Much as I love San Francisco, I’ve decided I am not a city boy any more. Yesterday was a beautiful day in San Francisco, a little fog, certainly not beach weather, but warm enough since San Francisco in the summer can be the coldest place in California. I spent most of the day, actually all of the day, negotiating traffic to and from the city, and mostly unsuccessfully looking for a place to park. If by some miracle you do find a place to park you can only park for 2 hours so forget the idea of parking and going off to explore. And parking lots, even at $25 a day, are rarer than genuine gold nuggets. And the drivers are almost as rude as in New York, laying on their horns if you don’t jack rabbit start when the light turns green: not what I remembered about San Francisco. Maybe their are all just transplanted New Yorkers. It was all I could do not to give one woman in a brand new, black SUV the size of a motor home a Bronx-style hand salute.
The Panama San Francisco Connection
Of course San Francisco owes it’s prominence to Panama since man of the gold seekers during California’s famed Gold Rush came to California by way of Panama. There were three routes to the Gold Rush, the long trek across the Continental US, the passage around the southern tip of South America, or the shortest and quickest route across the Isthmus of Panama.
And the Golden Gate Bridge, the symbol of San Francisco, was made from steel fabricated by the Bethlehem Steel Company and shipped to San Francisco via the Panama Canal.
The Panama–Pacific International Exposition in 1915 was held to celebrate the completion of the Panama Canal the previous year and to showcase San Francisco’s recovery from the 1906 earthquake. The beautiful landmark Fine Arts Pravillion and the Bill Graham Civic Auditorium at Civic Center Plaza are remaining structures from the 1915 Exposition. [San Diego held a similar exposition and celebration of the Canal and a number of those structures remain in Balboa Park.]
SWOT Panama Canal
Like any business, the Panama Canal today has strengths, weaknesses, opportunities, and threats. The massive expansion of the Canal now underway and originally scheduled for completion next year is in direct response to the Canal’s opportunity as well as the threat that post-panamax ships would use other routes.
When the US decided to build a canal there was major disagreement as to where the canal should be built. Panama and Nicaragua were the two competitors and each side had its proponents generally, in true US-style, depending on the proponents financial interests. Panama won out by a slim margin but there has always been the possibility and talk of someone coming along and building a competing canal across Nicaragua. The possibility of a Nicaragua Canal loomed again a few years ago when Nicaragua officially proposed the project. Panama Canal planners were convinced that even if there were a Nicaraguan canal, a useable Northwest Passage, or some other “land canal” that expansion of the current Panama Canal was viable and that in today’s interconnected world there was enough business for all potential players.
Interestingly as the world financial crisis has started to impact China production of goods, Panama Canal traffic has started to decline. Now comes word that Nicaragua has awarded a Chinese company a 100-year concession to build an alternative to the Panama Canal.
The Guardian reports that president of the country’s national assembly, Rene Nuñez, announced the $40bn (£26bn) project, which will reinforce Beijing’s growing influence on global trade and weaken US dominance over the key shipping route between the Pacific and Atlantic oceans.
The name of the company and other details have yet to be released, but the opposition congressman Luis Callejas said the government planned to grant a 100-year lease to the Chinese operator.
The national assembly will debate two bills on the project, including an outline for an environmental impact assessment.
Nicaragua’s president, Daniel Ortega, said recently that the new channel would be built in the north of the country, through the waters of Lake Nicaragua.
The new route will be a higher-capacity alternative to the 99-year-old Panama Canal, which is currently being widened at the cost of $5.2bn.
Last year, the Nicaraguan government noted that the new canal should be able to allow passage for mega-container ships with a dead weight of up to 250,000 tonnes. This is more than double the size of the vessels that will be able to pass through the Panama Canal after its expansion, it said.
According to a bill submitted to congress last year, Nicaragua’s canal will be 22 metres deep, 20 metres wide and 286 km (178 miles) long – bigger than Panama and Suez in all dimensions.
Under the initial plans for the project, the government was expected to be the majority shareholder, with construction taking 10 years and the first ship passing through the canal within six years. It is unclear if this is still the case.
Two former Colombian officials recently accused China of influencing the international court of justice to secure the territorial waters that Nicaragua needs for the project.
In an op-ed piece for the magazine Semana, Noemí Sanín, a former Colombian foreign secretary, and Miguel Ceballos, a former vice-minister of justice, said a Chinese judge had settled in Nicaragua’s favour on a 13-year-old dispute over 75,000 square kilometres of sea.
They said this took place soon after Nicaraguan officials signed a memorandum of understanding last September with Wang Jing, the chairman of Xinwei Telecom and president of the newly established Hong Kong firm HK Nicaragua Canal Development Investment Company, to build and operate the canal.
