Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
10d
ACTION ITEM
Date of Meeting
June 25, 2024
DATE: June 18, 2024
TO: Stephen P. Metruck, Executive Director
FROM: Stephanie Jones Stebbins, Managing Director, Maritime
Linda Springmann, Director, Cruise Operations & Maritime Marketing
SUBJECT: Carnival Corporation Preferential Berthing Agreement and Cruise Dashboard
ACTION REQUESTED
Request for Commission Authorization for the Executive Director to enter a 10-Year Preferential
Berthing Agreement with Carnival Corporation (Carnival), which includes Carnival, Princess
Cruises, and Holland America Line brands. The Agreement includes environmental and
community requirements in addition to business terms; and requires data sharing to support a
new public Cruise Dashboard for transparency along with tracking and reporting on performance
over the term of the agreement.
EXECUTIVE SUMMARY
The proposed 10-year agreement provides the Port of Seattle a long-term commitment from
Carnival to deliver a minimum passenger guarantee, significant actions to drive decarbonization
and air quality benefits, as well as other environmental, social and community commitments that
align with the Port’s goals, values, and commitment to social, environmental and economic
sustainability.
Through this agreement, Carnival agrees to the following noteworthy terms:
• Provide a guaranteed minimum number of passengers to Seattle annually.
• Deploy 100% shore power capable vessels to the Port of Seattle by 2026
• Pilot test a non-fossil fuel in Seattle
• Commitment to developing potential decarbonization pathways and associated
prerequisite assumptions regarding fuel supply and/or technology advancements and
provide to the Port.
• Continue participation in the ECHO and Quiet Sound programs to reduce underwater
noise.
• Develop a Responsible Sourcing pilot program for Seattle to promote use of small,
diverse, disadvantaged, and local suppliers.
• Provide the Port with pre-season, weekly, and post-season reporting on specified
environmental performance metrics.
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Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
• Meet annually to review progress on commitments, decarbonization and environmental
action, and overall performance. The Port will consider these factors in granting an
extension following the initial 10-year term.
The agreement has a 10-year term, with a 5-year extension option through 2038. The total
revenue generated over the term of the agreement is estimated to be $185M, and $273M if
extended. It includes a revenue-passenger guarantee of 550,000 passengers annually, which is
estimated to guarantee $146M in revenue during the 10-year term and an additional $68M if
extended. The passenger fee and dockage rates start at 90% of tariff with an annual increase of
4.5%. The rate structure also includes five-year resets to 90% of tariff in 2029 and 2034, if the
extension is granted and with continued 4.5% increases.
The data sharing terms in the agreement will allow the Port to develop and maintain a public-
facing dashboard of cruise performance data to enhance transparency and build public
awareness of cruise operations in Seattle and the Alaska market. The Port intends to make
continuous improvements to the dashboard and eventually include vessel-specific details and
other publicly relevant information. Additionally, the data sharing terms in this agreement will
support development of annual maritime emissions inventories to track and communicate cruise
lines’ progress toward the Port’s climate and air goals.
The agreement also commits Carnival to allow vessels from other cruise lines to plug into their
shore power equipment at Pier 91. Carnival currently owns and operates the shore power
connections at the pier. This term will remove a significant barrier which currently limits
connections by non-Carnival vessels at Pier 91.
The shore power connection at Pier 66, scheduled for activation this summer, achieves the
Northwest Ports Clean Air Strategy goal to electrify all three cruise berths by 2030, six years
earlier than anticipated. This has laid the groundwork to achieve the Commission’s shore power
directive of 100% connection of homeport shore power vessels by 2027, three years ahead of the
2030 goal set in the Maritime Climate and Air Action Plan (MCAAP). It is the Port’s intent to
require all cruise vessels (from all brands) to plug into shore power in the future.
