Inside Brazil's Cuisse Slump

Photo: Claudio Paschoa

By Claudio Paschoa

Brazil is still attracting cruise lines, such as Norwegian Cruise
Line, which is bringing a ship to Brazil for the first time in
the 2016/2017 season. However, hard numbers do not bode well for
the industry as the number of cruises dropped by more than half
in four years, with a staggering 54 percent decrease in the
number of regular cruise ships on the Brazilian coast. In 2012,
the season had 15 regular ships, while this year there will be
only seven, and the number of passengers boarding at Santos port
will be 42 percent lower.

The 2010/2011 season of cruises hit the record for ships on the
Brazilian coast: 20. Since then, this number has fallen year on
year, and this season, which started on November 21, will be the
worst since the 2004/2005 season, when only six cruise ships came
to the country. In the face of the economic crisis, port
infrastructure problems and the high cost associated with
operating in Brazil, cruise lines end up directing their vessels
to other more competitive countries. Of the ships Brazil lost
from last season, two went to Cuba, the newest and much awaited
destination for cruises, and one to China, a market that has
grown considerably. However, even with these setbacks, optimism
for the upcoming season still prevails among local operators and
foreign cruise lines, but the sector understands the hurdles it
faces in Brazilian waters. In addition to the high tax burden and
port charges (about 40 percent more expensive than anywhere else
in the world), one of the main complaints is the low quality of
port infrastructure at destinations which would be attractive to
cruise lines. As an example of the costs involved in cruise ship
operations in Brazil, in the 2014/2015 season, the total economic
movement (direct and indirect) totaled $641,054 million. Of this
total, $339,049 million was generated by the expenses of
companies with bunker fuel, port taxes and other taxes, purchases
of supplies, commissioning of travel agencies and tour operators,
water embarkation and garbage disposal, salaries paid, in
addition to marketing and office expenses, among others. The
total expenses of cruise ships and crew members in the cities and
ports of embarkation/debarkation and transit were $302,101

Fifteen ships that will pass through the Port of Santos passenger
terminal (Concais). Of these, four cruises are regular, these
being MSC Preziosa, MSC Musica, Costa Fascinosa, Costa Sovereign,
CVC and another 11 ships will only transit, one more than the
last two seasons. Concais will receive four transit ships for the
first time: Norwegian Sun (NCL), Crystal Serenity, Amadea and
Fram (Hurtigruten). In total, there will be 92 stops. Last
season, the total number of ships in transit had already been
higher than those on regular stopovers. During that period, there
were 10 vessels in transit and seven regular vessels in Santos.
This year, there will be 15 ships, 11 in transit and only four
regular. The forecast is for 455,741 passengers to travel through
the Maritime Passenger Terminal (between boarding, debarkation
and transit) in Santos. However, there will be a 42 percent drop
in the number of passengers that will board and debark at the
Santos quay, when compared to the previous season. In the
2015/2016 season, there were 700,408 passengers. This season, the
forecast is for 409,796 passengers to board and debark in Santos.

The vessels will sail through 13 destinations in Brazil, and 13
other locations in South American countries, including Argentina,
Chile, Uruguay and Port Stanley (in the Falkland Islands, which
is a British overseas possession). The itineraries will have a
minimum duration of three nights and a maximum of 20 nights.
Abremar (Brazilian Associations of Maritime Cruises) points out
to the high costs charged by Brazilian ports as one of the
reasons for this drop in the number of cruise ships in Brazil.
The search for increased competitiveness for Brazil to attract
more ship owners, is one of the fronts of the Association's work.
Abremar is debating with the Federal Government, the Legislative
and Judiciary powers, and suppliers in the search for an
environment with legal certainty, costs and taxes similar to
those found in other cruise friendly countries. Italian cruise
line MSC, one of the traditional players in the Brazilian cruise
ship market has reduced its stake, from five ships last year, to
only three ships this year. MSCs commercial manager in Brazil,
Bruno Cordaro, says that this retraction was only "momentary," as
a new MSC expansion plan will add 11 new ships to the fleet next
year. "Increasing the fleet, Brazil will certainly have more
ships," he says.

Cruise passenger terminals have also received various complaints
from passengers, these complaints range from cleanliness to
transportation problems, with some docks being so remote as to
need buses to take guests from the ships to the terminal proper.
The terminals in Santos and Rio de Janeiro are usually considered
the best and the Rio terminal was very recently refitted for the
Olympic Games, when a chartered cruise ship hosted the U.S.
Olympic Basketball team and other VIP's. As previous studies have
shown, the Port of Santos continues to be the main port for
boarding and debarking in Brazil, followed by Rio de Janeiro.
Other important destinations were highlighted by ship owners as
having high demand for cruises, these were locations such as
Salvador (Bahia), Búzios (Rio de Janeiro) and Ilhabela (São
Paulo). Destinations are benefited in different aspects by the
cruise ships, with increase in the flow of tourists to the
destination cities, which moves the local economy, generates
jobs, and stimulates the entry of foreign capital. Cruise lines
flagged the following factors as hindrances to growth in the
sector, in order of importance: High operating costs (ports and
pilotage), lack of adequate infrastructure at the ports (piers,
bathymetry and others), tax burdens (labor, visas, trade unions,
environmental taxes, etc.), bureaucracy, lack of new
destinations, and an unfavorable economic and political moment.

Mar 3, 2017

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