The International Cruise Ship Industry: Its Issues and Recommendations

The International Cruise Ship Industry: Its Issues and Recommendations

 

Globalization continues to stir in vast scales on the international cruise industry to position as one of the fastest revenue generating sectors in the international tourism industry which outpace other industries.[1] An average occupancy record rate at 104 percent per year since 2008 indicates a convincing rising population who interest spending in the cruising industry purposes. In a globalized economy despite bold factions within the common public to impose widespread economic measures of” belt tightening” in large and localized scales, yet stimulate revenue into the industry with large income scales generated by a workforce employed within developed countries and attracts emerging economic markets who dedicate to the cruise industry livelihood due to the need for human bodily rebalance. Studies reveal the growth impact folds how the cruise industry impact the psychological balance and sensory benefits people draw from cruises.  Despite the growing market response in recent years, there draws a spectrum of issues and other insights that need exhaustive attention to the cruise industry development yet the need to eliminate striking costs which in turn damaged the industry itself, stretching from economic to environmental setbacks and call urgent policy needs. The accountability drawn from these effects due to the industry operational imbalance to a quarter percentage measure compared to all global industries calls whether the benefits outweigh the costs (Houston and Adjust, 2005)[2].

Lack of environmental law enforcement in concentrate parts of the world results to the devastating effects of water pollution cruise ships cause with the increased rate of violation incidents generated overtime.  The deficiency in respective national legal systems on environmental enforcement escalate this impression of the cruise industry and the negative financial impact which associate to unnecessary costs through fines and penalties imposed to government levels. Particular examples cite legal neglect in the United States and Canada that cost millions of dollars for oil and hazardous waste discharge (Houston and Dust, 2005).[3] Moreover what brings to an elevated concern centers on the fact even some of the pioneer countries never took appropriate initiatives in their respective legal structures to enforce anti-environmental water pollution measures to penalize violators.[4]These urge legal actions by governments in a peripheral degree to impose severe sanctions imperative to a uniform consistency for environmental protection on a global scale. The severity of marine pollution and its effects to marine ecosystems extends in scales cruise systems cause comparable to other pollutant vehicles prompt this action. For example, diesel exhausts from ships surpass the diesel pollution levels a thousand of dirtiest trucks a day causes to (Holus and Adjust, 2005). Long term effects extend to radical degrees impact to barren the ecosystem production system to sustain global supply of marine food resources pollution causes. What is even more troubling governments sustain to finance the cruise ship industry aside from the profits generated that scale to millions of dollars, by which poses unnecessary and added costs governments who stake over on additional risks.

Taxation and collective enforcement measures also stand another prevalent issue. On the global economic scale, while governments lack the law enforcement and financial resources to keep enforcement at efficient levels to combat antipollution measures, with the costs associated to the million of dollars in revenue loss and the government even unreasonably financing the cruise industry at substantial levels, a grey area seems to persist on the global scale with no clear position the taxation system reckons challenges that also require severe enforcement measures at relatively high tax rates aside the fines imposed according to law due to risk levels the industry causes that extend to devastating measures of damage in marine life and peripheral effects to the general global environment, not only limited to air pollution and the severe effects of low food supply in a global scale. Therefore if solutions to increased taxation impose on global enforcement that overshadow the financing issues, there would avail an endowment fund to over sustained financially by a country contribution basis to rehabilitate marine ecosystems aside the fines imposed on each violation occurred. However, a grey area also exists on a collective basis an extensive scale of appropriate legal structure revamp that should preside first at international, national, state and local government levels to assure prior compliance and create and implement within all levels a reliable auditing system in order to properly enforce before restructuring respective taxation systems at all levels of government regardless the base revenue is a sale or expenditure (Houston and Adjust, 2005).[5] Because of elevated levels of taxation in the case of Canada and specific to the cruise industry, studies reveal the high revenue potential attribute to about 700 billions US dollars a year over operating expenses at around 300 billion US dollars. This means to assume if 25 percent is wrought from total net revenue after expenses that bear on the environmental costs attribute to ecosystem damages to the cruise industry, a  substantial net operating capital and profits combined approximately 300 billion US dollars left would cater at leverage to operating income and profits combined. Leaving a 100 billion US dollars bearing on penalties and fines, would not leave as enough reference to 20million US dollars per violation yielding 5,000 violations. This figure is not enough to convince enforcement bodies if all violations record into account. In addition the lack of enhancing mechanisms within national legal structures would assist to contain possible legal costs should potential cases litigation court system levels rather than effective costs when intermediation disputes resolve under international commercial and trade arbitration bodies through mediation but operating on a variant mode should take form and devise measures to avert unnecessary costs and damages.

