Monday, October 2, 2000

Two more for Costa
Last Friday saw Carnival Corporation conclude its previously announced deal to acquire the rest of Costa Crociere.

"The purchase of the remaining 50 percent of Costa will allow Carnival Corporation to aggressively expand the operations of Costa, which is Carnival's primary platform for growing our cruise business in the European market," said Micky Arison, Carnival Corporation chairman and CEO.

Costa announced that it has signed a letter of intent with Italian shipyard Fincantieri Cantieri Navali S.p.A. for the construction of two 105,000-ton vessels for delivery in late 2003 and late 2004.

The 2,720-passenger ships, which will be built at Fincantieri's Sestri shipyard in Genoa, will cost approximately 850 billion lira (approximately $400 million) a copy.

"It's very exciting to be building these vessels in our hometown of Genoa where Costa Crociere is based, and furthering our contribution to its economic development," said Pier Luigi Foschi, Costa's chairman and CEO.
"We are particularly pleased with this agreement with Costa Crociere which will allow Fincantieri to resume building large passenger ships at Genoa Sestri, a historic yard which built the Rex in the 1930s and the last Italian liner Michelangelo in the 1960s," said Corrado Antonini, Fincantieri's executive chairman.

More recently, Fincantieri's cruise ship construction activities have centered on its Monfalcone and Venice-Marghera facilities.

This latest agreement renews the association between Costa and Fincantieri, which began with the construction of the Costa Classica and Costa Romantica in 1992 and 1993, respectively.

Costa's recently delivered Costa Atlantica has received rave reviews from travel agents, guests and the European press. In July, Costa confirmed an order for the sister ship to the Costa Atlantica for delivery in early 2003. With this new letter of intent, Costa's order book stands at three vessels.

Carnival Corporation now has 16 ships on order, for its various cruise line brands, representing an estimated value of $7 billion.

EU-Korea consultations on shipbuilding fail
The row between the European Union and Korea on shipbuilding prices is headed for the World Trade Organization (WTO).

The European Commission says that Intensive discussions held at the end of last week between the Commission and Korean experts, failed to achieve an effective solution to the problem of unfair price undercutting by Korean shipbuilders, raised by the EU.

The Korean side was unable to offer a proposal which would alleviate EU concerns.

The Commission says it will report to the European Council in the coming days and propose alternative ways forward, including a possible action in the WTO under the Trade Barrier Regulation (TBR).

The discussions focused on the possibility for Korea Exim Bank to introduce a review mechanism of shipbuilding export contracts in order to monitor whether the prices offered by the Korean yards respect the "Normal Value", according to the definition of the WTO Antidumping Agreement.

The Korean side did not agree to the basic principle that prices should cover all the costs and that the application of the antidumping agreement would lead to a significant increase in prices whose result would be verified on the market in a short period of time.

In mid-September, Commission antidumping experts paid exceptional on-the-spot visits to two large Korean yards to determine whether prices of particular contracts included all relevant costs. Unfortunately, citing reasons of commercial confidentiality, one company was not prepared to give specific information per ship or per contract and to reveal its real costs. Thus, it was not possible, for the Commission to draw any clearcut conclusions on the alleged unfair Korean pricing practices.

As a result, the European Commission considers that a transparency commitment negotiated with the Koreans has not been fully implemented. More importantly, the main goal of the bilateral agreement, the stabilization of the market through the improvement in the level of ship prices, cannot be reached, due to the Korean's refusal to introduce an effective mechanism that would have helped to achieve it.



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