Nicaragua has accused Colombia and Costa Rica, which also has a claim on territory likely to be used by the new canal, of trying to prevent the project going ahead. [Newsroom Panama]
Rough Seas for The Cruise Industry?
When the COSTA CONCORDIA ran aground I expected our stock in Carnival, RCL, and the Carnivalized Princess successor PLC to all tank. They didn’t. They took a hit, but rebounded given the public’s fascination with cruising as an ideal and cost-effective vacation and way to explore. But a recent study indicates that the CARNIVAL TRIUMPH fire may have had a bigger long range impact on the people’s opinion of cruising. According to a Harris Interactive poll taken between May 14 and 16th (before the GRANDEUR OF THE SEAS fire) and reported by the industry magazine SEATRADE,
“US consumer attitudes about cruising have not bounced back following the Carnival Triumph incident but have continued to decline, with lower scores on trust, quality and intent to purchase . . . While Carnival Cruises Lines’ quality score showed the steepest declines (down 28% versus pre and 12% versus post), all the other brands tested ranged individually from 8%-11% below pre levels.”
Interestingly Harris noted that “Holland America Line’s purchase intent score has largely weathered this perceptual storm, holding at just 2% below its pre level”
I find this interesting because if a major airliner crashes [or maybe even COSTA CONCORDIA goes aground] people lament the tragedy but intuitively understand that people and machines are imperfect, and so continue to fly [or cruise] knowing that accidents happen. Of course one hopes the accident never happens to them, but we understand the odds so continue to fly. Or buckle up and get back on the freeway. But let an aircraft be stuck on the ground for a few hours with passengers unable to leave the aircraft, get up or (God forbid!) be unable to use their cell phones and holy hell erupts! So the fires, although efficiently extinguished with all emergency operations working according to plan, but with passengers inconvenienced because no nearby island happened to have an 3,000 empty hotel rooms and charter aircraft standing by, people get all upset.
I predict that public fascination with cruise travel will continue in two directions. First there are folks who like the mega-resort cruise ships where ports are an incidental inconvenience and the main focus, like a land-based resort, is spending money. Although many of these folks would be happy with a “cruise to nowhere” (as long as the bars and casino remained open) a few hours in a shopping mall port (like St Maarten, St Thomas, or Nassau) or a visit to a cruise line controlled Disneyesque stereotypical “port” are all that’s wanted. Second, there are folks to whom ports are still important and see a cruise as a special opportunity to explore new lands, experience new cultures, and expand their knowledge. Most of these folks prefer ships that actually float, and rock and roll sometimes and aren’t just resorts floating just outside the 12 mile limits.
So I see the “dip” as a kind of “market correction” and think cruise lines need to focus more on clearly defining their philosophies, products, and target audiences.
Those of you who are interested in the final report regarding the COSTA CLASSICA which is the basis of the official charges now against the captain can read the full report.
And for those of you interested in the future direction of cruising, or who like me, are Carnival stockholders and fans of Carnivals family of brands . . . here’s the best news ever!
Bob Dickinson is back! Nobody knows more about cruising that Bob Dickinson, formerly CEO of Carnival. Dickinson, who like me is 70, is being pulled out of retirement to act as a consultant to Carnival Corp CEO Howard Frank. Dickinson, known for telling it like it is, is charged with making recommendations. This should be fun! When Dickinson was captain of the Carnival he warned about the cruise business becoming commoditized where the competition is based on price and brands are not clearly differentiated. [The act of making a process, good or service easy to obtain by making it as uniform, plentiful and affordable as possible.] Well that’s exactly what cruising has become. Each of the Carnival companies is competing with everyone else, including sister companies, basically going after anyone and everyone with disposable dollars. Many cruise lines have embraced the idea that a CEO is a CEO and it doesn’t make any difference if he or she knows anything about the particular product as long as they can hit the numbers. Clearly Micky Arison and Howard Frank realize that the problem is larger than just a horrible accident and a string of unfortunate situations.
“Because I’m not tied to any one brand, I have sort of a 30,000-foot look at it; I can be very, very objective,” said Dickinson, 70. “It may be difficult for a brand to say ‘Gee, I made a mistake’ or ‘Gosh, I should have seen that and I didn’t,’ or ‘Gosh, maybe this strategy was the wrong one.’”
While he acknowledged that “there will be egos involved, obviously,” Dickinson said his job will be simply to present solid facts and leave the action up to managers. “It’s not meant to be an adversarial effort, it’s meant to be a collaborative effort,” he said.
Retired Carnival Cruise Lines CEO back as consultant