JUSTIFICATION
This agreement aligns with the Port’s Waterfront Guiding Principles (Commission Motion 2019-
02) to support the financial sustainability of the Port, to expand economic, cultural and
community benefits, to incorporate leading edge environmental stewardship and sustainability
practices; and to provide facilities that exceed existing regulations beyond maximizing the use of
the Port’s deep-water facilities and industrial lands to serve maritime industrial uses. It also aligns
with our Century Agenda goals of providing positive economic impact to the region and
supporting a thriving workforce. Furthermore, this agreement represents an ambitious and
collaborative step forward with Carnival Corporation toward the Port’s goal of being the greenest
port in North America. The terms of this agreement specifically advance the following:
COMMISSION AGENDA – Action Item No. 10d Page 3 of 8
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
• The Port’s Century Agenda goal two, to advance this region as a leading tourism
destination and business gateway; and goal three, to responsibly invest in the economic
growth of the region and all its communities; and goal four, to be the greenest and most
energy-efficient port in North America.
• The Northwest Ports Clean Air Strategy goal for 2030:
o To achieve 100% of major cruise and container berths with shore power installed
• The MCAAP goals for 2030:
o To support domestic and international efforts to phase out emissions from ocean-
going vessels.
o To have shore power infrastructure installed at all cruise ship berths.
o To achieve 100% of homeport cruise ship calls connected to shore power.
o To support continual advancements in equipment efficiency and emission
reduction from ocean-going vessels
o To support continual advancements in equipment efficiency and emission
reduction from cargo handling equipment
The climate benefits of shore power use are significant. Plugging into shore power can reduce
diesel emissions from cruise ships at berth by 80 percent and GHG emissions at berth by 66
percent, on average, using Seattle City Light energy sourced primarily from hydropower. The
terms in this agreement represent an essential component of the Port’s efforts to achieve
environmental goals. Based on modelled scenarios, using the 2024 cruise season as an example,
and assuming all ships are shore power capable and have access to a shoreside power connection
per the future requirements in this agreement, the Port would see the following estimated
emissions benefits:
• Avoids estimated 11,833 metric tons CO2e
• Equivalent to 13% of at total cruise emissions in the Airshed (based on airshed
totals in 2022 Cruise Emissions scaled to 275 calls)
• Equivalent to 9% of total Port maritime Scope 3 emissions in the Airshed
In addition to economic and environmental leadership, the agreement commits Carnival to
increased local economic impact through tourism and provisioning efforts that grow participation
by local, small, and disadvantaged businesses. The agreement prioritizes social and workforce
development efforts including internships, donations, and educational ship engagements.
Office of Equity, Diversity & Inclusion Collaboration
The Port’s Office of Equity Diversity and Inclusion informed the elements related to tracking and
measuring improvement on local provisioning, specifically related to Women and Minority
owned Businesses, donations to local non-profits, ship tours for workforce development
purposes, and annual reporting of disaggregated organizational demographics by hierarchy for
shipboard and land-based programs. In addition, the agreement includes a new Market Incentive
COMMISSION AGENDA – Action Item No. 10d Page 4 of 8
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
for establishing a baseline of provisioning sourced from local, small and disadvantage businesses
by the end of 2025 and tracking annual growth.
DETAILS
Collectively, the following three elements provide transparency, equity, and economic benefit
from the Port’s cruise business:
Cruise Dashboard
The Cruise Dashboard (version1) was created with the assistance of the Port’s Business
Intelligence Team. Multiple data sources were utilized to construct a visual representation of the
2023 cruise season which includes key elements for homeport ships, number of calls, number of
passengers, passengers utilizing Port Valet, shore power connectivity and the resulting CO2
emissions avoided. Additionally, the agreement with Carnival allows the Port to collect additional
data, which will be incorporated into the dashboard as the data becomes available. This will
include cruise line fleet profile data such as shore power capability, and information on vessels’
Advance Wastewater Treatment Systems, Exhaust Gas Cleaning Systems, and noise reduction
technology.
Shore Power Requirement
To accelerate the Port’s goal requiring cruise ships to utilize shore power connections and to
maximize the investment in shore power infrastructure, the Port is accelerating its goal to have
all homeport vessels plugging into shore power requirement by three years, from 2030 to 2027.
