Taiwan’s Cruise Industry is Shipshape

Star Cruises' Superstar Libra at the Port of Keelung (front), with Princess Cruises' Sapphire Princess right behind. Photo: Wikipedia

The burgeoning cruise market has raised Taiwan’s profile in the travel sector and revitalized the port of Keelung.

Taiwan’s northeastern port city of Keelung was once dubiously known for two unflattering distinctions: the country’s highest suicide rate and weather even gloomier than Taipei’s. A dozen years ago it seemed like a place that time had left behind: aging, dilapidated, eerily quiet. Aside from the main attraction of fresh seafood, the city offered little to visitors. Meanwhile, Taipei Port’s cargo throughput overtook Keelung’s in 2009, less than a decade after the former opened.

Now Keelung is awakening from a long slumber and the hum of activity is evident. The city might have drifted further into obscurity if not for the ascendancy of Taiwan’s cruise sector, now the No. 2 source market in Asia behind China.

Keelung Port has been reborn as home harbor for international cruise liners. Massive cruise ships carrying thousands of passengers regularly drop anchor in Keelung, usually on journeys to and from Japan. A total of 940,000 international cruise passengers visited Keelung Port in 2018, up from 400,000 in 2013, according to government data.

Taiwan International Port Corp., which operates the Port of Keelung, estimates that up to one million passengers may visit Keelung this year, contributing roughly NT$5 billion (US$161 million) to the Taiwan economy. “Cruise ships generate a lot more local economic activity than cargo ships,” says Peter Chen, regional director of Princess Cruises/Cunard Line Taiwan. “There are 1,000 to 3,000 passengers instead of 20 or 30 crew members.”

Feeding everyone on a cruise ship requires a large supply of provisions, much of which Taiwan (with its strong agricultural sector) can provide. Princess Cruises purchased a record US$20 million in local goods last year, Chen says, about half of which were fruits, vegetables and rice. The company expects to surpass that figure this year. 

Situated at the nexus of Northeast and Southeast Asia, Taiwan is well positioned to capitalize on the regional cruise boom. The number of Asian cruise passengers grew 4.6% in 2018 to reach a record high of 4.24 million people, according to the Cruise Lines International Association. Taiwan, along with Hong Kong and the Chinese mainland, is a destination for more than half of all cruise passengers in the region.

China remains the top source market by far, at 55.8%. Yet it is impressive that Taiwan, with a population 1/60 the size of China’s, is second with 9.3% (400,000 passengers). That’s ahead of Singapore, Japan, Hong Kong, India, and Malaysia.

“Taiwanese tourists are maturing – they’re looking for new tourism products,” says Princess’s Chen, adding that Princess entered the local market in 2013 to capitalize on that trend.

Indeed, cruises are enjoying something of a moment in the sun here. International cruise operators have shrewdly put together packages customized for the local market. The cruises usually embark from Keelung destined for Japan. The voyages last three to six nights, in contrast to the longer cruises common in North America and Europe.

A cruise line promotes its business by advertising in a Taipei MRT station. Photo: Matthew Fulco

“Taiwanese people have limited annual leave, so they can’t take too many consecutive days off,” says Steven Liou, president of the Port of Keelung. “But they only need a long weekend to take a cruise to Japan.”

For reasons of cultural affinity and geographic proximity, Japan is Taiwan’s preferred cruise destination. The local websites of the major international cruise lines operating in Taiwan are filled with options for visiting the Land of the Rising Sun. Okinawa and Yokohama are among the most common destinations for Taiwanese cruise passengers, but ships also stop off in Osaka, Kobe, Nagasaki, Fukuoka, Kanazawa, and Shizuoka. Some cruises departing from Keelung even travel to Hokkaido, Japan’s remote northernmost island.

Shopping in Japan

One of the favorite activities of Taiwanese tourists in Japan is shopping. As cruise passengers, they have no limit to their luggage weight. “Japanese products are extremely popular with Taiwanese consumers,” Chen observes. “If someone wants to load up on Japanese snacks, or even buy an appliance made in Japan [which might exceed the weight limit for a flight], they can bring it all home on the cruise ship.”

To meet demand in Taiwan for viewing cherry blossoms in Japan, cruise lines will offer special cruises in the spring of 2020 that will disembark at numerous Japanese cities. “If you miss the cherry blossoms in one place, you can try your luck in another,” says Liou, in reference to the unpredictability of the bloom period. Flowers stay open for just four to ten days before wilting and falling to the ground. Weather conditions factor heavily into when they open and the duration of the bloom period.

Now that Taiwan has developed a substantial cruise ship market, the next step is to deepen the industry’s roots here. That requires establishing a second home port besides Keelung. Kaohsiung Port, Taiwan’s largest commercial harbor and the world’s twelfth largest container port by cargo volume, is the obvious choice. “Kaohsiung is a major port – it has definite potential for the purposes of the cruise industry,” says Joe Y. Chou, director-general of the Taiwan Tourism Bureau.

