What kind of profit would the owner of a large modern container ship expect to make on an average trans-Atlantic cargo run? Comparatively, what does a large cruise ship make on a similar run? Let’s assume they’re going from New York to London; otherwise, state your assumptions. Don’t ignore overhead like fuel costs, and also discuss the possible effect the ship’s original cost (and expected life) has on the profitablility.
I realize there are two vastly different business models at work here, but I thought a per-passenger or per-ton analysis of their profits might be interesting. For example, if there are 5,000 passengers on a cruise ship paying $300 (average) for their fare, then the ship brings in $1.5M, but then has to pay for things like linen tablecloths, keeping the swimming pools clean, maids, chefs, and so forth. Whereas a container ship pays for a coat of black or red paint, some mattresses, keeps one cook on staff, and so on; their take may only be $100 (?) per container, but they hold hundreds (?) of them!
Talk to me about moving people and goods across the ocean!
It appears from a cursory search of the Internet that both cruise and container ship operations are financially viable operations, even to the point of being quite profitable.
Try various search terms in several of the search engines available to reach your own conclusions!
I guess you could get the company accounts of container and cruise firms and do a thorough analysis…then again, maybe you don’t have that much time
My WAG is that it’s a bit apples-and-oranges…shipping firms don’t have business that begins and ends on the dockside, onward connections and transport is integral to the business…and cruises are tied in with land-based tourism opportunities…
Not taking account of tax effects, the operation of both cruise ships and container ships obviously yields a rate of return on capital that is competititve with other medium-risk investments - or people would not invest in cruise and container ships, and both types are currently being build in highish numbers.
(BTW your estimate of ‘hundreds’ of containers is a bit low. There are container ships that can carry more that 8,000 TEU (1 TEU: equivalent of a 20 ft long container).
But tax effects also play a role. I read an article in Der Spiegel some weeks ago (sorry, it’s not online) according to which a large part of the world container ship fleet is owned by German dentists (and member of other affluent professions. The nationality of the actual owners is independant of the ship’s flag state and of the company operating the ship). This is because owning ships is a loophole in German tax law - owners get assessed low ficticious earnings based on tonnage instead of the real earnings for tax purposes. As people flock to tax saving schemes, sometimes disregarding the question of overall profitability, owning container ships might possibly not be that profitable.
Well, cruise ships don’t make a hell of a lot of profit on a New York to London run these days. AFAIK, only Cunard makes the run these days, and that’s only a few trips a year, partly when they’re moving from London to New York as the base for a season of cruises.
The Transatlantic run is dead these days. It’s expensive and takes longer than air. There are a few who will take it as a way of being nostalgic and who enjoy the pampering, but that’s not big enough to support more than a few trips a year.
Cruise ships make their money on tours of the Caribbean, the Mediterranean, and other places like Alaska. And these are always trips where the voyage is the thing – not an attempt to get from one place to another.
You’re merging ocean liners, which are obsolete, with pleasure-oriented cruises. They’re entirely different markets, different economics, etc., the only connections being that some of the companies adapted from one to the other. You correctly point out that ocean travel for the sake of getting to another continent is no longer viable for passengers. But that’s not what cruises are about.
Your question may have some sort of a theoretical answer, but does not really compute because the whole structure of the shipping industry is not really what you think, for at least two basic reasons.
Firstly, shipowners are usually divorced from the commercial operations of carrying passengers and cargo. I could describe common shipowning structures in detail, but that would be a whole essay of itself.
However, basically, ships are usually owned by companies that specialise in operating ships (as opposed to carrying persons or cargo). They charter their ships to companies that charter them to companies that charter them to companies that carry on the business of carrying persons or cargo. Why long chains of charters? See above essay that I’m not going to write.
The amount that shipowners make depends on charter rates at any given time. Charter rates are a volatile market that varies like the stockmarket. The market (as you would expect) depends on volumes of world trade and of available tonnage. And charter rates govern how much shipowners make.
Some cargo/passenger lines do own their own ships but this is much less common than you might think. Don’t let names fool you: something might be called the “P & O Bigtub” but that doesn’t mean it is owned by P & O. More likely it is owned by someone you have never heard of who charters it to P & O, the latter having naming rights.
Secondly, considering the profitability of single voyage leg in isolation is like considering how good a sports team is by looking at one player. Making a squillion on a voyage leg is no use if you can’t string that together with a voyage from there to somewhere else to somewhere else to somewhere else, and have the whole thing be profitable.
Answering your question in the broadest possible terms however (and I’m getting out of my depth here) the useless but accurate answer to the isolated question of whether you are likely to make more profit out of a transatlantic container or passenger voyage is I think likely to be the latter. Why? Because container vessels tend to work to tighter margins (and can do so because they work regular routes). The passenger business is much flakier, with off and on seasons, downtime, more regular refits, long re-positioning voyages etc, so they have to make more out of the voyages they do make.
