Transport CommitteeWritten evidence from Carnival Corporation & plc (SES 19)

1. Carnival Corporation & plc is a global cruise company and one of the largest vacation companies in the world. Our portfolio of leading cruise brands includes Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn in North America; P&O Cruises and Cunard Line in the United Kingdom; AIDA in Germany; Costa Cruises in Southern Europe; Iberocruceros in Spain; and P&O Cruises in Australia.

2. Headquartered in Miami, Florida, U.S.A. and London, England, Carnival operates a fleet of 101 ships, with another 10 ships scheduled for delivery between now and March 2016. With approximately 200,000 guests beds and 70,000 shipboard employees, there are more than 270,000 people sailing aboard the Carnival fleet at any given time. Last year Carnival carried over nine million passengers. Carnival’s stock is dually listed on both the New York Stock Exchange and on the London Stock Exchange under symbol CCL. Carnival is the only company in the world to be included in both the S&P 500 index in the United States and the FTSE 100 index in the United Kingdom.

3. Noting that the Transport Committee has invited written evidence on the implementation of IMO and EU regulations on sulphur emissions by ships I would like to advise you that Carnival fully supports the points made by the Maritime UK submission, and would add the following additional supporting comments:

The impact on shipping of more stringent limits on sulphur content in fuel, due to revisions to Annex VI of the IMO’s Marine Pollution Convention (Marpol)

4. The overall impact on Carnival of using 0.1% low sulphur fuel inside the four existing emission control areas (ECAs)1 in 2015 has been estimated to equate to an increased annual cost of between $185 and $205 million based upon Jan 2011 costs and itineraries. Approximately 10% of our total fuel is currently used in the North Sea and Baltic ECAs. If we are to assume that the earlier date of 2020 is agreed for the lowering of the global sulphur cap to 0.5% then we can expect the per annum impact to be significantly higher thereafter. We are currently reviewing our operations to look at ways to mitigate these impacts. This includes the fitting of scrubbers, alternative fuels, relocating vessels from 2015 and other means.

5. We fully endorse the comments made in paragraphs 8 and 9 of the maritime UK submission related to scrubbers. With a single installation (where there is the room and stability margin) costing somewhere between $13 and $20 million per ship and with annual running costs between $150,000 to $900,000 depending upon the type of scrubber the issue of regulatory certainty is one that needs to be resolved urgently.

Possible Implications for other sectors

6. With regards to paragraph 3 of the Maritime UK submission in addition to the possible reduction in tourism revenues if cruise ships were to move away from UK ports there would of course be a significant effect on local suppliers as well as the ports. Studies carried out by the ECC2 have shown that in 2010 direct spending by the cruise industry in the UK was in the order of Euro 2.6 billion – a 6.7% increase over 2009. When looking at this on a port basis, a recent study by Associated British Ports and Marine South East entitled the Economic Impact of the Port of Southampton indicates that the average economic impact of each call to the Port of Southampton by a cruise ship is in the order of £2.5 million. In 2011 there will have been 361 cruise calls in Southampton, with some 390 plus planned for 2012.

7. It should also be noted that most of the other large European cruise embarkation ports are outside of any ECA and that specifically those with more turnround traffic than Southampton (eg Barcelona) are all in the Mediterranean

Steps which the UK Government could take to assist the maritime sector meet its obligations under Marpol

8. The comments contained in paragraph 11 of the Maritime UK submissions and the supplemental information from the European Cruise Council related to sulphur averaging is fully endorsed and supported. Carnival is actively involved in the work that is being undertaken by the ECC and its sister organisation the Cruise lines International Association (CLIA) in this regard.

European Commission proposals to implement the revisions to Marpol, and the UK Government’s stance on these proposals

9. We believe that the best place to regulate shipping is at the IMO and not regionally as this allows for a level playing field for all, and that the UK should insist that the EU Sulphur Directive exactly mirrors Marpol Annex VI. It must be remembered that the revisions to Marpol Annex VI were supported by all stakeholders – including governments – only after long and hard negotiations and as a comprehensive package of measures. The Commission’s proposals significantly weaken this package by an unhappy mixture of “gold plating” and non-inclusion of important protections to shipowners to the extent that the proposed European regulations are significantly more onerous and costly.

10. Carnival Corporation and PLC therefore asks the Select Committee to ascertain whether the government’s commitment to global (ie IMO) rules for the international shipping industry is ongoing and, if so, to identify not only how these international rules can be imposed at least cost but also to ensure that the subsequent EU “alignment” process remains just that.

October 2011