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  • In March, 2020, the cruise industry shut down.

  • There are no qualifiers to that sentenceit’s not that certain ships from certain companies

  • in certain countries shut down.

  • It’s that every ship from every company in every country stopped accepting passengers

  • in March, 2020.

  • That’s… unprecedented.

  • Never before, in modern times, has there been such a complete, global shut down of an industry

  • of this size.

  • This isn’t like airlines or restaurants or movie theaters.

  • They couldn’t keep operating at a certain level or with certain precautions or in certain

  • geographiesevery single cruise ship shut down.

  • The second that happened, though, time started ticking.

  • Cruise lines were on the clock with the biggest challenge they might ever face: they had to

  • survive as organizations with no revenue, no passengers, and little-to-no government

  • support until it was safe and legal to sail again.

  • As it turns out, doing nothing, as a company, is actually quite a lot of work.

  • After ships dropped off their last loads of passengers, thousands of people remained onboard:

  • the crew.

  • Naturally, management started to wonder what they should do with them.

  • At first, the answer was nothing.

  • You see, as the shutdown started, much of the global cruise fleet was in the Caribbean,

  • finishing up the peak season before crossing the Atlantic for the summer Mediterranean

  • cruise season.

  • As most Caribbean cruises leave from the US, that meant that the American CDC’s March

  • 14th no-sail order was what officially prevented them from sailingeven if in practice most

  • shut down voluntarily.

  • That no-sail order, however, was initially slated to expire after just thirty days, so

  • most cruise lines decided to leave their ships staffed and wait it out, under the hope that

  • they could salvage their summer seasons.

  • On April 9th, though, the CDC extended the order for 100 days, until July 24th, making

  • it very clear that this would not be a short-term stoppage.

  • In most cases, cruise ships are subject to the laws of the countries in which theyre

  • registered, which means that most cruise lines register their vessels in countries with loose

  • labor laws like Panama, the Bahamas, or Malta.

  • That typically lets them hire from anywhere, which in practice gives them access to low-wage

  • labor pools from places like Eastern Europe or the Philippines.

  • Now, cruise ships are, of course, massive, and correspondently need a massive number

  • of staff to run.

  • The Carnival Panorama, for example, has a crew size of 1,450 people, and Carnival, its

  • owner, has some 23 ships.

  • That meant that, once they decided to officially pull the plug in April, 2020, they had some

  • 26,000 staff members from all around the world who each needed to get home.

  • In the era of pared-back flight schedules, border closures, and complex testing and quarantine

  • protocols, it soon became very clear that finding 26,000 flight itineraries for 26,000

  • stranded crew members would not be a quick and simple exercise.

  • So, rather than 26,000 itineraries, they cut it back to just about seven.

  • In late-April, 18 of Carnival’s 23 ships started sailing to a spot off the coast of

  • Grand Bahama Island.

  • Then, once together, over a few days in early May, some 10,000 crew members shuffled between

  • the various ships using tenders.

  • The task entailed more or less grouping the crew into geographic regionssouth-east

  • Asian crew boarded the Carnival Conquest, south-Asian crew boarded the Ecstasy, eastern-European

  • crew boarded the Magic, and so on and so forth.

  • Once the crew transfer was completed, on May 4th, seven shipsthe Liberty, Dream, Magic,

  • Breeze, Ecstasy, Conquest, and Gloryleft.

  • The Carnival Glory had the shortest journey of them alltasked with repatriating many

  • of the Caribbean crew-members to their homes.

  • Just five days after departing, it docked in St Lucia, then the next day in St Vincent

  • & The Grenadines, then St George’s, Barbados, and so on and so forthcompleting a multi-week

  • milk-run of the West Indies.

  • Next to complete its mission was the Carnival Breeze, dropping British crew off in Southampton,

  • while the Carnival Magic made a quick stop in Gibraltar before arriving in Dubrovnik,

  • Croatia to repatriate much of Carnival’s eastern-European crew.

  • Meanwhile, the journeys of the Liberty, Dream, Conquest, and Ecstasy were just getting started

  • as they each stopped at various South African ports to re-stock, refuel, and drop off African

  • crew-members.

  • After two weeks of sailing the Indian Ocean, the Dream and Conquest arrived in the waters

  • off the coast of Denpasar to bring many of the Indonesian crew home, while the Liberty

  • arrived in Mumbai, India.

  • The Dream then made a quick journey west to Jakarta to drop off more of its Indonesian

  • crew, just as the Ecstasy made it to Mumbai as well, carrying even more Indian crew members.

