södertörnshögskola

SÖDERTÖRN UNIVERSITY

Sodertorns University | School of business studies

Master’s Dissertation 30 ECTS | Spring Semester 2012

Cruise tourism on the BalticSea and implications of water

quality legislation

A case study on balancing the interests of the

cruise industry and local economies with

long-term environmental sustainability

Author: Sandy R. Polack

Supervisor: Dr. Anders Steene

Statutory declaration

”I declare in lieu of an oath that I have written this Master thesis myself and that I havenot used any sources or resources other than stated for its preparation. I further declarethat I have clearly indicated all direct and indirect quotations. This Master thesis hasnot been submitted elsewhere for examination purposes.”

Date: June 12th 2012 Signature:

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Acknowledgements

First of all I would like to thank my parents for continuous support and opportunityto pursue my desires for personal growth!

I express sincere gratitude to Anders Steene at Sodertorn University for the opportunityof writing this dissertation under his professional guidance. Your feedback during ourpersonal meetings and in numerous emails was always of high quality, to the point anda source of motivation and new ideas.

Of course I would like to thank all that contributed with their opinions and responsesto the investigative component of this research; Mr. Thomas Johansson, Mrs. StinaPaulin, Mr. Dan Lindstedt, Mr. Nicholas Rose, Mr. James Van Langen and Mr. OlofOlsson.

I would like to thank my sister Jessy, for helping me out around the house for theduration of this project!

And lastly I would like to thank Bart, Iris and Erik. Bart for never ending supportand relentless proof-reading. Erik and Iris for cheering mommy up in the moments sheneeded it most, with a laugh, a drawing or a song!

Sandy R. Polack

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Table of Contents

Abbreviations and organisations 10

Abstract 13

1. Introduction 141.1. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1.2. The structure of this dissertation . . . . . . . . . . . . . . . . . . . . . . . 17

2. Theoretical framework 182.1. Background: the cruise industry . . . . . . . . . . . . . . . . . . . . . . . 18

2.1.1. Relevant terminology . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2.1.2. The Cruise Industry . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.1.3. Definition of a Cruise . . . . . . . . . . . . . . . . . . . . . . . . . 21

2.1.4. Cruise ships and cruise ship classes . . . . . . . . . . . . . . . . . . 21

2.1.5. Economic significance of cruise tourism for ports . . . . . . . . . . 21

2.1.6. Cruise Ships and their environmental impact . . . . . . . . . . . . 23

2.1.7. Laws, Regulations and Incentives . . . . . . . . . . . . . . . . . . . 24

2.1.8. Magnitude of cruise traffic on the Baltic Sea 2006-2010 . . . . . . . 25

2.1.9. The Cruise Baltic project . . . . . . . . . . . . . . . . . . . . . . . 25

2.1.10. Cruise Ship Tourism in the Baltic - threats . . . . . . . . . . . . . 26

2.1.11. Stockholm as a Cruise Destination . . . . . . . . . . . . . . . . . . 28

2.1.12. Swedish organisations relevant for the Baltic Sea environment . . . 31

2.2. Background: the environment . . . . . . . . . . . . . . . . . . . . . . . . . 31

2.2.1. Relevant terminology . . . . . . . . . . . . . . . . . . . . . . . . . . 31

2.2.2. Sustainable tourism . . . . . . . . . . . . . . . . . . . . . . . . . . 32

2.2.3. Oceanography of the Baltic Sea . . . . . . . . . . . . . . . . . . . . 33

2.2.4. MARPOL Annex I on ship generated oil waste . . . . . . . . . . . 36

2.2.5. MARPOL Annex IV on ship sewage . . . . . . . . . . . . . . . . . 36

2.2.6. MARPOL Annex VI on emissions . . . . . . . . . . . . . . . . . . 36

2.2.7. EU Strategy and Action Plan for the Baltic Sea Region (EUSBSR) 37

2.2.8. HELCOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

2.2.9. Waste water management . . . . . . . . . . . . . . . . . . . . . . . 41

2.2.10. Waste water treatment onboard cruise vessels . . . . . . . . . . . . 42

2.3. Background: marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

2.3.1. The 4 P’s of marketing . . . . . . . . . . . . . . . . . . . . . . . . . 45

2.3.2. Influencing behaviour using cost and price . . . . . . . . . . . . . . 46

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2.4. Problem analysis and research questions . . . . . . . . . . . . . . . . . . . 462.4.1. Problem analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462.4.2. Research questions . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

3. Methodology 483.1. Research method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

3.1.1. Desk research, qualitative and quantitative methods . . . . . . . . 483.1.2. Case study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493.1.3. Expert interviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

3.2. Advantages and disadvantages of the chosen methods . . . . . . . . . . . . 513.2.1. Validation and reliability . . . . . . . . . . . . . . . . . . . . . . . 52

3.3. Researched stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533.4. Interview questionnaires . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543.5. Survey of general public . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

4. Results and analysis 574.1. Response overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574.2. Organisations’ response . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

4.2.1. Response from Swedish Agency for Marine and Water Manage-ment (Havs och Vattenmyndigheten) . . . . . . . . . . . . . . . . . 57

4.2.2. Response from Swedish Maritime Administration (Sjofartsverket) . 604.2.3. Response from Ports of Stockholm (Stockholms Hamnar) . . . . . 62

4.3. Cruise industry’s response . . . . . . . . . . . . . . . . . . . . . . . . . . . 644.3.1. Response from Birka Cruises . . . . . . . . . . . . . . . . . . . . . 644.3.2. Response from Carnival . . . . . . . . . . . . . . . . . . . . . . . . 664.3.3. Response from Royal Caribbean . . . . . . . . . . . . . . . . . . . 69

4.4. Facebook survey on willingness to pay for responsible sewage handling onthe Baltic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

5. Conclusion, critical review and suggested future research 765.1. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765.2. Research question: state of cooperation for long-term competitiveness? . . 765.3. Research question: how to deal with increased cost? . . . . . . . . . . . . 785.4. Closing remarks and personal opinion . . . . . . . . . . . . . . . . . . . . 785.5. Validation, limitations and critical review . . . . . . . . . . . . . . . . . . 795.6. Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

References 82List of URL’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

A. Appendix: Cruise lines calling on Stockholm in 2012 86

B. Appendix: Cruise Tourism on the Baltic Sea Statistics 88

C. Appendix: Economic theory on price elasticity 91

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D. Appendix: Economic theory on costs 94

E. Appendix: Example of questionnaires sent to various stakeholders 96E.1. Example of questionnaire sent to the Swedish Agency for Marine and

Water Management (Havs och vattenmyndigheten) . . . . . . . . . . . . . 96E.2. Example of questionnaire sent to Royal Caribbean Cruise Lines . . . . . . 97E.3. Example of customised questionnaire sent to Tumlare Sweden AB . . . . 99

F. Appendix: Baltic Ports Organisation (BPO) on HELCOM guidelines for sewagedischarge 100F.1. BPO comments to HELCOM guidance on technical and operational as-

pects of sewage delivery to Port Reception Facilities . . . . . . . . . . . . 100

G. Appendix: Comments from CLIA on PRF’s 103G.1. Technical problems related to port reception facilities . . . . . . . . . . . . 103

G.1.1. Comments from the CLIA and the ECC . . . . . . . . . . . . . . . 103

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List of Figures

2.1. The biggest cruise operators by market share in 2011. Adapted from:www.cruisemarketwatch.com/blog1/home/ . . . . . . . . . . . . . . . . . 20

2.2. Royal Caribbean International’s Oasis of the Seas, designed for 5400 pas-sengers, entering the port of Nassau, Bahamas. . . . . . . . . . . . . . . . 22

2.3. Snapshot of ship traffic in the Baltic Sea on April 8th 2009, Source: HEL-COM AIS, accessed via www.helcom.fi/stc/files/shipping/Overview%20of%20ships%20traffic updateApril2009.pdf . . . . . . . . . . . . . . . . . . . . 25

2.4. Number of ships crossing predefined AIS lines 2006-2009. Source: HEL-COM AIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2.5. Cruise Baltic statistics on passenger numbers on cruises longer than 60hours (source: www.cruisebaltic.com/media(1544,1033)/Cruise Baltic MarketReview 2012.pdf) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

2.6. Cruise Baltic statistics on top 5 ports for cruises longer than 60 hours(source: www.cruisebaltic.com/media(1544,1033)/Cruise Baltic MarketReview 2012.pdf) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

2.7. Left: Stockholm cruise vessel calls per year. Right: Stockholm cruisepassengers (000’s) per year. The 2012 figures are estimates. Source:Cruise Baltic, appendix B) . . . . . . . . . . . . . . . . . . . . . . . . . . 29

2.8. The Baltic sea basin (source: www.baltex-research.eu) . . . . . . . . . . . 34

2.9. Algal blooming in the Baltic Sea on 27-07-2008, source: University CollegeLondon, Dept. of Space and Climate Physics (Source:www.ucl.ac.uk/mssl/imaging/research) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

2.10. Delivered sewage (in tons and m3) to the PRF compared to calls at aport. Source: HELCOM Baltic Sea Environment Proceedings No. 123(2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

2.11. Typical steps in a waste water treatment system . . . . . . . . . . . . . . 43

4.1. Survey results: how much would you be willing to pay additionally perday to have your sewage treated instead of dumped in the Baltic. . . . . . 74

4.2. Example of a cruise operator (TallinkSilja) implementing a fuel surchargeto deal with varying fuel prices that were not included when prices forthe season were set. A similar approach to sewage surcharge is not rec-ommended (see text). www.digipaper.fi/tallinksilja/75337/ . . . . . . . . 75

B.1. Cruise passenger numbers per port. Source: Cruise Baltic www.cruisebaltic.com/media(1560,1033)/Cruise Baltic statistics 2000-2012.pdf . . . . . . . 89

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B.2. Cruise vessel calls per port. Source: Cruise Baltic www.cruisebaltic.com/media(1560,1033)/Cruise Baltic statistics 2000-2012.pdf . . . . . . . . . . 90

C.1. (Fictitious) demand curve for the number of consumers (x-axis) willing topay the price for a 5-day-cruise (y-axis) to satisfy their ’need for a break’. 92

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List of Tables

1.1. The various ’special areas’ under IMO . . . . . . . . . . . . . . . . . . . . 16

2.1. Examples of different sizes (classes) of cruise ships and their tonnage.Adapted from Morgan and Power (2011). . . . . . . . . . . . . . . . . . . 22

2.2. Cruise Baltic statistics relevant for Stockholm (appendix B). . . . . . . . 30

4.1. Summary of responses. Swedish names for the organisations listed can befound in section 2.1.12. In the ’survey’ colunn: • means: survey sent andresponse received, ◦ means survey sent but no response received. . . . . . 58

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Abbreviations and organisations

A selection of relevant organisations (and their abbreviations) that will appear oftenin subsequent chapters is listed here for future reference.

BPO Baltic Ports Organisation: Organisation that aims to improve the competitivenessof maritime transport in the Baltic region by increasing the efficiency of ports,marketing the Baltic region as the strategic logistics centre, improving the infras-tructure within the ports and the connection to other modes. Currently has justover 40 member ports from 9 countries around the Baltic sea. 1

BSAP Baltic Sea Action Plan: The Helsinki Commission’s strategy for achieving its goalof environmentally friendly maritime activities on the Baltic Sea. Its 8 managementobjectives are stated in section 2.2.8.1.

CLIA Cruise Lines International Association: Founded in 1975, it is one of the largestindustry organisations. From the CLIA website: ”CLIA’s mission is to promotepolicies and practices that foster a safe, secure and healthy cruise ship environment;educate and train its travel agent members; and promote and explain the value,desirability and affordability of the cruise vacation experience.” 2

ECC European Cruise Council: The European Cruise Council (ECC) represents theleading cruise companies operating in Europe and has 30 cruise members and 34associate members. 3

EUSBSR EU Strategy for the Baltic Sea Region is the first EU macro-regional strategy.It centers around making Baltic Sea cleaner, making the region more dynamic andprosperous, and improving security. More on EUSBSR on page 37.

GHG Green-house gas: a gas that contributes to global warming. In the case of shippingand maritime legislation CO2, SOx and NOx are of particular interest.

HELCOM Helsinki commission: The Helsinki Commission is a collaboration betweenthe countries that border the Baltic Sea (Denmark, Estonia, Finland, Germany,Latvia, Lithuania, Poland, Russia and Sweden.) From the website: ”HELCOMsvision for the future is a healthy Baltic Sea environment with diverse biologicalcomponents functioning in balance, resulting in a good ecological status and sup-porting a wide range of sustainable economic and social activities.” 4

1www.bpoports.com/about.html2www.cruising.org/regulatory/about-clia3www.europeancruisecouncil.com4www.helcom.fi/helcom/en GB/aboutus/

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IMO International Maritime Organisation: The International Maritime Organisationis the United Nations entity concerned with the safety and security of shippingas well as the prevention of marine pollution by ships. The IMO Conventionentered into force in 1958 and the organisation changed its name from IMCO toIMO in 1982. Although it started out as an organisation aimed mainly at makinginternational shipping more efficient, during the late sixties and early seventies theimportant tasks of prevening pollution at sea were added. MARPOL (see below)is an important result of IMO’s efforts. 5

International Convention for the Prevention of Pollution from Ships see MARPOL.

IPCC Intergovernmental panel on climate change: The Intergovernmental Panel on Cli-mate Change (IPCC) is the leading international body for the assessment of cli-mate change. It was established by the United Nations Environment Programme(UNEP) and the World Meteorological Organisation (WMO) to provide the worldwith a clear scientific view on the current state of knowledge in climate changeand its potential environmental and socio-economic impacts. Currently 195 coun-tries are members of the IPCC. 6 See also section 2.2.6 on MARPOL Annex VIEmissions.

MARPOL convention MARPOL is short for ”International Convention for the Preven-tion of Pollution From Ships, 1973 as modified by the Protocol of 1978”. Itsobjective: ”to preserve the marine environment through the complete eliminationof pollution by oil and other harmful substances and the minimization of accidentaldischarge of such substances.” 7 At this moment the convention is signed by 136nations, representing basically all nations that have access to the sea. Differentannexes of MARPOL are concerned with different types of pollution:

I Oil

II Noxious liquid substances carried in bulk

III Harmful substances carried in packaged form

IV Sewage (more on the content of this annex on page 36)

V Garbage

VI Air pollution

For ratifying parties recognition of annexes I and II is compulsory, the remainingannexes are optional. The for this dissertation relevant annex IV (entered intoforce 2003) has been subscribed by 124 countries (October 2009 figure). It shouldbe noted that the USA is one of the nations that have not ratified Annex IV toMARPOL. 8 MARPOL also defines Special Areas (stricter rules for certain areas)which follow the same numbering as the annexes (i.e. a ’Annex VI Special Area’

5www.imo.org/About/HistoryOfIMO/Pages/Default.aspx6www.ipcc.ch/organization/organization.shtml.T5VQnLODuAg7www.imo.org/about/conventions/listofconv....(marpol).aspx8www.imo.org/about/conventions/listofconv....(marpol).aspx

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is an area with increased requirements for shipping related air pollution). See alsoSECA below.

MEPC Marine Environment Protection Committee: MEPC is a committee of the IMO(see above) and also stands for the MEPC amendments to MARPOL annex VI(see above). It specifically regulates the exhaust of substances that harm the ozonelayer as well as the fuel change over when entering/leaving SECA areas (see below)and fuel oil sulphur limits.

MSFD Marine Strategy Framework Directive A EU directive (2008) that explicitlystates the objective that ”biodiversity is maintained by 2020.” 9

NECA (NOx) Emission Control Areas: Special areas in the MARPOL convention (seeabove) defined by the International Maritime Organisation IMO that due to theirunique geographical or ecological situation have to follow rules. See also SECA. 10

PRF Port Reception Facility: All ports handling any international shipping must pro-vide facilities where vessels can dispose of waste and residues that cannot be dis-charged at sea. The adequateness of PRF’s is discussed further in section 2.2.8.3.

SECA (SOx) Emission Control Areas: Special areas in the MARPOL convention (seeabove) defined by the International Maritime Organisation IMO that due to theirunique geographical or ecological situation have to follow rules. SOx EmissionControl Areas are: Baltic Sea (2006), North Sea (2007), US North Sea (2012) andUS Caribbean (2014). 11

9ec.europa.eu/environment/water/marine/ges.htm10www.imo.org/OurWork/Environment/PollutionPrevention/SpecialAreasUnderMARPOL/Pages/

Default.aspx11www.imo.org/OurWork/Environment/PollutionPrevention/SpecialAreasUnderMARPOL/Pages/

Default.aspx

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Abstract

”Environmental consciousness has progressed from a trend into a global way of life,”and customers expect environmentally friendly cruising. 12 As of July 2011, strictersewage discharge regulation on the Baltic Sea requires vessels to either treat sewageon board or deliver untreated sewage to Port Reception Facilities for treatment at themunicipal treatment plant. The present research investigates to what extent the stricterBaltic regulation, risks becoming an incentive for cruise companies to move itinerariesto regions with less strict regulation (cost savings). The first research question; ”is thecurrent state of cooperation between cruise operators and local (environmental, eco-nomic, development) organisations sufficient to ensure long term competitiveness forcruise tourism on the Baltic?” is answered by using desk research and expert interviews.The second, ”how should cruise operators deal with the increased sewage treatmentcost?” was assessed by a short survey among potential customers. Regarding the coop-eration between cruise companies and organisations, this research concludes that thereare good examples of cooperation, but that more intensive cooperation is desirable, espe-cially when stricter emission regulation enters into force in 2015. When it comes to costmanagement the survey strongly suggests that cost transfer to passengers is possible, butthat a ’sewage surcharge’ (similar to current fuel surcharges) is not recommended butthat cost increases should be included in the cruise price. Both research questions meritfurther investigation to define more specific actions and more detailed recommendations.

Keywords: cruise tourism, sewage discharge, Baltic Sea, port reception facili-ties, waste water management, surcharge

12www.worldcruise-network.com/features/feature78425/

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1. Introduction

This dissertation gives an overview of the current state of waste water discharge leg-islation on the Baltic, and tries to assess the level of cooperation (or tension) betweentourism stakeholders on one side and involved (environmental- and stakeholders-) or-ganisations on the other. Based on the analysis of the current state together with theoutcome of a more general ’waste handling’ survey to potential cruise passengers, a rec-ommendation to cruise operators will be made with respect to the desirability to add asurcharge for dealing with increased compliance costs.

1.1. Background

Tourism has become part of daily life for most inhabitants of developed countries.Cruise tourism is no exception to this and has shown growth for the past decades. Cruisetourism destinations have been impacted by this economically, socially, environmentally,culturally, sometimes positively, sometimes negatively.

Like any other economic activity there is a significant environmental impact from thissector which has to be dealt with. Traditionally, a lot of attention has been given tocarbon dioxide reduction measures that aim to limit the consequences of human emissionof greenhouse gasses.

Taking the 2009 United Nations Climate Change Conference or Copenhagen summit asan example, it is unlikely that legislation will be able to offer a complete sustainablesolution to the sector’s impact on ecosystems where it is present. 1

Cruise tourism, and therefore its environmental impact, will not cease to grow andadequate response is required to advance the sector in a sustainable way. It is safe toassume that the adequate response will lead to increased costs for the cruise operators,but it is not trivial that the tourist will be willing to pay for this offset. With the advanceof for example low cost air travel, all actors in the tourism sector have seen demandbecome more price elastic (customers are more sensitive to small price differences thanbefore, since they can shop easily for alternatives on internet).

With the margins under pressure due to increased competition, how will heavily cruise-tourism-dependent destinations manage the temptation to artificially boost attractive-ness by lowering requirements for ships that call on that destination (and thus remaininteresting for cruise operators reluctant to raise prices)?

1un.org/wcm/content/site/climatechange/lang/en/pages/2009summit

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This poses an interesting dilemma for the cruise operators: how to balance the desireto operate more environmentally conscious with the related increased costs? Can theincreased costs be absorbed in the cruise’s price or is a surcharge system (such as theone in effect for fuel with several cruise operators) desirable?

Moreover, Steene (2011) cites that carbon dioxide emissions are a big contributor tothe tourism industry’s environmental footprint. In 2035 emissions are expected to haveincreased by 150% and if no measures are taken tourism might become the largest soleresponsible for climate deterioration compared to all other industry sectors. Can thepartial results of this theses be successfully applied to a pricing recommendation forcruise operators when even stricter emissions-legislation comes into effect in 2015?

The Baltic Sea region is a unique ecosystem because of its location at northern latitude,its narrow connection to the North Sea (seriously limiting its capability for refreshingits water) and its relatively low salinity. This makes the Baltic Sea much more sensitiveto water pollution than other bodies of water where cruise liners operate.

Although stricter environmental footprint regulation will probably be imposed, it isimportant to make sure that for operators cruising the Baltic the water pollution goalsare made a specific and separate part of the requirement. Failing to do so, e.g. by definingonly generic environmental impact limits, might tempt operators to focus on (more)easily attainable noise, CO2 or low sulphurous-content-fuel measures, and neglect waterpollution (or vice versa). Since it is precisely water pollution that makes a difference forthe health of the Baltic Sea, failing to address it specifically would in practice mean afailure of the intent of the environmental regulations.

Since HELCOM (page 10) is most likely to impose the strictest environmental legislation,this paper will mainly focus on the cruise operator’s planned and anticipated measuresto comply with the requirements on discharge water quality imposed by HELCOM.

Attention will be paid to the industry’s environmentally friendly image against its actualbehaviour and the difficulties of effective regulations. This paper will focus on wastedischarges which are unavoidable and compliance in this area is expected to lead tohigher operating costs for cruise operators. Other spills, such as oil spills for example,although detrimental for the health of the Baltic Sea, will be considered accidental andtherefore not a cost driver (it is assumed that cruise companies will have taken everyprecaution to prevent spills, so that if an accidental spill might occur it will not lead tolower costs).

