Good morning. My name is Eline Hvamstad, and I'm pleased to welcome you to today's Cruise Special Investor Seminar. We have five speakers this morning, that over the following hour will talk more about the market trends in cruise, how the industry is responding to new expectations and demands, and how technology is driving the industry to become even more sustainable and environmentally friendly. The presentations will last from approximately now until 11:15 A.M., and will be followed by a Q&A panel where you have the opportunity to ask questions. Our first speaker up, Henrik Badin, is well known to this audience. He is Chief Executive Officer of Vow, a passionate leader, and also shareholder of the company with a long history in cruise. His speech is titled: A New Era in Wastewater and Waste Treatment at Sea. Please welcome Henrik Badin.
Thank you. I would like to start off by walking down the memory lane with you. This is Port of Miami, the biggest cruise port in the industry. It's 30 minutes away from our office in South Florida. There are some interesting pictures here. Some say that the inventors of modern cruises, cruising, is Knut Kloster and Ted Arison. Knut Kloster, the Norwegian, and Ted Arison, the American. In 1966, Ted had passengers. Knut Kloster had a ship in Bergen that was intended for cruise operations between Southampton and Gibraltar, but Franco closed down the borders. So Knut Kloster took Sunward over to Miami, and these two guys started Norwegian Caribbean Line. Six years later, they split apart, and Ted Arison went off to establish Carnival Cruise Line, that later became Carnival Corporation and PLC.
Micky Arison, the son of Ted, is the chairman of that business. There was also another initiatives in 1969, where the three Norwegian shipping families, Skaugen, Gotaas-Larsen, and Wilhelmsen, founded Royal Caribbean Group, or Royal Caribbean Cruise Line, in 1969. And from 1988, Richard Fain came on board, played a vital important role in the development of Royal Caribbean Group, and today is the chairman of Royal Caribbean. And the third one is Gianluigi Aponte, the owner of MSC Cruises. He started with his first ship in 1972. These founders were behind the four big cruise companies in the global industry today. Carnival controls 39% of the industry capacity, Royal Caribbean, 21%, MSC Cruises, 12%, and Norwegian Cruise Line, 10%. 82% together, a total capacity, a hotel capacity in the cruise industry of more than 600,000 beds.
But it all started some 60 years ago. For us, we have a legacy. Scanship has a 30-year legacy in the cruise industry. In 2023, we have delivered our Cleantech on board 173 cruise vessels, and today the industry counts around 360 cruise ships, so we have a significant footprint in this industry. If you look at the ship owners where we have delivered technology to, Carnival, we have delivered Cleantech on 34 ships; Royal Caribbean Group, 46 ships; NCL, 32 ships; and MSC, 23. Others, 48 ships we have equipped. Among the others, Viking Ocean Cruises, owned by Torstein Hagen. It was a or he did a successful IPO now earlier in May. We are delivering to 16 cruise ships for Viking Ocean.
Another would be mentioned, Virgin Voyages, owned by Richard Branson, we have four projects. So these are the 173 ships that we have delivered historically. We are delivering technology to shipyards as new build supplies, and we are doing retrofits with ship owners. And historically, we have delivered, if you look at our main system portfolio, wastewater purification and waste management, we have delivered wastewater purification to 108 cruise newbuilds historically, starting from 2003, approximately. 107 ships we have equipped newbuild supplies, and we have done 32 large retrofits within advanced wastewater systems directly with ship owners, and within waste processing, 13.
So this is our legacy business, all the way from the counting from 2008, where we had approximately 50 ships, to 2028, with the newbuilds coming out, 173 ships. Towards cleaner seas. What we're saying that the cruise industry is moving actually faster than the legislations in 1976, when you had IMO MARPOL, the UN-regulated body for pollution at seas that came in force in 1976, not that much happened. Of course, you had the North Sea Declaration, you had more focus in the North Sea on removing nutrients. But we started, our legacy business started back in the 1990s, where we started deploying food waste systems and waste handling, garbage handling systems.
But something happened here in 2002, where Lisa Murkowski, the Senator of Alaska, enforced a strict standard for the cruise industry, meaning that all the cruise ships could have continuous discharge in Alaska if they would comply, processing gray or purifying gray and black water to a certain standard. They could have continuous discharge. This standard was very important for Scanship. And from this, in this period, we deployed a lot of our advanced wastewater purification system, both on retrofits with shipowners. We did large retrofit programs with the major shipowners, starting from 2003. And we also developed that technology to also include nutrient removal, actually starting to deploy technology that later on became an industry standard in 2019, 2021, when those standards were adopted in the Baltic Sea as a special area.
And actually, the Norwegian seafaring authorities, the Swedish and the Danish, actually used Scanship as an example when this was approved by the IMO MARPOL convention in 2014, in looking at what kind of technology we had deployed in the cruise industry, later on became a standard. In 2019, we got the first contract also with advanced systems within garbage handling, using pyrolysis instead of incineration. This was back in 2019. There was no regulations. Last year, IMO MARPOL made a regulation concerning these type of processes, so the regulators are coming after. But it just demonstrates that the cruise industry is actually pushing, and later on, the standards, you know, it becomes industry standards.
