On another note, a 2 billion investment to build a ship seems absolutely crazy. How long does it take to make that kind of money back, and how long does a ship need to sail to pay itself back?
* The equivalent is insurance. Insuring a $2B ship carries pretty good due diligence. A ship simply failing is rare. Of course, ship insurance doesn't care about employee rights, safe food, medical care, or other things one might expect to keep people safe. It's about protecting the capital expense. If everyone on the ship dies, but the ship survives, that's okay!
* Welds are quite strong -- it just extends the metal. This is especially true when the baseline quality of the metal is not high.
On something heat-treated SAE AISI 4130 steel (what e.g. fancy steel bicycles are made of), you see significant weakening. There is a heat-affected zone where the normal tempering is taken off, and the joining material isn't the fancy CrMo of the baseline material.
I'm not a nautical engineer, but I doubt cruise ships are made of overly fancy steel. When you're making a 180,000 ton ship, your best bet is to use cheap steel, and if you need more strength, to simply use more of it. A good weld should be every bit as strong as the cheap steel around it, and the heat-affected zone is a lot less important if the steel isn't heat-treated or tempered in any way in the first place. It will harden the steel a bit, of course, but it shouldn't be the same level of impact.
It's also worth noting you already have welds, and things need to be engineered for welds. It's not hard to reinforce the welds. Indeed, on a bike frame, the welds are where the stresses are highest, and you get around that by making the tubes a bit thicker (or, for fancier bikes, thicker just near the welds -- that's what a butted bike tube does).
I think cruises are horrible, horrible things for a whole slew of reasons, but none having to do with the ship sinking Titanic-style.
Example time lapse of another cruise ship being built about a decade ago: https://www.youtube.com/watch?v=Pk_JIHel7To
Depending on the ship, shipyard, and I imagine a host of other factors, you might assemble a ship directly out of the order of ~50-100 blocks, or you might pre-assemble into order of ~10 "mega-blocks" which then get assembled together.
Wouldn't a fancy bicycle use Reynolds 853 steel? /s
"none having to do with the ship sinking Titanic-style."
It's rare, but not nonexistent. The Costa Concordia springs to mind. Schettino ended up with all the blame, but it did seem to be that there was some degree of institutional incompetence as well. But not with the construction AFAIK
This is very different from "sinking Titanic-style".
https://en.wikipedia.org/wiki/Costa_Concordia_disaster
EDIT: oh hm, maybe you're right; like the Titanic it collided with something and water began to pour in, unlike the Titanic it was close to shore so the whole ship did not sink.
This is not the case at all. A weld almost always weakens the base material. And you don't just use whatever steel is the cheapest to build a ship. You use what is appropriate to the use case. There are cheaper and more expensive options within that category, but you make it sound like you can just grab whatever is cheapest in the yard that day.
There's so much that goes into material selection and handling that this comment confidently hand waves away.
Of course shit welding can cause weakening of the material but thats true of everything. Anything that is worth welding that also is important will use metals that have strong welding properties that make the weld stronger than the base material.
The heat-affected zone is caused by the weld. Ergo, welds to weaken the base metal.
In most cases, this also doesn't matter. I think all but one of the things I've welded, even a bad weld would have been way more than strong enough, and for many, even the tack weld would have held fine. Welds are very, very strong, and it's usually cheap and easy to use sufficiently strong materials that all of this is moot.
But for something like an ultralight bike frame, racing car, or airplane, it is something you do need to worry about.
Revenue: 52 weeks of sailing x 5.6k passengers [1] x 1.8k $/week [2] ~= 525m $/year
Costs: Interest [3] 160m $/year + Crew [4] 118m $/year + Hospitality [6] 200m $/year = 478m $/year
Profit ~= 47m $/year or ~9%
[1] https://en.wikipedia.org/wiki/List_of_largest_cruise_ships [2] https://www.cruzely.com/heres-how-much-money-cruise-ships-ma... [3] 8% on 2b$ [4] Crew: 50k $/year * 2350 crew [5], just guessing the costs here, including all accomodation + living costs, probably still to high? [5] https://en.wikipedia.org/wiki/Icon_of_the_Seas [6] Hospitality: 100 $/guest/day? = 52 * 7 * 100 * 5.6k = 200m $/year
However I suspect 8% would be far higher that the rate they'd get.
You'd also have to include maintenence costs, and also the reduction in revenue as it gets older (people will presumably not pay as much to travel on an older ship than a newer one), or the refurb costs you'll need to offset.
On the other hand inflation has to be factored in. At 2% that debt will reduce 30% over the period.
https://www.macrotrends.net/stocks/charts/RCL/royal-caribbea...
https://www.macrotrends.net/stocks/charts/CCL/carnival/profi...
https://www.macrotrends.net/stocks/charts/NCLH/norwegian-cru...
Additionally, it's very rare for a company to own a ship for its entire lifetime.
The way they calculate depreciation now is based on resale value.
I wonder what happens to that in a world where interest rates AREN'T negative in real terms anymore...
Surely, it would have impacted the bottom line by now at at least one of those 3 businesses.
Estimating things is non-trivial.
It's not fraud for your depreciation estimate to be off by a few percentage points.
Banks regularly set their loss provisions artificially low or high to smooth earnings.
But because they live on credit, they were pretty badly hosed during COVID-19.
Some uninformed guessing:
A operational net of $100/passenger/day is 10,000,000 passenger days per billion dollars. That’s 27,000 passenger years.
With an average load of 5000 passengers that’s about five years per billion dollars.
My guess is that average operational net is well above $100/passenger/day because cruising caters to luxury market segments; the scale is vast; people expect to be up sold; and gambling. All with little regulatory oversight.
https://en.m.wikipedia.org/wiki/Ship_classification_society
They are unlikely to skimp on this due to the insurance implications.
For those not familiar, "The Finest Hours" by Michael J. Tougias and Casey Sherman recounts the 1952 rescue mission off Cape Cod. In a tragic coincidence, a storm split two different oil tankers in half. Both tankers split as a result of a construction process, at least superficially, similar to the one in TFA.
Step 1: cut a ship in half…