Carnival Corporation (CCL) announced results from its multi-year Fleet Fuel Conservation Program, started in 2007, at a National Press Club event celebrating world tourism in Washington, D.C.
This program, designed to save around $2.5 billion in fuel costs by end-2014, should improve Carnival’s overall fuel efficiency by 24% from the 2007 level. The Fleet Fuel Conservation Program uses energy-saving programs on ships and devises new energy-efficient ship designs to cut down on energy consumption and boost fuel efficiency. In fact, this plan forms the basis of Carnival’s strategies to enhance sustainability and improve environmental friendliness.
In the current fleet of ships, the company has introduced several conservation initiatives since 2007 including Propulsion – which optimizes speed and designs fuel-efficient itineraries. Apart from this, the company uses new hull coatings and cleaning technologies to discourage the growth of marine organisms that create drag on the hull. Carnival also continues to develop its ability to use alternative fuels.
Additionally, Carnival also installed new, energy-efficient air conditioning and LED bulbs to help reduce energy usage. The company is also reducing the rate of onboard water usage and finding more efficient ways to produce water, including improved use of engine heat to convert sea water to fresh water and installation of reverse osmosis systems.
When it comes to environmental sustainability, very few industries face more challenges than the cruise industry. To conform to the environmental regulatory standards, Carnival is expected to increase its fuel efficiency by 5% this year. The company is also positioned to surpass its goal of a 20% reduction in carbon emissions by 2015.
In fact, in May this year, Carnival announced its plans to invest $400 million to reduce pollution by more than 70% by installing a special exhaust gas cleaning technology — ECO Exhaust Gas Cleaning (ECO-EGC) — proven to eliminate key pollutants from exhaust gases, during maneuvering as well as at the port. This technology will be installed in roughly 70% of the company’s fleet.
The Fleet Fuel Conservation Program has served as a model for Carnival’s strategy to work in partnership across its nine brands through collaboration, cooperation and communication – known as "the Three Cs" – to improve guest satisfaction, strengthen brands, boost operational efficiency, reduce expenses and generate new sources of revenue.
For all the seemingly inherent wastefulness of the cruise industry and activists accusing these companies of taking environmental regulations lightly, Carnival — one of the world’s leading cruise operators — seems to have taken a step in the right direction. With intense effort to lower wastage, cut fuel consumption and generally reduce their impact on the earth, Carnival is striving to enhance sustainability and improve its environmental friendliness.
Carnival currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Royal Caribbean Cruises Ltd. (RCL), International Speedway Corp. (ISCA) and Speedway Motorsports Inc. (TRK). All these stocks carry a Zacks Rank #2 (Buy).
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