  • Then, as soon as the Conquest met the Dream in Jakarta, the two sailed together to Manila

  • to drop off a huge number of Philippine staff members, while the Liberty and Ecstasy sailed

  • south to anchor off the coast of Colombo and drop off Sri Lankan crew.

  • With that, as June turned into July, this repatriation mission was complete, with some

  • crew having spent two months sailing from the Bahamas to get back home.

  • While getting these 26,000 crew members off their boats and off their payroll was a major

  • concern of management at Carnival once the long-term nature of the shut-down became clear,

  • attention, among all cruise line management teams, quickly refocused onto how to actually

  • survive as a business when there’s no business to be made.

  • In the third quarter of 2019, each of the three largest cruise companies made billions

  • in profits.

  • In the same quarter one year later, Carnival earned $31 million in revenue, Norwegian $6.5

  • million, and Royal Caribbean managed to earn -$33 million in revenuesomething almost

  • unheard of among large companies.

  • So, how you do survive as a company when you quite literally have no way to make money?

  • Well, cruise lines did have one thing going for them.

  • Prior to COVID, they were highly, highly profitable.

  • In fact, many often pocketed hundreds of dollars in profit per passenger.

  • In addition, cruising is a highly cyclical industry.

  • What that means is that when the overall economy is good, the cruise business is quite good,

  • while when the overall economy is bad, the cruise business is quite bad.

  • That's because, when money gets tight for a person, one of the first things to go is

  • vacation.

  • Therefore, cruise lines are used to weathering out leaner times, so they traditionally keep

  • quite a lot of money in their war chests.

  • At the end of the third financial quarter of 2020, by which time the companies had unlocked

  • more liquid assets and passed the initial shock phase of the shutdown, Norwegian Cruise

  • Line Holdings, the third-largest cruise conglomerate in the world, had some $2.4 billion in the

  • bank.

  • Meanwhile, the Royal Caribbean Group had about $3 billion in cash, while the Carnival Group,

  • by far the largest cruise company in the world, held about $8.2 billion in cash.

  • That was what’s referred to as theirrunway,” and the task was to get their burn-rate, how

  • much they spend per day to stay in existence, to its lowest possible level.

  • In the case of Carnival, if they spent $50 million per day, for example, they would only

  • survive some 164 days without revenue.

  • If they were able to get that down to only $25 million a day, though, they’d have 328

  • days, almost a year, of runway.

  • Once the long-term nature of the shutdown became clear, furloughing or firing almost

  • all on-ship staff and a sizable chunk of onshore staff was an easy decision for cruise line

  • management.

  • One of the tougher decisions was what to do with their key assets: the ships.

  • Unlike people, they couldn’t just let them go.

  • In the case of Carnival, their oldest, smallest, and cheapest shipthe Ecstasycost some

  • $275 million to build back in 1991.

  • Nowadays, theyre building $780 million ships like the Carnival Panorama.

  • Put all together, this means a cruise line’s fleet is incredibly valuable, and since the

  • ships weren’t carrying passengers around the world, they had to put them somewhere.

  • However, as it turns out, both the world’s cruise ports and the world’s cruise ships

  • weren’t built with a total industry shutdown in mind.

  • First of all, you can’t just turn off a cruise ship, tie it up, and lock the door

  • behind you.

  • With very little exception, from the moment a ship enters service to the moment it’s

  • decommissioned, there are people onboard as these massive machines require constant monitoring

  • and maintenance to stay in working order.

  • In addition, cruise ports were built to suit the need, and since the early days of the

  • industry, the need has been for ships to stop every week or so to unload passengers, restock,

  • and load back up.

  • Theyre designed for the majority of ships to be at sea which historically was fine,

  • because the majority of ships were always at sea.

  • Now, however, that means there just isn’t enough space in the world’s cruise ports

  • for every cruise ship to tie up and wait things out.

  • In fact, there’s not even close to enough space, and most ports charge ships tens of

  • thousands of dollars per day to tie up, so the vast majority of the world’s cruise

  • fleet is out at seafloating around.

  • They each now carry an average of about 100 crew members—a fraction of their normal

  • staffing levelsperforming the most essential functionsnavigation, maintenance, engineering,

  • food preparation, medical care, and more.

  • In the case of Carnival, 15 of their 23 ships are currently anchored off the coast of the

  • Bahamas, and about once a week, one of them will sail to Miami to pick up food, mail,

  • and other supplies, which they then transfer between the ships upon return.

  • Most lines are operating with some version of this floating cluster approach as it’s

  • clearly one of the lowest-cost methods for storage that keeps ships in an adequate state

  • of readiness for when cruising finally returns.

