I just returned from a cruise to Bermuda where I was able to take a much-needed five-day break. But the experience did leave me wondering just cruise ship logistics work. How do they manage supply chain and procurement? At the end of our cruise, we docked at 7:00 a.m., but the next cruise was set to sail by 4:00 p.m. that day. Passengers could board as early as 11:00 a.m. The supply chain and procurement process must be one heck of an undertaking to resupply the ship
And it’s not just supplies that must be considered; the logistics of moving people can be overwhelming, demanding incredible organization. There were 4,000 passengers and about 2,000 crew members arriving in port. The process of ensuring that both arriving and departing passengers were well dispersed enough to simultaneously embark and disembark was flawless. The winding serpentine lines throughout the ship and about the dock was something to behold.
One fascinating aspect of the people management side of cruise ship logistics comes from Port Economics, Management and Policy. When you count passenger movements as opposed to merely counting the number of passengers on board, you can quickly see the enormity and complexity of people management that each ship must contend with:
Traditionally, cruise statistics have counted the number of onboard guests, measuring market size by the number of persons who decide to take a cruise each year. This can be misleading, as it underestimates the size of operations and the importance of the market for the port industry and the respective destinations. Each passenger embarking on a cruise visits between 4.6 and 5.2 cruise ports. As a result, the total number of cruise passenger movements hosted is remarkably higher than that of single passengers. Driven by industry trends, a ship with a capacity of 4,000 passengers on annualized 50 weeks deployment in a standard seven-day itinerary of six ports (one homeport, five transit ports) in the West Mediterranean market, and excluding any effect of interporting, generates 1.4 million passenger movements per year.
Supply Chains and Cruise Ship Logistics
The cruise ship industry is unique, and how they manage their supply chain is unique as well. Can you imagine needing to have the ship loaded and ready to go by a certain time with the risk of having 4,000 impatient guests waiting because of a disruption? Or worse, the economic disaster resulting from having to cancel a cruise because of supply chain issues? COVID-19 was one thing. But now that the cruise industry is back up to speed, those kinds of disruptions, cancellations, and delays are not well tolerated.
Getting a ship ready for a seven-day cruise is a huge undertaking. Not only do ships need to be sufficiently fueled and stocked with food and supplies but, because they stop at multiple destinations along the way, there are compliance and certification issues with which to contend as well.
DB Schenker outlines the major logistics considerations that must occur before, during, and after every cruise:
- Global sea freight
- Global air freight
- Inbound and outbound supply management
- Complete supply chain visibility for both dry and temperature-controlled cargo
- Food and beverage, hotel, and technical supplier management
- Warehousing and distribution of all food and supplies (including dry, temperature-controlled, and high value)
- Purchase order management
- Complete inventory visibility
- Shipside and pier-side deliveries
- Pier coordination
- Crew mail collection and distribution
- Vessel offloading/reverse logistics
- Passenger gift bag procurement and coordination
- Moving and staging equipment for onboard entertainers
- Coordination of goods for turnaround days
- Emergency resupplies
- Logistics management for ship overhauls in dry dock and getting new ships into the water
They further explain:
Properly supplying a modern cruise ship is literally a moving target. A cruise ship is limited as to where it can receive orders, restricted to the size, weight, and shape of the cargo, and it requires precision in timing unlike any other, all with few options to forward on to new destinations. Everything must be exact and on time or it will have a dramatic effect on the cruise experience for guests and the profitability of the cruise line.
Demand Forecasting Is Crucial
Because cruise ships are not only moving thousands of people but are also feeding and entertaining them, they’re required to offer a wide range of food choices in addition to a variety of activities, entertainment options, and events. Most cruise ship companies rely on third-party logistics companies to help with the supply chain and procurement necessities.
From Cruise shipping supply chains and the impacts of disruptions: The case of the Caribbean:
Demand forecasting becomes much more critical since the vessel is considered self-sufficient once it departed from its turn port. Thus, a cruise ship and its procurement are designed to be a sustainable mass tourism unit during its planned itinerary. Given limited storage space and various passenger preferences, procurement often involves longer replenishment lead-time and buffer inventory in the resupply process.