At this time the contribution of NOx and SOx emissions to eutrophication (see 2.2.1)are excluded from this paper’s scope since they do not present a challenge specific to theBaltic but more of a global challenge (especially by the stricter emission regulations ineffect starting 2015). The effects of these emissions on global climate change are brieflydiscussed in section 2.1.6. The unique character of the Baltic being designated a SewageSpecial Area is apparent in table 1.1 where all IMO special areas are listed. Almost allcould be studied ’anywhere’ whereas the sewage Special Area status is unique to theBaltic and therefore focus of this dissertation.

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Table 1.1.: The various ’special areas’ under IMO

Special Areas Adopted Entry into Force In Effect

Annex I: OilMediterranean Sea 2 Nov 1973 2 Oct 1983 2 Oct 1983Baltic Sea 2 Nov 1973 2 Oct 1983 2 Oct 1983Black Sea 2 Nov 1973 2 Oct 1983 2 Oct 1983Red Sea 2 Nov 1973 2 Oct 1983 *”Gulfs” area 2 Nov 1973 2 Oct 1983 1 Aug 2008Gulf of Aden 1 Dec 1987 1 Apr 1989 *Antarctic area 16 Nov 1990 17 Mar 1992 17 Mar 1992North West European Waters 25 Sept 1997 1 Feb 1999 1 Aug 1999Oman area of the Arabian Sea 15 Oct 2004 1 Jan 2007 *Southern South African wa-ters

13 Oct 2006 1 Mar 2008 1 Aug 2008

Annex II: Noxious Liquid SubstancesAntarctic area 30 Oct 1992 1 Jul 1994 1 Jul 1994

Annex IV: SewageBaltic Sea 15 Jul 2011 1 Jan 2013 **

Annex V: GarbageMediterranean Sea 2 Nov 1973 31 Dec 1988 1 May 2009Baltic Sea 2 Nov 1973 31 Dec 1988 1 Oct 1989Black Sea 2 Nov 1973 31 Dec 1988 *Red Sea 2 Nov 1973 31 Dec 1988 *”Gulfs” area 2 Nov 1973 31 Dec 1988 1 Aug 2008North Sea 17 Oct 1989 18 Feb 1991 18 Feb 1991Antarctic area 16 Nov 1990 17 Mar 1992 17 Mar 1992Caribbean, Gulf of Mexico 4 Jul 1991 4 Apr 1993 1 May 2011

Annex VI: Prevention of air pollution by ships (Emission Control Areas)Baltic Sea (SOx) 26 Sept 1997 19 May 2005 19 May 2006North Sea (SOx) 22 Jul 2005 22 Nov 2006 22 Nov 2007North American (SOx, andNOx)

26 Mar 2010 1 Aug 2011 1 Aug 2012

United States Caribbean SeaECA (SOx, NOx)

26 Jul 2011 1 Jan 2013 1 Jan 2014

* The Special Area requirements for these areas have not yet taken effect because of lackof notifications from MARPOL Parties whose coastlines border the relevant special areason the existence of adequate reception facilities (regulations 38.6 of MARPOL Annex Iand 5(4) of MARPOL Annex V).** The entry into force is subject to the amendments being accepted by Parties by 1July 2012.

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The remainder of the paper is centered around the following research questions:

1. Is the current state of cooperation between cruise operators and local (environ-mental, economic, development) organisations sufficient to ensure long term com-petitiveness for cruise tourism on the Baltic?

2. How should Cruise operators deal with the increased cost of complying to localenvironmental regulation?

1.2. The structure of this dissertation

The general outline of the reasoning behind this dissertation’s research questionswere presented in the previous section. Chapter two is divided in four parts, threediscussing the specific backgrounds of the relevant cruise-industry-related, environmen-tal and marketing concepts, and one part summarizing the research questions. Chapterthree presents an analysis of research methodology and data collection methods usedand lists interviewed stakeholders and typical questionnaires. Chapter four summarizesthe results and presents a consolidated discussion of how cruise operators as well asBaltic organisations are coping with the Baltic sewage legislation challenges. It includesalso results of an on-line survey on pricing with respect to the desirability of includingincreased sewage-handling cost in the cruise price or charge a surcharge. Finally chapterfive draws conclusions from the material presented, provides a critical analysis of thepossibilities of extending the conclusions to other research areas and offers suggestionsfor further investigation.

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2. Theoretical framework

This chapter contains four parts: three of them address the background of the cruiseindustry, environment and marketing, whereas the fourth states the research problemtogether with the research questions. Every section is introduced by a short list ofdefinitions that are used in the following paragraphs.

The backgrounds on the cruise industry and environment are provided to give a summaryof cruise-industry-related concepts and realities relevant for analysis of the force fieldbetween cruise industry and other stakeholders around the Baltic. It specifically reviewsthe statistics on cruise tourism on the Baltic together with its economic importance forthe region, as well as, the different legislation and regulation frameworks in place (suchas MARPOL, HELCOM etc.). Waste water management options on board cruise vesselsis briefly discussed to gain understanding of the challenges for cruise operators to complyto ever-changing requirements for sewage quality.

The research questions that conclude this chapter are introduced by the main researchproblem statement in section 2.4.

2.1. Background: the cruise industry

2.1.1. Relevant terminology

Not necessarily in alphabetical order, rather in logical-conceptual order.

Cruise Sail from place to place for pleasure, calling at a succession of destinations, or tosail, journey or move about by a cruise ship coined by Morgan and Power (2011).More on this particular definition on page 21.

Cruise ship Quoting Morgan and Power (2011), a cruise ship is a floating passengervessel used commercially for pleasure voyages (more on page 21).

Cruise tourist Again, Morgan and Power (2011); A cruise tourist is a person buying acruise trip who spends at least one, but usually two nights or more on a cruiseship, usually for leisure purposes.

Call When a ship enters a port, it ”calls”. The number of calls in a port is hence thenumber of ships visiting that port. A call is called a turn-around, if the passengersleave the ship at the port and new passengers board the ship. Turnarounds alsoinclude part-turnarounds. A call is called a part-turnaround if, not all, but acrucial part of the passengers leave the ship and new passengers board.

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2.1.2. The Cruise Industry

The cruise industry is relatively young (40-50 years). 1 The purpose of travelling inthis case is not entirely the destination it is also the means and the experience during thetrip. For many tourists, the cruise experience embodies a series of powerful motivations;it is often perceived to be safe, social, customer friendly and service oriented. Travelexpert Douglas Ward says: ”Cruising is popular today because it takes you away fromthe pressures and strains of contemporary life by offering an escape from reality. Ward(2002) elaborates; ”cruise ships are really self-contained resorts, without the crime, whichcan take you to several destinations in the space of just few days.”

It is additionally an important means of income for the tourism industry as a whole. In2011 the cruise industry was estimated at about US$ 29.4 billion carrying approximately19.2 million passengers. These figures are expected to rise to 31 billion and 21.6 millionrespectively for 2014. 2

Apart from sound growth, the cruise sector has managed to pull off another impressivefeat: it managed to add an image attracting younger passengers while not scaring awaytheir existing customer base. In 2002 the median age of a cruise passenger was 52, in2008 it was 46. 3

The major industry’s players widened their marketing programmes to appeal to a widervariety of customer segments, sometimes helped by sheer luck (cruise bookings soaredin the month the film Titanic was released). However the cruise industry is nowadaysused as a text book example of a segment successfully adapting to changing customerpreferences and appealing to new potential customer segments. The cruise industry isused as an example of successful segmentation by Mullins et.al. (2003) in their text onMarketing.

Factors that are frequently quoted in contributing to the cruise industry’s extraordinarymarketing are:

• Cruise operators invested significantly in larger, steadier ships that incorporatedmany additional facilities such as casinos, theatres, spas etc.

• Shorter and cheaper cruises become more common, attracting more price-sensitivecustomers. Cruises can last from a couple of days up to several (6) months.

• Cruise operators worked hard to extend their geographical footprint to offer cruisesfrom more and more cities all over the world.

• A considerable amount of resources was dedicated to advertising, campaigns andpromotion programmes. During the late nineties Carnival, Royal Caribbean andPrincess spent about $ 100 million annually on TV advertising.

• The cruise industry succeeded in establishing a segmentation of its customer baseand catering to the different needs of each segment. Examples are romantic settings

1For a brief historic description, see Morgan and Power (2011)2www.cruisemarketwatch.com/blog1/.....projections/ (See References for full URL.)3www.economist.com/node/15501665

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Carnival

51%

MSC Cruises

5%

Royal Carribean

26%

Norwegian Cruise

Lines

8%

Disney

2%

Other

8%

2011 Global cruise company market share

Figure 2.1.: The biggest cruise operators by market share in 2011. Adapted from: www.cruisemarketwatch.com/blog1/home/

attracting honeymooners, Disney themes attracting families with kids, Broadwayproductions for a more conventional audience etc. )

Future success will largely depend on the cruise-industry players ability to sustain growthat a par with the building of new ships and opening up of new routes.

Not all is positive though. The enormous growth of the sector has its downsides. Manydifferent threats can be identified such as cruise tourism becoming a more interestingtarget for terrorist attacks (cruising revenue dipped in 2002 after 9/11). Another threatto the industry itself is over capacity. It is hard to adjust the total available supply ofcruise beds to a varying global demand. This has already led to a significant consolidationin the industry with bigger players buying up the small players. Figure 2.1 shows thebiggest global players by revenue in 2011.

Cruise tourism has also been identified as a contributor to socio-environmental problems,ranging from water pollution to greenhouse-gas emissions and from low-wages-job-off-shoring to injecting sums of money in non-democratic societies.

Cruise tourism is not only concerned with the destinations (shore excursions) and thetravel in between (amenities and services on board). Many tourism packages include air

20

travel to and from the cruise’s embarkation port as well.

2.1.3. Definition of a Cruise

Cruise Europe’s definition:

A Cruise is a voyage of at least 60 hours by a seagoing vessel, mainly for pleasure. Onlypassengers with tickets that should include accommodation and all meals are transported.The Cruise voyage must include at least two visiting ports apart from the starting andending port. 4

We will however deviate from this definition by including also shorter cruises (24 hours).This allows us to include the inter-Baltic Cruises (cruises between Baltic ports for 1 or2 days). Because of the size of the Baltic, using the 60 hour limit would exclude a largepart of the inter-Baltic cruises. Since they operate on shorter distances but frequently,their environmental impact should not be neglected. We will for the purpose of thisdissertation define a cruise as:

Sail from place to place for pleasure, calling at a succession of destinations,or to sail, journey or move about by a cruise ship. Adapted from: Morgan andPower (2011).

2.1.4. Cruise ships and cruise ship classes

A cruise ship is a floating passenger vessel used commercially for pleasure voyages,see: Morgan and Power (2011).

At the time of writing the largest cruise ships can take on more than 5000 passengers.Rather than the number of passengers, gross tonnage is used to indicate the size of aship. Gross tonnage is a measure of the volume (not weight as the name might suggest)of a ship. Gross tonnage is used for the establishment of fees and the application ofregulation. It can also be used to compare different cruise ship’s sizes with each other,since the ratio of tonnage versus passengers, expresses roughly the space available toeach passenger and/or services on board (see table 2.1).

2.1.5. Economic significance of cruise tourism for ports

Considering the amount of passengers a single cruise ship can bring to a port or city,it is no surprise that the related spending is an important incentive for harbour cities topromote their port as a cruise destination.

Arrival of cruises ships and their passengers is normally expected to stimulate economyactivity. Some may be direct purchase of fuel, water, payment for berthings, port

4www.cruisebaltic.com/media(1315,1033)/Cruise Baltic Market Review 2010 final.pdf

21

Figure 2.2.: Royal Caribbean International’s Oasis of the Seas, designed for 5400 passengers,entering the port of Nassau, Bahamas.

Table 2.1.: Examples of different sizes (classes) of cruise ships and their tonnage. Adaptedfrom Morgan and Power (2011).

Classification Example Passengers Tonnage Tnge/psngr

Resort ships RCI Oasis of the Seas 5 400 220 000 41Mega ships P&O Ventura 3 100 115 000 37Large ships P&O Oceana 2 016 77 000 38Medium-size ships Cunard Queen Elizabeth 2 200 92 000 42Small ships Global Marine Marco Polo 826 22 080 27Ultra-luxury ships Seabourn Odyssey 450 32 000 71

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fees, etc. Most of the economy impact will however , be traced to the tourist and theiractivities, Manning (2008).

The industries that are most likely to benefit from the visitor activities are: trans-portation (taxis, buses,automobiles, boat rentals), tour operators (including organizers,guides), selected attractions (mainly those marketed as a part of tours or shore activi-ties by the tour staff on the ship) and shops (mainly those located close to the dock, ormarketed directly by the ship activities staff.)

2.1.6. Cruise Ships and their environmental impact

”For tourism, climate change is not a remote event, but a phenomenon that alreadyaffects the sector and certain destinations in particular, mountain regions and coastaldestinations among others. At the same time, the tourism sector is contributing togreen-house gas emissions (GHG), especially through the transport of tourists.” 5

Manning (2006) distinguishes between the impact of ship operations and the impactof tourist activities and claims that the latter (e.g. socio economic impact on ruralcommunities) has received less attention than the effects of the first (e.g. emissionregulations for cruise ships).

About one third of cruise-ship-generated air pollution is actually from emissions whiledocked in a port. Auxiliary diesel engines are used for power supply to the ship’selectric power circuits while the main engines are off. Efforts are ongoing to supplydocked vessels with (cleaner) shore-power to reduce these emissions. In a 2007 estimatethe carbon footprint of the total shipping industry is put at around 870 million tonnesper year, 2.7% of total global man-made-emissions.

An important contributor to environmental impact of cruise tourism is the sulphurouscontent in ship fuel oil. SOx present in exhaust fumes of ships, will lead to particlecontamination, but more relevant for the marine environment, acidification in the sur-roundings of ports and shipping lines. The same goes for NOx exhaust which leads toacidification and eutrophication (see 2.2.1) as well. The Baltic was declared a SOx Emis-sion Control Area (SECA) under MARPOL Annex VI (see page 10 and section 2.2.5),in 2006, which limited the allowed sulphur content of ship fuel to 1.5%. From 2010 thislimit was decreased to 1.0% and from 2015 the limit will be even lower at 0.1% .6

The Cruise Industry is well aware of the international pressure on reducing environmen-tal impact and realizes it is being scrutinized by international and/or self-proclaimedwatch dogs (e.g. www.foe.org/cruise-report-card). This has also led to the Cruise Oper-ator’s articulating environmental policies and creating positions such as ’environmentalofficer’ to make sure procedures, recycling initiatives and for example sewage treatmentregulations are followed. On a large cruise ship, there may be as many as ten crewmembers whose full-time job is to handle waste disposal.

5www.unwto.org/climate/bkg/en/bkg.php?op=16www.helcom.fi/shipping/emissions/en GB/emisions/

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Cruise companies recognize that their passengers ask questions about the ethical stancethe company takes on pollution and the environment so it makes logical business senseto adopt sound practices to ensure that the maximum possible is done in the name ofenvironmentalism, Vogel et.al. (2012).

The Baltic Sea region’s stakeholders, assembled in the Helsinki Commission (see page10 and section 2.2.8) are recognised globally as being a forerunner when it comes toenvironmental regulation and raising awareness for sustainability of Baltic Sea shippingand tourism in the region.

At the same time, Ketkar (1995) emphasizes that environmental protection is high onevery seagoing officer’s list of priorities. Both engineers and navigation officers arepersonally liable for the protection of the environment and, if negligent, can face criminalcharges resulting in hefty fines, loss of licences, and even imprisonment.

2.1.7. Laws, Regulations and Incentives

Shipping is an international industry, connecting parties from various parts of theworld. The sea presents the ”world’s greatest highway”, whose use is enjoyed by allnations and the continuance and safeguarding of the use is essential, according to Don-aldson (1994).

To regulate their interactions and to ensure the safe, secure and sustainable operationof this industry, a regulatory framework has been developed. As the cruise industryis one sector of the shipping industry , cruise companies have to adhere to the sameinternational rules and regulations as any other shipping sector.

The international nature of maritime legislations poses additional challenges to stake-holders trying to put up incentives to promote a certain (e.g. environmentally-friendly)behaviour. The regulatory framework of the shipping industry is discussed in more detailby Boy and Neumann (2012).

What’s important in the present discussion has been highlighted before as well: therelevant organisations and governments have already aligned themselves in the form ofthe Helsinki Commission, which reduces the risk for potential conflicts. Moreover theHelsinki Commission has proven to be ambitious in its goals, meaning that the HELCOMrequirements exceed the international requirements. If the countries around the Balticadhere to the HELCOM requirements, they automatically adhere to the looser MARPOLand IMO requirements (see page 10 and sections 2.2.8 and ).

This is however a bigger problem for Cruise operators that are required to adhere tointernational and local regulations at the same time. As local regulations diverge fromregion to region, this becomes a major cost driver for internationally operating cruisecompanies. A point emphasized by Norwegian Cruise Line’s mr. Fiebrandt in his exposefor the December 2009 ASTM (American Society for Testing and Materials) meeting.7

7www.astm.org/COMMIT/F25Presentations/fiebrandt.ppt

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Figure 2.3.: Snapshot of ship traffic in the Baltic Sea on April 8th 2009, Source:HELCOM AIS, accessed via www.helcom.fi/stc/files/shipping/Overview%20of%20ships%20traffic updateApril2009.pdf

2.1.8. Magnitude of cruise traffic on the Baltic Sea 2006-2010

The Baltic Sea is heavily trafficked by passenger ships, cargo vessels and tankers.Figures 2.3 and 2.4 show a snapshot traffic density in the Baltic on April 8th 2009 andtrend lines for ships counted crossing a reference line during one week between 2006 and2009.

Although the Baltic only accounts for 0.1% of the total water surface of the earth, itcarries 10% to 15% of the world’s maritime traffic. Cruise traffic, including the numerouspassenger ferries, accounts for 4.5% of maritime traffic on the Baltic. Every year thereare between 120 and 140 shipping accidents (2008) in the Baltic, and that numbers growsas the magnitude of traffic increases.

Many HELCOM data sources for Geographic Information Systems (GIS) are accessiblethrough the Helcom AIS online mapping tool: www.helcom.fi/GIS/en GB/HelcomGIS/.

2.1.9. The Cruise Baltic project

In 2004 twelve Baltic ports, 26 organisations, in 10 countries established a collabora-tion in order to promote cruise tourism to and in the Baltic Sea. Over the years it hasgrown to include 25 destinations, 41 partners.

Cruise Baltic’s statistics can be accessed on: www.cruisebaltic.com/composite-719.htmand are (partly) included in appendix B. It is important to note, though that Cruise

25

0

50000

100000

150000

200000

250000

2006 2007 2008 2009

Nu

mb

er

of

ship

s

Year

Passenger

Cargo

Tanker

Other

No info

Figure 2.4.: Number of ships crossing predefined AIS lines 2006-2009. Source: HELCOMAIS

Baltic’s definition of a cruise excludes cruises shorter than 60 hours, which for the Balticleads to a serious underestimate of total Cruise Tourism, considering the vast amountof ’Stockholm - Tallin’ type cruises!

However trends when it comes to cruises longer than 60 hours, are reproduced in fig-ures 2.5 and 2.6

2.1.10. Cruise Ship Tourism in the Baltic - threats

It is easy to describe the increasing (environmental) legislation on the Baltic as athreat in the eyes of the Cruise operators in the Baltic. The threat, however, is notthe increasing legislation. The increasing legislation is required to preserve the Balticenvironment as a cruise destination not only the next decade but for generations tocome as well. In that light all legislation, and related costs or expenses, should be seenas investments allowing the (Baltic) cruise industry to be profitable well into the 21stcentury.

The threat lies therein that too many different locally varying legislation will put prac-tical limits to how much individual cruise operators are willing to invest and thereforeachieve when it comes to actual exhaust and discharge reductions for example. Mr.Fiebrandt of Norwegian Cruise Lines showed at the December 2009 ASTM meeting,mentioned in section 2.1.7, that at that time cruise liners are subject to no less than 8different requirements on maximum concentrations of pollutants in sewage discharges,depending on the 8 regions they are serving. 8 It is this divergence in requirements

8www.astm.org/COMMIT/F25Presentations/fiebrandt.ppt

26

Figure 2.5.: Cruise Baltic statistics on passenger numbers on cruises longer than 60 hours(source: www.cruisebaltic.com/media(1544,1033)/Cruise Baltic Market Review 2012.pdf)

Figure 2.6.: Cruise Baltic statistics on top 5 ports for cruises longer than 60 hours (source:www.cruisebaltic.com/media(1544,1033)/Cruise Baltic Market Review 2012.pdf)

27

that is a threat to both the cruise industry as well as the environmental groups, sincecomplying with all of them will be economically prohibitive.

In a comment on the HELCOM guidance regarding waste discharges on the Baltic Sea,the Baltic Ports Organisation (BPO) sums up a number of issues complicating enforce-ment of Baltic HELCOM regulation. The document can be found in its entirety inappendix F.

The BPO comments on HELCOM raise a few challenging points:

• Regionally different and stricter sewage discharge regulations are causing moreand more ships to actually install Advanced Water Treatment plants on board.This enhances the uncertainty for ports when it comes to installing their own PortReception Facilities (a significant investment) since they might become obsolete asmore ships carry treatment plants.

• The term sewage is loosely defined which makes that actual chemical and biolog-ical composition of the sewage might differ from ship to ship (depending on itspre-treatment). This changing sewage composition might lead to municipalitiesraising treatment tariffs to the ports (or even reject sewage) due to time-wise highconcentrations of undesirable substances (e.g. metal content)

• While not all ports have Port Reception Facilities (PRF’s, see page 10 and sec-tion 2.2.8.3), how to deal with the increased treatment costs at the ports that dohave PRF when they take in sewage that was not discharged at the last port ofcall.

2.1.11. Stockholm as a Cruise Destination

As was stated in the introduction, this research will often use Stockholm as a startingpoint for discussions for the following reasons:

• Stockholm is part of the top 5 destinations in the Baltic. If Stockholm is taken asa reference for the other 4 top-5 Baltic cruise ports, 95% of Baltic cruise tourismis covered.