I would say that historically, we, together with the shipyards and shipowners, in the cruise industry, have actually been pushing the limits, deploying more and more advanced systems on board ships. In this period, Scanship has taken a leading position. We have been developing our business. We did an IPO in 2014. We stock listed the business, Scanship, back in 2014, with this revenue line. We have developed until 2023 to almost, you know, going into 2024, around NOK 600 million. It's been a very nice development. Of course, we had a couple of years with COVID that slowed the entire business down, but still, it's a very nice development. We are a technology provider, meaning that we are investing in technology development.
We have done that, we invested substantially in latest years, and today, we are, I would say, a technology leader in cruise. We are holding sort of around 117, around 110 patents behind our technology. We have a good footprint to fit sort of the needs of our customers. We are located in U.S. close to the cruise ship owners, and we are providing services to the industry, and we are located both in Norway, Poland, and France to deliver technology to the shipyards concentrated in Europe. A good development. We have, during the first months of this year, already signed up new build contracts in the cruise industry space for nearly EUR 50 million.
In February, to date, the largest contracts for sort of a single supply to a cruise ship with 1+1 , NOK 19.3 million. And two weeks ago, for a Carnival new build. I look forward to Sandra talking about, you know, representing Carnival here today, but that's a NOK 28.4 million for two ships. And these systems, we will go more in detail to present, and our Chief Technology Officer, Per Carlsson, will give you sort of an insight in what kind of supply, what this means in terms of complexity. But the contracts are getting bigger. We are delivering more and more advanced systems to meet higher and higher environmental standards on ships. And we are busy. This slide shows our ongoing activities this year.
We're delivering main equipment deliveries to 16 cruise ships towards European yards, plus two, there's two retrofit projects for Carnival as we speak, and we have 99 ships leaving the yards this year. And you see that the production where these ships are produced, Jørn from Clarksons will give you more sort of insight into that business later on. But you know, Fincantieri is a large player in this space, in shipbuilding space, and we have two projects at Sestri in Genova. We have four projects at Ancona, at Fincantieri, and Marghera, four, and two at Monfalcone. So the Fincantieri account for us is the largest on the new building space.
We're delivering six projects at the Chantiers de l'Atlantique in France, two projects at Meyer Werft, and one of that is the new Excel project for Carnival, and we are working on three projects in Turku. And among you see the big players, Royal Caribbean, Carnival, adding now more, one more, or actually one more project there. Viking Ocean, as I said in the introduction, we've been working on 16 ships for Viking Ocean Cruises, and we continue to deliver to Norwegian Cruise Line and MSC. So it's an impressive order book we are delivering on. And this is the visibility going forward. We have an order book, including options for NOK 1.2 billion, nearly NOK 1.3 billion. It's a substantial order book for us, and it contains 35 cruise new builds to hit the waters in the coming years.
Eight ships will be launched in operation this year. Next year, 10 ships, and the following years, six, six, and five. But there are also options to our contracts. We have eight options in our contract portfolio, and the gray ones are 27 projects we're working on together with shipowners and shipyards that potentially will lead to new contracts. And, and Hamid, our vice president, cruise operation, will talk about sort of how you work over time with shipowners and shipyards, how you develop projects over time. And I get to repeat already this year, EUR 48 million of order intake just in the cruise industry space for us. We also see a significant, significant market for us in the coming years within the retrofit side. We have, in the past, retrofitted the fleets with advanced wastewater purification.
We continue to retrofit the Carnival ships with advanced wastewater purification, but we also see a large potential in also now starting retrofitting ships with our new waste management systems featuring pyrolysis. It's a way, it's an easy way to do it because what we're basically are doing, we're taking out our conventional incinerators, and that makes space for our new technology. So it's doable, and we believe the industry will move on it. The more ships hitting the waters by 2028, it means that we are providing more and more service to shipowners. And this has been a very nice development, and this is the annual revenue from providing operational assistance to shipowners to provide consumables and spare parts.
We are about to hit sort of a NOK 200 million mark, and if you look at a total of NOK 600 million in the cruise business, NOK 200 million of it is recurring revenue. But you can also say that the ship new building part of our business is well recurring because you're delivering to sister ships. But it's good that this part is just building up with the number of ships that are launched with our systems on board. And of course, being locally based in Florida is of great importance because we're working close with shipowners to provide these type of services, but of course, also in Europe.
I would say that cruise, the cruise industry has enabled Scanship and Vow to not only sort of deliver and develop advanced systems to a, you know, highly demanding cruise industry from a, from a quality perspective, but also because of the ambitions within the environment. It has enabled us to develop technology. It has enabled us to buy more technology companies, and today, the company is also faced with substantial opportunities outside the cruise industry space, thanks to what we have done in the cruise industry over the years. We have shown this slide a couple of times. It shows that we have a prospect portfolio of nearly NOK 25 billion. So the opportunity is great, but it's actually thanks to the cruise industry, the legacy we have there.
And when we meet new, you know, customers in other markets. I remember last year I was in the U.S., in Rhode Island, meeting politicians and stakeholders in that state. And when we talked about these new projects on land for a large renewable project, all was impressed by our history in cruise. And they, you know, it really sort of comes across as, you know, a company that has been able to sustain the business over time, to grow the business over time, and working so closely integrated with the cruise industry. And that sort of message, a very strong signal to other markets that, you know, we're a solid partner. To sum up, at a glance, we have a solid backlog in cruise.