Supply chain relationships are also critical to the success of cruise ships, explain Rodrigue and Wang:
Like conventional supply chains, the physical flows of goods and services are most of the time from providers (upstream) to customers (downstream). In contrast, information flows are dominantly in the reverse direction since they relate to purchasing orders. Consumables ordered based on past consumption patterns require on-time delivery. Doing so in a seamless manner, local ship chandlers and suppliers will integrate with logistics providers and regional/global distribution centers. While cruise lines pursuing a profit-maximization focus on occupation rate per vessel, cruise ports focus on sustainable long-term contracts to utilize their facilities in terms of the total number of annual passengers served. Thus, the incentive mechanism between cruise lines and cruise ports needs to align along with different objectives. Meanwhile, due to the short resupply window, it is crucial for cruise lines to establish stable long-term relationships with service providers. Many large suppliers have better capabilities to provide for the short rotation cycle demanded by cruise ships, but cruise ship procurement is much more stringent than the equivalent procurements strategies found in the hotel industry. To meet such unusual requirements, cruise lines are more likely to provide incentives when issuing service requests and negotiating contracts with suppliers.
Turnaround Days Are Like Supply Chain Management on Steroids
According to Onsite Global Logistics, turnaround days refer to the days when one group of guests leaves the ship and another group boards on the same day. On that day, the crew closes off deck zero to passengers. That deck is nicknamed I-95 or the Autobahn depending on the ship’s location; because of the quantity of supplies on deck and the number of people moving about so quickly, it’s likened to a freeway. “Operations on a cruise ship logistics have always been organized chaos. There’s a lot that needs to be done and limited space to do it in.”
Turnaround days are one of the most important days for a cruise ship supply chain. Not only are these ships going through the process of cleaning and unloading from previous voyages but they’re also loading for the next voyage. The logistical planning required to load food, drink, and supplies for thousands of passengers in such a short period of time is an enormous challenge. To meet the overwhelming demands of passengers, cruise ship logistics and procurement professionals rely heavily on data and analytics. By tracking passenger behavior, they can use predictive analytics to determine what to resupply at each stop.
Using AI to Improve Cruise Ship Logistics
AI is the future of business. The more complex and intricate the supply chain, the more reliant we are on predictive analytics. It opens up a whole new world of possibilities. There are even new professional fields opening up due to AI.
If it seems that cruise ships have a great deal to manage when it comes to supply chain, procurement, and people, that’s because they truly do. And AI has become a valuable tool in the execution of cruise ship operations, aiding in demand forecasting and planning, as well as a tool for developing algorithms to help more accurately predict optimal inventory levels. AI has helped the cruise industry to:
Manage and Maintain the Ships – Proactive ship maintenance keeps costs down and cruise ships afloat. AI has transformed the ability of ships to better manage their maintenance schedules.
Manage and Optimize Fuel Consumption – AI can quickly analyze upcoming weather patterns and determine the most cost-efficient routes, to improve fuel consumption.
Ensure Capacity – By using AI to implement dynamic pricing, cruise ships can not only maximize profits but also ensure ships are filled to capacity.
Labor Management – AI is instrumental in managing the logistics of scheduling and ensuring that all shifts are covered.
Using AI to Improve Cruise Ship Customer Experience
AI is being used in the cruise ship industry for more than just supply chain optimization and cost controls. AI now plays a major role in delivering the best experience to cruise ship passengers. For example on our cruise, Norwegian’s app offered us many event suggestions. But frequent travelers are offered event suggestions based on their interests and past history. Chatbots are also becoming more powerful, allowing customers to get the information they need without having to wait for a human. Cruise ship loyalty programs are an essential part of rewarding loyal guests and gathering necessary data for the industry.
Download my white paper, Revolutionizing Supply Chain Excellence through the Integration of AI and Machine Learning
Cruise Ship Supply Chain and Procurement Is a Feat of Logistics
The supply chain and procurement process for cruise ships is a remarkable feat of logistics, requiring meticulous coordination and planning. From the seamless movement of literally thousands of passengers to the timely resupply of essential goods, every aspect of cruise ship operations is managed with precision, to ensure an optimal experience for guests and profitability for the cruise line. The complexity is further heightened by the short turnaround times between voyages, making it essential for cruise ships to have reliable supply chain relationships and advanced logistics strategies in place. The integration of third-party logistics, demand forecasting, and inventory management plays a critical role in the ability of cruise ships to operate as self-sufficient entities during their journeys.
The use of AI technology has further enhanced the efficiency of cruise ship logistics, providing tools for better demand forecasting, fuel optimization, and labor management. By leveraging AI, cruise lines can not only improve operational efficiency but also enhance the customer experience through personalized recommendations and dynamic pricing strategies. Turnaround days, when one group of passengers disembarks while another boards, exemplify the intensity of cruise ship logistics, with all activities occurring simultaneously in a tightly controlled environment. This intricate dance of supply chain management ensures that each cruise sails smoothly, keeping passengers satisfied and operations profitable.
Have you been on a cruise recently? What did you think?