  • And that’s the key question right now: when will it going to be possible for cruising

  • to return?

  • In Summer, 2020, some thought the answer was then.

  • Particularly in Europe, which had a robust summer travel season, quite a few smaller

  • cruise ships and even some larger ones brought passengers back onboard, with precautions.

  • In general, this meant the ships were capacity capped and passengers had to be tested before

  • boarding, were subject to temperature checks, were required to wear a mask in communal areas,

  • and could only go ashore on managed excursions.

  • With these and other rules, cruise companies thought they might have cracked the code of

  • sailing safely and profitably during a pandemic, but then reality hit.

  • On the MS Roald Amundsenan expedition cruise ship that typically carries 500 or so passengers

  • through the Arctic or Antarctic—62 people tested positive for COVID after a trip around

  • Svalbard, putting stress on the contact-tracing system of northern Norway.

  • Elsewhere in Norway, the SeaDream 1 had to cancel a cruise after a positive COVID test,

  • and then a few months later, the very same ship left Barbados on the very first cruise

  • in the Caribbean since the start of the pandemic, which soon had to be cancelled due to nine

  • passengers and crew testing positive.

  • On the other side of the continent, UnCruise adventures left Juneau in early August on

  • the very first cruise with passengers from an American port since March, 2020, until

  • a passenger’s test came back positive, forcing them to return to port, put all passengers

  • under quarantine, and cancel the rest of their season.

  • This is the reality of cruising during a pandemic.

  • As long as passengers are originating from a place with rampant community spread, no

  • matter how many precautions are taken, it doesn’t work from a public health perspective,

  • it doesn’t work from a business perspective, it just simply doesn’t work.

  • Therefore, for the most part, even in the cases where governments weren’t stopping

  • them, cruise lines stopped trying.

  • Nowadays, however, in Spring, 2021, tens of millions of COVID vaccines are entering people’s

  • arms every day around the world, and a solution has arisen.

  • Instead of trying to prevent COVID from spreading on their ships, the cruise lines are simply

  • going to prevent people who could have COVID from getting on their ships.

  • Many of the major players, including Royal Caribbean, are requiring all adult passengers

  • to be fully vaccinated before boarding.

  • Even though no vaccine is 100% effective, having a fully vaccinated ship means that

  • even if someone does board with COVID, this will not set off a chain reaction of community

  • spread throughout the entire vessel.

  • Given these new policies, cruise lines are reworking their schedules to center their

  • business on the places where vaccines are rolling out the fastest.

  • For example, with less than two months notice, Royal Caribbean announced that it would be

  • sailing from Israel, home of the world’s fastest vaccination campaign, for the first

  • time ever with one of the largest cruise ships in the worldthe Odyssey of the Seas.

  • In addition, while the summer cruise season is traditionally centered on the Mediterranean,

  • in 2021, many of the first cruises to restart will be based out of the Caribbean, in close

  • proximity to the US, which has also had one of the world’s fastest vaccination campaigns.

  • Cruise lines have, for the most part, succeeded with their grand challenge.

  • At the end of 2020, Royal Caribbean, for example, still had $3.6 billion in the bank, as runway,

  • and had pushed their burn rate down to $270 million a month.

  • That means they can survive without revenue until at least February 9th, 2022.

  • Norwegian Cruise Line, meanwhile, had enough to make it until April 25th, 2022, while Carnival

  • had enough to last June 9th, 2022.

  • The cruise lines will be fine.

  • But there is another side to the equation.

  • While cruise lines are typically massive, global enterprises, they rely on the places

  • they visitthey rely on all the small businesses that operate tours and excursions for passengers

  • at each port of call.

  • Specifically, they rely on places like Ketchikan, Alaska.

  • Last summer, under strict COVID protocols, I travelled there with a film crew to document

  • a summer like no other—a summer where the 1.2 million annual cruise tourists that keep

  • the economy of this small town of 8,000 alive just didn’t show up.

  • Two summers ago, Ketchikan was one of the most sought after cruise-destinations in the

  • worldthey would quite literally run out of space on the docks.

  • Last summer, they were experiencing the most acute form of economic ruin.

  • The documentary I made, profiling this, is out now exclusively on Nebula.

  • It’s the first on-location project weve released in almost a year, and I think youll

  • find it quite interesting.

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  • to the outside world.

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关闭邮轮业的疯狂物流(The Insane Logistics of Shutting Down the Cruise Industry)

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    joey joey 發佈於 2021 年 06 月 11 日
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