Economies of scale in cruise shipping

Sergi Ros Chaos (), Athanasios Pallis, Sergi Saurí Marchán, David Pino Roca and Agustín Sánchez-Arcilla Conejo
Additional contact information
Sergi Ros Chaos: UPC
Sergi Saurí Marchán: CIMNE-UPC
David Pino Roca: Barcelona Port Authority
Agustín Sánchez-Arcilla Conejo: UPC

Maritime Economics & Logistics, 2021, vol. 23, issue 4, No 5, 674-696

Abstract: Abstract The cruise industry has evolved rapidly over the past decades, with the building and operation of ever-larger cruise ships being a key factor in this growth. This study examines whether the observed increases in vessel size are supported by the fundamentals of economies of scale, as allegedly occurs with container ships; in other words, we inquire whether increases in ship size imply decreases in the average costs per passenger. We attempt this by developing a detailed cost model for cruise ships, distinguishing among three types of costs: capital costs, operating costs and voyage costs. The quantification of these costs allows the determination of potential savings due to the presence of scale. In parallel, we analyse the sensitivity of each cost category to parameters such as sailing speed and distance travelled. The research provides an assessment of the direction the cruise industry is heading, as regards the scale of vessels in operation: our findings suggest that economies of scale are realised only up to a certain ship size, which today stands at 120,000 gross tons. For larger cruise vessels, average costs (per passenger) increase and dis-economies of scale start to set in.

Keywords: Cruise shipping; Ship sizes; Economies of scale; Capital costs; Operating costs; Voyage costs (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41278-020-00158-3 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:marecl:v:23:y:2021:i:4:d:10.1057_s41278-020-00158-3

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41278/PS2

DOI: 10.1057/s41278-020-00158-3

Access Statistics for this article

Maritime Economics & Logistics is currently edited by Hercules E. Haralambides

More articles in Maritime Economics & Logistics from Palgrave Macmillan, International Association of Maritime Economists (IAME) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().