Shiny new port terminal has everything except ships

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

17 May 2008

The gleaming new $81 million cruise terminal at the  will open soon, but don't expect throngs of passengers, streamers or cracking champagne bottles. Or a ship, for that matter. Port officials haven't yet secured a deal with any cruise operators, and officials say ships probably won't start setting sail from the Bayport berth until fall 2009, even though the facility should be finished by the end of this summer.
"That is the primary next season we are looking at, although there is a chance of a vessel earlier," said Wade Battles, managing director of the Port of Houston Authority.
Port officials are in talks with Holland America Line, Princess Cruises, Mediterranean Shipping Co.'s MSC Cruises and Norwegian Cruise Line, he said. However, those lines have made no public indication that Houston might be on their maps anytime soon.
One culprit for the delay is the weak dollar. Experts say cruise lines that prefer to be paid in more valuable euros are concentrating on the European market, making life tough for U.S. ports of call.
But Barry Klein, a taxpayer advocate who worked against the bond proposal to fund development of the overall Bayport complex, questioned the push for the cruise terminal.
"The port authority jumped into the market before the market actually sensed a need," said Klein, who is president of the Houston Property Rights Association. "Now I guess they are having sort of a setback before even having one open."
Harris County Judge Ed Emmett said Wednesday that the port authority was in detailed negotiations at one point with one of the lines, but it just didn't work out.
"I'm not worried long term. We will get something," Emmett said. "I have confidence in the folks at the port. They will get a cruise line. I know everybody is a little frustrated at the delay."
Harris County Commissioners Court appoints two members to the seven-member Port of Houston Authority Commission.
Battles acknowledged there will be additional costs associated with maintaining an open — but unused — terminal.
"So, you have got utilities you have to provide and housekeeping so when a ship does arrive, your facility is in top-notch condition and ready to be used," said Battles, who didn't put a number on the cost.
Originally set for spring
The cruise terminal was part of a $387 million bond proposal Harris County voters approved in 1999 for the Bayport complex, which opened early last year. A subsequent $250 million bond issue for additional funding was approved last year.
The facility was supposed to be open this spring but was delayed, in part to put in additional security requested by U.S. Customs and city fire officials.
The port authority isn't new to the cruise business. Norwegian Cruise Line, which pioneered year-round Texas-based cruising in 1997 and operated from its Barbours Cut terminal until April 2007, and its vessels consistently were packed with vacationers.
However, spokeswoman Courtney Recht said this week that the cruise line's "current deployment does not have us calling on Houston."
Mediterranean Shipping Corp.'s MSC Cruises operates an eight-ship fleet with four large vessels under construction, two of which are set to sail this year. Since MSC already is a big client at the Bayport container terminal, port officials have been pushing for the company to add the cruises. But a spokeswoman for MSC Cruises said she had no information regarding the possibility of sailing from the new terminal.
Holland America probably couldn't even consider sailing from the new Houston terminal or anyplace else before 2010, spokesman Erik Elvejord said.
"Currently, we haven't made plans to sail out of Houston," Elvejord said.
Princess Cruises has sailed out of Galveston in the past, but spokeswoman Karen Candy said she has no confirmation there are plans to sail out of Houston's new terminal.
Container terminal running
While the Bayport container terminal opened in early 2007 and has seen increasing amounts of cargo moving through, construction of the cruise terminal was viewed in some circles as more of a roll of the dice.
On its Web site, the Port of Houston Authority said the cruise terminal plans to serve various cruise lines and expects final decisions for sailing in 2009 to be made by next month.
The North American cruise market is highly concentrated, with Carnival, Royal Caribbean and Norwegian Cruise Line accounting for about 97 percent of passengers, according to the U.S. Maritime Administration. However, many lines moved ships to Europe in the past two years because they could make more money there.
"But we think some of those vessels will be coming back to the North American market, and as they return, that is where there will be additional opportunities for vessels to sail out of the Gulf," Battles said.
Bob Simonson, an analyst with William Blair who covers the industry, said Houston's terminal should be OK once the Caribbean cruise market, which Houston primarily serves, improves.
"I would think that Houston, being such a big market with an opportunity to drive in from any number of locations, will be a solid investment over the next five or 10 years," Simonson said.
Steve Cernak at the Port of Galveston, which hosts two Carnival vessels and another from Royal Caribbean, acknowledged there has been a slight retrenchment in the industry because smaller ships have been going to Europe.
"We have been fortunate in Galveston because as smaller vessels have been redeployed, they have had larger ships replace them," said Cernak, the port director.
There simply aren't enough cruise ships to go around right now, he said.
"It is because they are all going to call these new markets, and it is a business opportunity for these cruise lines," Cernak said.

Source: Chron