• Stockholm and Sweden are recognised for being on the fore front of environmentallegislation. So studying the impact of Swedish regulations on the Cruise tourismsector, will prepare the industry for the future when even other ports adopt strictermeasures.

• For geographical reasons stakeholders with an office or representation in Stockholmare more easily interviewed in person than organisations in other locations.

Being one of the top five Baltic cruise destinations, Stockholm fully benefits from theimpressive growth the sector has shown the past decade (see section 2.1.9). Calls are get-ting more numerous and vessels are getting larger, hence the total number of passengersvisiting Stockholm grows even faster.

28

0

50

100

150

200

250

300

350

400

450

500

2007 2008 2009 2010 2011 2012

Pa

sse

ng

ers

(00

0's

)

Year

Cruise passengers to Stockholm 2007-2012

230

240

250

260

270

280

290

300

2007 2008 2009 2010 2011 2012

Ca

lls

Year

Calls to Stockholm port 2007-2012

Figure 2.7.: Left: Stockholm cruise vessel calls per year. Right: Stockholm cruise passengers(000’s) per year. The 2012 figures are estimates. Source: Cruise Baltic, appendix B)

29

Table 2.2.: Cruise Baltic statistics relevant for Stockholm (appendix B).

Year 2007 2008 2009 2010 2011 2012

Calls 255 265 293 261 263 274Passengers 281 000 365 000 447 000 415 000 452 000 470 000Turn-arounds 27 28 38 31 39 46

Stockholm appeals to cruise ship visitors because of its archipelago, its clean and inter-esting city, historic old town and signature buildings (e.g. city hall), the Vasa-museum,etc.

Stockholm is not only an important call for cruise passengers but also an importantturn-around port, where significant numbers of passengers (dis)embark and use otherinfrastructure such as the region’s hotels as well as airports for inbound (onward) travel.

Income due to cruise tourism for the Stockholm region is estimated to SEK 5 billion perannum. There are approximately 4200 cruise-tourism-related jobs in the region.9

Growth usually also implies bigger impact on the environment and the growth of cruisetourism to Stockholm is no exception. Stockholm prides itself as being an environmen-tally friendly destination and actively works to balance the economic benefits with thepossible adverse effects on the global and local environment.

A portion of the Cruise Baltic statistics (see appendix B) relevant to Stockholm isreproduced in table 2.2. Cruise Baltic’s definition of a cruise does not include cruisesshorter than 60 hours. The numbers in the table do not include the numerous shortcity-cruises from Stockholm to Riga, Tallin, Helsinki, Abo and Aland.

The major incentive for ports to promote themselves as attractive cruise destinationor turn-around is the economic gain to the city due to passenger spending while onshore. For Stockholm this amount is estimaded to SEK 1000 per passenger for regularpassengers that call on Stockholm and SEK 3000 per turn-around passenger. 10

The Stockholm port authority, Ports of Stockholm (Stockholms Hamnar), claims it wasranked the 8th most-environmentally friendly port in 2007. 11

In its environmental mission, Ports of Stockholm explicitly state that: ”The environ-ment is an integral and self-evident part of our daily operations. Our long-term andconscientious efforts have led to us being classed as one of the leading green ports in Eu-rope. We work actively, long-sightedly and strategically to create reliable and sustainabletransportation.” 12

Ports of Stockholm uses a system of differentiated dues, where vessels that meet certain’green’ requirements pay lower dues for port services. Vessels that use low-sulphur fuels

9www.stockholmshamnar.se10www.stockholmshamnar.se/en/News-and-press/2008/.../Frihamnen/ (See References for full URL)11www.stockholmshamnar.se/Documents/EN/Trycksaker/Miljofakta ENG.pdf12www.stockholmshamnar.se/en/Prices-and-services/

30

and choose to discharge sewage and waste using the port’s facilities, get discounts onfees.

2.1.12. Swedish organisations relevant for the Baltic Sea environment

Since this dissertation takes the port of Stockholm as a starting point (for it beingrepresentative for a port imposing the strictest environmental regulations) some Swedishentities concerned with the Baltic are listed here. Despite their different backgrounds,they all align themselves with the MARPOL convention and the HELCOM directives.They are listed here for completeness’ sake with clickable links to their respective web-sites.

Swedish Agency for Marine and Water Management or Havs och vattenmyndighetwww.havochvatten.se

Swedish Environmental Protection Agency or Naturvardsverket www.swedishepa.se

Swedish Maritime Administration or Sjofartsverket www.sjofartsverket.se

Swedish Transport Agency or Transportstyrelsen www.tranporstyrelsen.se

Ports of Stockholm or Stockholms Hamnar www.stockholmshamnar.se

The remainder of this paper will in most cases only state the English name of theorganisation.

2.2. Background: the environment

2.2.1. Relevant terminology

Eutrophication Excessive supply of nutrients to an environment leading to increasedlevels of organism growth. In marine context it is the excess supply of nitrogenand phosphorus to the water which leads to turbidity, algal blooms, disappearanceof underwater vegetation and oxygen-depleted areas on the bottom.

Sewage discharges Sewage discharges, or in the context of this dissertation residualeffluents from ships, contain many minerals, organic matter and in general nutrientsthat contribute to eutrophication (see above).

White water fresh potable water.

Grey water waste water from activities such as laundry, washing, bathing, dish washingwhich could (in theory) be recycled on site for use in irrigation or other activitiesthat do not per se require fresh potable water.

Black water or sewage waste water containing urine and faeces.

Bilge water water that accumulates in the lowest parts of the ship (the bilge). It maybe rain/sea/leakage/spillage water that on its way down from the deck takes withit pollutants (oil, detergents, urine etc.).

31

Salinity The salinity indicates the salt content of water.

• Fresh water: salt content <0.05%.

• Brackish water: salt content between 0.05 and 3%.

• Salt, salty or saline water: salt content between 3 and 5%

• Brine: salt content >5%.

Port A port is a harbour where cruise ships can enter and leave a destination. The lo-gistics at a port can be complicated since many passengers have to (dis)embark, atthe same time as waste and provisions are taken off/on board. Ports offer different(paid) services, of which waste disposal is the most relevant in the framework ofthis dissertation (see also below, PRF).

PRF Port Reception Facility: All ports handling any international shipping must pro-vide facilities where vessels can dispose of waste and residues that cannot be dis-charged at sea. The adequateness of PRF’s is discussed further in section 2.2.8.3.

2.2.2. Sustainable tourism

Sustainable tourism is a blanket term used to describe the type of tourism that triesto take into account its environmental impact and ensure sustainability so that futuregenerations can enjoy the same sites and resources we enjoy today.

Blom and Nilsson (2005) state that: ”The tourism industry is the worlds fastest growingindustry. In the 1950s 25 million travelled to a foreign country, and by 2020 it is countedto be nearly 1.56 billion tourist visiting foreign countries.”

Any such growth will be accompanied by major challenges to minimize environmentaland adverse socio-economic impact and be considered ’sustainable’. Addressing thesechallenges defines the area of sustainable tourism. It can be applied to all forms oftourism, but for the purpose of the research discussed here, focus will lie on the impactof Baltic Sea environmental sewage discharge legislation on cruise tourism.

For the Baltic, sustainability presents a short term dilemma; how to promote environ-mentally friendly cruise tourism (with its benefits for the region) without putting alarger pressure on the sensitive ecosystem of the Baltic. In the long-term there is nosuch dilemma; failure to protect the Baltic’s unique character will make its appeal (andin consequence its related benefits) disappear.

Regulation to achieve sustainability (work place equality, no or less CO2 footprint, re-duction of NOx and SOx emissions, reduction of sewage-discharge-generated nitrogenand phosphorous loads to the system) will add ’short-term cost’ to the region’s (cruise)operators. ’Short-term cost’ will affect price and price does affect demand. More onthat in appendix C and further. Above ’short-term cost’ (the use of quotes) is used todenote that in reality it is not a real ’cost’ in the sense that it could be considered aninvestment to allow for the (cruise) business to continue not only in the short-future butalso for generations to come.

32

2.2.3. Oceanography of the Baltic Sea

Figure 2.8 gives a quick overview of the entire Baltic Sea basin. With a surface areaof 392 978 km2 it is a relatively small body of water (18th by size globally). The averagedepth is 55 meters (quite shallow), with the deepest point just off Gotland, at 459 meters.The total volume is 21 205 km3.

There are several oceanographic features that make the Baltic unique to a certain degreewhen compared to other seas and oceans where Cruise Tourism operates.

• The Baltic is connected to the North Sea through the relatively narrow DanishStraits. This means that mixing with the North Sea is very slow. For the purposeof this dissertation, it is particularly important that once pollutants are dischargedinto the Baltic, they’ve got a big chance of staying in the Baltic. The water renewaltime is stated around 40 years (roughly from 500 km3 inflow per year on a volumeof 20 000 km3.)

• The coastline has a complicated shape with archipelagos, causing complicatedcurrents and making hydrographic modelling more challenging.

• The Baltic is composed of different gulfs and basins, which can differ significantlyfrom each other in terms of hydrography and ecology. Measurements done in onepart of the Baltic, may or may not be representative for other regions.

• In summer a pronounced stratification of temperature is present.

• Year round a stratification of salinity occurs, with higher salinity towards thebottom and more brackish water towards the surface.

• The Baltic is partly covered with ice every winter.

• Flow patterns are complex. About 940 km3 of brackish surface water dischargesevery year in the North Sea. Only 475 km3 of deeper, saltier water flows back.Not much mixing between the surface and deeper lying layers occurs, leading tosalinity stratification with most of the salty water staying below depths of 40 to70 m. The difference in flows is accounted for by the fresh water effluents from thestreams from the basin (1.6 million km2 [85 million inhabitants], see the colouredland masses in figure 2.8), plus precipitation minus evaporation.

• Overall the Baltic Sea is brackish with average surface salinity around 0.6-0.8 %compared to on average 3.5% for oceans. Salinity at deeper depths is on averagebetween 1 and 1.5%. In general waters close to the Straits of Denmark are moresaline whereas waters in the north of the Gulf of Bothnia are basically fresh waters.This makes ecosystems in the Baltic confined to narrow regions where life occursthat is adapted to the local salinity.

• About three quarters of deeper parts of the Baltic is considered an anaerobe(oxygen-depleted) dead zone. Because of the heaver salty water not mixing withthe lighter fresh water at the surface, the deeper salty waters do not have contactwith the atmosphere and suffer therefore from oxygen depletion. It is not literally

33

Figure 2.8.: The Baltic sea basin (source: www.baltex-research.eu)

34

Figure 2.9.: Algal blooming in the Baltic Sea on 27-07-2008, source: University College Lon-don, Dept. of Space and Climate Physics (Source:www.ucl.ac.uk/mssl/imaging/research)

dead; (anaerobe) bacteria live in the dead zones digesting organic material andreleasing hydrogen sulphide H2S.

• Myrberg (2008) writes: ”algal bloom occurs yearly in summer (and has been fordecades) when certain parts of the Baltic Sea become so rich with nutrients (seesection 2.2.1; eutrophication, SP) that phytoplankton thrives and become abun-dant in large parts of the Baltic.” (See figure 2.9).

All of the above make the Baltic different from many other places where Cruise Tourismtakes place. Many other subjects linking environment to Cruise Tourism could be studiedeasily or easier elsewhere, but the sensitivity of the Baltic with regards to its oceano-graphic properties, make it much more vulnerable to external pollutants, than manyother seas. This is why the operators in the Baltic will have to find a way to cope withincreasing legislation and related cost drivers. That cannot be studied elsewhere.

This is acknowledged by for example the following (partly paraphrased) passage fromHELCOM Baltic Sea Environment Proceedings No. 123 (2010): ”Currently the sewage-discharge-related nutrient addition is relatively small compared to the total nutrient loadto the Baltic Sea, they are, however, significant due to the sensitivity of the Baltic Seato eutrophication. Nutrients in sewage discharge may have considerable effects on thegrowth of pelagic phytoplankton since the nutrients are discharged directly to the opensea ecosystem.” Source: HELCOM Baltic Sea Environment Proceedings No. 123 (2010).

35

2.2.4. MARPOL Annex I on ship generated oil waste

Annex I of MARPOL (see page 11 for a refresher of the annexes of MARPOL) dealswith waste containing oil or oily mixtures. It explicitly requires that any effluent fromthe ship (be it deck run-off or discharge from cargo or oil tanks) must not contain morethan 15 ppm (parts per million) of oil content. The reason it is highlighted here, sincethe more relevant annex for this dissertation is MARPOL annex IV, is that only therequirements of Annex I & II (noxious bulk substances) are mandatory for all memberstates. Member states are not required to comply with annexes III through VI.

2.2.5. MARPOL Annex IV on ship sewage

MARPOL Annex IV is the most relevant part of the MARPOL convention since itdeals with sewage discharges from ships. As mentioned before, the special oceanographyof the Baltic (little mixing and refreshing with the North Sea) make that sewage dis-charges are especially important to control in order to keep the Baltic Sea healthy. Thisis more or less unique to the Baltic, as opposed to the implications of other MARPOLannexes which apply to ships, and in particular cruise ships, everywhere else around theworld.

MARPOL Annex IV allows discharge of sewage or waste from a ship into the sea underthe following criteria:

0-3 nautical miles (0 - 5.6 km) from the shore: discharge of sewage is only allowed ifthe ship has a certified sewage treatment plant on board.

3-12 nautical miles (5.6 - 22.2 km) from shore: discharge of sewage is allowed onlyafter disinfection and after it is been ground to small pieces.

at distances greater than 12 nautical miles (22.2 km) from shore: untreated, not dis-infected sewage may be discharged.

Any discharge should occur gradually at a cruising speed of at least 4 knots (7.4 km/h).

In July 2011, the IMO Marine Environment Protection Committee (MEPC) approveda joint proposal from the HELCOM countries to amend MARPOL Annex IV and des-ignated the Baltic Sea a special area for sewage discharges from passenger ships. 13 Inpractice this means that no sewage discharges from passenger ships are allowed on theBaltic. See also the section on HELCOM’s The Baltic Strategy (section 2.2.8.2).

2.2.6. MARPOL Annex VI on emissions

The United Nations’ Intergovernmental Panel on Climate Change is internationallythe leading advocate for greenhouse gas reductions, required to stop (or lessen) the trendof global warming caused by human actions. Relevant for marine vessels are CO2, SOx

13www.helcom.fi/shipping/waste/en GB/waste/

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and NOx emissions from sulphur in fuel oil and inefficient combustion in a ships engine.Although the specific effects of green-house gas (GHG) legislation are not an explicitpart of this research, parallels with sewage legislation can be drawn.

MARPOL Annex VI regulates the emissions from merchant and other vessels. Thedesignation of SECA’s (see section ) is a result of recent enhancements of MARPOLAnnex VI. The Baltic is such a designated SOx Emission Control Area and as a resultthe emissions of sulphur oxides in the region will be reduced by the use of low-sulphurfuel oil. More on this in section 2.1.6.

The shipping industry is also required to cut its NOx and CO2 emissions significantly.These are no different from emission-control efforts in any other industry and are notspecific to neither the cruise industry nor the Baltic and, therefore, not part of theresearch problem (section 2.4.1) of this paper.

2.2.7. EU Strategy and Action Plan for the Baltic Sea Region (EUSBSR)

The European Union has initiated the EU strategy and Action Plan for the Baltic Searegion in the year 2009. It aims to make the Baltic Sea cleaner, more prosperous anddynamic and more secure. The Baltic Sea coastal states can participate on a voluntarybasis in an Action Plan with 80 actions. From the Action Plan, specifically on AnnexIV (waste water) regulations:

”Encourage ports, local and regional authorities, and shipping companies to adopt volun-tary measures reducing wastewater discharges from shipping and boating and providingfacilities in ports for preventing or limiting air emissions of vessels, for example throughthe introduction of voluntary labels for clean Baltic shipping and sustainable port manage-ment complemented by awards for clean shipping projects and environmentally friendlyport”. [European Union Strategy for the Baltic Sea Region ACTION PLAN 2009]

In addition to the Action Plan, the EUSBSR includes flag ship projects to share best-practices among the member countries. An example is the following:

”Promote measures to collect ship generated waste.” This flagship project promotes theenhanced applications of HELCOM’s ’no-special-fee’ system (see also bullet on page39). It stresses the importance that ports around the Baltic follow a similar approachwhen implementing Port Reception Facilities (PRF) for example. At the same timeit advocates the enhancement of the capabilities of the PRF’s so they can receive andtreat not only oily waste waters, but also black sewage water. It builds on HELCOM’sproposal to the IMO to prohibit discharge of sewage from ships completely (acceptedJuly 2011, see above).

2.2.8. HELCOM

HELCOM Baltic Sea Environment proceedings nr. 123 (2010) gives a good overview ofthe current state of environmental legislation on the Baltic. Since Helsinki Commission’s

37

(HELCOM, see also page 37) directives are adopted by the relevant cruise destinationsin the Baltic, it served as a framework guide for the elaboration of interview questionsused in this research.

HELCOM has advocated and achieved a stricter sewage legislation than the one pre-scribed by MARPOL Annex IV (see section 2.2.5). The biggest amounts of waste waterare produced by the vessels that transport the largest numbers of passengers: cruiseliners and ferries. The longer the trip, the bigger the challenge ,and therefore cost, ofcorrect sewage handling.

According to Hanninen and Sassi (2009) longer cruise trip operators seldom dischargeto the designated PRF but choose to discharge the ’treated sewage’ directly into sea.However, the so-called ’sewage treatment’ does not include the removal of nutrients suchas phosphorous and nitrogen, since there are no maximum levels stipulated. So even the’treated’ sewage from these cruise vessels will contribute to eutrophication of the Baltic(see both section 2.2.1 and page 35).

If there were no waste water treatment whatsoever on board, the annual loads for ni-trogen would be 356 tonnes and for phosphorous 119 tonnes according to Hanninen andSassi (2009). These figures are quoted only as a reference to get a feeling for the orderof magnitude, since some treatment is actually taking place and some sewage is actuallyoffered to the Baltic’s Port Reception Facilities (PRF’s). From this overestimate we canstate that the actual nitrogen load to the Baltic is probably in the ’hundreds of tonnes’range, and the phosphorous loads in the ’tens of tonnes’ per year.

Even these relatively small amounts are significant for marine life in the Baltic withits unique geography (little mixing with the North Sea, 40 years refreshing cycle) andhydrology (stratification, see section 2.2.3).

MARPOL Annex IV water quality standards require ship generated effluents to complywith certain ranges of the following indicators:

Biochemical Oxygen Demand (BOD): milligrams of oxygen consumed per litre of sam-ple during 5 days of incubation at 20 C. This is a measure for the organic qualityof water; 1 mg/l is common for clean water. Untreated sewage will score up to600 mg/l and once treated sewage can come down to 20 mg/l. MARPOL requiresBOD to be smaller than 25 mg/l.

Total suspended solids (TSS): the amount of solid residue after passing through a filter(mg/l). MARPOL limit is 35 mg/l (plus correction for ship flushing water).

Faecal coliforms: less than 100 per 100 ml.

But as was already stated earlier, no allowable concentrations of nitrogen or phosphorousare stipulated.

Further reading: In www.astm.org/COMMIT/F25Presentations/fiebrandt.ppt Mr. R.Fiebrandt from Norwegian Cruise Line outlines the issues caused by different dischargestandards applied in different parts of the world.

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2.2.8.1. The Baltic Sea Action plan

The Baltic Sea Action Plan (BSAP) is the name of the Helsinki Commission’s strategytowards the goal of environmentally friendly maritime activities on the Baltic Sea. Its 8management objectives are:

• Enforcement of international regulations - no illegal discharges

• Safe maritime traffic without accidental pollution

• Efficient emergency and response capability

• Minimum sewage pollution from ships

• No introductions of alien species from ships

• Minimum air pollution from ships

• Zero discharges from offshore platforms

• Minimum threats from offshore installations

2.2.8.2. The Baltic Strategy

The Baltic Strategy, or in full: Strategy for Port Reception Facilities for Ship-generatedWastes and Associated Issues, imposes much stricter rules for waste and sewage dischargethan MARPOL Annex IV (see page 36).

• Discharge of all garbage and waste is prohibited with the exception of food wasteswhich may be discharges at distances from shore greater than 12 nautical miles(22.2 km).

• All ships with home port in one of the Baltic Sea states are required to havegarbage collection and separation facilities on board.

• All ships are required to send their waste and sewage to the Port Reception Facility(PRF) before leaving the port.

• A ’no-special-fee’ rule aims to discourage illegal dumping of waste and sewage bymaking the PRF service free of charge for the visiting ships.

At the initiative of HELCOM, in 2009 the participating countries submitted a proposalto the International Maritime Organisation (IMO) to impose stricter rules than theones in force under MARPOL Annex IV for the Baltic. Where MARPOL Annex IVstill allows the discharge of untreated sewage under certain circumstances, HELCOMadvocated for making the entire Baltic a Special Area for sewage discharge, similar tothe SECA areas for sulphur (see page 12). This is also called ”The Baltic Strategy” (seesection 2.2.8.2) In practice it means that no untreated sewage may be discharged intothe Baltic and that there are maximum levels of phosphorus and nitrogen for treatedsewage that have to be observed.

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Figure 2.10.: Delivered sewage (in tons and m3) to the PRF compared to calls at a port.Source: HELCOM Baltic Sea Environment Proceedings No. 123 (2010).

The March 2010 meeting of the MEPC (page 12) accepts the creation of the SpecialArea for Sewage Discharge concept and at the same time designates the Baltic as suchan area.

However, one of the conditions for the designation of the Baltic as a Special Area forSewage Discharge is the fact that the submitting countries should provide adequateport reception facilities (PRF, see section 2.2.8.3) for large quantities of sewage frompassenger ships. This leaves the stricter rules not legally binding until all ports havesuch facilities.

2.2.8.3. Port Reception Facilities (PRF)

Port Reception Facilities (PRF’s) are essential to the implementation and enforcementof the Baltic Sea as a Special Area for Sewage Discharge, completely prohibiting thedischarge of untreated effluents from passenger ships.