Another inference from legal restructuring and environmental enforcement imply the need to invest in technology based research and development on oversight and surveillance solutions to a substantial degree to track on violators who resort to illegal dumping activities from cruise lines. Substantial revenue flows expect to succeed if there establishes a reliable monitoring system to track close range imaging details on a global wide scale facilitated by international cooperation. Added to these figure do not even account the other violations foreign ships commit upon landing in a foreign port from a United States, which indicate a prospective indication other ships tend to dump waste as revealed by a case of the United States. This infers if such target enforces, a larger margin yield over expenses wrought for the government renders enough revenue for other public and private sector projects aside maritime industry costs borne these environmental issues. This would mean technology breakthroughs need to be introduced and invested in a global scale to assure compliance. It seems scant that earmarks the maritime history on a global scale a technology quest for increasingly innovative research and development for this specialization and purpose in need.

Social views spew forth confidence levels in the future market of the international cruise industry to multiply in folds. Statistics show the top reasons that cruisers prove an indelible earmark in the tourism industry bears on the reason for curiosity-associated exploration of the world, fine dining and appreciate a luxurious experience almost a typical individual would dream over a lifetime as the likely probability. This justifies the statistics indicated that especially in developed countries, diverse age groups divest their interests and find monetary worth and internal fulfillment to a repeated venture tending to an increasing rate of participations. Due to their leveraged monetary power with populations from the younger generations, as well as retirees, who profile monetary ability attribute their stability to their careers from developed countries, like in the case of the United States, would find satisfaction in a cruise as their pastime in vacation spending Anon., 2010)[6]. Because of the resultant demand and demographics growth, the cruise industry enters to a an relenting trend to diversify goods and services that compete with increasingly upgrade of innovative and world class amenities and features, which in turn, mean an incitement to add costs attribute to the contract of service providers, manpower and proportional expenditures, and increased probability to incur likely added insurance coverage due to additional international ports of call with risks of polluting foreign waters as globalization spurs, to maintain cruise ships. In line to the increasing threats of waste materials that imbue unnecessary costs and fines, how  the industry will strike the balance to maintain modest profits, if otherwise not a skyrocket profit, and response to rising human demand but with the added risks and costs to maritime and environmental damage come to surface.

With a legal implication, the environmental damages wrought by international cruise lines who dock on multilane international ports also face the potential risk whether which nation takes responsibility to finance the cost of environmental damage when accidental dumping takes place in an international port of call. Poor countries who may be liable may not sufficiently avail the insurance needed to pay in scales the immensity degree of penalties and fines associated to hazardous emission or accidental dumping on ports. Also studies show that developed countries infuse greater marginal contribution of financial inflows into developing countries due to their account openness that accommodate into adjunct financing to developing countries raise the risk interfering the obligations of developing countries to comply financial settlement obligations to developed countries in this respect (Obtsfeld, 2008)[7]. This infers the need of developing countries or without enough financial global stability to avail fixed income and hedge solutions from international financial institutions in a neutral position to insure their liability should the court or arbitration systems involved in their respective case between national legal systems determine the default party. Financial solutions in this respect need to resolve with conflicting views cited.

