JANUARY 25, 2017 — Wärtsilä and Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) have signed a comprehensive, 12-year agreement under which all engine maintenance and monitoring work for 79 of Carnival Corporation's cruise ships will be handled by Wärtsilä, with both companies collaborating on ongoing planning.
The performance-based agreement provides for shared financial incentives and exposure based on outcomes for both companies.
Wärtsilä says the value of the long-term agreement is approximately EUR 900 million.
The agreement includes Wärtsilä's Dynamic Maintenance Planning (DMP) and Condition Based Maintenance (CBM). These services are based on capturing digitalized data streams from every engine, after which this data is analyzed by specialists. This allows real-time optimization of the equipment whilst predicting operational and maintenance demands. With the DMP and CBM in place, vessel and fleet operations are optimized and engine overhaul intervals potentially extended. With approximately 400 Wärtsilä engines covered under the agreement, even the smallest improvements in vessel fuel consumption add up to significant annual savings in fleet operational costs.
"Our agreement with Wärtsilä extends our cooperation to a strategic partnership," said Bill Burke, Chief Maritime Officer for Carnival Corporation. "With Wärtsilä maintaining vessels under our agreement and ensuring a high level of safety and reliability, we can concentrate on our core priority – providing great cruise vacations for our more than 11 million annual guests. In addition to reducing our costs, the long-term agreement increases safety and operational efficiency – two critical advantages in the fast-growing cruise market."
The long-term performance-based agreement model provides predictability of costs and incentives for both companies as remuneration is based on how the equipment performs, with the companies sharing exposure based on outcomes. For Wärtsilä, the strategic partnership encourages increased focus on research and development, manufacturing and other functions to make its products even better and more efficient.
"We are very excited to develop our long-term partnership into a more strategic direction. Both Wärtsilä and Carnival Corporation are committed to investing significantly in this partnership as well as to develop our cooperation in the long run. We are confident that working closely together, we can improve performance in both organizations," says Pierpaolo Barbone, President, Services & Executive Vice President, Wärtsilä Corporation.
Further improvements in energy efficiency will be a significant focus area for Wärtsilä within this agreement and a key driver for the cooperation between the two companies. Engine efficiency and fuel consumption will be measured on a regular basis, with improvements to fuel efficiency based on continuous monitoring and data analysis. Potential savings in fuel costs are counted in tens of millions of dollars per year.