HELCOM Baltic Sea Environment Proceedings No. 123 (2010) provides statistics (figurefg:sewagepercall) on the amount of delivered sewage in comparison to the number of callsat ports.

These are based on the data available in 2010 and cannot be compared between countriesbecause of the different measures used; cubic metres versus tonnes.

Of course it is important to specify what is considered adequate Port Reception Facilitiesand the working definition adopted by HELCOM currently states: ”The cruise industryconsiders port reception facilities to be adequate when a port can receive all wastewatereffluent via a direct line/shoreside pipe connection at its cruise berth, which can then beeffectively treated at the municipal wastewater treatment plant.”

HELCOM considers that in 2010 the only ports that qualify for approval according tothe definition above, are Helsinki, Stockholm and St. Petersburg.

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2.2.9. Waste water management

Dickinson and Vladimir (2007) conclude that ”historically, waste disposal was nevera concern in the cruise business or the shipping business at large. Contributions ofshipping to pollution were literally considered of so little impact as to be without anysignificance”.

Water and waste water management are of increasing importance for the survival ofmankind in the 21st century. Only 1% of the water on earth is apt for human con-sumption (97% is salinated, 2% frozen which leaves 1% fresh water) and the scarcityis making itself felt not only in increased global attention but also in that water hasbecome a source of conflict in the world. The demand for water will increase five timesby 2050, but the available amount of water will not. 14

Global efforts are trying to make the general population more aware of for example thewater footprint of every day consumables. By adding all the water needed from thebeginning of the supply chain to the end, some organisations allow for people to learnhow much water is needed to produce a cup of coffee (190 liters), a pair of jeans (1000liters), a hamburger (5000 liters). 15 Existing water use is all but efficient. Ageinginfrastructure (old pipes) for example causes leaks of up to millions of liters a day forbigger cities (680 million liters per day for London for example, the USA 26 billion litersa day). 16

Since the amount of total available water (1%) does not change, the same water is used,treated, cleaned and reused all the time (we are drinking the same water the dinosaursdid). The cycle becomes shorter and shorter. For example dinosaur drinking water wouldhave returned to the fresh drinking water cycle after hundreds of maybe thousands ofyears. Used dinosaur drinking water would end up in water streams and eventuallyseas and lakes. Evaporate, build clouds and precipitate in the form of rain or snow.Snow would build glaciers and slowly work its way down through the glacier to end uppurified in melt water streams hundreds or thousands of years later. To be used againby creatures and humans.

The cycle is getting shorter: instead of letting nature take care of the purifying, manyindustrialized nations actually treat the effluents of its activities and population beforeit reaches streams, lakes or seas. It is actively recycled so that total water intake for acity for example becomes a combination of fresh water from a source (lake, river, groundwater aquifier) and treated and purified water from the waste water treatment plant.

14www.xyleminc.com/15www.waterfootprint.org16www.xyleminc.com/en-us/media-library/Pages/video-library.aspx

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2.2.10. Waste water treatment onboard cruise vessels

2.2.10.1. Types of waste water; black water and grey water

As was mentioned in the section on concepts, MARPOL Annex IV (section 2.2.5) is theregulation that specifically deals with sewage from ships (excluding the oil-contaminatedwaters that are covered by MARPOL Annex I (section ).

In its turn sewage water is often divided in black water (sewage or waste water containingfaeces and urine) and grey water (waste water from activities such as laundry, washing,bathing, dish washing which could (in theory) be recycled on site for use in irrigation orother activities that do not per se require fresh potable water).

This is not limited to waste water on cruise ships, land based municipal treatment plantsare offered the same type of waste water streams, be it that for cruise ships the streamsare often more concentrated and that retention times are much shorter compared tomunicipal retention times.

The discharge of sewage is covered by MARPOL Annex IV, the discharge of grey watersfrom ships is not internationally regulated and according to Hanninen and Sassi (2009)grey water is often discharged directly into the environment.

2.2.10.2. Typical amounts of waste water generated by passengers on board acruise ship

The amount of sewage generated on board per passenger per day depends on whattype of flushing systems are used. Conventional gravity type flushing (comparable to thedomestic flushing system) requires 6 times more water than the vacuum feed toilet flush(comparable to air planes). Hanninen and Sassi (2009) calculate that between vesselsthe effluent streams per passenger can lie anywhere between 10 and 200 liters per dayand more specifically for cruise ship passengers between 19 and 38 liters per day.

For completeness’ sake some typical waste water quantities for waste water on board ofcruise ships are:Activity Quantity

Conventional toilet flush (gravity feed) 6-8 liters per flushToilet flush (vacuum feed system) 1.2 liters per flush1 minute shower 12-14 litersgrey water accumulation less than 300 liters per day

HELCOM uses the following guidelines for estimated passenger generated effluent flowson board of cruise vessels:

• Conventional gravity fed system: 230 liters per person per day of black and greywater, of which 70 liters are black water.

• Vacuum fed system: 185 liters per person per day of black and grey water, of which25 liters are black water.

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Since cruise ships usually experience a peak in waste water generation in the mornings,holding tanks are required to store the flows during peak hour to allow for treatmentduring the day. The capacity (Cr in m3) can be calculated by multiplying the amountof sewage per person per day (A in m3), the number of people on board (Np) and theamount of days (Da) the holding tank should cover (usually 1 day).

Cr ≥ A ·Np ·Da (2.1)

For a typical cruise ship of say 3000 passengers, a daily sewage quantity of 60 liters aday (0.06 m3) and 1 day retention, the size becomes 3000 · 0.06 · 1 = 180 m3. Forcomparisons’ sake that is a three meter high 60 m2 area. While not necessary a largespace too consider when a cruise ship is built, it might be hard to find this amount ofspace on board of a ship when retrofitting a waste water treatment plant to existingships.

2.2.10.3. Treatment options

Treatment methods are divided into mechanical (filter type), chemical (disinfectanttype) and biological (bacterial processes that reduce and concentrate and settle con-taminants). Most treatment systems consist of a combination of at least two of these.The purpose of any treatment system is to achieve contaminant concentrations withinthe specified limits. In the case of cruise vessels the limits agreed upon in HELCOM(section 2.2.8) are repeated here:

Biochemical Oxygen Demand (BOD): milligrams of oxygen consumed per litre of sam-ple during 5 days of incubation at 20 C. This is a measure for the organic qualityof water; 1 mg/l is common for clean water. Untreated sewage will score up to600 mg/l and once treated sewage can come down to 20 mg/l. MARPOL requiresBOD to be smaller than 25 mg/l.

Total suspended solids (TSS): the amount of solid residue after passing through a filter(mg/l). MARPOL limit is 35 mg/l (plus correction for ship flushing water).

Faecal coliforms: less than 100 per 100 ml.

But as was already stated earlier, no allowable concentrations of nitrogen or phosphorousare stipulated.

A typical more or less conventional system and short descriptions of the treatment stepsis presented in figure 2.11. For a more detailed description see Hanninen and Sassi(2009).

Although the re-use of treated waste water is common in municipal treatment installa-tions, it is doubtful that cruise ships will soon re-use treated waste water. The risk thata malfunctioning treatment plant leads to mass-illness on board a ship together withthe PR challenges (newspapers writing articles on how cruise ships try to ”save moneyby recycling your neighbour cabin’s sewage”) are considered too big to overcome for thetime being (source: personal communication with Xylem employees).

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2.3. Background: marketing

2.3.1. The 4 P’s of marketing

The impact of legislation and (disposal/emission) penalties to influence supplier (cost)and buyer behaviour (price), can be studied using the framework and concepts providedby the field of marketing.

Marketing is a social process involving the activities necessary to enable individuals andorganisations to obtain what they need and want through exchanges with othersand to develop ongoing exchange relationships, as defined by Mullins et.al. (2003).

The above definition stresses among other things the exchange component of marketing.An unsatisfied need is the gap between a person’s actual state on some physical orpsychological dimension. ’Wants’ are preferred ways to satisfy needs. A person ’needs’to drink, but a person ’wants’ a Coke. Or, more applicable to this research: a person’needs’ a break but a person ’wants’ to go on a cruise.

The parties can be almost ’anything’ considering that not only individuals and businesseshave ’needs’, and not only big corporations (Coca Cola, Royal Caribbean) can supply.Museums, hospitals, universities also have ’needs’ as do they ’supply’ at some point.

The term marketing mix is often used to describe the controllable marketing variablesthat a marketing manager would use to pursue a firm’s objective in a given target market.The mix consists of the famous 4 P’s:

Product: products satisfy needs or wants and doing so they represent a benefit for theparty acquiring it. Many product-related decisions influence the marketing mix:product position (’premium’ or ’value for money’) with respect to identified targetmarkets (a process called segmentation in section 2.1.2).

Price: pricing decisions influence demands in price-sensitive markets (see appendix C).Pricing can be cost based (a certain gross margin target. It can be value based (acustomer is willing to pay X ’extra’ because use of the product [e.g. with a higherquality and longer life-span] saves him in the long term). Prices can be market-based (competitors charge X for a similar product), as long as the supplier canproduce at a cost smaller than X, the company makes a profit. Pricing strategiescan differ over the life cycle of a product (more on this can be found in texts onmarketing, for example Mullins, Walker, Harper and Boyd, 2003).

Place: the distribution channel for the product: how does the product reach the con-sumer in the most effective way.

Promotion: how to promote the product? Advertising or personal selling? Web-basedpromotion?

Although variations on the 4 P’s have been proposed to include other dimensions (for ex-ample researchers have advocated adding a fifth P for ’personnel’), this research choosesto group relevant variables in these groups (and for example ’personnel’ in the ’product’ingredient of the mix).

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From the 4 P’s the price parameter (through influence of a potential higher cost forcruise operators) is most relevant for this research. Which does not say it cannot bemixed with for example product-related advantages when using ’state of the art sewagetreatment’ can back-up a company’s claim to be ’environmentally-friendly’ and attracta new segment of ’environmentally-conscious’ consumers.

2.3.2. Influencing behaviour using cost and price

Governments try to influence supplier behaviour (taking responsibility for the environ-mental implication of their activities) by implementing legislation, charging taxes andpenalties according to the environmental impact of their choice of policy or technology.Customers evaluate how and where they get most value for money when making pur-chase decisions. These two groups: suppliers and customers, meet in the middle wherethe benefit for the customer is valued a fair price offered by the supplier.

More specifically: Governments (or other authorities) try to influence supplier- (cruiseoperator) cost by adding taxes, requirements or penalties. Suppliers will have to in-crease their prices in order to compensate and maintain operating income contribution.Customers (passengers) will decide whether the increased price is still ’value for money’and in general demand will decrease with increased price. When cruise operators arefaced with the choice; increase prices and risk number of passengers, or move the ac-tivity elsewhere with less ’taxes and/or penalties’, it can be seen that the Baltic en-vironmental legislation might scare cruise tourism to other parts of the world, puttingtourism-generated jobs and economic revenue in the Baltic at risk.

Appendices C and D contain more detailed descriptions of the process underlying in-fluencing buying behaviour. An important distinction with other industries is that forcruise tourism a large part of the product cost is represented by fixed costs, costs thatcannot be reduced easily when demand drops. This makes cruise operators relativelymore sensitive to cost increases than other industries.

2.4. Problem analysis and research questions

2.4.1. Problem analysis

Unclear and regionally varying sewage discharge regulations effectively create compe-tition between regions when it comes to remaining an attractive (not disproportionallyexpensive to comply with local regulations) cruise destination while at the same timetaking environmental responsibility (necessary for long-term sustainability of the eco-nomically important cruise tourism in the region). Aforementioned competition between(cruise destination) regions is currently underestimated by local organisations and cruiseoperators and long-term competitiveness of the Baltic as a cruise destination will requireextensive cooperation between the stakeholders in the region (governments, organisationssuch as HELCOM, ECC, BPO, CLIA and cruise operators).

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2.4.2. Research questions

The problem described in the preceding section will be tested by investigation of thefollowing research questions:

1. Is the current state of cooperation between cruise operators and local (environ-mental, economic, development) organisations sufficient to ensure long term com-petitiveness for cruise tourism on the Baltic?

2. How should Cruise operators deal with the increased cost of complying to localenvironmental regulation?

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3. Methodology

This chapter will introduce the research methods used for the investigation underpin-ning this dissertation. A general introduction on different research methods is given, aswell as a short discussion on the advantages and disadvantages of the chosen method.The interviewed parties are listed together with the respective investigative method. Theinterview questionnaires are discussed and the chapter concludes with a brief overviewof the survey of the general public that will prove to give a ’order of magnitude’ figurefor the acceptable additional cost for environmentally sewage handling on-board Balticcruise ships.

3.1. Research method

In order to obtain viable results and provide new valuable information to the aca-demic sphere concerning relationships (cooperation or tension) between Baltic cruiseoperators and interest organisations, the author selected literature review and in-depthexpert interviews as research methods for the compilation of this dissertation. Boththese approaches belong to the discipline of qualitative research methods, which standsin contrast to quantitative techniques. Veal (2006) summarizes the differences as fol-lows: ”in qualitative research, the collected information is not based on numbers andconsequential statistical analysis and conclusions, as it is the case with quantitativemethods.”

3.1.1. Desk research, qualitative and quantitative methods

Desk research was used to process existing information on the subject. The maininvestigative research was conducted following the conventional split of methodology inquantitative and qualitative methods. The research in this dissertation relies primarilyon qualitative methods.

Desk research (or secondary research): gathering and analysing information, alreadyavailable in print or published on the internet, Smith (2010. The available infor-mation on the subject is very often very generic (too generic for the specific andunique oceanography of the Baltic) or too much USA-specific-legislation-oriented.The background in the preceding chapter were compiled after extensive desk re-search on generic as well as Baltic-specific sources and serves as a concise summary

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on the application of generic and global concepts to the specific and unique sit-uation in the Baltic. On-line as well as conventional sources were used and arereferenced accordingly via internet-hyperlinks and references.

Quantitative methods deal explicitly with measuring a certain before-state, adjustingparameters or circumstances according to the research questions and measuring theresulting end-state. The difference between the expected result and the actuallyobserved end-state can be used to verify of falsify theories and hypotheses. E.g.questionnaires try to limit the range of responses to a defined number of possibleoutcomes to facility one-to-one comparison.

Qualitative methods deal with the intangible, unmeasurable processes that underlie be-haviour, intention or even strategy (the intuitive part of decision making). E.g.interviews are a typical qualitative method to elicit ’honest’ answers to open ques-tions.

One method does not exclude the other, as a matter of fact they often result comple-mentary to each other. No 100% qualitative methods without some quantitative aspects(how many objects and their interdependency are researched: 1, 2, more?). Likewise, no100% quantitative methods where the choice of subject and variables to research some-how was made by the researcher, subject to intangible forces such as culture, interest,previous studies etc.

This research dissertation will use a mix of all three methodologies, with an emphasison desk research and qualitative methods for reasons outlined below.

The research questions (section 2.4) of this dissertation might suggest a highly measur-able, and therefore quantifiable, nature: pollution can be measured. As can cost, pricesand demand. Sewage discharge regulations are somehow expressed in quantifiable terms(”gradual discharge at a speed of at least 4 knots at least 12 nautical miles from shore”).

On the other hand, the before-state and end-state cannot be unambiguously measured:the pricing strategy of the cruise operators is something that will evolve over timeand cannot be studied solely as a computer simulation. We cannot isolate the sewage-treatment-generated part of the total cost from the rest. It heavily relies on the cruiseoperator’s existing cost structure, which they will not share with anyone (corporateconfidentiality). It cannot be reliably anticipated what the cruise industry’s answer tofuture legislation is going to be. It is very much a reasoning around ’what if...’ typicalfor qualitative research.

3.1.2. Case study

In addition, in order to best contribute to the body of human knowledge, a case studywas conducted by collecting primary data. Case studies are a very suitable researchmethod offering comprehensiveness and profundity for understanding a particular phe-nomenon. Beeton (2005) explains that through the examination of a specific instance, ageneral problem can (...) become illuminated. Additionally, case studies demonstrate a

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high degree of flexibility and are used extensively in tourism research, see Hudson andRitchie, (2009).

Xiao and Smith (2006) provide an overview of the uses , methods and topics of casestudies as tourism research strategy. The reason for the growth of popularity of casestudies in many fields, is that they can provide a richer understanding of interestingand important phenomena that could no be achieved through other methods, and in away that provides a fuller description of the context of the phenomenon under study.Case studies are a tool to produce ’deep’ insights into some phenomenon , includingconclusions based on the context of the topic being studied, and involve the use ofmultiple methods and data sources.

In a research context, ’case study’ is best thought of as a research strategy or designrather than a distinct method. In order to gain insight into cruise tourism on the BalticSea and implications of water quality legislation, the case of Stockholm as long termenvironmental sustainable cruise destination was chosen to be analysed.

3.1.3. Expert interviews

To obtain the appropriate information, the conduction of expert interviews was identifiedas a crucial element of the research process. The aim behind the author’s decision toconduct expert interviews was to gain primary data, to fill the gap in knowledge andto better comprehend of the cruise industry’s work to keep up with innovative solutionsand compliance to stricter environmental regulations being introduced in the Baltic SeaRegion. So, in addition to conducting a thorough review of the relevant literature, theauthor also conducted a series of email exchanges with appropriate stakeholders, basedon the beforehand gathered theoretic information. In that way, the author wantedto identify and explore the issues and challenges that the Cruise Industry as to face inorder to be green or environmental friendly. According to Dunn (2005), interviews are anexcellent method of gaining access to information and collecting a diversity of opinionsand experiences. The following suggestions and recommendations outlined by Dunn(2005) were taken into consideration and provided a valuable basis for the conductionof the interviews:

Select participants The informants listed in section 4.1, were chosen purposefully onthe basis of their considerable knowledge about Swedish cruise market or Swedishmaritime environmental regulations. They were approached and agreed to provideanswers to the questionnaire by e-mail. All interviews were conducted in Englishbut since some of the respondents’ mother tongue was Swedish and for reasonsof better fluency, the answers were collected in Swedish. All translations fromSwedish to English, presented in chapter four, were done by the author.

Construct the survey The instruments utilised for the expert interviews were question-naires, consisting of between 5 and 10 questions, each individually adapted to thefield of expertise of the respective interview partners. At the end of the question-naire the author decided to add one extra question asking for any other thoughts

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or comments that they think would contribute to the research. The research topicscovered in the questionnaires were the result of thorough literature review and con-siderations about how the gained theoretical knowledge could be combined withpractical approaches.

Collect the data All questionnaires were answered by e-mail, there was no immediatepossibility for the author to dig deeper by asking further questions, however, therespondents provided very comprehensible answers and there was no lack of clarity.

Analyse the data After the collection of all opinions and the response translation, theresults and findings were compared and separated in two groups, the first one called’organisations’ and the second one called ’cruise operators’. It is very important topoint out that the author decided to divide the second group in two sub-groups dueto geographical factors (’Baltic-only’ and ’others’). The analysis of the findings isintegrated in results as well as in the paper’s conclusion.

3.2. Advantages and disadvantages of the chosen methods

The benefits of literature review have already shortly been outlined above and includedeepening the researcher’s knowledge of the topic at hand as well as serving as a basisfor the development of a suitable research protocol. Additionally, a thorough literaturereview can facilitate to place the study in the context of existing research. However, onemajor concern the researcher should be cautious about, is the risk of confirmation error.Smith (2010) reminds that ”when it comes to interpreting the own case study’s findingsin light of other existing models from the literature, one should be aware of and openfor the possibility that the findings contradict each other.”

Generally, case studies use a wide variety of different sources. The data sources for thisdissertation consisted of the already mentioned personal interviews with key informants,but also of in-house documents, company-specific studies and the organisations website.Smith (2010) points out that all the sources used for case studies need to be used withsensitivity and caution, and that it is good to have a certain degree of scepticism, as doc-uments might not necessarily be accurate or could be incomplete. Similarly, the contentof websites might be highly biased or even inaccurate, because it only shows how the or-ganisation wishes to be portrayed. Also, as already mentioned above, misinterpretationsof interviews and the other sources are very likely.

Case studies can be time-consuming. Not only must multiple data sources be accessed,but substantial time and effort may be required to be able to get key informants toagree to interviews. Then you need time to code and interpret the transcriptions of theinterviews. Finally, you should go back to your original subjects to show them yoursummary of those interviews to ensure that your interpretation is accurate.

Finally , case study researchers can become emotionally involved in their work andsubjects. However, a researcher doing a case study needs always to maintain a degreeof separation from her or his topic to minimize the risk of bias or misinterpretation.

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The main limitation of case studies is normally the fact that even though they canonly describe insights gained from one specific studied case, there is temptation forgeneralising these results. Like most case study researchers, the author of this thesis isaware that it is not possible to generalise to a larger population. Still, there is often adesire by researchers to report some general principles based on their findings that mighthave broader implications. This is definitely possible, as good case study research canwithout doubt teach important lessons, as shown by Smith (2010).

Decrop (1999) argues that ”regarding the virtue of expert interviews, it can be foundthat even though qualitative research is often criticised to lack credibility and rigour, itundoubtedly has some benefits.” First of all Walle (1997) argues that due to the factthat qualitative research is free to ask questions, it may be possible to examine reality inall its complexity, which may not be the case with quantitative research. Consequently,it may provide a deeper understanding of the research area. However, Dunn (2005) isaware of the disadvantages and reminds that carrying out expert interviews may be verytime-consuming, as the formulation of the questions and the definition of the specifictopics to be covered within the interview have to be carefully planned and prepared.Another potential negative aspect, reiterated by Jamal and Hollinshead (2001), is that”human beings are very complex and thus, the researcher might have difficulties tocorrectly interpret the behaviour of the interviewees.”