We have a solid business in cruise, which leads to, you know, increasing revenues and good cash flow in the coming years. It has allowed us to move into new markets, and some of the technologies that we are deploying now on Carnival is thanks to some of the experiences we have in new markets, so it sort of goes both ways. But the land-based, we have reached milestones on large projects, and we're growing that part of the business as well. On the technology side, we have invested more than NOK 300 million the last years, so we are in a good position, and we have actually, with this type of technology development, positioned the company very well. And we have a good team that we are continuing to streamline and to make the business more scalable for these type of growth.
We have, I would say also, not only the important relationship with our customers, but also a well-established relationship with our supply chain that makes this happen. Lastly, we are supported by megatrends within cruise, the conscious cruise tourism that Sandra will talk about in your presentation, but also regulations and economic incentives that drives the investments of our technology in the coming years. Thank you so much.
Thank you, Henrik. Now we will turn our attention to Carnival, in many ways, the reason why we are here today. As you will recall, VOW recently announced the award of a record-breaking contract in cruise, both in terms of value per ship, but also in terms of technology contents. At the time of the announcement, VOW was not ready to announce the name of the ship owner or the order. We are pleased to confirm here today that the ship owner is Carnival, and we're even more pleased to have, Sandra Bratland, Director, Destination Affairs of Carnival Norway, to present the company's efforts to be more sustainable from ship to shore. Sandra.
Yeps! Thank you so much. Actually, cruising in Norway since the late 1800s. Is it working?
But I'm a Bergener, so I'm sure you can hear me. People out. Sorry, did I break it?
No. It's fine. [audio distortion] There you go.
Okay.
[audio distortion] You can just put it back.
And it's working now? Okay, good. I'm gonna leave it here. Right, so first of all, thank you so much for the kind invitation, and thank you for allowing me to say a couple of words about Carnival and our sustainability efforts. I will also talk a little bit about our presence in Norway. So my name, Sandra Bratland. I'm a Bergener. I have an office in Bergen. I'm the only employee of Carnival that are actually in Norway, so I'm like the potato. I cover anything and everything they want. So, I'm gonna start to say a little bit about our company. We are the world's largest global cruise company. We have a big portfolio of world-renowned brands under our umbrella, catering for all cruise guest segments.
Over the year, we're calling at 22,000 different times in over 800 ports globally. With 12.5 million cruise guests in 2023, as Henrik was saying, our brand catered for around 40% of the global cruise market. Our goal is to deliver exceptional holiday experiences while honoring the places of visit and the oceans where we sail. As we are in Oslo, I would like to say a few words on our presence here in Norway. This year, 26 different ships from seven of our nine brands will sail in Norway from January through December. I mean, last year we even had a call, I think it was here in Oslo, but I'm not sure, on New Year's Eve, and we also call on Christmas Day. We have 1,100 calls planned in Norwegian, more than 40 Norwegian cruise ports this year.
Last year, our guests accounted for 51% of the total amount of cruise guests visiting Norway. This year, we expect to bring 3.3 million day visitors to Norwegian ports. To clarify, if I am a cruise guest on a cruise, and I'm visiting four Norwegian ports on my cruise, I'm one unique guest, but I'm counted as four different day visitors. In 2022, our direct spend with Norwegian-registered companies amounted to NOK 1.8 billion. Our six main sustainability focus areas are climate action, circular economy, sustainable tourism, good health and wellbeing, diversity, equity, and inclusion, biodiversity, and conservation. Under climate action, we support the adaptation of alternative fuels and testing new technologies as they become available. That means investing in new low-carbon or zero-carbon emission technologies, developing and installing advanced air quality systems, and partnering with organizations and stakeholders to support.
I'm proud to say that despite having increased our fleet capacity by 30%, we have reduced our GHG emissions by 10% the last decade. Sixty-four of our ninety-four cruise ships are equipped to connect to shore power. In Norway, Kristiansand, Bergen, Haugesund, Ålesund, and now also the Revier Pier here in Oslo, can deliver shore power to cruise ship, and I'm very happy to say that our ships connect when they can and where it's possible. For instance, our ship, Regal Princess, was the first one to connect in Norway in 2018 in Kristiansand, and we are also currently commissioning here in Oslo. I just spoke to Port of Oslo today.
The system is being tested, but once it's up and running, which it will be in just a short time, our ships who call at the Revier Pier will, of course, connect to shore power. We have invested in LNG in our path towards zero-emission operations and have today 10 LNG ships in operation, two of which are sailing in Norway. It's P&O's Iona and AIDA Cruises' AIDAnova. The latter one also calls here in Oslo. Although they are still fossil fuel, they have some benefits, such as zero sulfur, 85% reduction of NOx, up to 100% reduction of particulate matter, and up to 20% reduction in GHG emissions.
We have implemented several measures to reduce food waste on board and are currently at 42% reduction compared to 2019, which is ahead of our goal of 40% by 2025. However, as much as we like to reduce food waste, there will always be food waste on board a cruise ship, and the food waste we have is treated with the best and newest technology. Across our fleet, we now have more than 600 biodigesters and more than 60 food waste dehydrators. That reduces the volume of the food waste up to 90%. When it comes to new technologies, we are trialing fuel cell powered by hydrogen, derived from green methanol on board AIDAnova. We also have invested in the first of its kind lithium-ion battery storage system, 10 MWh on board AIDAprima.
