Stu Bykofsky: Philly's cruise business has sunk

Posted: March 05, 2013

PHILADELPHIA IS missing the boat.

During a recent cruise (out of Fort Lauderdale), I wondered what was happening with cruises out of Philadelphia, a business that's had its ups and downs. I knew cruises are thriving in nearby Baltimore and learned that even Bayonne(!) is bounding. Philly? Dead in the water.

But why? Bermuda (a popular destination) is closer to Philly than to Bayonne(!), 100 miles to our north. And we have the Navy Yard cruise-ship terminal, right?

Wrong. That was sold to Urban Outfitters, says Will Agate, senior VP of Philadelphia Industrial Development Corp., in charge of Navy Yard management and development. "The notion of cruise business at the Navy Yard is passé," he says.

Philly hosted 218 cruises since 1998, but none since 2010.

Why is Philly out of favor?

I asked the Cruise Lines International Association, but it (claimed) to have no idea. I called the Delaware River Port Authority and was told to try the Philadelphia Maritime Exchange.

The exchange is a nonprofit trade association that embraces the maritime industry on the Delaware River and Bay. Vice President Lisa Himber says her job is to provide statistics, not opinions.

Here are the stats: In recent years the high-water mark for Philly cruising was 2004, which welcomed 35 cruises, after logging 28 cruises in 2003. There was a steep drop-off in 2005 (three) and 2006 (one), followed by a rebound into the low double digits for the next three years. By 2010, Philly was down to two cruises and zero after that.

The city has no point person on cruising, and that tells me developing that business is not a mayoral priority.

That's surprising, because it's a clean business that doesn't require Philadelphia to do much. Cruise ships carry thousands of people - who have to park their cars here, who may stay over for a night or two and spend big bucks in hotels, restaurants and museums. The estimated average economic impact of a midsize ship, passengers and crew, is about $300,000, says Andrew Moody, of Exton-based Business Research and Economic Advisors, which does research for the cruise industry.

Cruise ships spend on provisions, plus port fees. It seems like not much of a gamble at all.

As I dug deeper, a culprit emerged: gambling itself.

I couldn't get anyone in the cruise industry to acknowledge it, and it isn't the only problem, but one hurdle to Philly's success is its location about 90 miles from the ocean. "Each ship is a profit center and anything that impinges on that is negative," says Moody. Ships have casinos that generate a lot of cash, and casinos can't open until the ship is in international waters.

Baltimore has a similar problem, he says, as ships must clear the Chesapeake Bay before the slots can spin. But Baltimore has overcome that handicap.

Another factor Moody mentions is location.

New York and its surrounding area (including Bayonne!) is an international gateway, and draws passengers from the north, Baltimore attracts passengers from the south, and Philly is squeezed between the two. As Baltimore's cruise business increased, Philadelphia's declined.

Philadelphia has created tax incentives to bring in other businesses, such as developers and movie companies. Can't something be done to sweeten the tea for cruise companies?


Phone: 215-854-5977

On Twitter: @StuBykofsky



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