I’ve been saying it for a while now, ever since the Pacific Princess case. The cruise industry is going to shut down due to COVID-19. Until recently that’s been in fringe lunatic territory, so I haven’t said much publicly apart from one or two conversation stopping posts on social media. I did however buy some put options on CCL on Feb 10. I was confident then that there was trouble coming. They’ve proved to be a good hedge against broad market losses in recent weeks.
Things are developing very quickly as I write this, but in the last day or so two cruise ships have turned up as index cases in onshore testing for the virus. Passengers who got off ships recently are getting sick.
The two ships I’ve been watching are the Grand Princess in San Francisco and the MSC Opera in Greece.
Now what’s going to happen? Here’s my doomsday scenario:
1) as authorities in both the US and Europe try to decide what to do both ships will remain at sea
2) there will be on board testing that will confirm infections in passengers and crew
3) there is already concern over other recent passengers as part of public health authorities, especially if test results are high. Don’t forget that the index cases just got off a cruise with 2500 others. More cases will heighten the panic.
4) as the publicity ramps up and the consequences sink in other cruises are going to become suspect. Further testing in Europe and/or US will point to other ships.
5) Ports will close to cruise ships, first on an individual basis as we’ve seen in the Caribbean recently, but eventually as temporary bans to all.
6) returning to home port and disembarking passengers and crew will become problematic even if there are no known issues. If a growing number of ships are proven to be infected all will be suspect.
7) the scale of an orderly wind down would be daunting. Ten million passengers a year take a Caribbean cruise. This is the busy season. The economic consequences are huge, particularly at busy or remote ports. But I don’t think there’s any hope of an orderly wind down at this point.
Go ahead. Poke holes in it. We’ll know fairly soon how it goes. But I’m throwing it out there. If I’m right it’s going to be very bad.