Airports and cities may face delays and rising costs, but cruise ships keep breaking records. They show what can still be built.
In January 2024 the largest passenger ship ever built, Icon of the Seas, set sail from Miami on her maiden voyage. Icon is five times larger than the Titanic by gross tonnage (the internal volume of a ship) and spans 20 decks containing more than 2,500 passenger rooms. At full capacity she can carry nearly 10,000 people – up to 7,600 passengers along with 2,350 crew. Passengers can enjoy 40 bars and restaurants across eight ‘neighborhoods’, plus several theaters and a top-deck aquapark comprising seven swimming pools and nine waterslides. The ship is 365 meters long and 65 meters wide, giving a population density equivalent to approximately 420,000 people per square kilometer. That’s about 70 times the density of London and 50 percent higher than Dharavi in Mumbai, often cited as the world’s densest urban area.
Airplanes today fly no faster than they did in the 1970s. In many countries, road speeds have decreased. Flying cars never showed up. In developed countries, the tallest buildings have only inched higher. Most rich countries produce less energy per capita than they did 20 years ago, and the cost of building new physical infrastructure like railways seems to rise inexorably. Yet cruise ships continue to grow: a natural experiment in what can be achieved outside the constraints that have stifled progress on dry land.
A brief history of very large ships
Between the latter half of the nineteenth century and the jumbo jet’s maiden commercial flight in 1969, people mostly traveled between continents on ocean liners, the largest passenger ships of the era. Though often luxurious, ocean liners were primarily a mode of transport. The most important consideration was speed.
The Titanic’s sinking in 1912 did not kill the ocean liner. In the 1910s and ’20s the Cunard Line ship RMS Mauretania could cruise at 25 knots (46 kilometers per hour) and held the Blue Riband, an unofficial award for the fastest Atlantic crossing by a ship doing a regular trip, with a crossing time of just under five days. Companies competed on speed and in the 1930s newer, faster ocean liners like the SS Normandie and RMS Queen Mary were introduced with a cruising speed of 30 knots, reducing the transatlantic crossing time to around four days.
The invention of the modern passenger jet in the late 1950s cut transatlantic journeys from days to just hours. When jet travel became cheaper in the late 1960s the ocean liner companies were left in a difficult position. Reduced demand for transatlantic crossings on their huge, expensive ships necessitated a pivot to a new offering: voyages in warmer waters calling at tourist destinations on ships packed with amenities. The leisure cruise was born.
The history of the SS France illustrates this transition. Launched in 1960 by Compagnie générale transatlantique, or French Line, as the world’s longest passenger ship (at 316 meters long), she became the flagship transatlantic liner of a dying industry. Airline competition and the oil crisis of the early 1970s forced her into early retirement in 1974 and she lay dormant for five years before being bought by Norwegian Cruise Lines in 1979. Norwegian renamed her the SS Norway, and she became their largest Caribbean cruise liner. Her heavy, oil-powered steam engines were converted to diesel and the old passenger rooms and public areas were redesigned to suit tropical cruises, adding luxurious suites and onboard amenities like new bars and lounges, a casino, and a discotheque. The SS Norway served as a cruise liner for 30 more years before being decommissioned in 2003.
The great stagnation in everything but cruise ships
New buildings, airplanes, bridges, and trains built today are often barely distinguishable from those built decades earlier, apart from often costing much more money. There is some incremental progress, especially in safety and energy efficiency, but in many areas we have stopped making performance records at all. In some, like the speed of the fastest passenger airplanes, we have even gone backward.
The record for the tallest building in Europe and the United States has seen only infrequent and relatively small increases over the past few decades, in large part because getting permission to build very tall buildings is difficult in these places. By contrast, the Burj Khalifa in Dubai, currently the world’s tallest building, faced fewer such constraints.
The cruise industry, in contrast, continues to break records. The title of world’s largest passenger ship has been broken nine times so far this century, including three times in the last five years. The trend for ever-larger cruise ships accelerated around the turn of the millennium when Carnival Cruise Line’s Sunshine became the first passenger ship to exceed 100,000 gross tons in 1995. By 2008 Oasis of the Seas had more than doubled that record at 226,000 gross tons.
Since the SS Great Eastern in 1858, the gross tonnage of the largest passenger ships has grown an average of 1.59 percent per year, nearly double the 0.84 percent annual growth rate in the height of the world’s tallest buildings between the completion of the Eiffel Tower in 1889 and the Burj Khalifa in 2010. If we restrict ourselves to the tallest buildings in the United States in the last century, from the completion of the Empire State Building in 1931 to the One World Trade Center in 2020, the record of tallest building has only inched up at 0.24 percent a year.
