Preserving the country’s ocean and managing the level of pollution caused by cruise ships is a significant challenge to the federal government and the cruise industry. For instance, Royal Caribbean’s Oasis of the Seas generates over 450,000 gallons of gray water, more than 40,000 gallons of sewage, and at least 20 tons of solid waste on a daily basis ( Klein, 2009 ). These wastes always end up in the environment either directly through dumping them in the water or indirectly through smoke and ash. Additionally, the gas emissions from burning fuel contaminate the water trough ballast water. Despite the attempts by the government to address this issue, the two companies tend to ignore warnings and remain unmoved by the fines they are made to pay ( Rajagopalan, 2011 ). However, some studies project that if this trend progresses in the next few years, Carnival and Royal Caribbean will lose many of their customers if they maintain the degree of which they are polluting the environment.
Research Question
Will the level of pollution caused by Royal Caribbean and Carnival affect the sales of these cruise lines and discourage guests from sailing with these cruise lines?
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Studies suggest that it is likely that these companies would lose many of their customers if they maintain the degree of which they are polluting the environment.
Problem Statement
In the United States, major cruise ship companies like Carnival and Royal Caribbean have been accused for more than two decades of the degree of pollution they cause on the oceans. Many aspects of the cruise industry are regulated by the International Maritime Organization (IMO). The IMO conventions that apply in this context are those that pertain to passenger ships cruising the ocean, including preventing marine pollution by these ships. Many companies in the cruise industry hold that their operations are in line with the IMO convention and that they are responsible stewards of the United States Oceans. Regardless, these operations have attracted fines of more than $50 million cumulatively since 1998, which disapproves such a statement. Cruising lines tend to gain considerable profits every year yet they are not compelled to pay any corporate taxes in the United States. Instead on investing such money on new technology to help reduce pollution, these companies tend to concentrate on increasing their profits. Considering the current state of pollution, it may be deduced that this trend will progress for the foreseeable future. The question is whether this trend will affect the sales of these cruise lines and guest from sail with these cruise lines.
Hypothesis
If Royal Caribbean and Carnival don’t change their ways on how they recycle and use their resources, their sales may decrease, and they may lose a lot of guests.
Objective
First, the research is aimed at investigating the extent of pollution caused by Royal Caribbean and Carnival. This can be done by considering the statistics provided for both ships. The second objective is to determine the impact of these companies’ practices concerning pollution on their sales and the number of guests boarding their vessels.
Literature Review
Background of the US Cruise Industry’s Pollution Record
Currently, in the United States, the cruise industry is dominated by three companies which control a combined 95% of the North American market. These corporations include Royal Caribbean Cruises Limited, Carnival Corporation, and Star Cruises. For the purpose of this paper, this section will only consider literature for Carnival and Royal Caribbean. Carnival controls 53% of the market with a total of 11 brand names whereas Royal Caribbean controls 33% of the market.
The cruise industry has been criticized, from as early as 1980, especially concerning the amount of water and air pollution caused by the ships. Accordingly, Royal Caribbean and Carnival have been particularly targeted by these criticisms. According to Klein (2009), their increased concerns regarding the contribution of cruise ships towards water pollution in the late 1980s, and it is these concerns that alerted the federal government to conduct more thorough surveillance on cruise lines. It was the United States Coast Guard that was responsible for this surveillance and the agency reported numerous violations of environmental conservation laws. However, there was no significant change in the degree of pollution in the first year following these reports. As a result, the United States introduced stricter penalties for pollution violations in the early 1990s. Towards the end of that decade, the federal government had charged more than 150 ships with violations such as the unauthorized discharge of oil, hazardous wastes, and garbage.
Royal Caribbean was the worst hit by these penalties and received a hefty fine of $9 million mostly for discharging oily wastewater, which is contrary to the country’s clean water regulations. Janet Reno, the Attorney General during that period, stated, “Royal Caribbean used our country’s waters as its dumping ground, even as it promoted itself as an environmentally ‘green’ company. To make matters worse, the company routinely fabricated the ships’ logs – so much so that its own workers referred to the logs with a Norwegian term meaning ‘fairy tale book.’ This case will sound like a siren throughout the cruise industry” (Klein, 2009). Despite the several fines and warnings, this company has received over the years, it does not seem to slow down on pollution. On 10th October 2008, for instance, Royal Caribbean’s Rhapsody of the Seas dumped more than 20,000 gallons of wastewater in the portion of the ocean that is Southeast of Alaska. There were several instances during that period that the company received warning from the Coast Guard and Alaska, but the trend does not seem to be changing for the better.
Like Royal Caribbean, Carnival was also fined in 1998 for an event that occurred four years before where it dumped oily bilge water into the ocean around Alaska on thirteen different occasions in the span of only ten days. Klein (2009) argues that this is one of the most reckless actions taken by the company given the nature of oil bilge. Even in small quantities, oil bilge has the potential to cause considerable harm to marine life. If the contaminated fish are consumed by human beings, then this presents a risk of severe health complications. In 1999, the company was also reported to have violated air opacity standards in Alaska. Consequently, the company had to pay $55000 in fines. Carnival did not seem to mind the fines because the company was accused of more such violation in the following years.
Consideration for Future Sales and Boarding Guests
Klein (2009) claims that fining these companies does not seem like an effective approach to addressing this problem. It is very unlikely that the two companies would develop strategies to reduce the pollution. As compared to annual profits, these fines have no significant impact on the operations of the cruises. Additionally, since these companies care only about making profits, they are not easily affected by public humiliation, since this was part of the strategy used by the federal government. The managers of these companies reckon the demand for ships in the United States, and since they control a combined 86% of the cruise industry market, they do not project any changes in the coming years concerning sales and the number of guests boarding their ships. Regardless, Carnival reports that “Negative publicity regarding the cruise industry us specifically, including any adverse environmental effects of our operations on the environment, could affect the demand for cruises, impact our reputation and compromise our future sales and profitability” ( Sun et al., 2011 ).
Analysis
Contrary to the argument of Klein (2009), Rajagopalan (2011) claims that if this trend progresses for a few more years, then the two companies will start experiencing a decline in sales and the number of boarding guests for two main reasons. First, there are more green cruises, which are considered to be more environment-friendly than Carnival and Royal Caribbean. The introduction of such green cruises as Crystal Cruises and Costa Cruises will provide competition for the two leaders in the industries. Second, the world is growing increasingly sensitive to matters concerning pollution. If Carnival and Royal Caribbean continue featuring in the headlines for contributing to pollution, it is expected that many people will be reluctant to buy or board their ships simply because of the companies’ negligence regarding pollution.
Solution Proposal
The cruise companies should operate their Environmental Management System (EMS) onboard so that they raise the waste management standards. This measure would also imply that the companies are complying with the zero discharge policy for solid wastes that would be burnt up onboard or on arrival at the port.
The companies should also consider reducing the production of sludge and oily wastes. One way of ensuring this is by using clean and treated fuel which produces less sludge and is eco-friendly. Additionally, emulsion breaking filters may be fitted on the separators.
The federal government should require United States cruise companies to have a “White Box.” This tool works in such a way that water passes through a flow meter before it is disposed of. The flow meter is usually fitted to a recorder which derives data regarding, among other things, the oil content meter level over a discharge cycle.
References
Klein, R. A. (2009). Getting a grip on cruise ship pollution . Friends of the Earth.
Rajagopalan, R. (2011). Environmental studies: from crisis to cure . Oxford University Press.
Sun, X., Jiao, Y., & Tian, P. (2011). Marketing research and revenue optimization for the cruise industry: A concise review. International Journal of Hospitality Management , 30 (3), 746-755.