Kaohsiung is already getting a taste of the cruise ship business. In July, World Dream, a luxury cruise ship operated by Genting Cruise Lines, sailed to Okinawa three times from Kaohsiung. Together, the voyages were expected to earn NT$160 million in tourism revenue, local media reported.

Genting is reportedly considering introducing an “island-hopping” domestic cruise-ship tour that would leave from Kaohsiung, stop off in Tainan, and then sail to the outlying Penghu and Matsu islands.

However, Kaohsiung faces a number of obstacles in its bid to become Taiwan’s second home port. First, the southern city’s geographic location makes it an obvious choice for southbound voyages, but not for those heading north – and most of Taiwan’s cruises are destined for Japan.

To visit Japan, Kaohsiung locals would prefer to take the high-speed rail to Taipei – and from there travel 45 minutes to Keelung – rather than embark on a cruise ship from their home city, says Chen of Princess Cruises. “They would rather get to Japan faster than spend an additional night aboard the ship,” he says.

Embarking from Kaohsiung makes sense for cruises bound for Southeast Asia, but at present demand for such voyages is limited. After Japan, South Korea – also to the north – is the top destination for Taiwanese cruise passengers.

One market that Chen sees as a natural fit for Kaohsiung is China. The city could serve as a destination for Chinese cruise ship passengers who have selected flight-cruise packages, he says. Such trips entail flying to a destination, taking a cruise from there and back, and then flying home. Chinese tourists interested in visiting Kaohsiung as part of their trip wouldn’t mind their cruise taking an additional night to reach Japan or Korea. 

In the months after the surprise victory of the Kuomintang’s Han Kuo-yu – viewed as relatively friendly toward China – in Kaohsiung’s November 2018 mayoral election, the city saw an increase in Chinese tourist arrivals. Although Beijing recently banned individual Chinese from visiting Taiwan, a Kuomintang victory in the 2020 presidential election would likely result in a lifting of the ban.

Political complications make it impossible for most cruise ships to sail directly between China and Taiwan. Given ample cross-Strait flights and the Taiwanese preference for visiting Japan, demand for that travel segment is limited. But it’s not now even an option because Taipei and Beijing cannot agree on which waters are domestic and which international.

Beijing and Taipei both remain active in the Asia Cruise Cooperation Alliance, whose members include Taiwan, Hong Kong, the Philippines, Korea, Hainan Island, and Xiamen. The Alliance seeks to facilitate visits by international cruise lines to the six destinations as well as to develop Asia’s overall cruise market.

One issue cruise lines need to watch more closely is customer satisfaction. Research by Taiwan Business TOPICS has turned up multiple accounts of Taiwanese passengers criticizing the quality of cruises. In April, Taiwan’s Consumer Foundation received more than 900 complaints from passengers who took a cruise to Okinawa. After the cruise was truncated because of bad weather conditions, the travel agency that arranged the cruise offered to compensate each passenger with NT$500 in cash and an NT$100 coupon. The passengers, who had paid anywhere from NT$25,900 to NT$60,900 for the planned four-day trip, considered the compensation to be far too low.

At the same time, many customers are satisfied. Amy Lin, who works for a research institute in Taipei, took a cruise to Japan earlier this year with a major international cruise line operating in Taiwan. She enjoyed the overall experience and says she would be willing to take another cruise in the future. She lauds the quality of live entertainment onboard the ship and the wide array of recreational facilities, from the large swimming pool to a mini-golf course.

For gambling enthusiasts – and Taiwan has more than a few of those – the onboard casino is a big attraction, she says, even though she personally didn’t gamble on this voyage.

However, Lin found that certain elements of the experience left much to be desired, including cramped cabin space and the disappointing quality of the buffet-style meals.

On the whole, though, prospects look promising for the cruise business here. The government is intent on developing the industry, consumer demand is robust, and ample room remains to grow more specialized market segments, particularly flight/cruise packages.

The Port of Keelung recently invested more than NT$50 million to install an e-gate system, which automates part of the immigration control process. That facility should considerably speed up the movement of passengers in boarding and disembarking from ships, Port of Keelung president Liou says.

Perhaps even more important than financial incentives is the improvement of tourist sites. After all, if visitors have seven or 12 hours in Keelung, what will they do with their time? Shopping, of course, is one possibility, and to meet such demand, the city could set up a duty-free retail center.

But one can buy duty-free goods anywhere. To Keelung’s credit, the city has focused heavily on strengthening the quality of its distinct scenic and historical attractions. The once neglected Heping Island Park – which boasts magnificent views of Taiwan’s rugged northeast coast – has been rejuvenated. It now has new seawater bathing pools, changing facilities, and showers, as well as a visitor center that sells high-quality locally made souvenirs.

There are also plans to boost Keelung’s infrastructure, including construction of a convention center, renovation of Keelung Port’s western half, and perhaps even an extension of the MRT from Nangang, a business hub on Taipei’s eastern outskirts. The latter project would integrate Keelung with the nation’s economic and political capital, cementing its future status.

“The rise of the cruise industry has been the driving force behind all this development,” says Liou. “It’s been a golden opportunity for Keelung to reinvent itself.”

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