This is delivered by Corvus, which is a Norwegian Bergen-based company. We have also done a lot or several of biofuel trials, and currently, the longest and largest project that we have is on board the MS Rotterdam, who is also sailing here in Norway, and she will continue to trial 100% advanced biofuel during her season in Norway. But other than that, we are, of course, looking into all other kinds of alternative fuels in our path to zero-emission operations, so all cards are on the table. As a large international company, we seek excellence and are proud of the cooperation we have and the economic benefit that we bring to Norwegian companies, both direct and indirect.
In addition to what our guests independently are spending ashore, which is not insignificant, we cooperate and contribute to a number of Norwegian companies, some of which you can see here on the screen. In 2022, as I mentioned earlier, Carnival alone spent a staggering $168 million, which is around NOK 1.8 billion, to Norwegian-registered companies. Some of these include DNV, Telenor Maritime, Brunvoll, Kongsberg, Wilhelmsen, and of course, well, Scanship, and we proudly continue to do business with Norwegian companies as we move along. Thank you so much.
Thank you, Sandra. Now it's time for us all to take a closer look at what's really inside these large ships. What does an advanced wastewater and waste handling system look like, and what do it exactly do? How are the systems being developed, designed, and fitted into the ships, and how is the process from initial idea to successful delivery and maiden voyage for the ship? Here to answer these questions, and probably many more, we have Per Carlsson, Chief Technology Officer, and Hamid Ghorbani, a VP Sales of Vow. The floor is yours, and I think Per will start.
Thank you. So it's not without challenge to try to describe the scale and importance of the systems that we have on board, but I will try to give it a shot. So if we are looking at these larger ships with 8,000-10,000 people on board in total, we are treating 2,500 cu m of gray water and black water every day. And now I see blank faces all over the room, because that's a number that is difficult to relate to. But fortunately, this year is an Olympic year. So I would like to bring you to Paris. This is the Paris 2024 Aquatic Center, which you will see more of this summer.
But this, this is roughly the number that we are treating every day with mechanical, biological processes, chemical processes, disinfecting and nitrogen removal, and discharging it with a close to drinking water standard. So keep this swimming, this Olympic swimming pool, in your head when you see the scale of the systems that we have on board. The gray and black water treatment is with our advanced wastewater purification process, is, of course, the biggest system that we have on board in terms of mass treatment or volume treatment. So in this, slide, I want to visualize what we have. So on the left-hand side, we have what goes into our processes, and on the right-hand side is what comes out. The thickness of these lines represent the rough mass flow rate of each stream.
So we treat the gray and black water, notice that it's scaled by 1/10, dry garbage, food waste, and glass, cans, and tins. To give you a perspective, the dry garbage, food waste, and glass and tins represent roughly 1-2 garbage truck a day. We are seeing that the cruise operators are reducing this amount, but the ships go, grows larger, so we have to handle all these amounts. But on the right-hand side, you see what come out. Nothing gets wasted. We have a clean effluent from the wastewater treatment, material to recycling, and renewable energy that gets used on board and replaces MGO or other fossil fuels that produce a stream, steam on board or in ports when the main engines are not available.
The biocarbon, I will return to that, but roughly in this case, 3.5 tons every day, that can be used for carbon sequestration, even if it's landfilled. You don't have to have a dedicated program to get the sequestration potential out of this. Even if it's landed in landfill, we still get the carbon sequestration potential out of this material. Just an overview of our total offerings. We have the water use, reuse units, the AWP units, and food waste handling, food dewatering and food waste dewatering and treatment, drying, and our advanced pyrolysis systems, now replacing incinerators in the upcoming ships. We are seeing a move from incinerators to pyrolysis. A shift. Of course, waste recycling for tins, glass, plastic baling, and so on, that is sent for recycling. Again, nothing is wasted on board these ships.
Let's go on board, should we? And see something that I don't think any one of you have seen before. So what I'm going to show you is our food waste processing system, where we come to dewatering, drying, later pyrolysis, sludge handling, that get pyrolyzed on board. You can see the thermal hydrolysis that goes into a dewatering, reduces energy uses on board, the dryers, steam production, and in the bottom, you see our pyrolysis units that will be installed on the Excel class. You also see palletizers that let us reduce the volume of the waste that is produced on board. And more importantly, you see the ship in the background. So the importance of these systems. Just one thing, when you're out at sea and sailing, there is no way for the waste to go.
You have to treat it, and you have to keep it in holding tanks if they, it's not treated. So if you do not treat anything on board, you have to increase the size of holding tanks, storage volumes. This costs fuel. It increases your environmental footprint on board without treatment. What we can provide is an odorless and sterile product, no need for special handling, no need for special compartments on board. It reduces the landing liability. You don't have to visit different ports you can use your turnaround port. We can operate in special areas such as Alaska and the Baltics. We are compliant with the MARPOL latest directive, of course, and we reduces the fuel load on the steam boiler that is available on boards, especially at port. A ballpark number of what our pyrolysis system can replace is five tons a day of MGO.