Passenger numbers have also increased from just over 7 million passengers per year in 2000 to 31.7 million in 2023. The industry suffered badly during the Covid-19 pandemic, beginning with the high-profile Covid outbreak aboard the Diamond Princess off the coast of Japan in February 2020, resulting in the quarantine of the 3,700 people on board. Subsequent lockdowns, capacity limits, and mask mandates that persisted long after widespread vaccination all contributed to depressed passenger numbers. But new megaships like Icon have driven a strong post-Covid recovery, and passenger numbers and revenues in 2023 surpassed pre-pandemic records.
Part of the reason for the relatively slower progress of physical infrastructure projects, compared to rapid progress in digital technologies, is sheer technological difficulty. Software products can be built rapidly and iteratively improved. Mistakes can usually be easily rectified by editing offending lines of code. When, on the other hand, Ford discovered in the late 1990s that ignition switches in its cars could cause fires, it had to recall 14.9 million vehicles.
But not all differences between the rates of progress in the worlds of bits and of atoms can be explained by technological difficulty. In the United States, housing, medical care, and childcare costs have risen faster than overall inflation since 2000, while consumer electronics, digital services, and small manufactured goods have become significantly cheaper in real terms. British researchers found something similar: in industries where increasing supply requires building new physical infrastructure, like houses, electricity pylons, power stations, and new railway lines, prices have risen.
Even between wealthy countries, costs can differ enormously for similar projects. In Britain the cost per mile of new tramway is £87 million while in Germany it is only £24 million. In South Korea, the construction cost for a new nuclear power plant is estimated at approximately $1,746 per kilowatt while new nuclear builds in the US range from $6,000 to over $10,000 per kilowatt.
The discrepancy between house prices and the construction cost to build new housing reflects, at least in part, the value of the permission to build a house in that location. On the coast of California house prices are three times the cost of building new ones. It costs around £2,700 per square meter to build new homes in London, which then sell for at least double that amount, and in many areas go for triple or quadruple that, or even higher.
Compared with large-scale construction projects on land, the cruise industry is something of an outlier. Large modern cruise ships are sometimes even cheaper in real terms to manufacture than flag carriers of the past when measured per gross ton in 2024 dollars. The steady improvement of European shipbuilding suggests that it isn’t technological difficulty, a lack of skills, or the prices of raw materials that make infrastructure expensive in Europe, but flawed rules and institutions.
Cruise fares have also fallen in real terms. A cruise forum user unearthed a Royal Caribbean brochure from 1983 that shows pricing for its first dedicated cruise ship, Song of Norway. The prices indicated are per person based on two people sharing a room. The cheapest seven-day Caribbean cruise fare is $995 (about $3,000 dollars in 2024 prices) per person for an interior room. An equivalent cruise in 2024 aboard Royal Caribbean’s Freedom of the Seas was roughly five times cheaper, at around $600 dollars per person. A balcony room in 1983 cost $1,750 ($5,500 per person in 2024 prices) while a balcony on an equivalent weeklong Caribbean cruise aboard Wonder of the Seas (constructed in 2022) only cost around $1,000 per person in 2024. Even on Icon, which is in greatest demand, a balcony cabin costs around $1,700 dollars per person.
And it’s not simply that cruise lines are managing to cram more people into a smaller space on modern ships. If we divide the gross tonnage of a ship by its passenger capacity we find that each passenger on Icon of the Seas has about 33 percent more space than they would aboard Song of Norway.
Unpriced externalities
Industries are usually regulated in proportion to the negative externalities they impose on people, particularly when the affected parties are concentrated in a geographic area. Building more housing is noisy, can increase traffic congestion, and may intensify competition over public services like medicine and education. Airplanes and airports are loud. Trains must run on tracks cutting through private property, creating noise and sometimes making natural landscapes uglier. The people who bear these costs tend to either oppose the projects that create them altogether or demand regulations that control them. That is usually the source of things like zoning restrictions on dense housing, controls on airports that prohibit takeoffs and landings at night, and bans on onshore wind generation and solar farms. All of these things drive up costs by creating artificial scarcity.
In Britain, a planned 140-mile high-speed rail link from London to midland and northern cities like Birmingham and Manchester known as High Speed 2 has risen in cost from a 2013 estimate of £37.5 billion in total to a projected cost of £60 billion today, for just the first half of the line. One contributor to the cost is the miles of tunnel that it has required – nearly a quarter of the line is tunneled, including a ten-mile-long tunnel through the Chiltern Hills that was added to mitigate the noise and visual impact of the project in several Parliamentary constituencies held by the then-governing Conservative Party.
