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  • Volume Eight, Number Seven: October 2003

    Cruise ship industry not a panacea for port cities, finds Report

    A new report from the Canadian Centre for Policy Alternatives says port cities need to take a realistic look at their expectations of what the cruise ship industry can deliver in economic benefits.

    The study finds that a likely slowdown in industry growth combined with ongoing investments in new cruise terminals and facilities is a recipe for overcapacity and “race-to-the-bottom” style competition between port cities.

    Ross Klein, author of Charting a Course: The Cruise Industry, the Government of Canada and Purposeful Development, says that in their rush to embrace the cruise industry, Canadian ports have underestimated the costs of development and overestimated income. “Ports are investing millions in anticipation of a continuing boom in the growth of the cruise industry — an expectation that isn’t realistic, given depressed prices for cruises, fewer contracts for new ships in 2005 and beyond, and the dependence of the industry on American cabotage laws.”

    Klein says this expansion has been accompanied by port cities marketing themselves to the cruise industry in an effort to capture part of the market. “With so many cities vying for business from the cruise industry, not to mention ports in the US, conditions are ripe for one port to be played off against another. There are more suppliers than demand for ports — one city’s gain is another’s loss.”

    The Port of Vancouver has made significant investments in its berth facilities, yet cruise ship calls have decreased significantly in 2003, he says. At the same time, cruise passenger numbers for BC are up overall. Victoria has embarked on a redevelopment project that will cost between $5 and $10 million. Prince Rupert is spending $9 million on a new cruise terminal, and Nanaimo is considering dredging and modifying one of its berths.

    Klein says these investments are based on what tend to be unrealistic estimates of the benefits of cruise tourism, such as the commonly cited $100 per passenger in onshore spending. “The cruise industry leaves a relatively small economic footprint,” says Klein. “Governments need to take a realistic approach to developing the industry that acknowledges the real costs, risks and benefits of cruise tourism.”

    The report makes numerous recommendations on how to address these problems, including encouraging Canadian ports to work together to avoid being pitted against each other, introduction of a small head tax on cruise passengers to fund related expenses; a national, independent study that assesses the economic and social benefits and costs of cruise tourism, and encouraging the federal government to legislate sound environmental regulations, especially dealing with cruise ships dumping waste into local waters.


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