So it's, if we are using pyrolysis on board, we use the excess heat that is produced, and we produce steam on board, which replaces in, roughly five tons of CO2 or five tons of MGO per day. In terms of CO2, if we calculate what that does, the savings is roughly 7.5 tons a day of CO2 storage potential, which is an interesting, interesting number, because if we translate how much CO2 savings a typical UK passenger will have on land, we get to the same number. That person is, if he was on land, would be carbon neutral. If we express the biocarbon as quotas in CO2 storage potential, we are in the EUR 500,000 annually. For the operators, it's a reduction of landing fee, and steam production at port can be obtained or maintained with fuel that is already on board.
This is why we have recurrence in the cruise industry. We have an attractive package. It covers all waste streams that are available on board, makes sure that we have no waste leaving the ship, renewable material, biocarbon, energy, and clean effluent. If we are looking in the [audio distortion] ball, what's ahead? We are, of course, seeing stricter regulations. We encourage stricter regulations, and we see an approach for especially what we see in flue gas emissions. We see that we're approaching land-based regulation on board. That means, of course, more complex systems, but also less emissions. We're seeing a lot of ships, more passengers, that increases the volumes, not necessarily per passenger, but the total volume will increase over waste on board. That means that we can scale up our system and tailor to different markets.
As emphasized by Sandra, the focus on sustainability and the public acceptance and perception goes hand in hand. What we see is an alignment here between the yards, the cruise operators, and our core deliveries, that we can work together for cleaner oceans. With that, I would like to leave the word to Hamid, that will take us back on board, and again show the scale.
Thank you, Per . I would like to show you our typical footprint on board a cruise vessel, in this case, the Excel [audio distortion] with Carnival. In the marked area, you can see the green area, that's where we are operating. We calculated the number or the surface area of a typical basement, as we call it, in a cruise vessel, and we found out it's roughly 40,000 square meters of machinery area. And we are taking approximately 1,700 sq m in that space, which is equivalent to about 4.5% of the total machinery area.
In comparison, it's a small footprint, but it has a significant impact on the sustainability and operational ability of the vessel. As you see, there's a lot more to a cruise ship than what we are normally used to when we are cruising, where we see the hotel area. So, I would say this is the heart of the vessel, and this is where we are ensuring that the passengers can enjoy their cruising. Yeah. With our long experience and delivering these complex systems, we can ensure that the operational ability of the vessel will be covered and sustained, and we will improve the vessels and the Carnival's, in this case, sustainable goals.
I would like to take you on the journey that we have had with Carnival for this Excel project. So it all started early 2022, where we had initial contact with the client, Carnival, in this case. Where Carnival approached us and asked for the state-of-the-art solution for the new series. Directly after we planned visits, we visit their operational center, both in Southampton, but also in Miami, where we showcased our technology.
The way it works is that, once the cruise operator agrees with what they find, they contact the yard that they are intending to build with, and we received the first technical specification in mid 2022 to work with. Of course, there are significant changes along the way, where we shoot back and forth and try to find a common solution that is suitable. And based on that fact, we provide our budgetary proposal, and we have a first evaluation together with the yard to see how this can be implemented, how this can be built. Already a year has passed when we reached this level. We start also with a preliminary general arrangement, the one that you see with, where Per showed the 3D view.
And as soon as the owner, the yard, and Scanship agrees upon the solution that is set, we continue with an official RFQ, request for quotation, that we receive. As you can see, it has taken us almost, well, a little bit about, about two years, two years plus, to be within this position, and along the way, we have had the from the owner side, the technical team visiting us and experiencing firsthand the equipment, the solution that we are providing, to have the confidence to take that leap forward. And once that is set, we are agreeing together with the shipbuilding yard, and that is, of course, two weeks, three weeks back, where we signed the contract with Carnival.
Estimated delivery for the first batches of equipment from Scanship is in early 2025, and the estimated handover with the ship to the owner from the yard side is 2027. In our dialogue, our daily dialogue with the cruise owners, we feel when we receive feedback from them about their insights, their priorities, what is their main goals, what do they want to achieve? A few bullet points here explaining what we are experiencing in Scanship. We are admiring how determined they are with their philosophy to set these goals, to reach these goals.
They have an extreme focus on the efficiency, and efficiency, I think, Sandra, you had very nice bullet points as well, mentioning where you are becoming more efficient, the fuel, and the testing of new technology, saving on the food side, and how they are steering this towards sustainable tourism. They're also focusing on everything that can be recycled, reused, and the valuable materials that can be regained and recycled. There's no doubt about the teams that we are working, how passionate they are, their leaders, their proactive way of thinking, and the mindset that they have, always focusing one step ahead. And again, this is clearly visible through what we saw on Henrik's slide, mentioning that we are always ahead of the regulation.
And the last point, their willingness to take that leap, to challenge and to improve, and always pushing also us as a supplier, to come to becoming even better. And that leaves us with a good position, I would say, in the cruise market. I think significant proof of that is, or a concrete proof of that is our strong backlog, and the options that we have, but also the activities that we see are now in the future for us, working with the prospects, and understanding the market, we see what is requested, what is the owner's point is to get out of, you know, Scanship and the future, of course. Yeah.