Apart from rigorous literature review using articles, reports and books on the topic, theauthor extensively used the method of data collection by internet. Although often crit-icised for having the disadvantage of being a subjective rather than an objective source(companies will state their objectives, but usually no objective feedback is available onthe data presented), this method was included for three reasons. Firstly, the amountof information available is just so extensive that the mere presence of the data indi-cates the importance given to the subject by the respective organisations or companies.Secondly, by disregarding the data present on the internet the author’s questionnaireswould probably only elicit ’please refer to our web-page’-replies. There is no reason tobelieve that the intentions in a response to a questionnaire are any more than intentionsinstead of objective data, thereby invalidating the second argument to discard inter-net sources for data collection. Thirdly, is the tourism industry a dynamic one wherenew developments happen all the time. Even the legislation proposals (usually not theimplementation though) are made available as they are conceived by the legislative au-thorities. Relying solely on printed or peer-reviewed research channels, would mean atoo big delay for this contemporary research subject.

3.2.1. Validation and reliability

The limitations mentioned above lead to the issue of the concepts of validity and reliabil-ity, which are the key challenges of research and should be addressed at this point. Yin(2003) proposes that validity, on the one hand, is about whether the applied instrumentsactually measure what is intended to be measured. There are three forms of validity,namely construct, internal and external validity.

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• Construct validity indicates whether the author’s judgement and evidence aresound and allow him or her to obtain valid conclusions.

• Internal validity is about whether the conclusions made about causes and effectsare reasonable and make sense, hence if they are functionally related.

• External validity, moreover, implies whether the findings lead to deeper insightsor support other concepts and models related to the topic of the study.

These concepts, which are commonly used to judge the quality of any empirical socialresearch, are also vital for this dissertation. Especially during the empirical data collec-tion, the author of this dissertation aimed at assuring high validity. Increased validitywas thereby assured by avoiding subjective data collection. Instead, multiple informa-tion sources, ranging from personal interviews to website and other published data wereused for the compilation of the relevant chapters.

Smith (2010) defines that ”reliability, on the other hand, is the degree to which theresearcher, or any other person, would come to the same results if the exact same studywas to be carried out again.” The author’s aim was to conduct a reliable study, however,it is not possible to determine its true reliability unless the same investigations wouldbe carried out again under the same conditions and with the same subjects.

3.3. Researched stakeholders

Following the methodology described in previous sections, the following stakeholderswere identified for further research. They are grouped in ’organisations’, ’cruise oper-ators’ and ’other’. Web-research was conducted on all of them. From the informationon their website it was decided on whether to elicit further input by sending out aninterview. Organisations or cruise operators with extensive information on their web-site, were regarded less suitable to send questionnaires to, since the reply would mostprobably be along the lines of ”please read the information on our web site”. Whenseveral cruise operators belong to the same group, usually on the group was contacted,assuming that there is no differences in environmental policies between companies withinthe same group.

In general, the type of sampling used for this purpose was non-probability sampling,this means that the subjects were not chosen at random, but after pre-selection processbased on desk research. This method is preferred over probability sampling because thetotal number of stakeholders (different opinions) is relatively small (adding all cruisecompanies, organisations would yield a total population in the ’tens of subjects’, nothundreds or thousands). When dealing with relatively small populations, selecting atruly random sample (and verifying the randomness of the sample) is too difficult. Thenature of the research therefore changed from a statistical survey to a case study on thedegree of cooperation between stakeholders.

Organisations An email survey was sent to the following organisations:

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• Swedish Environmental Protection Agency or Naturvardsverket

• Swedish Agency for Marine and Water Management or Havs och Vatten Myn-digheten

• Swedish Transport Agency or Transportstyrelsen

• Swedish Maritime Administration or Sjofartsverket

• Ports of Stockholm or Stockholms Hamnar

Cruise operators Email surveys were sent to the respective holding companies for thefollowing brands. For cruise operators with extensive information on their website, web research was used as input.

• Royal Caribbean International, representing brands such as: Azamara ClubCruises, Celebrity Cruises, Pullman Tours.

• Carnival Cruises, representing brands such as: Aida Cruises, Cunard, HollandAmerica Line, Ibero Cruceros, P& O Cruises, Seabourn, Princess Cruises,Costa Cruise Lines.

• Prestige Cruise Holdings, representing brands such as: Oceania Cruises, Re-gent Seven Seas Cruises.

• Tallink Silja Line

• Viking Line

• Birka Cruises

• Destination Gotland

Other A broader perspective on the impact of water quality legislation on the Balticwas obtained by interviewing and miscellaneous contact with the following adja-cent stakeholders:

• Tumlare Sweden AB, the Stockholm-based office of an international supplierof city-tours to cruise companies calling on Stockholm.

• Xylem Water Solutions AB, manufacturer of water treatment systems withheadquarters in Stockholm.

3.4. Interview questionnaires

Since the two stakeholder groups of organisations on one side and cruise operatorson the other, have different angles on the issue, two different surveys were elaborated.Complete survey examples are included in appendix E and the main questions are out-lined here. In the actual questionnaires sent out to organisations and cruise operators,much more context was given in order to facilitate a quicker and better understandingof the purpose with the questions.

The questions to organisations boil down to the following:

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1. How is [organisation] involved when it comes to balancing the benefit that tourismbrings to the region with the local point sources of pollution that come with it?

2. Having adequate PRF’s in all ports of call is a prerequisite for enforcing the latestno-untreated-sewage-discharge regulation from HELCOM. How does [organisation]deal with the challenge these loopholes offer?

3. How does [organisation] look upon the fact that nitrogen and phosphorous concen-trations contribute to eutrophication but are not regulated in the latest MARPOLconcentration limits?

4. Does [organisation] have an opinion on HELCOM legislation affecting the possi-bilities of ports trying to encourage cruise operators to call on their city?

5. Any other comment relative to the subject being discussed?

Whereas the questions to cruise companies were angled slightly differently (again, thereal questionnaires contained other phrasing and more context for clarity’s sake [seeappendix E]):

1. How has [cruise operator] dealt with increasing sewage regulation on the Baltic?Have you had to expand treatment facilities? How?

2. Have you analysed the financial impact of increasing treatment requirements onoperating cost and passenger prices?

3. Although not required by MARPOL, do your treatment plants remove nitrogenand phosphorous or do you alternatively only discharge in PRF’s?

4. If you use PRF’s, are they sufficiently flexible and adequate as to not interfere withoperations?

5. Is your competitive position with respect to other tourism forms (e.g. low-costairline city trips) affected by increasing treatment requirements on the Baltic?

Results and responses to the surveys will be presented in sections 4.2 and 4.3 precededby a summary of entities that chose to respond and those that didn’t (section 4.1).

The expert interviews conducted with for example Tumlare Sweden AB did not followa standard questionnaire.

3.5. Survey of general public

A survey was held via Facebook, asking participants to indicate how much of a costincrease per day they were willing to accept for their onboard generated sewage to bedisposed of in an environmentally sustainable way.

SOx and NOx emission impact were excluded because it is a too abstract subject forthe general audience to be considered in their cruise-destination-choice behaviour. Thesurvey was held to find out how much a typical cruise passenger would be willing topay in order to have their onboard generated sewage not dumped in the Baltic, but

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treated and/or discharged in the next port of call. This cannot be done in a meaningfullway for SOx and NOx since the typical cruise passenger has no grasp of the concept orimplications and the question (how much are customers willing to pay extra) cannot beresearched in a quantitative way.

Survey: How much would you be willing to pay per day, so the sewage you generatewhile on the cruise is not dumped into the Baltic Sea, but disposed of in anenvironmentally friendly way?

1. nothing

2. between 5 and 10 euros per day

3. between 10 and 20 euros per day

4. more than 20 euros per day

The number of survey questions was purposely limited to one question, in order toenhance the probability of the survey actually be answered by sufficient respondentsto be statistically meaningful. Smith (2010) cites ratios of 1:4 to 1:10 of questions perrespondent to be representative (so 1 question needs between 40 and 100 respondents).

It was at the same time also decided not to aspire 95% confidence interval for thissurvey. These levels of confidence on a population of potential cruise customers to theBaltic, would require a sample size of 380-385 respondents (see table 4.4 in Smith, 2010).This number of respondents was judged to be unattainable within the scope (time andresources) of this research. A smaller scale but attainable survey with lower confidencerequirements was desirable. Results will show a strong suggestion to engage in furtherresearch.

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4. Results and analysis

The results are grouped by organisations and cruise industry’s response on the basicquestions outlined in section 3.4. Followed by the outcome of a semi-informal surveyconducted on Facebook to get a first idea of whether and how much a certain segmentof cruise passengers would be willing to pay for responsible waste water handling on theBaltic.

4.1. Response overview

Table 4.1 summarizes the responses of the different organisations and cruise operatorsand lists the type of research that was conducted and whether a response was received.Some (not necessarily all) brands that are owned by the same parent company are listedas well. A more extensive list of which brands calling on Stockholm belong to the biggerplayers, can be found in appendix A.

4.2. Organisations’ response

In the following sections the responses of the Swedish Agency for Marine and WaterManagement, Swedish Maritime Organisation and Ports of Stockholm will be presentedand analyzed.

4.2.1. Response from Swedish Agency for Marine and Water Management(Havs och Vattenmyndigheten)

When the Swedish Environmental Protection Agency (Naturvardsverket) was contactedthey referred to the Swedish Agency for Marine and Water Management as their proxyin these matters. The following can therefore also be interpreted as the Swedish Envi-ronmental Protection Agency’s position on the subject.

On the issue of balancing the region’s economic and socio-economic interests with thesustainability of the Baltic, Mr. Thomas Johansson, Division manager sustainable ex-ploitation and maritime issues, answers as follows (author’s translation from Swedish toEnglish):

”The Swedish Agency for Marine and Water Management (HaV) uses thefollowing guideline: advocating in the widest sense of the word that sea and

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Table 4.1.: Summary of responses. Swedish names for the organisations listed can be foundin section 2.1.12. In the ’survey’ colunn: • means: survey sent and response received, ◦means survey sent but no response received.

Name and brands Web Survey Baltic-only Comments

Organisations- Swedish Environmental ProtectionAgency

• ◦ - Refer to SwedishAgency for marine andwater management

- Swedish Agency for marine andwater management

• • - See section 4.2.1

- Swedish Transport Agency • ◦ - Refer to Swedish Mar-itime Administration

- Swedish Maritime Administration • • - See section 4.2.2- Ports of Stockholm • ◦ � No response. Desk re-

search in section 4.2.3

Cruise operators- Royal Caribbean Int. • • - See section 4.3.3

- Azamara Club Cruises • -- Celebrity Cruises • -- Pullman Tours • -

- Carnival Cruises • • - See section 4.3.2- Aida Cruises • -- Cunard • -- Holland America Line • -- Ibero Cruceros • -- P & O Cruises • -- Seabourn • -- Princess Cruises • -- Costa Cruise Lines • -

- Prestige Cruise Holdings • - - Part of Apollo Manage-ment L.P.

- Oceania Cruises • -- Regent Seven Seas Cruises • -

- Tallink Silja Line • ◦ � Contact, no response- Viking Line • - �- Birka Cruises • • � See section 4.3.1

Other- Tumlare Sweden AB • ◦ - Tour operator, personal

communication- Xylem Water Solutions AB • - - Water treatment spe-

cialist, personal com-munication

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water be used, but not over-exploited. Sea and water shall contribute to well-being and purpose for both people and the ecosystem, now and in the future.In other words: we promote an active use, by for example the cruise industry,that at the same time is adapted to the environment it operates in. It shouldalso be sustainable in the long term. Of course does the industry have goodcause to keep costs down, among others, but our mission is to cooperate,support and challenge the industry for enhanced environmental conscience.All have to implement measures. Some of the ones benefiting most fromimproved environmental status is exactly the tourism industry, including thecruise segment. To sell a destination which has a low environmental statusis harder. To sail a cruise vessel in algal bloom affected seas does not havethe same development potential as cruising a healthy sea has.

Although HaV does is not directly involved with the creation of legisla-tion and regulation, we also try to influence the requirements and legislativeprocess. In this effort we collaborate extensively with the Swedish TransportAgency (Transportstyrelsen) which is Swedish representative in HELCOMand IMO.”

Mr. Johansson makes it clear that HaV is aware of the tension between economic andsocio-economic interests and the environment. He also clearly states that it is in thecruise industry’s own interest to make the investments necessary to make sure the Balticis also on the long term environmentally healthy. He does not comment the fact thatpoint sources of pollution are carrying a disproportionate share of the responsibility sincethey are easily identifiable (as opposed to the more diffuse sources (e.g. agriculture inthe Baltic catchment area) contributing much more to eutrophication [Hanninen andSassi, 2009]).

On the matter of the tension between the cruise industry and the Port Reception Facil-ities regarding the latest HELCOM regulation on ’no sewage discharge whatsoever onthe Baltic’ (see section G and appendices F and G), Mr. Johansson reasons as follows:

”The answer is that in the end all is politics. The agreement that wasreached was about as far as one could get at that time and opportunity. Ingeneral it is better to have a imperfect agreement than no agreement at all.(...)

And it is important to remember that even if we advocate enhanced consid-eration for the environment, there are other stakeholders, e.g. the industry,that do not want special regulation, strict requirements etc. But even otherauthorities have to take into account other factors, e.g. Swedish TransportAgency (Transportstyrelsen). Even if we agree on the desired state, even thencan Swedish Transport Agency through its expert-role claim that the pro-posal goes against for example international regulations (e.g. IMO’s). Thatcan take time; to change regulations to allow for new rules to be applied.(...)

There are forces that can contribute to ports wanting to build Port Re-

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ception Facilities; to be an attractive cruise-ship call, to have clean andattractive in the waters around, and in some cases the opportunity to usewaste in biogas generation. Waste, including sewage, will increase in valuein the future.”

Mr. Johansson further describes some of the practicalities on how HaV liaises with thedifferent organisations and how they in turn relate to HELCOM. Mr. Johansson displaysa rather pragmatic view when he states that it was the best we could achieve at the time,it’s better than nothing, in the end it’s all politics (Author’s paraphrasing, SP).

On the subject of whether stricter regulation in the Baltic, compared to other regions,will present an incentive for interregionally operating cruise companies to move linesto other regions with less regulation (thus lower investments and operating costs), Mr.Johansson argues as follows:

”HaV does not have a formal active role, but we work to enhance theunderstanding that the Baltic is a especially sensitive area. Does one wantto operate there, with all the different advantages, than one has to take abigger environmental responsibility. The Baltic only represents a tenth of apromille of the world’s water, but at the same time 10-15% of the world’smaritime traffic. From our point of view it is logical that environmentalresponsibility is allowed to cost its fair share, after all, the cruise industryhas free access to the waters as a means for transport (with the exception offees for use of certain waterways.”

Mr. Johansson’s comments here a no surprise. Given the organisation’s assignment andmission, there is little incentive to actively participate directly in discussions with thecruise companies on whether local regulations pose a barrier to developing the Baltic asa cruise destination.

Mr. Johansson and his organisation were the ones that elaborated most on their answersand input.

4.2.2. Response from Swedish Maritime Administration (Sjofartsverket)

When contacted, the Swedish Transport Agency (Transportstyrelsen) refers to theSwedish Maritime Administration.

Mrs. Stina Paulin (Section environment of the maritime division) at the Swedish Trans-port Agency explains that their role is merely to ”develop the rules, grant permissions,monitor compliance and maintain records, whereas we do not take a political posi-tion. We execute the tasks we receive from the government,” (author’s translation fromSwedish to English).

Mrs. Paulin answers as follows to the question of whether the current deficiencies inMARPOL/HELCOM legislation present loopholes for cruise companies (enforcement isdifficult until there are PRF’s all around the Baltic, and ports are reluctant to invest inPRF’s):

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”We operate within the HELCOM cooperation platform by creating guide-lines on how the reception of black water is required to happen. The portsshall have reception facilities for the vessels that normally call on them.”

Mrs. Paulin’s response is reaffirming the explanation she gave in the introduction thatthe agency is concerned with creating legislation more than taking an active role orposition on the political issue at hand.

Mrs. Paulin further comments on the fact that no existing nitrogen and phosphorouslimits exist in MARPOL legislation:

”There is an ongoing project by a correspondence group of MEPC/IMOthat is defining requirements for sewage treatment on the Baltic. I believethey are due to present a proposal to MEPC in October 2012. When thelegislation comes into effect, it will be adopted by the Swedish legislation.(...)”

Mrs. Paulin’s statement that MEPC is working on limits for nitrogen and phosphorousto be proposed in October, could not be confirmed independently within the scope of thisresearch. She included a comment in her answer regarding this that since this is goingto be implemented in the future, it does not represent a problem any more. It couldbe said that that misses the point the author tried to make by stating that more andever-changing regulation on the Baltic might become an incentive for cruise operatorsto move operations and lines to other parts of the world.

On this particular question (question 3 of the questionnaire (see appendix E) Mrs. Paulinreplies:

”No, (we don’t have an active role in discussions between HELCOM andcruise operators, SP), Sweden has been taking the initiative within HELCOMto implement the ban on sewage discharge on the Baltic, which we did onthe government’s orders. HELCOM consists of representatives for all Balticstates and has no power, as such. It is a cooperation between membersand when something is decided in HELCOM, it’s because the member statesback that decision. Already today the cruise vessels that operate in theBaltic have treatment plants in place. However there is no nitrogen andphosphorous removal yet, which are processes that will have to be addedonce MEPC has decided which concentration limits to impose.”

Being the executing part of the legislative authority in Sweden when it comes to maritimeissues in the Baltic, Mrs. Paulin’s comments and answers align with the mandate theSwedish Transport Agency has gotten from the government. From the replies Mrs.Paulin sent, there seems to be a rather high degree of ’we-and-them’ and a high degreeof specialisation (’that’s not our area’-type responses) when it comes to dealing with theBaltic from and economically important and environmentally challenging point of view.

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4.2.3. Response from Ports of Stockholm (Stockholms Hamnar)

Despite repeated attempts to follow up on the questionnaire sent to Ports of Stock-holm, to date no direct response has been received.

Fortunately for this research the information on Ports of Stockholm’s web site is ex-haustive and can be expected to be representative for their answers, if they had an-swered the questionnaire directly. The following analysis was based on the questions inthe questionnaire and the expected response deducted from the information on Port ofStockholm’s web site. Compared to other organisations they have a very complete arrayof information published and they explicitly apply both an environmental as well as asocio-economic view on the subject.

On the issue of balancing the region’s economic and socio-economic interests with thesustainability of the Baltic, Mr Rudeberg General Counsel and Head of EnvironmentalAffairs writes on different occasions:

”Part of Ports of Stockholms mandate is to promote tourism and passengertraffic, as well as archipelago and waterborne local traffic. This also includesmaintaining and developing the city’s inner city quays so that residents andtourists alike can enjoy the maritime city of Stockholm. Considering ourpublic activities, our owners, our geographical location in Stockholm and thevulnerable nature of the archipelago and the Baltic Sea, environmental andsocietal responsibilities has been an integral factor of our work for a longtime.” 1

On the matter of the tension between the cruise industry and the Port Reception Facili-ties regarding the latest HELCOM regulation on ’no sewage discharge whatsoever on theBaltic’ (appendices F and G), Ports of Stockholm publishes the following statements:

”There have been facilities in place for a long time, with good capacities,to enable black and grey water to be offloaded at the quayside at Ports ofStockholm’s ports. These facilities are used in the daily operations of allof the shipping companies operating regular scheduled services. It is alsopossible to offload black and grey water at each of the quays used by cruiseships, free of charge. Vessels also have the option of offloading black and greywater to tanker trucks and barges in Stockholm.” 2

As was to be expected Ports of Stockholm, being one of the fore-runners when it comes toenvironment in the Baltic, can state that this is not an issue. It does however not addressthe fact that not all ports have similar facilities and that until then the enforcement ofthe strictest MARPOL rules remains a challenge.

Ports of Stockholm (a corporation owned by the City of Stockholm) describes some ofthe practicalities on how they liaise with the different organisations and that shipping

1www.stockholmshamnar.se/en/About-us/Network-and-collaborations/2www.stockholmshamnar.se/en/Prices-and-services/Enviromental-Measures-for-Shipping-Company-Customers/

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is governed by international laws, including the MARPOL Convention, the HelsinkiCommission and EU directives.

”These conventions form the basis of the Swedish Maritime Administra-tion’s (Sjofartsverket) Code of Statutes. These state, among other things,what certain regulated exceptions there are to the ban on the release ofsewage waste, for example when a vessel has a certified waste water treatmentfacility aboard, that the results of sample testing in such cases is availableand that waste is finely dispersed. Ports of Stockholm is therefore unable tomake it mandatory for shipping companies to offload black and grey waterwhile in port, run on low sulphur fuel, use catalytic converters etc.” 3

This mainly confirms the question: until all ports have PRF’s, vessels (including cruiseships) with waste water treatment on board are exempt from mandatory off loading theirblack/grey water and can continue to discharge effluents from the plant in the Baltic.

On the subject of local regulations ’scaring’ global cruise operators off to ’cheaper’ re-gions, Mr. Rudeberg explains (on their web site) that:

”Ports of Stockholm offers environmentally differentiated port fees. Inother words; shipping companies using our ports pay a discounted fee whenthey call in to our ports if they meet certain environmental standards. Thelargest discounts in fees are given to the vessels that use low sulphur fuels andthose with catalytic converters fitted to all engines. 4 (...) Ports of Stock-holm is an active participant in several national and international networks,which helps us to develop our environmental work. (...) Safeguarding theenvironment necessitates cross-border efforts to be able to achieve change,whilst development requires cooperation with other stakeholders, exchangesof ideas and experiences. It is important that we learn from each other andjointly drive issues forward.

Ports of Stockholm are working with other cities and ports in different net-works such as Baltic Ports Organisation (BPO) and The European Sea PortsOrganisation ESPO and the Environmental Manager of Ports of Stockholmalso serves as the Chair of the ESPO Environmental Committee.” 5

From the information on their web site Ports of Stockholm seems to be one of thestakeholders that is most aware that in order to maintain long term attractiveness in anenvironmentally sustainable way, more cooperation is required:

”An important tool in being able to attain stringent environmental tar-gets is to work together with ports from which there are regular sailings toStockholm. In 2009 Ports of Stockholm signed an agreement with the Portof Helsinki concerning joint initiatives, including the management of blackand grey water and the provision of vessel electricity

3www.stockholmshamnar.se/en/Prices-and-services/Enviromental-Measures-for-Shipping-Company-Customers/4www.stockholmshamnar.se/en/For-Customers/Environmental-measures-for-shipping-company-customers/5www.stockholmshamnar.se/en/Prices-and-services/Collaborations-and-networks/

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We are also part of BaltMet is a network whose members comprise themajor cities of the countries bordering the Baltic Sea. Stockholm currentlychairs the BaltMet Network, which means that Ports of Stockholm activelyparticipates in the work of reaching a consensus of opinion when it comes toport-specific environmental issues.

