the Hellenic Coast Guard also reported that general cargo vessel Wittenbergen ran aground off the island of Kithira. None of the vessel’s eight crew members sustained injuries. The vessel is operated by Arkon shipping.

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Royal Caribbean momentum builds

Shares of Royal Caribbean rose sharply on 31 July in the wake of better than expected quarterly results and a steadily improving cruise booking environment.
NYSE-listed Royal Caribbean posted net income of USD185 million for 2Q15 versus USD137.7 million in 2Q14. Earnings of USD0.84/share came in
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