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I did a post about a year ago on the rise of the cruise market in Germany, and the way that this is being reflected (indeed, possibly even caused) by the number of new-build ships being constructed for that market. Two of these ships are for AIDA, Carnival’s German arm. The first will be named AIDAprima; I don’t know the proposed name of the second ship.

AIDAprima was supposed to have been delivered in March 2015 and the second ship by early this year, but Mitsubishi Heavy Industry (MHI), the builders, have only just delivered the first one. That’s a year late….. It’s worth just thinking about that for a minute. We have got so used to new ships emerging from the shipyards exactly when promised that we have perhaps forgotten just how impressive that is. I can’t think of the last time a ship coming from the major builders (Fincantieri, Meyer, STX, etc) was significantly delayed. Indeed, they’re more likely to turn up a few days early, if anything. Ship after ship, ever bigger and more complex, and the yards just deliver them on time, within budget and to specification. That’s an extraordinary achievement. Yet here we have a major shipyard, in a major technological nation, that has missed its deadline by a year.

So what went wrong? Well, recently the president of MHI went public with the causes of the problems. I’m not able to link to a site where his comments are directly quoted, but apparently it boiled down to these issues:

  • more than 10 years have passed since MHI last built a cruise ship (Sapphire and Diamond Princesses, for Princess Cruises) and perhaps their project management skills for this sort of project had atrophied in that time;
  • in any case ships had got more complex in that decade. Safety-related issues and wifi in all cabins were mentioned as examples of things that they found challenging;
  • and perhaps most importantly, they were unprepared for the challenges of building the first ship in a new class. The two Princess ships mentioned above were the fifth and sixth Grand Princess class ships to be built and although there were differences between that pair and all other members of the class, the fundamentals were the same. By contrast AIDAprima is the first of a new class, larger than any previous AIDA ship (124,000 tons as again c72,000 tons) and with a lot of new technology. It seems that MHI had underestimated the time that finalising the new design would take, and the costs involved.

I gather that in 2013 (two years into the project) MHI replaced many of the existing project management and engineering teams, partly with external specialists including non-Japanese. This must have been a blow to them. Since then the project has progressed, although apparently detailed design work was only finished in mid-2015. However AIDAprima is just about finished – she completed her third (!) set of sea trials at the end of December – and I believe she is being handed over at the time of writing this (mid-February 2016). Her first cruises will be from Hamburg in March, having been rescheduled several times. (Yes, booking were taken by AIDA for cruises that had to be cancelled due to the non-availability of the ship.)

This is all costing MHI a fortune. The original contract price was $650m for each ship, to include the design work. MHI has already booked a loss of $1.7bn, which I think means that they’ve spent over $3bn getting this far. I’m not sure if those costs include compensation/recompense to AIDA. If they don’t, MHI’s losses will eventually be even higher. Not too surprisingly, there are stories that MHI is going to exit the cruise ship construction business.

As an aside, this also suggests that it is in practice impossible, at this stage, for any new players to enter the market. Imagine you were a cruise line executive wanting a new ship built. Would you choose to go with a new player that promised an early delivery at a budget price (as MHI did), or would you place the order with the industry’s major players and accept that, thanks to the volume of existing orders, you won’t get your new ship for about five years? I think any such executive would go go with the experienced builders and accept the delay, especially after what has happened with AIDAprima.

2 Responses to “Mitsubishi's problems with AIDAprima”

  1. Malcolm Oliver says:

    Reblogged this on Malcolm Oliver's Cruise Blog and commented:
    I was about the feature this story in my blog when Tom did in his. He has probably done a better job than I would!

  2. Malcolm Oliver says:

    Tom, this in part explains how quickly UK shipyards lost their ship building skills between the decline of the ocean liner and the rise of the cruise ship.

    In between building techniques and technology changed and we simply got left behind.

    It sounds like MHI almost did too!


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