The Malta Independent 16 October 2019, Wednesday

Impressive growth in cruise liner arrivals

George M Mangion Tuesday, 24 September 2019, 10:38 Last update: about 21 days ago

It is not uncommon to read in brochures about the idyllic setting of our Grand Harbour (see picture). The better ones show a rising sun which illuminates the buildings next to the 16th-century fortifications, making the sea shine bright and, like a mirror, reflect majestically the beauty and grandeur of the bastions. Certainly, there are only a few ports in the Mediterranean that can match its splendour.

Pause for a minute and hold your breath so you can enjoy the entry of a cruise liner majestically manoeuvring its way into the harbour. This is a view, a particular one indeed, which is envied by many and enjoyed by few. It goes without saying that this scenario is just the starting point of this nascent industry which has seen heavy investment on the part of both the government and the private sector.

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In the past decade, we have seen increasing numbers of cruise liner visitors landing on our shores. What is still a mystery is why the NSO has never taken the trouble to measure their economic contribution while monitoring the numbers arriving, by noting their spending patterns plus the contribution to berthing fees, local transport, shipping agent commissions, etc.  Such a study is long overdue.

It is still a mystery as to whether the whole activity is profitable (given the heavy environmental cost) and by how much. Of course, this can only be professionally assessed if one were to analyse the expenditure habits of the day visitors that arrive on these luxury ships. The challenges the sector is facing are simple ones. Make our port as attractive as possible, try to offer the best berthing and ship chandelling services and provide a unique retail experience next to the arrival terminal so that the exchequer can maximise opportunities from this sector.

The greatest challenge to augment revenue is that berthing in port lasts a few hours. Projected arrival figures augur well and one would have thought that the sector had finally got back on its feet and will only continue to grow, save possibly for some unforeseen circumstances. When interviewed by TVM this year, Valletta Cruise Port chief executive Stephen Xuereb said he expected the industry to recover from last year's reduction in the number of passengers and that 2019 will be a record one for the number of passengers visiting Malta on cruise liners: about 830,000 are expected this year.

On the subject of emissions and their effect on the environment, Mr Xuereb emphasised the fact that the cruise liner industry is very aware of the need to use cleaner energy. The fly in the ointment is fuel prices. This expense is a constraint that affects cruise liner companies when deciding whether to extend their voyages south to include a visit to Grand Harbour.

The recent increase in the price of fuel may therefore be a harbinger of a fall in the number of cruise liner passengers next year. The clock is ticking ahead of dramatic changes to the fuel that global shipping fleets are allowed to burn. The new regulations will dramatically reduce sulphur levels in bunker fuel, but experts fear it will lead to repercussions in respect of oil prices next year. The IMO rule can be circumvented by ship owners who decide to fit ships with elaborate and bulky sulphur-cleaning devices known as scrubbers. This begs a further question - will the IMO directive result in a sharp fall in cruise liner passenger numbers?  

On the face of it there is no easy answer to this question but one expects that public awareness regarding the high emission levels in all our ports will increase.  In a recent article, The Times of Malta said that in 2017 road vehicles generated 3.4 tonnes of toxic sulphur oxides (SOx) compared to 502.8 tonnes from the 83 cruise ships that visited the island.

According to the campaign group Transport & Environment (T&E), the reason for the extremely high emissions are due to overly lax marine fuel quality and engine emissions standards, made worse by the large size of marine engines and the time spent in port.  "Luxury cruise ships are floating cities powered by some of the dirtiest fuel possible," said T&E's Shipping Policy Manager Faig Abbasov.  

Of course, apart from cruise ships, increasing numbers of maritime vessels are entering our ports carrying transhipment cargo.  Running heavy ship engines on heavy fuel oil contributes considerably to global and local emissions of sulphur oxides, nitrogen oxides (NOx) and particulate matter (PM). The latter includes soot emissions (black carbon) which are particularly harmful to both health and climate.

During a typical 10-hour stay in a harbour, one single cruise liner produces about 66 tonnes of CO², the equivalent of what six Hummers produce in a year.  In terms of the type of greenhouse gas, CO² comprises by far the largest share, with 98 per cent of emissions from fuel combustion in the transportation sector.  This is followed by nitrous oxide (N20) at 1.7 per cent and methane at 0.3 per cent.  Since 1990, Grand Harbour emissions from transport (in CO² equivalent), have increased by 89.9 per cent.

It is certainly hoped that next year there will be a greater use of selective catalytic reduction systems (SCRs) which eliminate most of the nitrogen oxides from ships' exhaust fumes and the use of more expensive Liquefied Natural Gas (LNG) as the latter reduces emissions of sulphur dioxide and PM emissions by up to 99 per cent and of nitrogen oxides by up to 80 per cent. Notwithstanding such precautions, it must be pointed out that escaping methane gas is even more harmful than air pollution from the use of heavy fuel oil.  

Although the forecast for arrival figures are positive, we must never be complacent as we might hit an 'iceberg'.  While it is important to continue to support established industries, the government must be fully aware of the importance of clean air in our harbours and not just assume undue credit due to the increasing number of one-day visitors.

It is of paramount importance to give our visitors a rewarding experience, offering them guided tours off the beaten track and encouraging them to enjoy Malta's folklore and unique traditions.

In conclusion, PKF Malta thinks that the saga surrounding the emissions dilemma can be resolved by carrying out scientific inspections of the fuel types used by visiting vessels. A lack of such inspections would be like flying without navigational equipment - certainly a wasteful and somewhat dangerous experience.

 

 

George M. Mangion is a senior partner of an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services.

He can be contacted at [email protected] or on (+356) 2149 3041 
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