Forwarders prep for tourism’s return with new hospitality divisions

Global tourism has suffered a severe setback from the COVID-19 pandemic as people around the world have canceled vacations and the cruise industry made early headlines following the outbreak of the virus and subsequent fallout aboard the Diamond Princess vessel. With the sudden change in their fortunes, related businesses are trying to move quickly to ensure their own survival. Some third-party logistics providers aim to support the ailing industry with the launch of new divisions covering cruise and hospitality logistics. Houston-headquartered Crane Worldwide Logistics announced the launch of its new Cruise, Marine and Hospitality Logistics division in April, when Maxine Krajniak joined the company as vice president of the new division. Krajniak told Air Cargo World that the launch of the division had been in the works before the pandemic struck, and the timing turned out to be fortunate since the early days of the crisis left cruise and hospitality businesses scrambling to adjust their supply chains. “Nobody predicted this and there was already a lot of things in the supply chain, and a lot of supplies were arriving in the U.S. from various markets,” Krajniak said of the cruise lines Crane has serviced. “They had nowhere to put it because the ships weren’t coming into port, so we reached out and offered our warehouses for storage.” Crane’s new division has also partnered with its sister company, Davaco, which specializes in projects like hotel conversions and program management, to develop offerings for cruise lines and the hospitality industry, Krajniak said. Proposed solutions offered include expansion of onboard hospitals, creation of pop-up quarantine stations and hospitality kits of personal protective equipment for guests. On the traditional logistics side, Crane is also managing delivery of supplies to ships anchored off-coast that are not allowed to return to U.S. ports. Meanwhile, the larger supply chain is still facing disruptions that are affecting logistics for cruise and hospitality companies. According to Krajniak, there have been modal shifts as ocean carriers have canceled sailings and some cruise and hospitality volumes have shifted to air freight, although with significantly lower volumes as demand for these businesses has declined. “They financially got hurt considerably in detention and demurrage charges with all of the thousands of containers that got stuck in ports through the outbreak,” Krajniak said. Supply chains are largely “in holding patterns” where possible for now, and the structure of the supply chains for these industries will likely change when the industry resumes. “I think they will definitely be changing the supply chain models. Specifically, I think we’re going to see more of a near-sourcing model, just because of the environmental and political factors that we’re dealing with,” Krajniak said. At the same time, Krajniak said many companies have taken on fixed overhead costs as they have insourced some logistics and warehousing, which Krajniak expects to change in the future. The industry is likely to “move to more of an outsourced environment so they can try to move from a fixed model to more of a variable model, because it’s so unpredictable,” she said Companies aiming to reduce their fixed costs could seek out 3PL partners with existing warehouses and other logistics offerings. “We can help them with reducing some of the supply chain costs,” Krajniak said. New York-based forwarder Sobel Network Shipping also recently launched a new division serving this market alongside the opening of a new office in Miami to support the company’s business in the region and new divisional operations. According to Brian Wills, Sobel’s president and CEO, the slowdown in business has impacted 2020 operations, but tourism is expected to pick up in 2021. Sobel has handled regular shipments of large items, like furniture for hotels and cruise lines, he said. For more on Sobel’s new division, listen to Air Cargo World ’s July podcast with Wills here . The question of when the recovery might occur is difficult to answer. The German cruise line TUI Cruises launched a short three-day cruise July 24 at only about 40% of its passenger capacity, but a more widespread return is likely further out, considering the current state of lockdowns and positive tests. Sobel’s Wills is optimistic that a recovery might begin near the end of 2020 or early in 2021, with people eager to return to their pre-COVID enjoyments. However, Crane’s Krajniak expects it may take up to four years for cruising to rebound to 2019 levels. With the hotel industry representing about 4% of the global workforce, according to Krajniak, “to get this back a little makes a huge impact, even if it doesn’t get back to where it was.”

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