Conscious Choice: Cruise Ships

February 2003

Cruise Ships

The Industry's Dark Side

by Ross A. Klein

Over the years, I’ve probably been on close to a dozen different lines with cruises in the Mediterranean, Europe, the Caribbean, Hawaii, South America, and Alaska. As a sociologist, I first became intrigued with the social life and social problems onboard. As I accumulated additional experiences, I began to uncover the seamy underside of shipboard life. Contrary to positive media and industry representations, the harsh reality is that the industry is neither environmentally nor socially sustainable. It also has a history of misleading consumers through advertising.

The less-than-positive side has been occasionally identified, but the industry’s economic power — it has an advertising budget of over a half a billion dollars — has been relatively successful in keeping bad press to a minimum. In 1978, it demonstrated this power following a story in the London Sunday Times that reported U.S. inspectors had found cockroaches and other filth in the galleys of the Queen Elizabeth II and sister Cunard Line ships. In retribution, Cunard Line withdrew $100,000 in advertising both from the Sunday Times and the London Times.

At the 2001 World Cruise Tourism Summit in Miami, the industry’s attitude towards the media was made clear in a session entitled Cruise Industry in the Media where several industry executives discussed the politics of media relations. Their view was that there are two types of media: good media and bad media. The good media say good things about the industry. The bad media printed stories that looked at the underside of the industry. Several stories printed by The New York Times, written by Douglas Frantz, were singled out as examples of the bad media. The articles discussed environmental assaults by the industry, inadequate medical care on cruise ships, and passenger and crew vulnerability to sexual assaults.

The "All-inclusive" Cruise

Like other corporations, the cruise ship industry is out to make money. Out of all the lines, Carnival Cruise Lines is one of the most effective. Most passengers, trusting the advertising that promotes the cruises, expect few, if any, expenses that have not been covered by the "all-inclusive" fare. They are quickly surprised by the numerous methods used to separate them from their money. Almost giving their cruises away, the lines rely heavily on onboard spending for their profit margin. In 1999 (the latest statistics available) the average person spent between $220-$232 per day on onboard spending, in bars, gift shops, and for onshore excursions.

In the past five years, Holland America has increased its take per passenger for shore excursions by over 70 percent. Very recently, I was on Carnival’s newest ship, the Carnival Legend. With its extra tariff dining room and à la carte menu — minimum $25 per person — this "all inclusive" ship will make more than $1 million a year on that one dining room alone. In 1997, a Princess ship — one of their smaller ones — was reported in an industry paper as taking in $6 million a week from onboard spending.

Economic Domination

Tour operations, particularly in Alaska, have become the domain of the cruise lines. In 1968, on one of my earliest cruises, there were no tour operations. We explored on our own, or in small groups. Today, cruise lines increasingly are the owners of buses, railcars, and end-point resorts, controlling much of the shore-side activity. Local tour operators are left to compete with the cruise line (which has the passenger’s undivided attention for sales while onboard the ship) and often have to undersell their product.

The economic domination of the cruise line means that little revenue trickles down to local residents. The problem is further compounded in terms of employment. The seasonal nature of the stores means that they hire mainly college students, arriving in Alaska for summer work. For those in the local community, jobs are not only few in number, but are often minimum wage, available only during the peak tourist season. Throngs of tourists descend upon quiet communities, and outsiders wanting summer employment displace employment opportunities.

The relationship with tour operators in the Caribbean is a bit different. Local businesses provide the tours, but the price paid the operator by the cruise line can be as low as one-third of the amount received from the passenger. The operator is faced with operating on a small profit margin while maintaining a high quality service. When passengers are dissatisfied, they are more likely to blame the local island or community than they are the cruise line that sold the shore excursion.

Ports’ Love-Hate Relationship

Cruise passengers in the 1960s and‘70s were welcomed at ports because they arrived in small numbers. They were also different than those who cruise today. People cruising back then were a bit adventuresome — the cruises were not always luxury and they were not cheap.

With the industry’s growth, cruise ports such as St. Thomas and St. Maarten can have 15,000 or more visitors in a single day — a large influx of people to communities and islands that are relatively small. The impact is not trivial — sidewalks are congested (if passable at all), noise volume is high, and far from the reality of the town when cruise ships are not visiting. However, tourists are a major source of income and the inconvenience is endured.

