Cruise Control

Tags: Supply Chain Management, Specialized Logistics, Logistics, Supply Chain

When it comes to cruise supplies, logistics personnel have to run a tight ship—or risk missing the boat.

It was Artur Pankowski's worst nightmare. The director of global logistics for Royal Caribbean Cruises Ltd., had a cruise ship docking in South Korea, where it would pick up supplies. There had been a MERS virus outbreak in that country, though, and Chinese authorities didn't want their cruising citizens exposed to the virus. They asked the cruise line to dock elsewhere; the company accommodated the request.

"Elsewhere" in this case ended up being a port in Japan—not exactly a few miles up the coast from the original destination. "It was an extremely difficult situation because my supply center in the region was in the port that was removed from the itinerary," says Pankowski.

And it wasn't just a question of shifting the waiting supplies to another port. Because the alternate port was in a different country, the Korean customs documents for the goods to be loaded were irrelevant.

"I was faced with a situation where I had to move containers to a country that doesn't recognize South Korea's customs certificates, and I had to do this using local transportation that I haven't contracted with," he recalls. Add to that the timeline—the cruise company had just half a day to deliver the re-routed containers to the alternate port.

The cruise line was able to work out a solution, but as Pankowski points out, "You can't predict what will happen."

In spite of rare situations like this, Miami-based Royal Caribbean boasts a 99.96-percent on-time supply delivery. "Of the 5,000 containers we ship annually, we miss only about seven to 10 of them, and that's usually because of weather or a strike," Pankowski says. Contingency planning helps the company prepare for most potential problems.

That planning is essential because of the nature of cruise ship supplies: There is a small window of time for loading provisions when a ship docks in port—usually just a few hours. Goods that aren't at the ship in time to be loaded in the proper sequence might need to be delivered at sea—and often at the vendor's expense.

"This is a unique industry where a hotel moves from pier to pier at a certain hour," Pankowski says. "The process is precise, organized, and well-planned so we don't miss the departure."

"This isn't like delivering to Walmart," agrees Jonathan Bales, director of global operations and product development at Miami-based Hellmann Worldwide Logistics, a Royal Caribbean partner. "If we don't make a delivery to Walmart by 5 p.m., Walmart will still be there the next day. But if we don't get the containers to the cruise ship by 3 p.m., that ship is gone."

On-time supply deliveries are crucial to the success of the cruise industry because the provisions are an essential part of the customer experience. Whether it's food and beverage products, hospitality supplies such as towels, or technical and marine products used to keep the ship working, they all contribute to a satisfactory passenger experience.

The industry couldn't experience the growth it enjoys if passengers were disappointed. Cruises in 2016 were expected to transport one million more passengers—24.2 million in total—than the previous year, according to trade organization Cruise Lines International Association. That adds up to an industry that delivers what's expected, in more ways than one.

With Royal Caribbean's Oasis class ships housing as many as 6,000 guests and a crew of 2,000 or more, each is a self-sufficient floating town while at sea. Those communities go through a lot of provisions, too. When the Oasis of the Seas leaves the dock in Fort Lauderdale, Fla., every week, it is re-stocked with a wide range of items that include:

  • 1,899 pounds of coffee
  • 7,397 pounds of cheese
  • 1,000 new light bulbs
  • 30 replacement TVs
  • 10,272 rolls of toilet paper

What's the Forecast?

The process starts with accurate forecasting.

Carnival Cruise Line's English division, Carnival UK, uses LLamasoft's Optimiza demand and forecasting tool. The division has 11 ships under two brands, Cunard and P&O Cruises. The ships can accommodate up to 3,500 passengers.

As with most cruise lines, the provisions needed for each Carnival UK ship vary according to the brand's personality, the ship's itinerary and length of time at sea, and passenger profiles, as some cruises are geared to families, others to single travelers. Each ship has its own supply list, replenishing plan, and schedule.

"It's a complex mix of challenges to produce a good forecast," says Richard Forrest, vice president of planning at LLamasoft, a supply chain design software company in Ann Arbor, Mich.

Supply planning is done centrally at Carnival UK's Southampton office. Each evening, the ships feed the day's consumption data into the software's planning module. That actual consumption, combined with other data, is used to prepare supply forecasts that are reviewed and vetted before they are sent to the provisions program. From there, the replenishment system generates orders that will be delivered when the ship docks at the next port.

"The process starts with getting that demand plan right," says Forrest. "There's no use replenishing to an inaccurate demand plan." The forecast also feeds into each ship's Marine Exchange Program, which is software that many cruise lines use to manage on-board inventory.

Ships in Norwegian Cruise Line Holdings Ltd.'s three brands—Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises—order supplies individually.

"Our system incorporates all the relevant statistics, including the number of passengers and crew, and the cruise length," says Jose Vazquez, senior director of global management and administration for Miami-based Norwegian. "The algorithms incorporated into the system can predict, for example, that a particular cruise will need 100 pounds of potatoes."

The system is highly regimented and monitored so that supplies get ordered within the timeframes needed to ensure delivery to the right port for loading. Vessels in Australia, for example, need to order further in advance because of the extra time required to get supplies to those ports.

