Slowly sinking: The industry struggles to stay afloat with increasing costs and competition
London, United Kingdom (PRWEB) August 09, 2013
The Sea & Coastal Passenger Water Transport industry is diverse, offering services such as cruise ship voyages, ferry services and fishing charters. The industry is reliant on tourism and international tourism, as ferry services transport travellers and cruise ships offer combined travel and accommodation. The past five years have been challenging for the industry as the world economy started its descent into recession leading travellers to curb discretionary spending. The cruise section of the industry is the exception, which has continued to grow by marketing value-vacations such as all-inclusive cruises.
Industry revenue is estimated to fall from £3.3 billion in 2008-09 to £2.6 billion in 2013-14, a compound annual decrease of 4.8%. This decline is forecast to continue in the current year, when revenue is expected to fall by 6.1%. According to IBISWorld industry analyst Andrew Johnson, “the economic conditions over the past five years have compounded the industry's struggle to compete with cheaper substitutes, with ferry services in particular under siege from intense price rivalry from air and rail competitors on major routes.” Job losses have resulted from the poor revenue performance, as companies have attempted to reduce their costs to keep their heads above water. Innovation in products and services to try and grow new markets has been most prominent in the cruise industry.
The industry is expected to decline further over the five years through 2018-19. This intensity of competition with other transport modes is expected to continue. In addition, regulators are paying increasing attention to the industry's emissions of carbon and sulphur. The industry is likely to face growing purchase costs from fuel regulation in the coming years. Such costs are expected to make some routes uneconomic and decrease the scope of industry activities. Johnson adds, “growth is only projected for the cruise segment, as outbound tourism by UK residents grows with improved economic conditions and cruise operators take a greater proportion of the total.” However, it is expected that declines in other segments of the industry will offset this.
The Sea & Coastal Passenger Water Transport industry has a high level of market share concentration. A large proportion of revenue is generated from services that are dominated by a small number of players that operate in the United Kingdom and international waters. These large-scale services have high barriers to entry and consequently it is very difficult for new entrants to challenge the incumbents. The four largest companies in the industry account for about 86.5% of industry revenue. Major companies include P&O Ferries, Carnival, David MacBrayne Limited and Fred Olsen Cruise Lines.
For more information on the Sea & Coastal Passenger Water Transport industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
The industry includes all operators involved in the transport of passengers on sea and coastal waters. This includes the operation of excursion, cruise or sightseeing boats, the operation of ferries and water taxis and the renting of pleasure boats with crew for sea or coastal transport. The renting of boats without crew and restaurant and bar activities on board ships, when provided by separate businesses, are both excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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