In 2000 the Ports of Stockholm launched the Environmental Buoy Awardas a way of honouring notable environmental achievements in the field ofshipping. After each cruise season, a special group at the Ports of Stock-holm will nominate ship(s) based on certain criteria. The winner(s) willbe announced at the Environmental Buoy ceremony scheduled during theSeatrade Convention in Miami.” 6

This if further emphasized by the realisation that more work needs to be done, especiallyin preparation for the regulations to come into effect by 2015:

”We will increase our focus on societal and environmental responsibility inthe coming years, We offer shipping companies who regularly or on occasionvisit Ports of Stockholms ports assistance and services to reduce our envi-ronmental effects to the minimum, while at the same time gathering moreknowledge about the resources that are used.”

It was however not possible to find specifics on ideas on solutions for the challenges thatlie ahead.

4.3. Cruise industry’s response

In general the web-sites for the Cruise companies were among the most informativeones when it comes to their environmental conscience and responsibilities. That providesevidence for the thesis that the environment is successfully used in marketing campaignsto promote a ’greener’ image. That also makes the investigative research more difficultsince most cruise companies that were contacted, one way or another refer to theirwebsite for information, without any guarantee that the information presented there iseither correct or relevant.

To this date Tallink Silja have acknowledged reception of the survey and are forwardingit from one department to another in their respective organisations. No answer wasreceived within the time frame stipulated for this research.

4.3.1. Response from Birka Cruises

Birka Cruises was one of the few cruise companies contacted that replied to the emailsurvey. Mr. Dan Lindstedt (Development Manager Environment, Ship Management)answers as follows to the question of whether local Baltic regulations translate into higheroperating costs:

6www.stockholmtown.com/templates/page 15096.aspx

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”We pump all our black and grey water to shore and we have done so formany, many, years. This is not a problem for us.”

Mr. Lindstedt’s reply should be taken as typical for a ’Baltic-only’ cruise operator. Sincethey have no (easy) choice of moving lines to other regions, they just have to implementall the various regulations that are implemented on ’their’ Baltic Sea.

Mr. Lindstedt’s answer to the question whether the installation of treatment plants hasled to higher operating cost, he answers:

”To start installing treatment plants on a vessel would be to go back intime and is therefore not relevant.”

Again this reply can be considered typical for a Baltic-only operating player, since thecruise duration is short and the destination ports (in the case of Birka at least) wellequipped to receive the grey and black water generated while at sea. Other cruisesmight not have the same advantage (longer times at sea, not all ports of call haveadequate reception facilities).

Another interesting observation can be made from Mr. Lindstedt’s answer: apparentlyBirka’s vessels rely completely on the PRF’s at the ports and the vessels do not have anyindependent treatment plant at all. A follow up question would be what does a vessel dowhen a PRF for some reason (failure at the plant, shore personnel strike) cannot receivethe black and grey waters?

The third question for cruise companies differed a bit from the question that was sentto organisations, in this case the survey tried to elicit information on whether nitrogenand phosphorous are removed on board prior to discharge (at sea or otherwise). Mr.Lindstedt’s answer is both clear and concise and at the same time it raises anotherquestion:

”Onboard the Birka Paradise there is a treatment that reduces the hydrogen-sulphide concentrations in black and grey water before it is pumped to shorein Stockholm. In all other cases all black and grey water is delivered tothe city’s/country’s treatment plants where nitrogen and phosphorous areremoved.”

The question is then: does Stockholm impose additional requirements on the quality ofthe sewage delivered to the PRF compared to other PRF’s around the Baltic? if so,that would back the claim by Baltic Ports Organisation (BPO) that the requirementsare not the same from PRF to PRF and that compliance becomes a moving target (andthereby an unpredictable economic risk factor, what happens if, say, Helsinki startsto impose other concentration limits on other substances? Or discharge in the PRF isdenied because of concentrations of a certain substance [heavy metals, hydrogen-sulphideetc.]). See appendix F for a more complete list of BPO pain points with the HELCOMregulation and PRF’s.

Mr. Lindstedt is very clear in his response that Birka has never had any problems withdischarging into the PRF’s in the ports it is calling on.

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On the issue of the discharge regulations being a moving target, Mr. Lindstedt states:

”Since we are pumping everything to shore already, this is not an issue forus. We traffic the Baltic on a regular basis and I feel your questions are morerelevant for the bigger cruise companies that cruise different oceans and seasall the time.”

Which justifies the decision to look at two different groups of cruise companies: the onesthat only sail the Baltic and the ones that sail in other regions as well. The assumptionbeing that ’Baltic-only’ operators have no choice but to comply to the latest regulationsince they can’t (easily) relocate operations to other waters.

Mr. Lindstedt concludes his response as follows:

”The big issue for maritime traffic in the Baltic region are the emissions(EU sulphur directive) where we are required to use fuel oil with less than0.1% sulphur from the year 2015. This is an enormous challenge of greatimportance for the free competition all over the world. This will be verycostly and the competition with the rest of the world will be very muchaffected.”

4.3.2. Response from Carnival

Carnival Corporation & PLC was one of the few cruise companies contacted thatreplied to the email survey and at the same time provided the author with the latestcorporate report and other useful information. For Carnival Mr. James R. Van Langen(Vice President Management Systems Maritime Policy & Compliance) replied as follows:

”(...) I would like to provide you with answers to your questions. However,these are quite broad issues and giving the full discussion that they deservecould require quite a bit of time and writing effort, both of which are inshort supply. Therefore, I would like to suggest that, if you have not done soalready, you read the information that we have already published about ourmanagement approach to sustainability, particularly in the environmentalarea. The best sources of such information from Carnival’s perspective arethe sustainability reports that we have published for both the Corporationas a whole, for several of our subsidiary Operating Lines. These reports canbe accessed online in the ’Sustainability Reporting’ section of our Corporatewebsite. I have also attached a copy of our latest Corporate report, for yourconvenience.”

Which is in line with the assumption made in the chapter Methodology: desk researchcan be considered as good a source for information, since many stakeholders will referto their web sites for information. The analysis that follows is therefore based on websources 7 and the Corporate Report mentioned by Mr. Van Langen (referenced Langen2011).

7phx.corporate-ir.net/phoenix.zhtml?c=140690&p=irol-sustainability env

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The Sustainability Report states the following on waste water management:

”(...) Our Corporate Standard for discharges of black water and graywater is more stringent than international and national regulations. Whereadequate shore facilities are available, Carnival ships sometimes dispose ofwaste water to an approved shore-side reception facility. Gray water fromCarnival ships is discharged only while the ship is under way and proceedingat a speed of not less than six knots. Gray water is not discharged in port andnot within four nautical miles from shore or such other distance provided forby local law or as agreed with the authorities that have jurisdiction, exceptin case of an emergency, or where the ship is geographically limited.”

These rather generic remarks do not specifically address the challenge that regionallyvarying regulations pose. The untreated grey water can also contain high concentrationsof nitrogen and phosphorous from for example laundry and other facilities.

”(...) Prior to discharge, all black water from Carnival ships is processedthrough a sewage treatment plant called a Marine Sanitation Device (MSD)that is approved in accordance with applicable international and nationalregulations. Discharges of treated black water take place only when the shipis at a distance of more than 12 nautical miles from the nearest land andwhen the ship is travelling at a speed of not less than six knots. On more thanone-third of Carnival ships, black water and gray water are treated in ad-vanced waste water purification systems (AWP, SP) that utilize technologiesdesigned to produce a higher effluent quality that may meet or surpass stan-dards for secondary and tertiary effluents and reclaimed water. The abovedistance and speed limits do not apply to black water or gray water dischargesthat have been processed through an AWP. However, such discharges complywith all applicable international and national laws and regulations.”

The statement that the treatment plants and consequent discharges comply ’with allapplicable international and national laws and regulations’ is a strong one and it doesnot address the issue of the regulations changing continuously. The systems that comply’today’ to all regulations in all regions, will probably not comply with ’all regulationstomorrow’ when new regulation comes into effect in a certain region (e.g. the Baltic).

(...) The biological treatment portion of an AWP requires routine testingto determine the concentration of microbes and other solids in the tank.If the solids exceed a set limit (...) the tank must be emptied to recreateoptimum conditions (...). This partially treated waste water is called biomassand is discharged more than 12 nautical miles from shore while the vessel istraveling more than 6 knots or landed ashore.(...) Sewage sludge accumulatesat the bottom of an MSD and is periodically cleaned out. It is dischargedfrom the system when the vessel is more than 12 nautical miles from shoreand traveling at a speed of more than 6 knots, or it is landed ashore.”

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The timing of the response from Carnival was such that further follow up questions couldnot be asked before the deadline of this research. It would be interesting to learn howCarnival addresses the sludge removal in the Baltic? Are PRF’s used? Is it discharged atthe required distances? Or is the sludge always accumulated in the Baltic but dischargedin other regions with less stringent sewage discharge regulation?

The Sustainability Report further mentions:

”We are strongly committed to protecting the fragile natural environmentsin which we operate, and we have a solid record of developing and imple-menting sound environmental practices. We have dedicated senior shipboardand shoreside staff who are responsible for environmental systems and initia-tives, including compliance with applicable environmental regulations, train-ing, and implementation of Corporate and Operating Line standards. (...)We are subject to the decrees, directives, regulations and other requirementsof the more than 500 ports that our ships visit every year as they apply tothe various aspects of ship operations. (...) The laws, regulations and otherlegal requirements applicable to our operations do not remain static basedon a fixed geographic location, but change regularly, sometimes on a dailybasis, depending on the itineraries of our ships and the ports and countriesvisited.”

In another part of the report Carnival elaborates on this:

”(...) We must, of course, consider the additional costs of new regulations,particularly those relating to air emissions. (...) Being a global companywe are primarily regulated at the international level. However, as our shipstravel around the world, we must also understand and comply with an in-tricate labyrinth of regulations issued by flag states (our ships countries ofregistry) and port regulatory authorities in countries where our ships visit.Wherever possible, we seek technical solutions to regulatory issues that arebased on sound science and engineering. One of the most dramatic areasof rapidly changing regulations is in the area of air emissions. Current andpending regulations address sulfur oxides (SOx) and nitrous oxides (NOx).In addition, the issue of global warming and the impact of production ofgreenhouse gases (CO2 and CO2 equivalents) is an area of major technicaldiscussion and focused regulatory activity.”

and more specific on waste water:

”Around the world Carnival ships operate in or near numerous environ-mentally sensitive regions, where biodiversity and habitat protection are par-ticularly critical. Such areas include:

• MARPOL-defined ’Special Areas’ and ’Particularly Sensitive Sea Areas’

• Marine Protected Areas

• Marine Sanctuaries

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• No Discharge Zones

• National parks

• Other areas where discharges are restricted or subject to local agree-ments.

We comply with all applicable requirements, laws and regulations regard-ing waste water discharges in these regions. (...) We are also working withthe Ocean Conservation and Tourism Alliance, a collaboration between Con-servation International and the Cruise Lines International Association, toidentify and map sensitive marine areas. (...)”

According to the information Carnival provides, they comply to all regulations, every-where. Although that this is of course not impossible it must be a cost driver for Carnivaland there is no information on how this cost is handled.

Carnival goes even further:

”Carnival established an alliance with the International SeaKeepers Soci-ety to house scientific data-gathering devices on five Carnival Cruise Linesand Holland America Line ships (...) the devices gather a wide range of datato aid in assessing ocean pollution and researching global climate change andcyclic weather patterns. (...) Carnival has also supported the organizationwith annual contributions of $50,000 since 2008.”

This also demonstrates the commitment of Carnival to a sustainable cruise industry andthe apparent marketing advantages that justify financial contributions to this cause.

4.3.3. Response from Royal Caribbean

Much of the data to follow is based on the information from Royal Caribbean’s in-formative website. 8 It was the outspoken environmental attitude and responsibilitythat caught my interest and the inclusion of Royal Caribbean in my research. RoyalCaribbean owns several brands such as Azamara Club Cruises, Celebrity Cruises andPullman Tours, and Royal Caribbean’s environmental policies are applied equally acrossthe different brands.

To this date Royal Caribbean have acknowledged reception of the survey and are for-warding it from one department to another in their respective organisation. The firstcontact was to Mr. Jamie Sweeting, Vice President - Environmental Stewardship andGlobal Chief Environmental Office Royal Caribbean Cruises Ltd. who kindly forwardedthe email to his assistant. Somewhat later an email from Nicholas Rose (Lead, Environ-mental Regulatory Environmental Stewardship) was received, expressing the desire toreceive a draft of this dissertation to have a better idea of what the research was aboutand have a background to answer the survey.

8www.royalcaribbean.com/ourCompany/environment/rcAndEnvironment.do

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Unfortunately, after submitting the draft to Mr. Rose, no response was received withinthis research’s stipulated time frame. Therefore secondary research (desk research) wasused to predict Royal Caribbean’s probable position with respect to the questions raised.

Fortunately for this research’s purposes, the information on Royal Caribbean’s web siteis exhaustive and can be expected to be representative for their answers, if they hadanswered the questionnaire directly. The following analysis was based on the ques-tions in the questionnaire and the expected response deducted from the information onRoyal Caribbean’s web site, 9 the article ”Cruising to a Greener Future” 10 and RoyalCaribbean’s (RCCL) ”Stewardship Report 2010”, 11 all of them under Mr. Sweeting’sresponsibility.

On the subject of continuously changing regulation, Mr. Sweeting states on RCCL’sweb site:

”Our Above and Beyond Compliance (ABC) policy challenges us to riseabove what is required by law. Similarly, our policy of Continuous Improve-ment drives us to look at new and different ways in which we can improve onour past performance. With regard to our stewardship of the environment,we constantly strive to minimize our environmental footprint, increase oursupport for conservation, and set new environmental standards in the travelindustry. ”

In the Stewardship report he adds:

”(...), we aim to thoroughly treat both grey water and blackwater beforedischarging anything into the ocean. In 1999, we began the research anddevelopment needed to install and operate Advanced Wastewater Purifica-tion (AWP) systems (...) on our ships. These systems treat black water andgrey water and produce an effluent that is cleaner than what is required byinternational sewage regulations and what is discharged from most munici-palities.”

Especially the comment on the fact that the effluent from their AWP exceeds the qualityfrom municipal treatment plants, echoes the vision of Cruise Lines International Asso-ciation (CLIA) that forcing cruise operators to discharge via PRF’s is not necessarilybetter than the ship’s AWP. This does not motivate ports to actually continue installingPRF’s.

In the 2010 Stewardship report, RCCL mentions that:

”We are installing these (AWP, SP) systems onboard all of our RoyalCaribbean International, Celebrity Cruises and Azamara Club Cruises ships,at a cost of more than U.S.$150 million. Our goal is that every ship in ourfleet will be equipped with an Advanced Wastewater Purification system.”

9www.royalcaribbean.com/ourCompany/environment/rcAndEnvironment.do10www.worldcruise-network.com/features/feature78425/11viewer.zmags.com/publication/49a26be2%23/49a26be2/1

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In the rather technical, but (for this research) insightful article ”Royal Caribbean Inter-national Advanced Wastewater Purification Systems”, RCCL states further: 12

”We install the new systems either when a ship goes into its normallyscheduled dry dock, or while the ship is in service. Our new ships will be de-livered with AWP systems already installed. Ideally, it takes approximatelyfour to five months to manufacture a system and four months to install oneonboard. Then it takes approximately two months to commission the sys-tem, which includes a sampling period to ensure the system’s performancemeets standards comparable to the U.S. federal standards for ships operatingin the State of Alaska (regardless of where the ship is operating.)”

The article also explains with a certain degree of detail three types of AWP’s that arebeing used on board of RCCL’s vessels.

So as to the question ’how much does it cost’ RCCL claims it invested 150 million dollarsto upgrade 22 ships. That is 6.8 million USD per ship, a somewhat higher figure than thefigure used by Hanninen and Sassi (2009), which was 4 to 5 million USD (3-3.5 millionEUR).

On the subject of nutrient removal, the RCCL 2010 Stewardship report informs thefollowing:

”One of the challenges we share with shore side waste water treatment facil-ities is the effective removal of nutrients (phosphates and nitrogen) from ourtreated waste water. (...) There are two ways to reduce the phosphate load ofwaste water: eliminate them at the source or remove them during treatment.(...) On the treatment end, our Advanced Wastewater Purification Systemsremove some of the nitrogen and phosphates from solids during the courseof treatment, but there are still some residual contaminants that remain.Removing phosphates requires the use of additional chemicals, which createanother waste stream that requires treatment and/or disposal. Removingnitrogen is much more difficult, as it requires a very complex, specializedprocess. While technology does exist to carry out such treatment on land,its land use has been limited, and, to our knowledge, it has thus far neverbeen applied on a ship.”

This statement strongly suggests that PRF’s together with municipal treatment plantsthat remove nitrogen and phosphorous are the most viable way for avoiding nutrientloads from cruise ships in the Baltic.

The accessible information does not provide much information on the use of PRF’s byRCCL or their level of adequateness for RCCL’s purposes, other than (Stewardshipreport):

”Unfortunately, there are not many waste water treatment plants that canactually remove nutrients in the Baltic region, and only two ports that are

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equipped with hookup facilities to adequately allow cruise ships to dischargewaste water ashore.”

It does however not indicate whether RCCL’s vessels use the facilities or if they rely ontheir own treatment plants and discharge effluents to the Baltic.

The next question on the questionnaire is how RCCL deals with continuously and re-gionally changing regulation, turning compliance into a moving target.

Part of the answer is given above, RCCL designs and orders their AWP’s to comply withthe strictest (Alaska’s) so that they are automatically suitable for other regions as well.

”(...) in keeping with our policy of going Above and Beyond Compliance,our internal policies for discharge of grey water and black water are stricterthan U.S. and international governmental regulations. For example, althoughU.S. and international laws allow grey water to be discharged from shipsinside of 12 nautical miles from land in many locations, since 1998, ourcompany policy has restricted discharge of grey water to outside 12 nauticalmiles from land in all areas of the world. Similarly, international standardsrequire ships to discharge untreated black water outside 12 nautical miles andat a speed of not less than four knots (for effective mixing); our companystandard is to only allow discharges of treated blackwater outside 12 nauticalmiles and only at a speed greater than six knots.”

The statement above does not indicate whether exceptions are being made for the Baltic(no discharge whatsoever?).

RCCL cooperates with other organisations (from the 2010 Stewardship report):

We are also working with the Ocean Conservation and Tourism Alliance, acollaboration between Conservation International and the Cruise Lines Inter-national Association, to identify and map sensitive marine areas that wouldfurther benefit from additional protection beyond our current Above andBeyond Compliance policies. Once identified, we intend to integrate theseareas into our company policies, so that we can avoid discharging even treatedwaste water in these areas.

When it comes to future developments, Mr. Sweeting is quoted as follows in the ”Cruisingto a Greener Future” article: 13

”Sweeting thinks the industrys environmental image is sometimes misun-derstood. ’I have brought colleagues in from the conservation world who havebeen stunned by what we are doing,’ he says. Despite the improvements al-ready made by Royal Caribbean, Sweeting acknowledges that there is alwayspotential for further development. ’The greatest opportunity is when we de-sign and construct new ships,’ he says. ’We have broken new ground withthe launch of the Oasis of the Seas and based on sea trial data for our firstfew months in operation, we believe the carbon footprint per passenger per

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day is around 30-40% lower than ships built a dozen years ago.’ However, thecompany is not resting on its laurels. ’We are far from perfect, but we arepaying attention,’ he adds. ’Our mantra is that we will be better tomorrowthan we are today.’

4.4. Facebook survey on willingness to pay for responsiblesewage handling on the Baltic

The semi-informal survey outlined in section 3.5 ran on Facebook between April 28thand May 6th 2012. Out of 96 invitations to participate, 42 responses yielded usabledata. The survey reached out to a sub segment of the cruise market described by thefollowing traits:

• Age composition of the respondents: mainly between 20 and 40 years of age ap-proximately.

• Bias towards environmentally conscious sub-group of the sample (they are morelikely to respond to a question concerning the Baltic environment).

• Bias towards tourism-interested sub group (there are relatively more tourism-interested people in the researcher’s immediate circle of contacts, than in thegeneral population.

• Bias towards the Stockholm area with people familiar with the relatively short 24hour and 36 hour city cruises (therefore less representative for segments that wouldengage on longer (e.g. 7 day) cruises).

Despite the semi-informal character and the semi-representative sample (explained above),some interesting observations can be made.

The responses of the 42 participants that returned the survey are graphed in figure 4.1.It shows that most people (62%) are willing to pay between 5 and 10 euros per day forresponsible sewage treatment or discharge in a PRF. None of the respondents are willingto pay more than 20 euros, and 14% does not want to pay at all. Grouping the peoplethat would be willing to pay for adequate waste water treatment of the sewage theygenerate, the figure climbs to 86% (62% + 24%).

General comments on the survey included:

• ”I would want to make sure that the cruise operator does not make a profit on thefee, the fee should be the same as the cost”

• ”I would like the fee to be included in the total cruise price”

Hanninen and Sassi (2009) present a solution for a cruise ship of 2500 passengers plus800 staff, producing about 185 liters of black and grey water. The cost for the systemis 3-3.5 million euros (here the 3M euro figure is used) investment plus another 170 000euros per year in operating expenses. Assuming a lifetime of 30 years, the following

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0 5 10 15 20 25 30

0 EUR

5-10 EUR

10-20 EUR

20 EUR or more

Number of respondents

Willingness to pay for responsible sewage disposal

Figure 4.1.: Survey results: how much would you be willing to pay additionally per day tohave your sewage treated instead of dumped in the Baltic.

