'Are We Ready? We're Ready' – PortMiami Director On The Return Of Cruising
It’s a multi-billion dollar question for the South Florida economy — when will cruise ships set sail again with passengers? PortMiami's boss says: "We're ready."
The sun was shining. It was in the mid-80s and a decent breeze was blowing on Biscayne Bay last Tuesday. A decent day for a cruise, but Terminal B and the rest of the cruise passenger terminals at PortMiami were quiet.
There were no passengers bustling to board or get off the cruise ships docked. There have been no paying passengers on cruises in U.S. waters since March 2020 when the Centers for Disease Control ordered shops to stop sailing in the effort to slow the spread of COVID-19.
Hopes are growing the passengers will return this summer to the cruise capital of the world.
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"Are we ready to go? We're ready to go," said PortMiami Director Juan Kuryla.
Two years ago, PortMiami hosted more than 6.5 million cruise passengers — a record. For more than a year, no passengers have been allowed to sail from PortMiami or any other American port.
Seven months ago, the CDC released rules for what cruise ships need to do to return to business. Some of the safety protocols have been criticized as onerous and confusing. The agency has since released additional guidance for training, testing, social distancing, screening, communicating and handling COVID-19 on board.
Cruise ship operators are required to have a series of agreements in place with local health authorities and ports. PortMiami signed its first agreement two weeks ago with Royal Caribbean. According to a Facebook post by Royal Caribbean International CEO Michael Bayley, last Friday the company submitted what he called "the first of several port/health plans to the CDC."
A company spokesperson said the company submitted its agreement with Port Canaveral to the state department of health.
It represents one of the steps necessary for the industry to restart and for workers and passengers to return to PortMiami.
Kuryla said "ideally July of 2021" will see the return of the cruise industry with paying passengers. He primarily credits the expansion of COVID-19 vaccinations followed by widespread testing capabilities as the drivers of his confidence.
"Those two issues, I really believe, have moved the needle substantially," he said.
Through Sunday, three-quarters of Americans 65 years old and older are fully vaccinated according to CDC data. Half of American adults are fully vaccinated.
And then there are the CDC rules to return to cruising. Kuryla said the port is "showing the CDC that no matter what that situation may or may not be in the future, and hopefully won't be in the future, that we are prepared to handle any sort of outbreak."
Those preparations include medical teams, law enforcement teams, "a state of readiness that needs to be in place every single day whether we have cruise ships or not," he said.
"It shows the CDC that Miami-Dade is ready to have cruises here at the port of Miami in July," Kuryla said.
Torin Ragin represents hundreds of workers directly impacted by the cruise business not sailing. He is the president of the International Longshoremen's Association Local 1416. It has nearly 800 members who work at PortMiami. Before the pandemic, just over half of its members worked on the cruise side as porters and other positions. The starting wage is $20 an hour.
"We're preparing our members to be as fluid as possible to stay in line with the CDC guidelines," he said. "We want to make sure that we do our part in maintaining public health and public safety."
Vaccinations — A Political, Corporate Lightning Rod
The CDC guidelines allow cruise ship operators to skip simulated cruises if they can declare 98% of crew and 95% of passengers are fully vaccinated. ILA Local 1416 is not requiring its union members to get the vaccine.
"We encourage vaccination among our members. It hasn't been mandated but we encourage it," Ragin said. "If the difference between cruising and not cruising is vaccination, the ILA would not stand in the way of cruising. It is just too important to what we do."
Requiring vaccinations on cruise ships has become a political and corporate lightning rod. Gov. Ron DeSantis signed an executive order, and a new law, banning businesses from requiring customers to be vaccinated. A day after signing the prohibition, Norwegian Cruise Line Holdings CEO Frank Del Rio floated the idea of leaving Florida.
"Cruise ships have motors, propellers and rudders. And, God forbid, if we can't operate in the state of Florida for whatever reason, then there are other states that we do operate from. And we can operate from the Caribbean for ships that otherwise would've gone to Florida. We certainly hope that doesn't come to that," he said on the company's second quarter conference call with investors.
It was a proverbial shot across the bow over the state’s ban on vaccine passports. Norwegian is requiring all passengers and crew to be fully vaccinated for trips though Oct. 31.
"This would be a total tragedy for our economy, for our workforce, for our community and the whole state of Florida. I believe that this is a high stakes game of chicken that is being played," Miami-Dade County Mayor Daniella Levine Cava told The South Florida Roundup earlier this month.
Neither Kuryla nor Ragin heard Del Rio's musings as a threat, though.
"I wasn't surprised," Ragin said. "The frustration has been growing for 12, 13 months. We certainly don't want people flying to the Caribbean, in other parts of the world to cruise, when they can cruise out of PortMiami."
"You're a CEO of a publicly traded company, you need to make sure that your shareholders know that you're looking after their best interests," said Kuryla.
DeSantis dismissed Del Rio's comment in a different way. He referred to Norwegian as "not one of the bigger" cruise operators.
"If one of the smaller ones says they somehow don't want [to sail from Florida], that niche will get filled in Florida," the governor said.
Norwegian is the third large cruise operator by market value, number of employees and number of ships behind Carnival Corporation and Royal Caribbean. It is a $10 billion company with 3,300 land-based employees and 28 ships. It has about twice the number of ships than MSC, which started sailing from Miami eight years ago. Disney has four ships sailing from different ports and Virgin Voyages will have one ship when it starts cruising.
Since March 2020 when PortMiami began waiving docking and harbor fees for cruise ships, Norwegian has had more than $9 million taxes skipped — far more than any other cruise operator using the port.
Where Port Finances Stand
Each cubic foot of space on board a cruise ship is worth 40.5 cents in taxes per day at PortMiami. If the ship is docked at the port with no passengers, there’s a 50% discount. And for cruise ships subject to the Centers for Disease Control ban on sailing with passengers — which is all cruise ships in American waters — there’s a larger discount.
These fees are just one way PortMiami generates revenue. They have been waived for more than a year, though, costing the port more than $19 million in lost taxes.
The port is county property and it has issued hundreds of millions of dollars in bonds to build new cruise line terminals. In return, it has received minimum passenger guarantees from the cruise operators as a source of money in the years to come to pay the borrowing costs. While the port’s cargo business has been strong, the cruise side of its business had been responsible for just over half of the port’s operating revenue before the pandemic.
The port entered the pandemic with $125 million in the bank. Kuryla expects it will dip into those reserves to pay for operating expenses in the months ahead. Just how much will be determined by how fast cruise passengers can return. The port also may be in line to receive federal stimulus money through the American Rescue Act.
Kuryla said the worse case scenario — assuming the port does not get any stimulus money — the port would use $22 to $28 million of its reserves.
"We have budgeted fiscal [year] 2021 through Sept. 30, assuming zero revenue from the cruise lines," Kuryla said.
He called the forecast for 3.8 million cruise passengers in the next fiscal year beginning in Oct. "conservative." That pace of passengers would represent less than half the number of passengers the port saw in the fiscal year before the pandemic.
"I'm really thinking that it could be much greater than that," he said.