WHY ARE WE SQUANDERING A BILLION RAND BUSINESS?
Back in the day, when kids were still in awe of what was happening in Durban, I recall waving off a great aunt and uncle from the then glamorous Ocean Terminal. They were boarding a Union Castle ship to England.
Decades later, the cruise industry has changed. The Ocean Terminal is an office block and the cruise terminal is a cargo shed.
Nowadays, it is bums in cabins with thousands of passengers packed in, much like on large continent hopping Boeings. The only difference is that it’s about the journey rather than the destination.
The MSC Sinfonia (with its fun upper deck, comfy rooms, but mediocre food and service) recently enjoyed a 50 million Euro facelift. It is like an expensive middle of the road hotel on water.
The ship has enjoyed a bumper cruise season in local waters this year and calls the port of Durban home.
The cruise division of the global Mediterranean Shipping Company (MSC) cruise division has grown exponentially over the past few years as have those of other international cruise lines. Even Disney is moving into this sector and Branson’s Virgin empire is about to spawn a cruise ship operation.
In South Africa, the Sinfonia carries 2 500 passengers at full capacity. The ship has operated at 100 percent capacity during this year’s cruise season – something that few hotels could claim to do.
The problem is that the majority of passengers are locals. International tourists are the ones growing the cruise industry, though. But their destinations of choice are the Caribbean and Mediterranean.
At a recent conference on board the Sinfonia, speakers from both Durban Tourism and Tourism KwaZulu-Natal pointed out that, when it came to statistics, Africa featured under the column ‘other’ and accounted for an almost nonexistent slice of the $39,6 billion (R594 billion) global cruise tourism pie.
Now cruise lines are sussing out new destinations in South America, Cuba and the Middle East. Durban is barely a blip on the radar.
A cruise to nowhere?
The local cruise tourism offering comes with its fair share of idiosyncrasies. For starters, home grown passengers are required to hand over their passports to cruise to a small Indian Ocean island that is barely across the border and back again.
And they fork out for everything from water to cocktails in USD dollars.
The departure point is N-shed; a converted cargo warehouse that the Transnet National Ports Authority (TNPA) brags has been upgraded to fit in with world standards with a little help from MSC.
New features, according to TNPA, include new signage, immigration and check-in desks, a new fast track lounge, new baggage scanners and conveyor belt, an air-conditioning system, extra seating, balustrades, turnstiles and sail shades, new ramps and a back-up generator and UPS in the event of load shedding.
The reality is an overcrowded facility that seems to have gotten a coat of paint and a maze of railings, a shambolic customs area where passengers are packed like sardines in the Durban heat with no air conditioning and nowhere to go so much as buy a Coke. Outside, catering alongside the drop off zone is a dilapidated old shipping container that serves coffee that tastes like mud. Parking is dirty and shambolic.
Stephen Cloete, senior cruise director for MSC Cruises, told delegates that Sinfonia passengers rated the embarkation and disembarkation as the most stressful and negative parts of their cruising experiences. Passenger ratings scored the ship’s facilities at over 8 out of 10 but the port facilities at just 3.
He said current challenges were the lack of facilities in the port of Durban where passengers had no facilities to buy refreshments, no waiting areas and no areas to say goodbye or greet friends and family, a lack of immigration officers which led to huge queues and transport problems as guests were forced to take taxis that charged exorbitant fees.
Durban was missing out on revenue as the average passenger spends about $134 per day, he said.
“Tourists want to spend money but there is nowhere to spend in the port of Durban. It is unbelievable that the city of Durban is wasting so much.”
The same lack of facilities and lack of spending opportunities stopped the hundreds of crew on cruise liners from coming ashore and contributing positively to the local economy. Most did not want to go into the city because of customs issues and there were no facilities for them close to the ship. Those that made their way on to the quay usually went no further than a few concrete blocks where they sat to smoke, he said.
Explaining just how much he wanted Durban to benefit from cruise tourism, he nevertheless admitted that it had probably missed the boat or would take a very long time to catch up.
Technically speaking, the Durban cruise terminal is one of the section 56 initiatives that TNPA has identified to encourage private sector participation as a key element of its Market Demand Strategy (MDS). The MDS aims to create capacity ahead of projected demand as with the proposed mega Durban Dig Out Port.
Apparently, there’s no shortage of passengers or vessels.
From 2000, cruise travel has outpaced general travel by 22 percent. Whereas 17 million people around the world cruised six years ago, an estimated 24 million were expected to take vacations on cruise liners this year.