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Figure 4.2.: Example of a cruise operator (TallinkSilja) implementing a fuel surcharge todeal with varying fuel prices that were not included when prices for the season were set.A similar approach to sewage surcharge is not recommended (see text). www.digipaper.fi/tallinksilja/75337/

annual costs have to be covered in addition to normal operating expenses: 3M / 30 =100 000 + 170 000 = 270 000 euro per year.

Assume the cruise ship has 200 sailing days with paying passengers, the additional costto be covered is then 270 000 / 200 = 1 350 euro per day. So if the cruise is alwaysfully booked that becomes 1350 / 2500 = 0.54 EUR per passenger per day (the staff isexcluded because they are not charged for responsible waste water handling).

So the instinct of survey respondents to gain some insight on whether the fee chargedis in proportion to the incurred cost is valid. Although much can be said on the waythe 0.54 EUR above was established (e.g. cruise ships not always fully booked), cruisecompanies are probably better of including the waste water handling costs in the cruiseprice, instead of charging them separately as is happening with for example the fuel cost(see picture 4.2).

One preliminary objective: see how PRF’s will be able to help preserving the Baltic,could not be answered because of lack of answers from ports and cruise companiesreluctance to release data on that matter.

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5. Conclusion, critical review and suggestedfuture research

5.1. Conclusion

When it comes to the environment, the cruise industry has not always enjoyed thebest reputation, but in recent times, the sector is working together in order to madesubstantial efforts to improve their practices and use the environmental friendly conceptas a marketing tool.

The Baltic Sea continues to be one of the most popular cruise destinations and is re-sponding fast to the challenges posed by a huge increase in cruise traffic.

While the new IMO, HELCOM regulations affect all areas of the shipping industry,cruise ship operators face a particular challenge when it comes to compliance; it is achallenge for cruise operators to keep up with the continual changes in environmentallaws that vary from region to region.

But with increased traffic comes an additional strain on port infrastructure, an issuethat is being handled better than average in northern Europe. Ports actually want toupgrade their infrastructure and put in place adequate facilities to deal with the rise inpassengers and the challenge of waste water disposal.

All cruise ship operators either the big ones who operate worldwide and the other local(Baltic) ones, are taking environmental responsibilities seriously because they know thattheir livelihood depends on the environment.

5.2. Research question: state of cooperation for long-termcompetitiveness?

Collaboration and communication between cruise ship operators and legislative andregulating organisations is the key to go further. This research has shown that manysuch good initiatives exist but also pinpointed a few areas where improvement is needed;

• When asked to comment, the Swedish Transport Agency refers to the SwedishMaritime Administration, who then states that ’we only execute what the SwedishTransport Agency and the government decide’.

• The response from Birka, stating in a matter-of-fact tone that this is not an issue(which is partly understandable since they are a ’Baltic only’ player).

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• The standpoints of the Baltic Ports Organisation explaining the difficulties forports to upgrade their waste water reception facilities.

• The comments of CLIA on the Baltic sewage regulations, expressing doubts tothe degree of treatment at municipal plants compared to the on-board treatmentsystems. Comments that are also made by Mr. Sweeting for Royal Caribbean.

From the above, and the need to preserve the Baltic for the future, it is desirable tointensify the collaboration. This will become even more important when the SECA andNECA’s become effective in 2015.

There are also valuable examples of cooperation; for example cruise operators sharingbest practices on treatment technologies and new and alternative ways for treating wastewater. Both Carnival as well as Royal Caribbean boast participation in the OceanConservation and Tourism Alliance, a collaboration between Conservation Internationaland the Cruise Lines International Association (CLIA). One organisation that standsout when it comes to their realism (there is a relation between attractiveness for cruiseoperators and local regulations) is Ports of Stocholm.

Environment is an integral and self-evident part of Port of Stockholm operations andthis can be confirmed with the fact that now the Stockholm Port is being classed as oneof the leading green ports in Europe.

They also understood that creating long-term and sustainable means of transport ischallenging and collaboration of different partners is needed. They work together withseveral international and national organisations to jointly create the preconditions tomake shipping greener. Their environmental efforts can be summarised by the devel-opment of financial incentives (price differentiation), collaborating with their customer,transport industry and organisations, and by extending and sharing their knowledge inresearch and development.

It is also very important to mention that they are working with the Stockholm CruiseNetwork to establish Stockholm on the map of attractive cruise destinations. The long-term goals are to gain new markets and to increase the numbers of turnarounds inStockholm.

Other cruise-attractiveness related examples are the way Ports of Stockholm is preparingthe Stadsgarden quays for the Grace (Viking Line’s new cruise vessel, to come intoservice January 2013). At the same time Ports of Stockhom are upgrading the ferries’waste water management with new lines, new sewer pumps and new connections to themunicipal treatment plant.

The responses from Birka and Royal Caribbean (RCCL) are not always in agreement.For example the matter of nutrient removal is completely avoided by Birka’s answer (’werely on PRF’s’), whereas the RCCL answer is much more open in recognizing that thereis no practical on-board solution for this yet, other than transferring the problem to themunicipal treatment plant. At the same time RCCL admits there are only 2 ports withadequate PRF’s today and it can be concluded that for all other destinations they stillrely on their own AWP, without nitrogen and phosphorous removal.

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These differences in views can be partly explained by the fact that Birka is a Baltic-onlyplayer whereas Carnival and RCCL are typical global players.

5.3. Research question: how to deal with increased cost?

As was to be expected, cruise operators are reluctant to share their cost structureand cost drivers, because of competitive forces between them. Royal Caribbean (RCCL)published a figure of ”150 MUSD for 22 ships or 6.8 MUSD”, which is higher than theHanninen and Sassi (2009) estimate of 3-3.5 MUSD. Possible explanations could be thatthe information of Hanninen and Sassi (2009) is based on quotes and not real installa-tions. Others could be that RCCL includes other costs in this figure, for example thecost of ’downtime’ during installation and commissioning of the Advanced Wastewa-ter Purification (AWP) plant. If we assume the 22 AWP-equipped vessels to carry onaverage 3500 persons, the extra cost per person becomes approximately 0.67 USD perpassenger per day (using the same assumptions and operating cost as in section 4.4),very close to the figure of Hanninen and Sassi.

Customers express a general distrust of surcharges. Surcharges are too non-transparentand the amount is almost always believed to be a ’over-estimate’ to have some safetymargin for future variations. This research hints that including increased costs in thecruise price is the better way to go.

The reason for surcharges, cruise companies claim, is that the cruise prices are fixedfor an entire year and that they cannot increase prices to their intermediaries to off-set increased operating costs. The cruise industry is required to find different pricingmodels that actually allow for a more flexible pricing, to avoid the surcharge. Twospecific suggestions are given here:

• A more on-line price look-up system comparable of that of the airlines, where anintermediary can enter and get today’s price.

• A clause (common in other industries) in the price list to their intermediarieswhere they state that if fuel prices rise/fall with more than 10% during the year,the cruise company reserves the right to update prices up/down. This is done forexample with exchange-rate risks in industries where price lists are in one currency,but the seller’s cost structure in another.

5.4. Closing remarks and personal opinion

Although the re-use of treated waste water is common in municipal treatment installa-tions, it is doubtful that cruise ships will soon re-use treated waste water. The risk thata malfunctioning treatment plant leads to mass-illness on board a ship together withthe PR challenges (newspapers writing articles on how cruise ships try to ”save money

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by recycling your neighbour cabin’s sewage”) are considered too big to overcome for thetime being (source: personal communication with Xylem employees).

Another important fact to notice is that environmental consciousness has progressedfrom a trend into a global way of life, and customers expect environmentally friendlycruising. 1 However,there is always more to be done and it is important to point outthe cruise industry is not resting on its laurels.

One very positive impression on the state of collaboration that can be achieved, wasmade by Ports of Stockholm that does not deny the tension between attractiveness asa cruise destination on one side and cost factors for cruise operators on the other. Theapproach Ports of Stockholm chose should be considered a ’best practice’ for the industryas well as the region and has a high potential to be exported within as well as outsidethe Baltic region.

A good example from the cruise industry’s side are the actions and (easily accessible)information provided by Royal Caribbean (RCCL) and Carnival. The analysis RCCLmakes in their 2010 Stewardship Report displays ambition and a fair amount of self-criticism and realism.

5.5. Validation, limitations and critical review

The author’s personal concerns discussed above can somewhat be considered limitationsalready. Other than that, some additional issues became apparent during the work onthis dissertation. As outlined before, the main limitation of this dissertation is the factthat it included a case study and the generalisation of the empirical findings is thereforelimited.

Moreover, one of the main problems detected during the compilation of this thesis wasthe fact that few experts responded within the time frame stipulated for the investigativepart of the research. This has led to more weight being given to the case-study characterof this dissertation.

The critical review will be structured in accordance with the definitions of validity andreliability, introduced in section 3.2.1.

Construct validity: The construct validity of this dissertation’s logical structure, theproblem analysis and the research questions, have been confirmed by the responsesfrom the respondents. Both from the side of Ports of Stockholm as from Carnivaland Royal Caribbean’s information compiled from other sources, the author’s theseof the problem existing, has been confirmed. The research part therefore exhibitsconstruct validity.

Internal validity: The cause-effect chain of the thesis has been made plausible. Noneof the questionnaire respondents and none of the background and research ma-terial examined, contradicts the causality-assumption that ’more unique regional

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regulation’ −→ ’higher operating cost in this particular region’ −→ ’competitiveforces between regions’ −→ ’ incentive for operators to move itineraries to cheaperregions.’ The research exhibits therefore internal validity.

External validity: The author claims that external validity is partially attained. Thelimited time frame made it harder to conclude data collection with more responses,at the same time there is no indication that additional responses would have con-tradicted the ones already received. Much of the material reviewed speaks for theother responses being in line with the responses received and analysed. Full ex-ternal validation could have been achieved if more time had been available for thestudy. Especially the strong suggestion that ’cost-absorption/transfer is prefer-able from marketing standpoint over applying surcharges’ is worth a more detailedstudy, adding external validation to this result.

Reliability: Other researchers conducting similar studies within a short to medium termare expected to come to the same findings. Due to the changing nature of one ofthe underpinning concepts (the changing legislation and degree of cooperation) it isvery likely that studies conducted in the longer term come to different conclusionson the degree of cooperation between cruise operators and organisations. Since theauthor claims that more cooperation is needed to successfully remain competitiveas a touristic cruise destination, future research confirming that increased cooper-ation has led to increased competitive position compared to other region, shouldbe interpreted as a confirmation of this study.

All experts were offered the option to include their responses anonymously. None of therespondents used this option which is taken as an indication that they are committed tothe answers they provided. Therefore, no further approval for publication of the materialand analysis was deemed necessary.

With regard to the Facebook survey of a selected group of potential customers, thefollowing remarks can be made (the first four were already mentioned in section 4.4):

• Age composition of the respondents: mainly between 20 and 40 years of age ap-proximately.

• Bias towards environmentally conscious sub-group of the sample (they are morelikely to respond to a question concerning the Baltic environment).

• Bias towards tourism-interested sub group (there are relatively more tourism-interested people in the researchers immediate circle of contacts, than in the generalpopulation.

• Bias towards the Stockholm area with people familiar with the relatively short 24hour and 36 hour city cruises (therefore less representative for segments that wouldengage on longer (e.g. 7 day) cruises).

• The sample size of 42 respondents is on the lower limit for being statisticallysignificant for a one-question-survey (ratio questions:respondents between 1:4 to1:10 required, see section 3.5).

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• Extrapolation from Table 4.5 in Smith 2010 (p.104) the sample size of 42 togetherwith a 20/80 attribute incidence (conservative since 86% indicated to be willing topay more than nothing) indicates a confidence interval of approximately 85%-90%.

• For a more rigorous analysis, requiring 95% confidence interval, assuming a pop-ulation (passenger numbers) in the 100 000’s, table 4.4 in Smith 2010, requires asample size of roughly 380-385 participants. Since a sample size of this magnitudewas beyond the allotted time and resources for this particular dissertation, thevalidation of the result is left to future research.

5.6. Future Research

Academic research is crucial to the cruise industry. One of the difficulties with cruiseresearch is that cruise studies are subject to quickly varying knowledge where informationcan change rapidly.

This research is about the impact of Baltic Sea cruise tourism on the environment andtries to give an overview of the current environmental state regarding the ban on sewagedischarge. A lot of research needs to be done on the same environmental subject. Forexample the effect of the following regulations;

• IMO’s SOx marine fuel regulations, that requires reduction in sulphur content inmarine fuel for ships to 0.1%, to take effect from 1st January, 2015 in SECA areas.

• IMO’s NOx regulations that designate the Baltic Sea as a NOx Emission Con-trol Area (NECA)to be submitted in October 2012 (according to Mrs. Paulin atSwedish Maritime Administration).

As stated in the introduction, both of these were explicitly excluded from this researchsince it is not an issue specific for the Baltic, but more of a global research subject andfor reasons of scope limitation.

From the result that potential cruise customers do not like to see surcharges but prefercost variations to be included in the price, the cruise industry should initiate a thoroughlook at its ’surcharge’ pricing model, backed up by more rigorous research (380-385sample size required). The confidence interval of 85%-90% for this preliminary research,warrants further investigation.

Future research might take up issues that were not considered in the present research.Research into the economic and sociocultural impacts of the cruise industry in develop-ing countries is needed as there is a global trend of increasing cruise tourism to thesedestinations. Focus is needed on regions, such as the Red Sea, The Indian Ocean andalso the Far East, where ships are drivers for economic growth but at the same timea danger to the sociocultural environment when up to 5000 passengers arrive at once,especially at smaller ports.

81

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List of URL’s

The following is a complete list of URL’s used as a reference in this dissertation. Forreadability reasons, if a particular URL was too long to be included in the context,

83

it was abbreviated using ”.....” in the URL name (digital readers can still click on theabbreviated link). The table can be used to identify the full URL. All relevant pages weredownloaded by the author and are saved in case the link or information disappears atsome point. Relevant copies of the downloaded web pages can be requested by emailingsandy.polack@gmail.com. All links were downloaded and accessible on June 3rd 2012.

84

ec.europa.eu/environment/water/marine/ges.htm

un.org/wcm/content/site/climatechange/lang/en/pages/2009summit

www.astm.org/COMMIT/F25Presentations/fiebrandt.ppt

www.baltex-research.eu

www.bpoports.com/about.html

www.bpoports.com/assets/files/MoS/BPOCommentstoHELCOM.pdf

www.cruisebaltic.com/composite-719.htm

www.cruisebaltic.com/media(1315,1033)/Cruise_Baltic_Market_Review_2010_final.pdf

www.cruisebaltic.com/media(1544,1033)/Cruise_Baltic_Market_Review_2012.pdf

www.cruisebaltic.com/media(1560,1033)/Cruise_Baltic_statistics_2000-2012.pdf

www.cruisemarketwatch.com/articles/cruise-market-watch-announces-2011-cruise-line-market-share-and-revenue-projections/

www.cruisemarketwatch.com/blog1/home/

www.cruising.org/regulatory/about-clia

www.digipaper.fi/tallinksilja/75337/

www.economist.com/node/15501665

www.europeancruisecouncil.com

www.foe.org/cruise-report-card

www.foe.org/news/blog/2008-11-the-facts-about-cruise-ships

www.havochvatten.se

www.helcom.fi/helcom/en_GB/aboutus/

www.helcom.fi/GIS/en_GB/HelcomGIS/

www.helcom.fi/shipping/emissions/en_GB/emisions/

www.helcom.fi/shipping/waste/en_GB/waste/

www.helcom.fi/stc/files/shipping/Overview\%20of\%20ships\%20traffic_updateApril2009.pdf

www.helsinki.fi/henvi/yvv/HERCseminarseries08/Myrberg.pdf

www.imo.org/about/conventions/listofconventions/pages/international-convention-for-the-prevention-of-pollution-from-ships-(marpol).aspx

www.imo.org/About/HistoryOfIMO/Pages/Default.aspx

www.imo.org/OurWork/Environment/PollutionPrevention/SpecialAreasUnderMARPOL/Pages/Default.aspx

www.interact-eu.net/downloads/1725/Action_Plan_(EUSBSR).pdf

www.ipcc.ch/organization/organization.shtml.T5VQnLODuAg

www.royalcaribbean.com/content/en_US/pdf/RCI_wastewater_pur.pdf

www.royalcaribbean.com/ourCompany/environment/rcAndEnvironment.do

www.stockholmshamnar.se/Documents/EN/Trycksaker/Miljofakta_ENG.pdf

www.stockholmshamnar.se/en/About-us/Network-and-collaborations/

www.stockholmshamnar.se/en/News-and-press/2008/New-Stockholm-landmark-dedicated---Stockholm-Cruise-Center-Frihamnen/

www.stockholmshamnar.se/en/Prices-and-services/

www.stockholmshamnar.se/en/Prices-and-services/Collaborations-and-networks/

www.stockholmshamnar.se/en/Prices-and-services/Enviromental-Measures-for-Shipping-Company-Customers/

www.stockholmtown.com/templates/AgentManualPDF.aspx?pid=18136&cid=2&pall=0

www.stockholmtown.com/templates/page____15096.aspx

www.ucl.ac.uk/mssl/imaging/research

www.unwto.org/climate/bkg/en/bkg.php?op=1

www.vtt.fi/inf/julkaisut/muut/2009/VTT_R_07396_08.pdf

www.waterfootprint.org

www.worldcruise-network.com/features/feature78425/

www.xyleminc.com/

www.xyleminc.com/en-us/media-library/Pages/video-library.aspx

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A. Appendix: Cruise lines calling onStockholm in 2012

source: www.stockholmtown.com/templates/AgentManualPDF.aspx?pid=18136&cid=2&pall=0)

86

Cruise companies calling on Stockholm grouped by originAmericanAzamara Club Cruises (RCCL), www.azamaracruises.comCelebrity Cruises (RCCL), www.celebritycruises.comCrystal Cruises, www.crystalcruises.comElegant Cruises & Tours, www.elegantcruises.comHolland America Line (Carnival Corporation), www.hollandamerica.comLindblad Expeditions, www.expeditions.comNorwegian Cruise Line / Orient Lines (Star Cruises), www.ncl.comOceania Cruises, www.oceaniacruises.comPrincess Cruises / Cunard (Carnival Corporation), www.princess.comRegent Seven Seas Cruises, www.rssc.comRoyal Caribbean Cruise Line (RCCL), www.royalcaribbean.comSeabourn Cruise Line (Carnival Corporation), www.seabourn.comSilverSea Cruises, www.silversea.comDisney Cruise Lines, www.disneycruise.disney.go.comBritishCunard Line, www.cunardline.comFred Olsen Cruise Line, www.fredolsencruises.comNoble Caledonia, www.noble-caledonia.co.ukPage & Moy, www.pageandmoy.comP&O Cruises, www.pocruises.comSaga Shipping Company, www.saga.co.ukSwan Hellenic, www.swanhellenic.comThomson Cruises, www.thomson.co.uk/cruiseTravelscope, www.travelscope.co.ukVoyages of Discovery, www.voyagesofdiscovery.co.ukGermanAida Seetours (Carnival Corporation), www.aida.deHansa Kreuzfahrten, www.hansakreuzfahrten.deHapag Lloyd Kreuzfahrten, www.hlkf.deLord Nelson Seeresen, www.lord-nelson-seereisen.dePeter Deilmann, www.deilmann-cruises.comPhoenix Reisen, www.phoenixreisen.comPlantours und Partners, www.plantours-partner.deSea Cloud Cruises, www.seacloud.comTransocean Tours, www.transocean.deTUI Cruises, www.tuicruises.comItalianCosta Cruises (Carnival Corporation), www.costacruises.comMSC Cruises (Mediterranean Shipping Company), www.msccruises.comSpanishIbero Cruceros, www.iberocruceros.comPullmantur Cruises (RCCL), www.pullmanturcruises.comFrenchPlein Cap Croisires, www.plein-cap.comCompagnie du Ponant, www.ponant.com

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B. Appendix: Cruise Tourism on the BalticSea Statistics

Source: HELCOM AIS data, Number of ships crossing pre-defined AIS lines in the BalticSea, 2006-2009. Source: HELCOM Baltic Sea Environment Proceedings Nr. 123 (2010).Year Passenger Cargo Tanker Other No info Total

2006 42731 226855 67458 39627 - 3766712007 43215 237342 69335 56981 6901 4137742008 49355 210021 61996 122029 10297 4536982009 42408 200595 69021 73906 8096 394026

The statistics presented in tables B.1, B.2 are based on Cruise Europe’s definition ofCruise which excludes all cruises shorter than 60 hours. This excludes for example thenumerous Finland-cruises organised from Stockholm. They are, however, facing thesame challenges, with the difference that Baltic-only cruises (roughly the ones excludedin the tables that come) do not have an easy way of moving their business to otherregions. The figures in the table to come can therefore be interpreted as the numbers ofpassengers and calls that are at risk, when the Baltic ’regulates itself out of the market’.

88

Figure B.1.: Cruise passenger numbers per port. Source: Cruise Baltic www.cruisebaltic.com/media(1560,1033)/Cruise Baltic statistics 2000-2012.pdf

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90

C. Appendix: Economic theory on priceelasticity

Mullins et.al. (2003) list some factors affecting the customer’s sensitivity to price:

• Buyer’s perceptions and preferences

– Unique value effect: customers are less price-sensitive when they perceive aproduct or service provides unique benefits; there are no acceptable substi-tutes.

– Price-quality effect: customers are less price sensitive when they perceive theproduct or service offers high quality, prestige or exclusiveness.

• Buyer’s awareness of and attitude towards alternatives

– Substitute-awareness effect: customers are less price sensitive when they arerelatively unaware of competing brands or substitute products or services.

– Difficult-comparison effect: customers are less price sensitive when it is diffi-cult to compare objectively the quality or performance of alternative brandsor substitutes.

– Sunk-investment effect: customers are less price sensitive when the purchaseis necessary to gain full benefit from assets previously bought.

• Buyer’s ability to pay

– Total-expenditure effect: customers are less price sensitive when their expen-diture for the product or service is a relatively low proportion of their totalincome.

