Seven years after opening the South Locust Point cruise ship berth and terminal, Maryland port officials have a problem: capacity, as in, not enough.
Without expansion, the record-breaking annual statistics will plateau at about 100 cruises and 241,000 passengers a year.
It is a profitable perch, but not one that fits the port of Baltimore's competitive nature or record of expanding market share wherever it can — from autos to coal. And with an annual economic value to Maryland estimated to be $90 million and 220 jobs, the cruise ship business is an asset worth protecting and continuing to develop.
Despite recent problems, including Thursday's stranding of a cruise ship at a dock in St. Maarten after an apparent generator failure, cruise demand keeps expanding.
Royal Caribbean's Enchantment of the Seas ties up at Baltimore's single berth each Saturday morning to disembark 2,200 or so passengers and take on a like number in the afternoon for cruises to Bermuda and the Caribbean. Carnival Pride performs the same bit of nautical choreography the next day.
Given most folks' Monday through Friday schedules, there isn't potential for weekday growth. If Baltimore wants to be a bigger player, it has to move carefully.
"We're at capacity right now doing two cruise ships a week," said James White, executive director of the Maryland Port Administration. "Both cruise lines are very satisfied with the profit levels, otherwise they wouldn't be back. When we look to expand that business, which is something we need to do, we need to keep the companies and the passengers happy."
Royal Caribbean has announced it will be sailing out of Baltimore next year. Carnival's contract with the port ends in August, with a series of one-year options that take it to mid-2016.
To keep the peace, the port would need to do an extensive — and expensive — marketing survey to gauge demand for a third or fourth ship. And, White said, officials would have to see if Carnival or Royal Caribbean had any interest before trying to find another partner.
"We have to be very careful that when we do move forward and provide more cruising for Maryland that we don't take passengers from Royal and Carnival and they're not sailing full anymore. If they're sailing at 60 percent and they're losing money, then they're going to another port, and we've blown up our cruise business," White said.
Getting a cruise business to flourish isn't easy, as neighboring cities have shown.
In 2010, after spending $21 million to turn an industrial building in South Philadelphia into a cruise terminal only to attract a handful of ships each year, the Delaware River Port Authority voted to terminate its lease.
Since opening in 2007, the $36 million Half Moone Cruise and Celebration Center in Norfolk, Va., has never been able to match the record 107,000 passengers who used a makeshift terminal in 2004. In 2010, Royal Caribbean dropped the city as a home port.
"I'd caution Baltimore to move slowly," said Carolyn Spencer Brown, editor of CruiseCritic.com. "Yes, they need to talk about expansion, to do their due diligence. But be careful what you wish for. Look at Norfolk."
The first ships began calling on Baltimore in 2001, after the Sept. 11 attacks closed New York's port. In May 2006, the port opened a $13 million terminal in a converted paper warehouse, so that passengers no longer had to compete with cargo at the Dundalk Marine Terminal.
Ragina Averella, a spokeswoman for AAA and a cruise aficionado, said she switched from Florida ports because of the low prices and convenience.
"You don't have to pay for airfare, and you don't have to worry about airline issues and security hassles and luggage weight," she said. "You literally pull up, drop off your luggage, park and walk onto your floating home for the next week."
Brown called Baltimore a family-friendly port.
"For a family of four, do you blow your money on airfare or a nice cabin? A lot of people would rather drive and have more money to spend," she said.
Year-round cruising from Baltimore began in 2009 with Carnival Cruise Lines; Royal Caribbean consolidated from Norfolk the next year. The business grew quickly, and the port now ranks as the East Coast's fifth-busiest, No. 11 in the United States and No. 20 in the world.
Terry Thornton, Carnival's senior vice president of revenue management and deployment, said that over the past four years, the cruises have performed well.
"Carnival carries more than 115,000 guests annually from Baltimore aboard the Carnival Pride. Our guests appreciate the convenience of the port, which is within easy driving distance for millions of consumers," Thornton said. "The ability to drive to the port makes our cruises even more affordable. The convenience and affordability also enable us to attract more first-time cruisers. With such high guest satisfaction, we find that these first-time cruisers often return for many future cruises with us."