Due to growing demand, larger and more cruise ships are taking to the water. Cloete said that, this year alone, 27 mega cruise ships would debut around the world. There are currently around 448 cruise ships globally. Another 12, each capable of carrying more than 6 000 guests, were due in the next four years. These liners would dwarf the infamous Titanic.
According to the TNPA, in 2006 Durban handled 50 cruise liners and 67 017 passengers. By 2014, cruise vessel calls had grown by 48% to 74 vessels while passenger growth was just under 224% or 217 000 passengers. For the first two months of the 2015/16 cruise season which ends early May 2016, Durban had already received 51 vessel calls with 123 719 passengers.
Recognising the potential of the cruise tourism industry to contribute to growing tourism in KwaZulu-Natal and in Durban in particular, the eThekwini municipality appointed Grant Thornton to conduct an assessment of the cruise industry value chain in 2014.
The resulting report pointed to exciting possibilities. It showed that the Durban cruise industry is estimated to account for 2 700 jobs in the tourism sector. Direct spend via the Durban cruise industry for 2013 was approximately R1,38 billion (of which passenger spend accounted for R1,3 billion).
According to the SA Cruise Tourism Study, cruise passenger throughput could increase to one million passengers by 2025. Durban and Cape Town are expected to achieve the highest market share with Durban attracting as many as 470 000 passengers by 2025.
If N-shed is now battling, it is hardly going to handle 470 000 cruisers. But a replacement seems further away than ever.
Although the TNPA, in whipping up excitement for the construction of new cruise terminals in Durban and Cape Town, initially hinted that Durban’s would come first, a recent press release contradicted this.
“TNPA recently awarded the tender for the upgrade of the cruise facility at E Berth in the Port of Cape Town to the V&A Waterfront and is finalising the Terminal Operator Agreement with the preferred bidder. The V&A Waterfront has proposed a three-phase growth plan involving capital spend aimed at enhancing the passenger experience. The terminal upgrade makes up the first phase of a larger site revamp. Once completed, the port’s passenger terminal will be able to accommodate its current and future passenger vessel fleet. It is also envisaged that the upgraded facility will house value-added retail and hospitality services,” it read.
The Cape Town project, expected to cost R179 million will be ready by December 2017.
Hopes for Durban’s one at A and B Berths along the North Pier – estimated to be worth anything from R500 million to R2 billion – are sinking fast.
The idea was that the successful tender applicant would manage the facilities, develop a multipurpose facility that could include a conference and exhibitions venue and retail and entertainment facilities for at least 20 years. TNPA and MSC even brought in architects to illustrate what the new facility could look like.
That’s as far as it went. Attempts by 031business to extract an update towards the end of last year was met with a stony silence. Months later, questions were answered with: “(The) tender process is still underway and TNPA/Transnet refrains from speaking about developments during this process due to their own governance processes.”
One question that went to this ‘port spokesperson’ was whether the cruise terminal was still happening or had been scrapped altogether. The answer was: “(It is) still a priority as per the Port of Durban’s Development Framework Plan, the TNPA’s Cruise Strategy and the eThekwini Municipality’s development framework plan. Following the latest call for proposals, I have no info as to the quantity and quality of proposals received. But we don’t quite have the likes of a V&A here to bid.”
Never a truer word, it seems.
In January this year, TNPA finally came clean, admitting that the second bidding process had resulted in a non-award.
Lauriette Modipane, General Manager Commercial and Marketing at TNPA, explained: “The latest Request for Proposals was advertised on 24 July 2015 and 1 August 2015. Twenty five RFP documents were sold, however 23 companies were represented at the briefing session which took place on 11 August 2015. The closing date for the submission of bids was 2 October 2015 and a multi-disciplinary bid evaluation took place on 12 October 2015. A single bid was received which was declared administratively and substantively non-responsive, hence the non-award.”
Richard Vallihu, Chief Executive at TNPA, went as far as suggesting that there didn’t seem to be an appetite “for a private player to pursue this project”.
MSC, which had up until then played an integral part in the whole process, had set sail.
Then came the life raft. TNPA said it would embark on a third open bid process within six months and would also review the scope of the project.
But Transnet delegates aboard the Sinfonia deftly sidestepped questions as to whether a third bid was actually going out or plans for the new Durban cruise terminal would be revised.
Nevertheless the eThekwini municipality presented it as a definite as far as development of the redevelopment of the Point area was concerned.
Now, back on dry land and a month later, those tantalising opportunities presented by cruise tourism seem to have been forgotten.