Vessel Performance Key to Secondhand Ship Market for Carnival

Carnival Corporation has sold 28 ships since 2006, averaging around two ships per year based on demand in the market.

That number was up in 2018, with the company announcing the exit of four ships overall.

The Pacific Eden was sold to Cruise & Maritime Voyages while the Pacific Jewel will head to Indian start-up Jalesh Cruises.

Holland America Line sold the Prinsendam, which will become the Amera next summer for Phoenix Reisen.

P&O Cruises UK also announced the Oriana will leave the fleet in 2019. 

“The practical reality for us is, if ship is relevant to our guests and is delivering double-digit return on invested capital ... we have to invest more in that ship over time. We'll continue with the ship in the fleet if it's relevant to the guests and his earning is key, if it's not then the ship will be gone,” said Arnold Donald, president and CEO, on the company’s year-end and fourth quarter earnings call.

The secondhand cruise ship market has historically been highlighted by two to three nine- to eight-figure transactions on an annual basis, according to the Secondhand Market Report by Cruise Industry News.

“And so in terms of there being a robust secondary market, there's no question, the secondary market has opportunity not only because the IMO regulations but simply because the aging of ships that are in the secondary market," Donald added.

Donald said many operators in the secondhand market were sailing ships that are 40 to 45 years old, and those vessels will need to be replaced.

“So there should be a market for a number of the ships. But at the same time, to drive earnings and return on invested capital, if we had a need to scrap for ships in nutshell we would do that. We don't see that at this point in time. But if it came to that, we have no problems doing that,” Donald continued.

“But we're not going to hold onto an underperforming asset, because we're not able to sell it. I mean, if – we would scrap it if we had to. I don't anticipate that, but if we had to do it, we would do it.”