One of the biggest surprises to a cruiser today (in comparison to the early days of cruising) is the degree to which cruise ports have become much the same. Almost all major Caribbean ports have the same stores — Little Switzerland, Diamonds International, Colombian Emeralds, etc. Each store under the same brand name carries virtually the same products on one island as the next. There are fewer and fewer small locally owned stores. Local stores can’t compete with the discounting done by large operators. They also cannot as easily afford to pay the cruise line to be included on the list of "approved stores."

Merchants, tour providers, taxis, and local guides are all at the mercy of multinational companies for their livelihood. They have to compete with the multinational, or if they sell their product to the multinational it is often at a price that leaves little real profit. Stores pay considerable sums to be included in the ship’s shopping program. The effect: the cruise line and the company marketing the shore excursion and the onshore stores make sizable profits. These profits end up in the coffers of a faceless corporation with headquarters thousands of miles away; relatively little remains in the local community.

The irony is that the cruise lines, because they are foreign-registered, pay virtually no corporate income tax. Even a corporation like Carnival, earning $1 billion every year, pays virtually no corporate income tax because it is registered in Panama. Royal Caribbean, which also owns Celebrity Cruises, is registered in Liberia where there are no taxes.

Cruise Ship Waste

Given the waste that is produced on a cruise ship — 100 gallons of wastewater per day, per person, including 10 gallons of sewage, as well as nearly eight pounds of solid waste per person, per day — ships have an interest in remaining in areas where waste can be legally discharged. International regulations limit the discharge of sewage within four or 12 miles of the coast (depending on whether the sewage is treated) and disposal of other waste within three or 12 miles (depending on whether it has been ground and fits through a 25 mm screen). There are no regulations pertaining to gray water — wastewater from showers and sinks, the galley, the spa and beauty parlor — almost anything that goes down a drain other than a toilet.

As much as possible, ships remain in areas where discharges are allowed. With the exception of Alaska and British Columbia, there are generally no regulations for discharges other than those specified by international conventions, and unfortunately, these international conventions are not vigorously enforced. I have been on many ships, standing on deck and taking in the fresh salt air, and had the putrid stench of sewage being pumped overboard into the sea. I’ve watched sea gulls and other scavengers follow the ship’s wake, picking out food and other waste being discharged. Not a pretty sight.

There is also further cost to the environment. It isn’t just the discharge of pollutants into the sea, but collisions of ships with whales, discharging waste with known and unknown effects in ecologically fragile fish beds, and what are often described as "accidental" discharges in harbors and ports. Many of these accidents never reach public attention.

The Backlash

Because of its lack of dependence on the cruise industry for income, Alaska is relatively unique as a cruise destination. Caribbean ports are known to overlook environmental violations for fear that cruise lines may cease port calls, but Alaskans have taken a firm stand on environmental issues. The reaction to environmental assaults, combined with the broader economic issues, is visible in many Alaskan communities. Some communities limit cruise ship visits. For example, residents of Sitka overwhelmingly voted down a proposal to construct a wharf that would enable ships to offload passengers directly into the downtown area. The town of 8,800 people believed that the need to transport passengers ashore via lifeboats would keep a lid on its more than 225,000 cruise passenger visits per year.

The town of Tenakee Springs was more aggressive. It proclaimed that cruise ship tourism is incompatible with the community’s lifestyle, facilities, and services, and vowed to take whatever steps necessary to prevent this type of tourism in the town. When the first cruise ship came to visit in August 1998 — a small ship with only 120 passengers — the city tried to persuade the ship to cancel the visit. After that effort failed, cruise passengers were handed leaflets as they disembarked, and were told they were not welcome as part of an organized tour, but they would be welcome to return on their own. Most businesses closed during the visit. A similar welcoming strategy was undertaken for the inaugural cruise ship call at the island of Molokai in Hawaii in December 2002, but the stop was cancelled because of high sea conditions.

In other Alaskan communities, the publicity around cruise ship pollution tipped the balance in favor of new taxes on cruise ship passengers. In 1999, voters in Juneau approved, with a 70 percent majority, a $5 per head tax for each cruise passenger landing in the city. The $5 per head tax was the first time any port of call in an American state had imposed such a fee. Holland America Line responded to the tax by withdrawing much of its support to Juneau charities.

Al Parrish, a Holland America Line Vice President was quoted by the Juneau Empire, "We’re reassessing our whole involvement in Juneau.... In the past we’ve had a good, informal relationship with Juneau. But it’s been made clear by Juneau citizens that the relationship needs to be reassessed."