Andrew Coggins, a professor of management at Pace University's business school and a cruise expert, said Baltimore draws upon a large, middle-class market within a four-hour drive and builds from there.
"One of the big assets for Baltimore is BWI," he said. "You have a major means to get traffic, not just people driving there. That gives you a fairly good catchment area. You have airlines with competitive fares and lots of flights. Amtrak adds to the mobility."
Then, he said, there's the city and the region.
"Baltimore is a historic city, a tourist destination" Coggins said. "There's lots else to do, and D.C. is just an hour away. It has a brand attached to it. You can get a cruise plus a book-it-yourself tour of the city."
But the industry is fickle, and Baltimore officials must ensure that their vision and that of the cruise lines they are wooing are in sync, Coggins cautioned.
He points to Mobile, Ala., where officials had a short and expensive relationship with Carnival Cruise Lines. The city built a $20 million terminal, which Carnival occupied in 2004. Five years later, city officials invested $2.6 million in a new gangway. In 2011, Carnival abandoned Mobile for New Orleans.
Celebrity Cruises dropped Baltimore in 2004, returned in 2009 and left again after the 2011 season.
Coggins said Baltimore could guard against a loss as New York officials did before building the $52 million Brooklyn Cruise Terminal, which opened in 2006. They brokered a deal that locked in the Carnival and Norwegian cruise lines for a decade with about $200 million in port charges and a guarantee of 13 million passengers.
Even armed with positive marketing data, Baltimore's port would face a second hurdle: finding the money and the space to expand. The berth at the Cruise Maryland Terminal is 1,139 feet long with a depth of 35 feet, and the facility has more than 1,500 parking spaces.
"We could probably expand cruising where it is right now, but we'd have to take one of our cargo sheds out to do that, and it's really not the right place, the right atmosphere for going on a cruise," White said. "You don't want to put people through a warehouse. That's what we did when we first started at Dundalk, and we failed at that approach."
To expand, the port would have to rely on money from the state or a public-private partnership like the 50-year deal with Ports America that resulted in the expansion of the Seagirt Marine Terminal. Ports America manages the Manhattan Cruise Terminal.
"If [the Maryland Department of Transportation] said to the port of Baltimore, 'OK, we have $30 million that's unaccounted for. Where would you like to apply this money?' we'd obviously look at the cruise terminal," White said. "I feel very good about the probability of a third weekly sailing here."
Disney, with just four ships, hasn't shown an interest, although White said talks continue.
Brown said the port could add value by successfully wooing a more upscale line such as Holland America or Princess, which is owned by Carnival.
The opportunity for expansion exists. Last year, a record 17.2 million people took North American cruises with an economic value of $38 billion, despite the January 2012 accident in Italy in which a cruise ship ran aground and partly sank, killing 32, according to the Cruise Lines International Association.
The association projects that the business will grow 7 percent this year, even in the aftermath of the fire in mid-February aboard the Carnival Triumph that left the ship powerless and adrift in the Gulf of Mexico with 4,200 people and overflowing toilets. That incident appeared to have little immediate impact on cruise bookings, according to a recent research report from Tim Conder of Wells Fargo. Historically, cruise customers shrug off such events as aberrations, he wrote.
The industry suffered yet another black eye Thursday when generators on the Carnival Dream apparently failed, stranding the ship and its passengers at a dock in St. Maarten, with stories of overflowing sewage.
Despite such tales of cruise woe, Baltimore remains committed to the business for the long-term.
Brown said Baltimore has carved out an ideal market between central New Jersey and the Carolinas and as far west as Ohio that appears safe from passenger poaching.
"I don't know who the competition would be. It won't be Philly. It won't be Norfolk," she said. "Baltimore is in a great spot in such an important market. It's not like it's suddenly going to lose its international airport or become an island no one can get to."Copyright © 2015, The Baltimore Sun