The cruise sector is one of the fastest growing market segments in shipping and seaport activities. However, the high level of market concentration and the geographical concentration of passenger flows at departure ports and destinations lead to possible congestion and delays in handling cruise vessels and passenger services.
The increasing importance of coordination, cooperation, and vertical/horizontal integration may effectively impact the performance of cruise lines, cruise ports, and involved service providers. The scale of vertical and horizontal integration is a vital part of both the strategies of these companies and for the analysis of profitability. Horizontal integration enhances economies of scope and scale and determines the optimal size of operations through merger and acquisitions and forms of horizontal cooperation. Vertical integration increases the synergies between cruise ship operations and other business interests, opens the door for product diversification, and emphasizes the link between cruise terminal operations and shore-based activities (i.e. shore excursions or cruise port resorts).
PortEconomics members Thanos Pallis and Theo Notteboom and Grace Wang presented their latest port study on Cooperation and vertical integration in cruise ports during International Association of Maritime Economists Annual Conference (IAME2015), held in 24-26 August in Kuala Lumpur, Malaysia.
Their research provides an understanding of what comprises a maritime cluster in a cruise port and to what extent core maritime industries involved coordinate and cooperate, and the extent they are integrated. We particularly analyze how various cruise businesses interact, the level of vertical integration in the cruise business and the processes followed to implement this kind of integration. Authors’ also examine the mechanisms deployed to align cruise lines, cruise terminal operators and port authorities’ interests.