Some of the key drivers that are driving this change is the landing challenge they have. Per mentioned about the garbage production amounts, the volumes, and what it could lead to. How can they reduce operational costs? And of course, one key point is how to operate while in port, because when you don't have that possibility, you will generate and take up some volumes, which could be unnecessary, of course. And of course, the cost of CO2 emissions that are anticipated in the future. We would like to believe that by choosing Scanship, our technical solutions, we will enhance the ship's operations, and the ship owners will achieve all of these challenges that were mentioned in above.
So, yeah, thank you for me, and, I would like to hand over to.
Thank you, Per, Hamid.
Clarksons.
Now, for today's final presentation in our Cruise Special Investor Seminar this morning, Jørn Bakkelund, Senior Analyst at Clarksons, a renowned shipbroker with deep knowledge of the industry, will talk more about the cruise market, sentiment, drivers, and outlook. Please welcome Jørn Bakkelund.
Thank you. Okay, thank you for being invited here to talk today. Just a very few words about Clarksons, for those of you who do not know us, we are, like Carnival, in our industry, by far the biggest shipbroker in the world. We have a long history, 172 years. We are listed on the London Stock Exchange. We have 63 offices around the world in 24 different countries, and we're not like a 160,000 like Carnival, but we are about 2,000 people, but that's still a significant amount for a shipbroker.
Of course, we have a massive client base, which we contact and talk to every day, and we are involved in basically all the different segments of the shipping industry. So here I'm today talk about the cruise market and the new building side of things. To start, just to put the cruise in a bit of a perspective, this is the total order book for the world merchant fleet, and it's denoted in what we call compensated gross ton. That's just a factor that enables us to compare different types and size of ships.
And as you can see here, the lighter blue area is the cruise order book, and it started really to increase back in 2014. There was and significantly picked up in 2016. That was back in the days where the cruise industry were profitable. And of course, the owners ordered quite a lot of ships. And at the peak, the order book for cruise ships represented around 16% of the total order book. Since then, a lot of the ships has, of course, been delivered, and today, the cruise order book represent around 5% of the total. But we have seen an interest in new capacity lately.
This is the number of, or the contracting volume in gross tons, and also here, the value of the contracts. And as we saw or mentioned earlier, quite an increasing in the contracted volume up to 2019. Of course, because of COVID, there was a really quiet period. But this year, we've seen the activity picking up. Eight contracts has been done so far, with a value of more than $6 billion, and I think Carnival has two of them. So we see definitely the activity picking up. Historically, we have said that we think there is one new building trend, when it comes to all types, and size of ships.
I think, as I'm showing here, this is our price assessment for a cruise ship, a sort of fairly large 120,000 gross ton ship. It's a rough estimate because even though the contract price for some of these contracts are announced, there's a big difference in the actual what the contract actually involves. Because some owners would like to put on board a lot of their own equipment, while some leave all of that to the shipyard. So the owner's supply varies quite a bit.
But nevertheless, we saw prices for cruise and our general price new building price index being quite nicely correlated all the way, a bit past the financial crisis in the middle of the last decade. But then, because of the increase in activity for cruise ships, we saw price new building price for cruise ship actually taking off, atypical for the general market. Of course, we saw the prices coming down a bit during COVID, but lately, the price has come up, as has the general new building price, as well. Part of that is, of course, supply and demand, but part of that is certainly also the cost of building.
We are in the midst of a sort of high inflation era, and the cost of building has increased quite significantly. If you look at the order book in relative terms, the red line here, red against the left-hand axis, shows the order book in percent of the fleet. And from a peak before COVID, where the order book represented around just over 40% of the fleet, we are now down to around 16%. So the order book doesn't really now look too big. But again, if we look at the actual fleet development in number of berths, we are now just over 700,000 berths.
And if we compare that to what, what will that mean in terms of capacity, and last year, the average cruise duration was 7.3 days, leaving 350 days of operation for each ship. That means that today's capacity in number of passengers is around 32 million on a yearly basis, and that's approximately what we expect the number of passengers to be this year. All in all, we have seen the cruise fleet increasing by seven or close to 7.5%, in the first decade of this century. But it has since then calmed down, and we are now looking at a fleet growth of ±4%.
Again, with the current order book, we are, I think we will see that fleet growth of around 4% continue also in the next [44] years or so. Looking at the actual building capacity and the cruise ship building market is really a European story. This is the historical development, but also the order book in number of gross tons. And you can see the red bar is Fincantieri, at least the Italian part of the capacity, and this is by far the biggest builder.
If we convert gross ton into a typical 4,000 berths, or 160,000 gross ton ship, Fincantieri in Italy will be able to deliver between three and four ships per year. France, Chantiers de l'Atlantique, also is also a big, big player here, and able to deliver around twtwo of those standard ships per year. And then we have only one shipyard now left in Germany. That is the Meyer Werft, and they can deliver around 2 of those ships per year. And they have also some years back, bought Turku or the old Kvaerner Werft in Finland, in Turku, which can deliver about one of those ships.
We have also lately seen China, and again, Carnival being involved in that. They have, end of last year, delivered one big ship, and they have one ship also coming in 2026. So they will probably also become a builder eventually. We have also others that have been tried trying to build or have built cruise ships. Japan have built four big cruise ships. Two, the two first ones was delivered around 20 years ago without any big success, I would say, or at least the building part of it. And they have also built two ships in 2017 and 2018, and I think they will not build any more cruise ships because that was a big loss for them.
