PortMiami has been especially hard hit by the ongoing suspension by the cruise industry. The port, which has long positioned itself as the cruise capital of the world, has been working to support the cruise industry while counting on its cargo operations to supply income to the port during this period.
According to reports in the Miami Herald, PortMiami earns upwards of $35 billion from its cargo business. The port, however, has implemented cost cutting measures to help it manage in the current business climate. So far, the Miami Herald reports the port has not had to draw on its financial reserves.
Starting on March 13, 2020, PortMiami in an effort to support the cruise industry announced a 30-day waiver of all lay berth fees for PortMiami’s home-ported vessels. The waiver in fees has cost the port more than $8 million so far. No one has fully calculated the lost revenues from the more than 6 million passengers that were expected to pass through the port this fiscal year, many of whom would have also stayed in hotels, shopped and gone to bars and restaurants as well as taken tours and visited to tourist attractions.
Initially, the cruise ships were using the port as part of their efforts to conduct repatriation flights for the crew members on chartered flights from Miami International Airport. While regulations from the Centers for Disease Control later prevented the crew from disembarking, PortMiami continues to provide dock space. The cruise ships have used the port for necessary replenishment efforts as well as for lay-up berths.
Recently, Miami-Dade Mayor Carlos A. Gimenez announced that the port will again extend the waiver of lay berth and harbor fees for an additional 30 days. Currently, it has been extended through August 11, 2020, subject to availability at PortMiami. The time period for the waiver can be amended at the sole discretion of Miami-Dade County, as needed.
“Our partnership with the cruise industry is stronger than ever, and we will continue to offer our support,” said Mayor Gimenez.
While the port has been able to assist the cruise lines with dock spaces, a larger issue has also been under discussion which is the long-term construction programs the port was undertaking with the cruise lines to create modern terminals to accommodate the new cruise ships. The more dated facilities were being replaced with elaborate signature designs and new facilities able to handle the largest ships.
Norwegian Cruise Line was working to complete construction on its new terminal which had been delayed from an originally anticipated opening in late 2019. In addition, PortMiami had entered into agreements with Virgin Voyages and MSC Cruises for new terminals. The port and Carnival Corporation had also agreed to plans to renovate the existing terminals used by Carnival Cruise Line.
The cruise suspension and the cost of the terminals, however, are leading to revisions to these plans. Discussions are reportedly ongoing with each of the cruise lines for revisions to the commitments, revenue agreements, and scope of the projects.
In April 2019, MSC and Miami completed an agreement for MSC Cruises to design, construct, operate and maintain a large building that would host two cruise terminals allowing the company to conduct two turnaround operations simultaneously. The terminals were designed to handle up to 28,000 passenger movements per day. MSC was reportedly investing more than $300 million in the project. PortMiami has recently agreed to give MSC extensions to arrange the financing and now the port told the local commissioners that terms of the agreement are also being revised for the land lease and future revenues.
In a surprise move, the PortMiami and MSC Cruises also agreed to share the project with Disney Cruise Line. Typically each of the cruise lines was seeking sole use of the new terminals which were being built to their individualized designs. PortMiami and Disney had been exploring plans for a new terminal on the south side of Dodge Island, but by combining Disney into the MSC plans it will reduce the financial commitments for both cruise lines as well as saving the port costs associated with the construction of another terminal. While the terms of the agreements vary by cruise line, PortMiami typically incurs costs in preparing the sites as well as potential infrastructure improvements.
At the western end of Dodge Island work has already begun to clear the site for the new Virgin Voyages terminal that featured a fanciful tropical design in keeping with the spirit of the new cruise line. The port recently told the local commissioners that discussions are underway looking both at ways to create cost savings as well as revisions to the terms of the agreement.
Terms of the agreements with both Norwegian Cruise Line and Carnival Corporation are also likely to be revised as PortMiami continues to work with its cruise line partners.
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