Cruise lines have adequate time to redeploy their homeport fleets so that ships calling in Seattle
by 2027 should be shore power capable and commissioned. Princess Cruises and Holland
America brands installed the original shore power equipment at Terminal 30 in 2004 and then
relocated the two connection points to Pier 91 in 2009 when the Port relocated the cruise facility.
These were the 2
nd
and 3
rd
shore power installations in the world. Princess Cruises and Holland
America remain owners of the shore power infrastructure at Pier 91.
Carnival Corporation Preferential Berthing Agreement
Carnival Corporation includes Carnival Cruise Line, Princess Cruises and Holland America Line
brands homeporting in Seattle. Sister brand, Cunard Line’s Queen Elizabeth will join in 2025.
Carnival has had preferential use agreements with the Port since 2009. These agreements
provided certainty to the Port in terms of revenue, but also provided Carnival the ability to make
capital investments in shore power—a significant benefit to the Port—and investments
elsewhere in the region and the Alaska market. The most recent Carnival agreement dated March
4, 2019, included a three-year term with two, one-year extension options. During the pandemic
and the loss of cruise operations for over a year, these two extensions were granted bringing the
agreement through the 2023 season.
In 2023 Carnival Corporation brands brought 140 ship calls to Seattle representing 48% of the
Port’s cruise calls. Carnival brands represented 100% of the Shore Power connections in 2023
COMMISSION AGENDA – Action Item No. 10d Page 5 of 8
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
with 102 ships plugging in achieving a 73% connectivity rate for their Seattle-based fleet. In 2024
Carnival brands will again have six of their brand’s ships committed to the Seattle market with
the number growing to seven ships in 2025.
This proposed agreement is a world-class example of how the Port can leverage business
agreements to advance shared priorities. Examples of how this agreement is innovative include
the following:
• It includes robust terms in length of agreement and rates,
• It advances the Port’s environmental commitments,
• It establishes social and economic impact as priorities and requirements.
Terms: The agreement provides a 10-year term, from 2024-2033, with a mutually agreeable
option to extend from 2034–2038. The Port explicitly states in the agreement that the approval
of the extension will be based on decarbonization progress and the demonstrated achievement
of other sustainability terms. It includes a revenue-passenger guarantee of 550,000 passengers
per year and provides the cruise line with historical berthing rights for day-of-week used the prior
year. To preserve the historical berthing rights for day-of week, the agreement adds a 12-call
minimum per homeport vessel per season to ensure prime dates are utilized. The specified rate
represents 90% of Tariff with an annual increase cap of 4.5%. This rate structure also includes a
five-year reset to 90% of Tariff at each five-year mark of 2029 and 2034, if the extension is granted
and with continued 4.5% increases.
The agreement also includes a security provision via a $3M letter of credit or surety bond which
matches previous agreements; typically, for leases, Port procedures require 6 Months of rent as
a security bond. This security provision was modeled on previous agreements granted by the
Port.
The environment: The new agreement upholds environmental compliance commitments, such
as ongoing participation in the Memorandum of Understanding between Washington
Department of Ecology (DOE), Port of Seattle and the cruise lines, and introduces new
commitments. Through this agreement, Carnival also affirms their commitment to continue to
partner with the DOE and others on public engagement and policy making around the use of
exhaust gas cleaning systems, adherence to the Port’s stormwater best management practices,
and reporting on shore power connectivity. The agreement adds significant new provisions
including piloting a non-fossil fuel in the 2024 or 2025 season and striving for a minimum of 5%
non-fossil fuel use for the Seattle-based vessel fleet by 2030 and beyond. It commits Carnival
Corporation to developing potential decarbonization pathways and associated prerequisite
assumptions regarding fuel supply and/or technology advancements and sharing the results with
the Port by December 31, 2026. Shoreside, the agreement requires Carnival to incentivize
ground handlers and stevedores (if contracted directly) to use of low emission equipment with a
goal to use zero emission shoreside equipment by 2030.