And you also have a bit of building capacity here in Norway. Croatia is building one for Storylines, but those are smaller ones. So for the bigger ships, the capacity is really these four countries. And we are talking about, again, for the standard 160,000 gross ton ship, 8-9 ships per year. And that will equate to a fleet growth between 4.5% and 5%, at least in the coming years. So, take a look at the current fleet. These are, again, the number of berths capacity, for the bigger ones, about 20,000 gross tons. The average age is 13.5 years.
Well, if we look at the ones that are likely to be replaced in the coming years, and that sort of still remains to be seen when they are being scrapped. But these vessels trade until they are almost 40 years of age, as opposed to if you take, for example, a big tanker, a VLCC, will typically trade only half of that, 21 years. So these ships are, of course, high-value ships, and they will trade or have a long trading life. So looking at the average scrapping age for the past years, 36 years of age, that means that by 2030, we have to replace this part of the fleet, which is just 3% of the capacity.
So I don't think that I mean, I don't see the need for a lot of capacity based on replacing old ships. Even though we are now in the midst of a period where there's a lot of regulation. In 2023, there was a new regulation in, uh, that came into force, reducing the, uh, the carbon emission from the whole shipping industry. But again, I think these being high-value ships, I think the owners will be able to convert or invest in some energy-saving devices to actually reduce the CO2 in order to comply with the, with the regulation. We have seen another trend, as we see on the right-hand side. A number of the newer ships have been ordered with alternative propulsion, and that was also mentioned by Carnival.
From the ships that are being delivered from 2024 onwards, 60% of them have been ordered with alternative fuels, and LNG is by far the preferred fuel so far. But of course, that will perhaps change over time. Another trend that we see, if we look at the number of ships and divide them into the different size segments, you can see the red bar here towards the right. The lower or the smaller ships are increasing in size, and that has to do with sort of the smaller luxury segment and also the exploration ships that we have seen increasing quite significantly lately.
But also a trend towards even bigger ships, as we can see on the lighter blue on top here, so the ships are becoming bigger and bigger. And of course, this is really a cheap way to do your vacation. The bigger ships here on top, contemporary classes, will typically cost around EUR 200 per night per person. So again, and that's all included with food, etcetera. While the smaller segment here, exploration and more luxurious cruises, will typically be you will be typically charged well over EUR 1,000 per night. So but it's the mid sizes here doesn't really grow that much.
So if we look at the total fleet capacity with the current order book until 2027, and then I've also added the recycling, putting the age at 36, so only a small fraction of the fleet is expected to be removed from the market. Then you can see the fleet growth is coming down from around 5% growth per annum now to less than 3% by 2027. And I think that correlates quite well with the forecast for passenger, as we shall see a bit later on. This is the forecast I mentioned by CLIA, an industry standard, so to speak.
And of course, we saw the number of passengers tumbled during COVID from a trend per year, actually, by that the growth was around 7% or more than 7% per year until 2019. Last year, almost 32 million people were on cruise ships. And that meant that we were still not back sort of in the same trend, but of course, the number were up significantly. But the forecast that CLIA have put in here is actually quite well correlated with the fleet growth going forward, and they have forecast the number of passengers to increase by around 3% per annum, at least through 2027.
I think the potential for cruises is obviously a lot, obviously here. The total travel and leisure market in the world represents around just over 9% of the world GDP. The cruise industry is just 1.6% of that. So it's a very, very small part, even though it's of course a massive amount of money involved and a massive, massive amount of people, it's still a fairly small part of the total world output. So last to look at the shape of the cruise industry, I think historically, the number of passengers, as I have argued, has been very well correlated with the fleet growth.
The reason for that, of course, is when a cruise operator has not sold out all the capacity just before takeoff, they tend to sell out all the capacity for cheaper money, because of course, the marginal cost of putting an additional passenger on board is very small, but the onboard spending increases their revenues. So I think to look at the shape and the balance of the market, you actually need to look at the profitability, and that's what we have done here on the right-hand side. And this is the net income for the three major stock-listed companies. And then we have the green line is an index that shows that net income per passenger per day.
And of course, being through the COVID period with massive losses, the cruise industry now is back in profitable areas and for 2024 to 2026, this is sort of the consensus for the different stock analysts. And I think the consensus is that the profitability will come again, and come up to a level where we actually saw back in the period 2016 to 2019, which is a good sign for the cruise industry and also enable them to renew their capacity and also increase it in terms of ordering new ships. I think that was my contribution.
Thank you, Jørn. I would actually like you to stay on the floor, and I would like to invite Henrik and Sandra to join us, as we're moving over to the Q&A session or part of the day with all mics on hand. I think we will start by taking questions from the room and then go online, and we encourage everyone to present themselves with their name and who you want to direct the question to. Do we have any questions from the room? You have the opportunity to ask them now, or I will go to the online viewers? I think I will start towards final contract award, which was described [audio distortion]? Is this a typical timeline, or am I right thinking that this gives you a very good visibility with regards to future prospects?