Replenishing at Turn-around Ports

Ships are replenished at "turn-around" ports while they offload passengers and luggage from one trip and load both again for the next voyage. Local vendors supply produce and dairy products dockside while dry goods, frozen proteins (meat and seafood), hotel supplies, and "marine" products used to keep the ship functioning are delivered to and consolidated in nearby distribution centers.

Supplies for Norwegian's 24 ships are consolidated and organized in three locations. The main distribution hub is in Miami, while Barcelona's warehouse supplies the Southern Mediterranean. The Hamburg distribution center, located near shipbuilders, supplies materials needed for ship maintenance and repair.

Hellmann supports Royal Caribbean's provisioning from a 200,000-square-foot consolidation center near Fort Lauderdale's Port Everglades, one of the top three cruise ports in the world. Hellmann accepts vendor deliveries, consolidates them according to destination ship, and loads them onto trailers for delivery to ships in port.

"We have a lot of loose cargo coming in— anything from a small box to a big crate of repair parts," says Bales. "We don't have a set master list of different parts that get delivered regularly, so we need to be able to process anything that comes through the door." Supply chain transparency makes it possible for Hellmann to see orders and set delivery schedules.

Every shipment that's delivered to the distribution center has to be managed, consolidated, and shipped out on a tight schedule. Loose items are packaged on pallets with products from the same category—dry goods, hotel, or marine—because the three categories are stored in different spaces on the vessel. In addition, trailer space is optimized according to how goods will be off-loaded and to minimize the number of trailers used to help the cruise lines save on transportation costs.

Most of this happens for several ships at once. "We could be loading 10 ships at the same time, but we can't mix the shipments to the vessels, can't combine the product categories, and can't miss the date and arrival time," says Bales.

What's more, a percentage of those containers are traveling much farther than Fort Lauderdale—they're going to the other side of the world, in fact. Hellmann consolidates goods shipped to ports in countries as far away as Australia.

"If people on a cruise in another part of the world want corn flakes, they need to be able to get it—so we provide it," says Bales, adding that it's also a quality control mechanism for the cruise lines. "Someone who took a cruise in the Caribbean expects consistency from the cruise line when taking another of its cruises in the Mediterranean," he adds.

Technology and Teamwork

Cruise ship logistics is a sophisticated operation that relies on technology and a dedicated team that understands the consequences of a mistake or delay. Bales' team members can distinguish between a 20- and 25-pound bag of rice at a glance, all while handling, sorting, and labeling as many as 300 loose parcels daily and unloading truckloads of other foods, beverages, and commodities.

"You can have the best technology in the world, and we do, but if you don't have a good team, it doesn't matter," Bales says.

Once trailers arrive at the dock, they line up in a staging sequence determined by what needs to get loaded on the ship first. Norwegian starts with the frozen items—"You don't want them sitting on the pier," Vazquez says. Frozen is followed by produce, dry goods, and technical or marine items. The four-hour process includes security inspections and drug-sniffing dogs.

Royal Caribbean follows process models created according to the vessel and its storage space. Offloading might be frozen first, followed by dry, or the reverse, depending on how storage space is configured. Internal logistics on a Royal Caribbean vessel sync with how galleys prepare food and the way food is picked from storage.

The cruise line's process involves two types of forklifts—one to move pallets off the truck and another with longer arms to transfer them onto the platform extending from the vessel. Ship storage is on steel pallets for sanitation reasons, so the process often involves "flipping" goods from wooden to steel pallets.

Reverse logistics happens simultaneously—waste, for example, is removed from the ship and properly disposed of elsewhere.

Regulations and customs requirements in various destinations further complicate the process. "Cruise logistics is challenging to manage," says Christian Kathke, director of development for cruise and hotel logistics at Kuehne + Nagel, Inc., Royal Caribbean's Switzerland-based freight forwarder. "We deal with regulation requirements for a supply chain comprising 65,000 items coming from hundreds of countries and moving to more than 100 destinations."

The company has a "do not ship list" that's updated daily by employees in various countries. Regulations often require information on how foods are cooked, frozen, or produced—including what farm any beef came from in some instances. They also apply to pharmacological products used by on-board spas.

Monkeys and Goldfish

Managing cruise logistics is intense—but lighter moments do occur. For example, during a meeting with officials in one country to review food certifications, Kathke was asked about the meat certification for Ben & Jerry's Chunky Monkey ice cream. The official was confused because the documentation didn't reference... wait for it... monkey meat.

"We had the same problem with goldfish crackers," Kathke says.

Then there are the problems created during those rare occasions when a ship runs out of an essential item. If it's a food item, the galley staff often improvises by altering the menu. When an unscheduled delivery is required, though, the cruise lines pull out their contingency plans.

Royal Caribbean relies on its Fleet Services agents. Available all day, every day, these agents tap into a network of local suppliers who can provide emergency stock. "They can usually deliver sufficient quantities to carry us until the container arrives at the port with our regular provisions," says Pankowski.

Emergencies aren't common, though, because of the processes facilitated by technology and people.

"It all starts with planning. Then you do more planning, and then you plan some more," says Vazquez. "After that, it's the execution. We're very proud of our team and how we accomplish all of this."

Think of them the next time you take a cruise, but don't expect to take a picture of dock workers loading provisions onto your ship.

Says Pankowski: "We try to make the logistics invisible."






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