COMMISSION AGENDA – Action Item No. 10d Page 6 of 8
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Social and economic impact: The agreement includes a new market incentive opportunity for
tracking and growing economic impact to the region via pre/post overnight stays and
WMBE/local provisioning growth. This includes piloting a responsible sourcing program in Seattle
including supplier assessment mapping and development of procedures that promote & train
small, diverse, tribal and disadvantaged local suppliers. To support educational and workforce
development Carnival will offer ship tours, two or more internships locally, and a commitment
to explore opportunities to donate reusable goods to local non-profit organizations. The
agreement also requires Carnival to partner with maritime-focused non-profit entities to assist
in creating curriculum and experiential field-based learning opportunities and internships for
students as part of Maritime-focused workforce development programs and to collaborate with
the Port on Anti-human trafficking efforts, signing on to the Port Allies Against Human Trafficking
Pledge.
Schedule
The new Cruise Dashboard is launched for the full 2023 season and be updated as the season
progresses, and we receive new data. The dashboard will expand to include the new “Fleet
Profile” detail. Each year within a month of the cruise season’s end the Port will publish the
updated dashboard for that completed cruise season.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
The Port’s options are to decline another agreement and have Carnival pay Tariff or enter into a
Preferential Berthing Agreement with a 10-year term and a 5-year optional extension.
Alternative 1 – Decline to enter into a preferential berthing agreement with Carnival
Corporation.
Cost Implications: no view of expected revenues or number of port calls further than one-year in
advance. Losing one 2,500 passenger ship for 20 turns amounts to approximately $3M dollars in
revenue to the Port in addition to related jobs and economic impact to the community.
Pros:
(1) Port has ultimate flexibility should another customer enter the market.
Cons:
(1) No long-term commitment or visibility to ship calls, passengers, revenues.
(2) Loss of collaboration on Environmental, Social, Community efforts as included in
proposed new agreement.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 10d Page 7 of 8
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 2 – Enter into a 10-year agreement with a 5-year option at the Port’s discretion, with
Carnival Corporation for berthing at Terminal 91.
Cost Implications: guaranteed passenger visits and revenue visibility for the next 15 years to
allow for capital, expense budgeting, and employment planning. Related commitments to
regional economic impact and jobs to support cruise calls and their customers.
Pros:
(1) Provides certainty for Port of Seattle related to projected incomes.
(2) 10-year window gives time for innovations in technology related to alternative fuels and
other decarbonization efforts to evolve and be in place for the next possible agreement.
(3) Continues a long-term relationship with our customer who has historically had similar
term-lengths.
(4) 5-year option is tied to decarbonization effort and achievements.
Cons:
(1) Unpredictability over the next 10-years of environmental innovations and Carnival’s
willingness to enter into amendments to take advantage of these mid-agreement.
(2) Locking-in berthing guarantees gives no flexibility if new customer approaches the Port
to enter into the market.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
A preferential berthing agreement will provide certainty of future revenues that could not be
guaranteed without an agreement. The 2024 passenger and dockage fee rates in this agreement
are set at 90% of tariff rate as an incentive that commits Carnival Group to a minimum amount
of long-term cruise sailings and revenue. The 550,000 minimum revenue passenger guarantee
would secure present value revenues of approximately $146M during the 10-year term and an
additional $68M during the 5-year extension period.
Financial Analysis and Summary
Project cost for analysis
N/A
Business Unit (BU)
Cruise Operations
Effect on business performance
(NOI after depreciation)
10-Year Minimum Annual Guarantee Revenue (PV):
$146M
15-Year Minimum Annual Guarantee Revenue (PV):
$214M
Estimated 10-Year Passenger Revenue (PV): $185M
Estimated 15-Year Passenger Revenue (PV): $273M
IRR/NPV (if relevant)
N/A
CPE Impact
N/A
COMMISSION AGENDA – Action Item No. 10d Page 8 of 8
Meeting Date: June 25, 2024
Template revised June 27, 2019 (Diversity in Contracting).
ATTACHMENTS TO THIS REQUEST
(1) Preferential Berthing Agreement
(2) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
June 14, and June 18, 2024 – Commissioners were briefed on final terms
February 2024 – Commissioners briefed on status of agreement
December 2022 – Briefed Commissioners on initial plan for negotiation and term inclusions