It's a typical timeline for a first project, but you have to remember that, as I said, Viking Ocean Cruises, we are on the 16th vessel on the new building series. So it takes a lot of time in the early stage to get on to the first project, and then you have the following. So yes, to initiate the first series or the first ship in a series, it, it's a, I would say, a two-year, two-year time. But then you're, you're just repeating, you know, repeat orders on that series until they change to another sort of platform.
Does this give you a good visibility of what's to come?
Yeah, it does. And if you look at our 35 projects in the cruise industry space now, all the way to 2028, that's the type of visibility we have.
Sandra, what are your plans with respect to retrofit projects going forward? Will we see many of these?
Yes, absolutely. And I was looking at Clarksons' presentation here regarding the new builds. We do have some new builds coming on, but we have more retrofits coming on, and it's also in line with the sustainability of reusing or recycling the ship, so to speak. So we are upgrading a number of ships in the coming years.
Jørn, I think this one is for you. What are the most important regulatory processes to watch for the cruise industry today, you think?
Well, I think, I mean, being from the shipping industry, I may be more concerned with the propulsion and the different fuels. But of course, you have different also regulation for waste treatment, etc . But of course, the CII regulation, which I mentioned, is of course important to reduce the carbon emissions. I think that's from my perspective is the most important, but of course, you have others as well, of course.
Do you want to comment, Sandra or Henrik, on important regulations?
On important regulations? Well, it goes without saying that we operate according to, the rules and regulations wherever we sail, whether it's local, regional, national, or international regulations. So for our sake, when it comes to the operation in Norway, we are eagerly awaiting the, zero-emission requirements for the World Heritage Fjords that is to apply from 2026. However, the ministry has not yet decided on the actual regulations, so this, of course, affects, our planning ahead, as we tend to plan at least two, three, four years, ahead.
Henrik, you said you are currently tendering for 27 new builds. How big are these contracts, and are all similar in size to the ones you recently secured from Carnival?
Yeah, they are. The projects are bigger. We see, as you mentioned, Jørn, that there are more larger ships being planned. And that, of course, creates sort of the average contract we have now for Carnival is a EUR 14 million-EUR 15 million project. So it's three times what we previously were delivering. So the industry, in that sense, is growing for us.
Sandra, Carnival has ambitious climate targets, which will require new technology and solutions. How do you work with technology providers and partners such as Scanship to reach these goals?
Well, I would say at any given time, Carnival is part of more than 100 different R&D projects. Also here in Norway, like with SINTEF and others, just to come up with the really best possible solutions. And also, as Henrik was saying here earlier, you know, the discussion that they have with our procurement department, with our new builds department, really to set the standards on what we want to achieve and what can companies like Scanship actually delivers, which ends up in a contract in the end. We're always seeking the best possible solutions for our ships. So having that direct contact, not only with the suppliers or with the companies that deliver systems, but also, of course, with the shipyards, just to find the right solutions for us.
Moving over to Jørn, should we expect the cruise industry to continue to grow forever, or do you see a peak sometime in the future?
Well, you know, no, I think, I mean, it's the cruise industry, as I said, is a very small part of the leisure market and has great potential. I think with the emphasis they have on all regulation and they will sort of or be able to market themselves as a green vacation. And you know, as the wealth around the world is growing, so is the leisure market. So I think that there is great potential for the cruise market going forward.
Henrik, have you seen cost and delivery times in the [audio distortion] supply chain develop during the past few months, improving?
Yeah, I see now the industry is absorbing higher costs. And I saw that the trends that you were showing, it's a higher cost to build ships now these days, taking into account inflation. That means that the industry is absorbing it, and it makes sure that the shipyards are becoming, you know, profitable and sustainable as well as the suppliers.
Sandra, a cruise ship has everything you desire on board, but what can you do to ensure that Carnival contributes to local jobs and value creation?
Well, I would say that let's use Norway as an example. When we visit, w e have 1,100 calls. Last year we had 1,200 calls in over 40 different Norwegian ports, and especially coming into the rural areas, like when you go to Geiranger, to Olden, to Svolvær, to Lofoten Islands, it's a vital part of the economy for the local destinations, as we have seen not only in the media. I, I'm so happy to read the media, I mean, from Haugesund to Lofoten, to Nordfjordeid, where people, where the local businesses go out in the media to say how much this means to them, the cruise calls. It's like whenever there's a cruise call, it's like you can compare it to Christmas shopping.
So it just shows for us that the local value creation is so important, and what we do is that when a ship comes to a port, we sell organized excursions on board using local companies ashore, and we do have Norwegian operators who kind of package this for us. So for us, it's important to use that local operator, whether they have a RIB boat, whether it's a museum, whether it's a farm that, you know, produces their own cheese or whatever it is, just to make sure. And the fact that we're also sailing here from January through December means that this is a contribution to all-year workplaces. So I really base our contribution on what the local destinations are telling us.
Henrik, what do you consider a normal success [audio distortion] are bidding for new builds and retrofits in cruise?
We, if you look at the order backlog today, we have around 60% market share, and of course, the order book is dominated by larger ships. So that explains pretty much our, our success rate in the industry, high.
Are there any questions from the room now, or? Then I think perhaps we will conclude there. Thank you so much for everyone joining to us today and our Cruise Special Investor Seminar. For more information, you are welcome to log on to vow.com later. Thank you.