– End-benefit effect: customers (manufacturers) are less price sensitive whenthe expenditure is a relatively small proportion of the total cost of the endproduct.

– Shared-cost effect: customers are less price sensitive when part of the cost ofproduct or service is borne by another party.

– Inventory effect: customers are less price sensitive in the short run when theycannot store large quantities of the product as a hedge against future priceincreases.

In its most theoretical form, demand for a product or service is inversely proportionalto its price, i.e. the higher the price the lower the demand.

91

Figure C.1.: (Fictitious) demand curve for the number of consumers (x-axis) willing to paythe price for a 5-day-cruise (y-axis) to satisfy their ’need for a break’.

Figure C.1 shows a linear relationship between the price of a cruise and the number ofpotential consumers that are willing to pay that price to satisfy their ’need for a break’.For example if the cruise would cost EUR 1000 there would be 2000 buyers.

An commonly used term that expresses the sensitivity of demand to price changes iscalled the (price) elasticity. It indicates the change in demand when a certain change inprice is made:

E =

∆QQ

∆PP

(C.1)

with Q for quantity of demand and P price. For example, the price elasticity for cruisedemand as in figure C.1 is at the point of the example1 equal to 1. When price-elasticityis equal to one, it is said that the price-elasticity is unitary. A price reduction of, say,10% will lead to a demand-increase of 10% as well.

Other values for the elasticity are:

E < 1 Demand is price-inelastic: variations in price have little influence on demand.For example gasoline price are relatively inelastic due to their unavoidable nature.Many consumers(especially corporate ones) have no alternative than to use gasolineto power their cars, trucks, vans, they cannot change to public transport as privateconsumers could.

E > 1 Demand varies more than proportionally with price changes. For example ’roastbeef dinners’ at a restaurant, when promoted as ’lunch special’ with a 10% dis-count might lead to 20% increase in demand. The market for roast beef (in thatrestaurant, that particular day) is said to be price-elastic.

1∆P = 100, P = 1000, ∆Q = 200 and Q = 2000

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E = 1 Discussed in the example (and included here for completeness): price elasticityis said to be unitary: 10% change in price, leads to 10% change in demand.

E � 1 In this special situation the the demand curve approaches a horizontal line anddenotes the case where no price-increases are possible: for example a wheat farmerbeing able to sell its entire produce at the going wheat price, but nothing at all ata price above that. The is also called a perfectly elastic demand curve.

E � 1 The demand curve approaches a vertical line, demand is constant, whatever theprice level is. It is also called a perfectly inelastic demand curve.

Demand-curves are not the same for all consumers. Consumers with a higher income areless sensitive for price (and price variations) than low-income consumers. This will inpractice (together with other factors) lead to non-linear demand-price curves. This is ofless relevance for the scope of this research. Demand as a function of price is summarizedabove for the sake of clarifying that changing legislation, increases cost, which increasesprices that can influence demand and therewith the profitability of the Baltic Sea Regioncruise segment.

Price-elasticity of the Baltic Sea cruise market is deciding for whether cost increases can(and will) be passed on to the end customer (cruise passengers) and the consequencesfor actual cruise demand (and therefore growth of the sector in the Baltic).

This can be relevant since large cruise operators do have the possibility to actuallychange routes to other destinations if the restrictions in the Baltic start influencing theircustomer numbers and profits (assuming they are hindered in passing the entire costincrease on to their customers).

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D. Appendix: Economic theory on costs

For an in-depth analysis of cost in relation to supply curves see for example Lunden(2008).

For the purpose of this research it suffices with the following train-of-thought to un-derstand the influence of legislation on cost, price and therefore possibly demand andcompetitiveness.

Costs for a company can be divided in two types: fixed costs, that are constant in theshort term, and variable costs, which vary directly with the level of production.

For example for a cruise operator, costs related to owning and maintaining vessels arefixed. They cannot be adjusted on the short term when ’production volumes’ (passen-gers) vary from day to day. Other examples are rent, interest on loans, heating cost,executive salaries, cost for functional departments such as purchasing etc.)

Other costs vary directly with the number of passengers transported and can be ad-justed on the short term: meals served on a cruise, amount of laundry required to keeppassengers quarters with a set of fresh bed linen every day, commission paid to travelagents for every sold cruise package.

Fixed costs per unit, contrary to what their name might suggest, go down with increasingquantities sold, whereas variable costs per unit are constant.

Total cost per unit (passenger) is the sum of fixed cost per unit plus variable cost perunit. For any business to be profitable in the long term it is imperative that total unitprice is larger than total unit cost.

Example: A cruise operator expects to transport 300 000 passengers one year. Its fixedcosts are US$ 200 M and its variable costs US$ 20 per passenger. From that itfollows that its unit cost becomes:

Unit cost = 20 +200000000

300000= US$20 + 667 = US$687 (D.1)

This holds as long as the actual number of passengers is 300 000 for that year. Ifat the end of the year it turns out that only 250 000 passengers were convincedby the company’s advertising campaign (a fixed cost), the new incurred unit costbecomes 20 + 800 = US$ 820. If the company had been selling cruises that yearat US$ 750, it would have made a significant loss.

The example above showed a greatly simplified situation, but it illustrates the difficultiesof ’costing’ (as it is known in accounting) remarkably well. Unit cost estimates are based

94

on fixed cost projections, as well as expected quantity estimates. Deviations in either ofthese will lead to a cost figure that does not match the cost-estimate any longer. This isparticularly true for cost-estimates for cruise vacations as such a large part of the unitcost is represented by fixed costs.

Cruise liners will have a relatively large part of the cost per passenger represented byfixed costs, since the infrastructure (big cruise ships) requires enormous investments(US$ 1 400 000 000 for the Oasis of the Seas). These fixed costs are typically hardto reduce in sudden changes in demand. For example during the downturn in cruisedemand after 9-11, cruise company’s might manage to cut variable costs (e.g. laundry)but fixed costs (e.g. personnel, interest pays on loans for purchasing big cruise ships)not immediately. Personnel is especially sensitive because for example doing away withskilled employees at the onset of a downturn, might turn out expensive to replace andtrain when customers return.

This explains also why cruise companies (similar to airlines) have a unique opportunityfor offering last-minute deals which cost ’next-to-nothing’. Once the fixed costs havebeen covered by the minimal number of passengers required to do so, the next cabin(or airliner seat) costs almost nothing to offer. As a matter of fact, the margins onthose ’last-minute’ deals turn out to consist of almost 100% profit for the company. Thereverse is also true; every passenger short of reaching cost-break-even, represents analmost 100% loss (unit cost) for the company.

Anything a little more akin to reality than a fictitious costing example, represents genuinedifficulties for accountants. Measuring costs is all but trivial and topic of discussion inall industries and sectors.

95

E. Appendix: Example of questionnairessent to various stakeholders

The following questionnaires are an example of the type of questions sent out to thestakeholders in section 3.3. Three different set-ups were chosen: one for organisations,one for cruise operators and one more customised questionnaire for expert interviews, inthis case with Tumlare Sweden AB.

E.1. Example of questionnaire sent to the Swedish Agency forMarine and Water Management (Havs ochvattenmyndigheten)

Although the Baltic Sea in global terms is a small market for cruises, itsgrowth is strong. Cruise tourism in the Baltic Sea has increased dramaticallyin recent years. The number of cruise passengers arriving in Stockholm hastripled in the last ten years and last year was over 450 000 visitors.

1. Cruise tourism is important for the destinations in the Baltic Sea regionin terms of economic growth, employment, public relations. In Stock-holm the contribution of cruise tourist spending to the local economyis estimated to 5,1 billion Swedish crowns under one year when theyvisit Stockholm. They use 345 000 hotels rums in Stockholm per year.This is an incentive to continue developing Stockholm as an attractivecruise destination. How is Havs och vattenmyndigheten involved whenit comes to balancing the benefit that tourism brings to the region withthe local point sources of pollution that come with it?

2. The latest Helcom legislation completely prohibits raw sewage disposalwhile at sea. On paper an important initiative to reduce the contri-bution of cruise tourism to Baltic Sea euthrophication and pollution.However

a) A clause in Helcom legislation specifically limits enforcement of thenew rules until all Baltic destinations have adequate Port ReceptionFacilities. Cruise companies can (and probably will) continue todispose of raw sewage in the Baltic until all destinations actuallyhave PRFs (at the moment of writing only a hand full of the biggestports have adequate PRFs) and at the same time it can be argued

96

what is considered to be ’adequate’ (not disturbing the cruise liner’sschedule, availability around the clock, with a better effluent qualityof what could otherwise be achieved by using the onboard treatmentsystems. All in all many loopholes that make the newest Helcomlegislation easy to circumvent for cruise companies. How does HaVdeal with these challenges?

b) Current legislation (MARPOL) for the onboard treatment plantsonly prescribes limits for BOD, TSS and faecal coliforms. It doesnot address the nitrogen and phosphorous loads present in cruiseship generated sewage. So even if cruise ships treat their own sewageto comply with Helcom regulations, this does not help nitrogen andphosphorous eutrophication. How does HaV see on these shortcom-ings?

3. For cruise ships to comply with the stricter Helcom legislation posesseveral challenges for the cruise companies as well:

a) An adequate onboard treatment plant can cost up to EUR 3.5 M.Operating cost for the system EUR 150 K per year.

b) Retrofitting a treatment plant to existing vessels means sacrificingother profit generating square meters

c) Or choosing to discharge in PRFs instead of at sea requires holdingtanks with the same draw back as under b.

Balancing the above the cruise companies are faced with a local (Baltic)cost increase which will serve as an incentive to consider alternativedestinations for their fleet where compliance with sewage regulations is’cheaper’ (assuming also that cruise passenger are price sensitive andare scared away if Baltic cruises come disproportionally more expansivecompared to cruises in/to other parts of the world). Does HaV have anidea of the forces between Helcom on one side and popular cruise desti-nations wanting to increase their appeal to potential cruise operators?Does HaV have an active role in these discussions?

4. Any other initiatives on the interface between economic interest of theBaltic and the cruise ship operators operating in the Baltic, you wouldlike to highlight?

E.2. Example of questionnaire sent to Royal Caribbean CruiseLines

Many of the questions to follow are based on the information on your excel-lent website: www.royalcaribbean.com/ourCompany/environment/rcAndEnvironment.do and it was the outspoken environmental attitude and responsibility thatcaught my interest and the inclusion of Royal Caribbean in my research.

97

HELCOM has reached an agreement with the member states around theBaltic to completely ban the discharge of untreated sewage and waste intothe Baltic (the discharge of treated sewage is still permitted). My thesis triesto find answers to the question how to balance the desire for a sustainableenvironmental development of the Baltic with the direct competitive positionof cruise destinations (in this case the Baltic). By imposing local Balticregulations that are much stricter than regulations in other popular cruisedestinations, the added cost to comply to these stricter regulations, mightactually become an economic incentive to cruise companies to (partly) movetheir operations to other (’cheaper’) parts of the world (provided that theycannot or do not wish to (due to effects on passenger volumes at increasedprices) transfer the higher costs for sewage storage and/or treatment to thecustomers).

1. How has Royal Caribbean dealt with the increasing sewage legislationon the Baltic? At some point all sewage had to be carried to the nextport-of-call for treatment, what areas were sacrificed to make room forthis storage?

2. When it comes to treatment; do you have any idea of the total expen-diture in acquiring and installing the treatment plant on board of theships? Do you have any idea of the operating cost per day per pas-senger of the plant? Have you been able to include the higher sewagetreatment costs in the price the passenger pays?

3. MARPOL sets limits for treated sewage for BOD, TSS and faecal co-liforms. However, there are no limits on nitrogen and phosphorouscontent in effluents, which both contribute to Baltic eutrophication andalgal blooming. What are the operating characteristics of your onboardtreatment systems? Are nitrogen and phosphorous removed before dis-charge or is 100% of black and grey water delivered to the sewage PortReception Facilities around the Baltic?

4. Many cruise lines have criticized the PRFs for being too restrictiveon their working hours which then interferes negatively with the cruisesschedule for example. Is this something that has affected Royal Caribbean?

5. Cruise Lines International Association (and others) have repeatedlypointed out that different requirements on sewage discharge in differentparts of the world are presenting challenges to actually comply with allof them. Since you also operate in the Baltic, how do you deal with theever moving target of sewage discharge and emission restrictions in theregion?

6. Stricter regulations will force cruise operators to upgrade or install evermore sophisticated treatment installations. How do you anticipate tobalance the increased operating costs to comply with environmentallegislation with medium term direct competition with other tourismforms such as low-cost airlines weekend city trips?

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E.3. Example of customised questionnaire sent to TumlareSweden AB

When it comes to the environment, the cruise industry hasnt always en-joyed the best reputation, but in recent times, cruise ship operators havemade substantial efforts to improve their practices. Experts now agree thatwhen visiting some of the worlds most ecologically sensitive regions, cruiselines are duty bound to help preserve these vulnerable areas. For operators,this means a range of measures including the reduction of fuel consumption,cutting down on unnecessary waste and the introduction of the latest tech-nology to help re-use water and conserve energy. While there is always morethat can be done, the cruise industry is taking significant steps to reduce itsimpact upon the environment.

Although the Baltic Sea in global terms is a small market for cruises, itsgrowth is strong. Cruise tourism in the Baltic Sea has increased dramaticallyin recent years. The number of cruise passengers arriving in Stockholm hastripled in the last ten years and last year was over 450 000 visitors.

Cruise tourism is important for the destinations in the Baltic Sea regionin terms of economic growth, employment, public relations. In Stockholmthe contribution of cruise tourist spending to the local economy is estimatedto 5,1 billion Swedish crowns under one year when they visit Stockholm.They use 345 000 hotels rums in Stockholm per year. This is an incentive tocontinue developing Stockholm as an attractive cruise destination.

1. How is Tumlare involved when it comes to balancing the benefit thattourism brings to the region with the local point sources of pollutionthat come with it?

2. ECC (European Cruise Council) and CLIA (Cruise Lines InternationalAssociation) and others have repeatedly pointed out that different re-quirements on sewage discharge in different parts of the world are pre-senting challenges to actually comply with all of them. Since the Baltichas one of the strongest environmental laws; Do you think this is a threatfor the Baltic as a cruise destination? How does this affect Stockholmas a Cruise Destination?

3. What do you think about IMOs new rules for less sulphurous contentin maritime fuel?

4. What kind of costs will be related to their work in improving the envi-ronment?

5. Will there be higher costs for the tourists and are they willing to paythe higher price for their holiday?

6. What do you think the Baltic Cruise Tourism market will be like after2015?

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F. Appendix: Baltic Ports Organisation(BPO) on HELCOM guidelines forsewage discharge

The following is a copy of the Baltic Ports Organisations (BPO) comments on theHELCOM regulations for the Baltic Sea. Source: www.bpoports.com/assets/files/MoS/BPOCommentstoHELCOM.pdf

F.1. BPO comments to HELCOM guidance on technical andoperational aspects of sewage delivery to Port ReceptionFacilities

The enforcement of the recent IMO and HELCOM requirements on passenger shipson sewage discharge in the Baltic Sea area raises a number of significant challenges forthe ports in question and for the passenger ships operating in the Baltic Sea Area. Aport is only the link between the ship and the municipal treatment plant. The port haslimited possibility of pretreatment of the sewage, especially at old terminals and quays.

Passenger ships in regular traffic is the largest group which are no longer allowed todischarge sewage into the sea, unless they are equipped with sufficient and approvedsewage treatment facilities which hold back nutrients. Cruise ships are the group of shipswhich causes the largest challenges to the ports due to the large quantities of sewage tobe discharged at port reception facilities during port calls which only last a few hoursand due to a relatively limited number of port calls during a relatively short season,compared to the large investments needed for upgrading the port reception facilities.

The challenges for the ports are mainly the uncertainty to what extent new investmentsare needed, what port reception solution (or solutions) is the most suitable and costefficient to meet the requirements, the costs of establishing and running the receptionfacilities and various requirements from the city sewage treatment plant with respect ofvolumes and content of the sewage. The passenger ships are allowed to discharge sewageinto the Baltic Sea if the ship is equipped with an approved waste treatment plantwhich holds back the nutrients. If all or most of the passenger ships were equipped orare being equipped with such a sewage treatment plant, no further or only very limitedinvestments in ports would be needed. Because of the uncertainty the ports then makelarge unnecessary investments in sewage reception facilities for which the ships has to

100

pay for anyway through the no-special-fee system. This is the first challenge for the portsand the shipping industry. There is a need to clarify to what extent the investmentsare needed in the single port, and which ships are or are being equipped with sufficientsewage treatment facilities before the regulation comes into force. An annual update ofthe list would be appropriate.

Main challenges/obstacles to enforcement of the new regulations for sewage reception inports from ferries and cruise ships that should be met in the HELCOM guidance are:

1. Different international regulations are in mutual conflict. This must be solvedbefore the new sewage regulation comes into force. For example, there are noexemptions set up in the new regulation, which is a problem if for some unexpectedreason the ship cannot discharge to port reception facilities.

2. The No-Special-Fee system is not adapted to the regulation or vice versa. Theregulation should be in compliance with the EU-directive on port waste facilities,which is about to be revised. There is a need for flexibility on how to complywith the regulations, and it must be allowed for the ports to charge for exceedingvolumes that are not produced since the last port of call.

3. Definition of sewage is not in place. The content and character of sewage variessignificantly, which makes it difficult to decide which technical solutions meet therequirements.

4. Ships are equipped with different sewage treatment systems which produce sewagewith different velocity and content. This again must be received with differenttechnology and treated differently in the ports. There is a need to clarify whichtechnological solutions are needed in the ports and it may be necessary throughregulations to make requirements to ships in this respect on which sewage qualitythe port can receive. Bio-sludge can block the piping system and back flush valves.

5. The existence of hydrogen sulphide in sewage threatens the working environment.The guidance must come up with reasonable solutions to this problem. Further-more odour problems cause great inconvenience to passengers, crew and staff atshore as well as offices and housing in the neighbourhood.

6. Limit exceeding metal content threatens the municipal treatment plants qualitydemands. This leads to significant exceeding costs for the port (we have seenexamples of trebling of the costs)

7. We have seen examples of, that municipalities reject reception of sewage either mo-tivated with large volumes or motivated with metal content or hydrogen sulphideexceeding limits. The guidelines must come up with a solution to this problem.Best solution would be if all municipalities could be forced to accept sewage as itis to their treatment plants. Technical obstacles must be solved between the shipsystem and the municipal system.

8. Minimum (and maximum) pumping capacity from ship to fixed installations or tobarges is not agreed upon. The pumping capacity at the ship side is not alwaysadequate. The guidance and the regulation must deals with this problem.

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9. There are not commonly agreed different connections and size of pipelines andconnection equipment. Agreed standards would ease the operations and reduceinvestment costs.

10. Winter condition problems with movable pipelines. Movable pipelines are heavy.The guidance should deal with how this could be solved.

11. The guidance should highlight the legal and actual possibilities for investmentsubsidies and loans.

12. The cruise ship does not always berth. Sometimes it anchors outside a city (anda port) and the next port of call must receive double or triple volumes. This canimply delay to the ship if all the sewage must be discharged at the port and itimposes extra costs to the port. The guidance and the regulation should deal withhow this problem can be solved.

13. When a cruise ship berths in a port which is not one of the selected ports that haveto apply to the new sewage regulation, the port is not necessarily able to receivethe sewage. What should be the solution for the ship and the next port of call ifthe port does not receive the sewage? What does this impose on the no-special-feesystem?

14. It must be highlighted in the guidance, that it is not imposed on the port to receivegreywater under MARPOL Annex IV. This makes it necessary for the ship to keepthe black water and grey water separately. However some ports receptions facilitiescannot receive high velocity sewage. The guidance must deal with solutions to thisissue also in respect to the functioning of the no-special-fee system.

15. Some cities are not able to receive sewage at extreme situations, such as whenheavy rain blocks the city sewage system and delay tanks. The guidance shoulddeal with a solution to this issue too.

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G. Appendix: Comments from CLIA onPRF’s

Adapted from Hanninen and Sassi (2009).

G.1. Technical problems related to port reception facilities

Information concerning technical problems related to the discharge of sewage intoPRFs was received mainly from the CLIA, the Finnish Port Association and the ECC.The ports that replied to the ad hoc HELCOM Correspondence Group had few com-plaints concerning their own systems.

G.1.1. Comments from the CLIA and the ECC

Cruise ships rarely find reception facilities in ports sufficient in capacity and quality oftreatment. Treatment on-board ship is frequently better than is available onshore, or onemay find that the vendor accepts the waste, only to discharge it into the port withouttreatment (this is unacceptable to the cruise lines, therefore, promoting treatment on-board). Amongst the deficiencies of port vendors in meeting the needs of vessels are thatthey are sometimes unreliable (do not show up) are not equipped with certified hoses orcommunications equipment, or have not undergone emergency response training.

Discharge connections to a sewer are rare (the Port of Helsinki does have them but theyare not always reliable). Discharge to shore has also been attempted in Copenhagenand in St Petersburg (by barge). Discharges to tank trucks require a constant supply oftrucks since they each only hold 25-30 tonnes, with the ships duty officers monitoringthe connections all day/night. According to the ECC response, Cruise Baltic has con-ducted a survey for the cruise industry concerning the adequacy of PRFs, and 25 portsrepresenting all HELCOM countries were reviewed. The results indicated that 15 outof 25 ports had no direct shore connection available, while most ports utilized trucks tooffload the waste waters from ships. This practice may be suitable for cargo ships ortankers but it is completely inadequate for cruise ships.

The ECC response remarked that the ship-to-shore interface for unloading waste waterrequires considerable improvement to ensure safe and environmentally responsible prac-tices in line with those adopted by the International Shipping Management (ISM) codeand the environmental policies and procedures adopted by ECC member lines. The ECC

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is aware of a number of operators that have attempted to discharge ashore with variousdegrees of success depending upon the PRFs. While ECC member companies welcomethe opportunity to use shore-based facilities, the vast majority of facilities available areinadequate to serve the cruise industry (ECC, 2009b).

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