With the exception of islands such as Bermuda and the Cayman Islands, both of which intentionally limit their dependence on cruise ships, almost all Caribbean ports have been pressured by the cruise industry to rollback or limit increases in port charges. After it was unsuccessful in getting Grenada to drop a $1.50 increase in port charges — to cover the cost of a garbage reception facility built with the support of the World Bank — Carnival Cruise Line stopped calling at the island.

What Does the Future Hold?

As I look to the future, my greatest concern is for the environment. While the cruise industry argues that international regulations and local initiatives such as Alaska’s are enough, the simple fact is that restrictions are inadequate and the environment continues to be threatened.

However, my concerns go beyond environmental issues. While the cruise industry has positive economic impacts on many ports, these benefits rarely come for free. The industry plays ports off against one another. Some of the major ports in the Caribbean — Phillipsburg, Saint Maarten, Charlotte Amalie, USVI, and St. John’s Antigua — are actively expanding and compete with one another for cruise visits. Not surprisingly, the cruise lines exploit the competition and secure the best deal possible for themselves. This competition also plays out between smaller ports, each wanting to attract cruise ships for the perceived economic benefits. Ports often spend more in port development and promotion than they are likely to recover from ship visits.

While ports are trying to attract the cruise industry with a belief that it is a cash cow, there is little consideration of the downside. A careful look at established ports in the Caribbean, Alaska, and beyond to see who is making the money on cruise ship visits should be sobering to aspiring ports and established ports alike.

Ross A. Klein is the author of Cruise Ship Blues (New Society Publishers, November 2002) and a Professor of Social Work at Memorial University of Newfoundland in St. John’s, Newfoundland. Visit his Web site at www.cruisejunkie.com

Violations and Fines

* 1998 — Holland America Line fined $2 million dollars for a discharge of oily bilge water in Alaska’s Inside Passage. The same year, Royal Caribbean International was fined $9 million for falsifying records of oily bilge discharges in Florida and Puerto Rico.

* 1999 — Royal Caribbean International fined an additional $18 million for 21 counts of dumping oil, dry cleaning fluids, photographic chemicals, and solvents from the print shop, and lying to the U.S. Coast Guard. These cases were all in Federal court.

* 2000 — Royal Caribbean was fined $6.5 million by the State of Alaska for dumping toxic chemicals and oil-contaminated water into the state’s waters. As part of the plea agreement, Royal Caribbean agreed not to discharge wastewater within three miles of Alaska’s coastline.

* 2002 — Carnival Corporation was fined $18 million after it admitted to dumping oily waste from five ships operated by Carnival Cruise Line. It also admitted that employees made false entries in record books from 1998 to 2001.

* 2002 — Norwegian Cruise Line was fined $1.5 million for discharging oily bilge water and other waste overboard the SS Norway and at least one other ship. The fine was considered lenient because the cruise line turned itself in to the Department of Justice.

— RK

Workers Rarely See the Light of Day

Given expansion and staff turnover, the cruise industry requires as many as 100,000 new workers every year, the majority of them drawn from countries in Asia, Eastern Europe, the Caribbean, and Central America. Seduced by the idea of getting paid to travel the world on some of the most modern and beautiful ships, the image is not the reality. As the ITF reports, "below decks on virtually all cruise ships, there is a hidden world of long hours, low pay, insecurity, and exploitation. Those who work continuously below deck, like in the galleys (ship kitchens), rarely see the light of day, let alone the shimmering sea of the Caribbean." Workers commonly work 10 to 13 hours a day, seven days a week. A shipboard waiter may work as many as 16 hours a day, every day. Remuneration is low by North American standards. Wages for salaried workers who receive no tips can be as low as $400 (U.S.) a month. Sexual exploitation (of male and female staff by superiors) is not uncommon. Because staff are vulnerable, they are often unable to do anything about it. If they complain, they’re likely to be fired. They have little recourse.

— RK

Growing and Growing

The cruise ship industry is the fastest growing segment of leisure travel. Even with September 11, 2001, it is on track for about a 3 percent increase from 2001. Since 1970, the number of people taking a cruise has increased more than 1,000 percent. Worldwide, the figure for 2000 was over 12 million passengers. This pattern of growth is expected to continue. Within the next four to five years, Holland-America forecasts a 73 percent increase in capacity. Carnival Corporation is anticipating an 18 percent increase per year for the next several years. Carnival Corporation, Royal Caribbean Cruises Limited, Star Cruises, and P&O Princess control almost 90 percent of all berths on cruise ships.

— RK

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