Focus Areas for 2024

During the last few years, fueled by the industry shutdown, there was higher-than-usual sale and scrapping of non-essential vessels to reduce costs. For instance, Carnival scrapped or sold 26 ships from 2020 through 2022. In total, BA estimates that 38 vessels (or almost 50k lower berths) were withdrawn between 2020 and 2022, falling to just 5 vessels (4,100 lower berths) in 2023.

Looking ahead, it is expected that global fleet withdrawals will revert to historic levels from 2023 onwards. The only potential challenge that could lead to further retirement of ships at a higher-than-average pace is any future regulations where older vessels will struggle to meet compliance – which brings us to a key area of focus for the industry in 2024 (and beyond).

The expedited retirement of older ships and the steady introduction of new vessels have made the global fleet younger and have helped the industry work toward meeting its environmental sustainability goal of carbon neutrality by 2050.

The ships on order today will be the most efficient in the fleet and use newer technologies. For instance, new ships are often built with the capability to burn more than one type of fuel and will be able to utilize cleaner fuel sources once they become more readily available. It is clear that the fossil fuels in use today will need to be phased out over the next two decades, and new fuels will slowly be introduced.

What is not clear, however, is how fuels will evolve and what the mix of fuels will be. Navigating the specific trajectory of future fuel demand in the maritime industry is complex, given evolving regulatory frameworks, technological advancements, fuel availability, and geopolitical factors. However, this is not a cruise-specific issue, and the entire shipping industry is working towards a solution – albeit solutions may vary depending on a variety of elements, such as ship type, port, region, etc.

Another focus area for operators will be their financial health. 2023 marked a turning point as operators implemented varied strategies to begin to reduce their debt. This trend is expected to continue into 2024, and continued evolution of cost-saving measures will continue.

Key Takeaways

In summary, the cruise industry embarks on 2024 with resilience, growth, adaptability, and strategic adjustments defining its course. We expect to see the market continue to increase, propelled in 2024 by 13 new ships scheduled to enter the market and strong consumer demand to fill those new ships.

BA’s global passenger projection through 2030 is shown below, with passengers anticipated to reach between 35 and 39 million passengers over the next six years.

2024 – 2030 Global Passenger Projection

The Caribbean and Europe will continue to be the top markets serving the cruise industry, continuing to receive the newest vessels in the fleet. However, additional new (or redeployed older) vessels will be deployed to existing and emerging markets today, all of which will help continue to support industry growth throughout the world.

Cruise lines (and ports alike) will be focused on sustainability initiatives and continued research and development towards a greener tomorrow, to meet the long-term needs and regulations of the industry, all the while higher prices, full ships/occupancy levels, and cost-consciousness help them pay down debt.

As seen, continued growth is expected beyond 2024 now that the cruise industry is back to full pre-pandemic operations, poised for sustained growth in the long term. Stay tuned for more industry insights into the new year with BA’s bulletins.

Happy holidays to all!