 

Recommendations

Ramp Legal Structures. Reliable legal structures in local, national and international levels need skeletal restructuring to defined succinct measures drawn to the specifics how national legal systems will enforce to curtail environmental violations. These legal parameters should expose and breakdown to event levels that conform to prescribed penal laws applicable. Because of the devastation effects caused by environmental dumping measured in multifold effects by cruise ship lines, severe criminal penalties of firms urge to be imposed, extending to consequences that associate not only to a firm operational shutdown. Imposing monetary fines apparently do not sufficiently justify to enforce absolute discipline cruise liners need to evade violations. Through the facilitation of a speedy litigation trial system integrated implementing these specific laws and events in local, state, national levels, surveillance systems implemented should trail local, state and national enforcement agencies to enforce such laws with prompt and intensive action to overcome the tendency of cruise liners to neglect laws for each violation occurred and ensure proper compliance. Devising a reliable testing system on board measuring suspected levels of contamination should cater to detect cruise ships to ensure proper compliance. An invincible auditing system similarly should devise the monitoring agencies to ensure a proper guidance system is followed to assure environmental law compliance. On international levels, a mediation system patterned after the overall legal system of international commercial and trade arbitration implementing bodies that alleviate severe consequences available in litigation systems be able to attract adherence collectively a strong compliance system among countries.

Restructure a Revised, Central and Upgraded Financial and Taxation System. Contemporary figures reflect the underassessment of revenue gathered attribute to the fines and penalties for each violation occurred. Not even a few concentrate portions of the globe impose a high and centrally driven system to cater taxation enforcement issues to resolution.  A model structure of high rate schedules is imperative to peg rates not lower than 10 percent according and derive a virtual assessment model which should pattern after sound legal norms with public approval to measure fines or criminal penalties patterned according to the damage value on an individual case basis wrought from each violation occurred and corresponding degrees of severity. International cooperation among governments should devise solutions at a intermediation level how potential disputes on suspected dumping or contamination should resolve in the event foreign cruise ships during the course of international port calls are alleged by the docking country with respect to an alleged violation. Optional financial schemes from international financial firms should cater poor countries in such events of violation.

 

 

[1] The international cruise industry development spurred after the September 11 attacks due to land transportation system prone more to terrorist attacks though less on water transportation systems.

[2] Tons of waste dumped hold accountable to the cruise ship industry, Victoria’s Cruise Ship Industry: Economic Benefits and their Environmental Impacts, (Houston and Adjust, p.5)

[3] From 1992 to 2003, Royal Caribbean Cruise Lines were fined 18 million dollars for hazardous waste disposal, oil discharge and falsifying records. In 2003, they were fined 200 million dollars for not complying. In addition, oil bilge, on-board and fuel spills causes immense damage to sea life of the ocean. Some effects of marine life are respiratory problems, reproductive failure and pneumonia, (Houston and Adjust, pp.7-9)

[4] Unlike America Canada have had no fines handed out, due to the lack of enforcement laws, and Canada had no established standards for grey areas on water and sewerage systems, with America’s standards far established for solid wastes than Canada’s, (Houston and Dust, 2005, pp.6-7).

[5] This interpretation infers from the statement, “At 14 percent, British Columbia’s tax rate surpasses any tax rate of any US state tax, and is one of the highest provincial taxes imposed in Canada. The cruise ship industry generates millions of dollars in revenue for both British Columbia’s and Canada’s tax system, as each passenger purchasing a good or service must pay provincial and government taxes, but are difficult to receive under strict rules.” (Holus and Adjust, pp.20-21).

[6] CLIA defines the target cruise market to cater individuals from ages 25 and older, with household earnings of at least ,000. This segment represents 43 percent of the US population. Of the total US populations with ages 25 years and older, 44.6 percent have taken cruises with 22.7 percent who taken cruises consistently for the past 3 years.  Cruise Industry Overview  2010, Florida Caribbean Cruise Association, (p.7, 2010)

[7] Recent years have shown a surge of financial flows from richer countries into the developing world. Three contrasts stand out: in the recent period the developing world is in substantial current account surplus, whereas in the 1990s poorer countries borrowed from the rich; the period of net external financing by richer countries has been nearly three times what it was then; one counterpart of the current account surplus is a massive rate of average annual reserve accumulation in the last six years, compared to levels in 1992 to 1997. International Finance and Growth in Developing Countries: What We Have Learned? (Obstfeld, p.15).

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