The Cape Wind project, an offshore wind farm to be located in Nantucket Sound, off the coast of Cape Cod in Massachusetts, was first proposed in 2001 and aimed to be the first offshore wind farm in the United States. In 2017, after 16 years of legal battles and rising costs, Energy Management Inc., the company behind the project, announced it had ceased promoting the scheme.
Cruise ships spend their lives either temporarily docked at a port or out at sea, where they impose almost no localized negative externalities and there is therefore little drive to subject them to national regulation.
They also have a trump card they can play to escape regulation that might come their way: the flag of convenience. Each ship sails under a specific nation’s flag, obliging it to abide by the laws and regulations of that nation. Cruise liners, because they are mobile, can choose which flag to fly.
Most cruise lines opt for registration in countries with favorable regulations, such as the Bahamas or Liberia, to take advantage of lower taxes and more lenient labor standards. Icon of the Seas sails under the flag of the Bahamas. Under Bahamian law maritime workers are entitled to the International Labour Organization’s minimum wage for seafarers of $666 per month ($3.20 per hour for a 48-hour working week) rather than the higher minimum wage found in popular cruise departure nations like Britain ($14.26 per hour for 21-year-olds), Germany ($13.53 per hour), Florida ($12.00 per hour), or Australia ($15.42 per hour). The Bahamas does not have a personal income tax or corporate income tax.
In its early days the cruise industry benefited from unpriced externalities, whereby it could essentially pollute for free, dumping sewage into the ocean and diesel fumes into the ports its ships docked at. In recent decades, however, international environmental regulations have been enforced by the International Maritime Organization, such as MARPOL Annex IV, which compels cruise ships to treat their sewage onboard. The Norwegian government has also banned diesel ships from calling at popular fjord destinations from 2025.
Regulations like these are driving the cruise industry away from diesel power toward using liquified natural gas (or LNG) for propulsion. LNG is cleaner than diesel in terms of sulfur and particulate emissions, reducing localized pollution (though it still has a large carbon footprint).
Technologists speculate that cruise ships could be a core use case for small modular nuclear reactors to deliver power without carbon emissions. Nuclear-powered civilian vessels date back to the 1950s, when the merchant ship the NS Savannah was built by the US government as part of Eisenhower’s Atoms for Peace program showcasing civilian uses for nuclear technology. Though a technical success, she had higher operating costs than a conventional merchant ship and was decommissioned in 1971.
Cruise ships are held back – by land
Cruise ships could be even bigger and more numerous. The main limiting factor is not the ships themselves, but the land-based infrastructure with which they interact, such as ports, bridges, and canals.
The issue with ports is depth. Engineers therefore aim to maximize gross tonnage (the overall internal volume of a ship) without excessively increasing its length or draught (how deep a ship projects into the water). Typically, a heavier ship would be built with a larger draught to provide stability, but this curtails the range of ports that large cruise ships can access. Popular tourist destinations like Venice and Santorini have ports that can no longer accommodate the largest cruise ships. Deepwater ports like Miami and Barcelona have the necessary depth to handle vessels with significant draughts and typically provide better infrastructure for large numbers of passengers. As large cruise ships proliferate, more artificial deepwater ports like the international cruise port in Cozumel, Mexico, are being built to meet demand.
While the depth of existing ports constrains the maximum draught of cruise ships, the height of key bridges limits size in the opposite direction, placing a cap on the maximum sailing height. This was illustrated recently when Icon of the Seas could barely sail under the Great Belt Bridge in Denmark during her maiden voyage from the Turku shipyard in Finland to her final destination in Miami. The bridge has a clearance of 65 meters above sea level, requiring Icon’s engineers to partially disassemble the ship’s masts and travel at high speed during the lowest tides to safely clear it. Symphony of the Seas has retractable funnels that allow it to shrink from its usual sailing height of 72.5 meters and squeeze under the Verrazzano-Narrows Bridge (clearance 69 meters).
Once cruise ships approach 70 meters in sailing height, they lose access to some important destinations. The Verrazzano-Narrows Bridge, connecting Brooklyn and Staten Island, blocks access to New York Harbor. And to traverse the Suez Canal a ship must be able to fit under the Al Salam Peace Bridge (clearance 70 meters). In Sydney, cruise ships originally docked at Darling Harbor, west of the Sydney Harbor Bridge (clearance 40 meters), but as they grew too tall to pass under the bridge, they shifted their operations to the Overseas Passenger Terminal east of the bridge.
With ports limiting maximum draughts and important bridges restricting maximum sailing heights, the latest generation of megaships has expanded outward, resulting in the distinctive wide profile of modern vessels. The largest cruise ships are now too wide to use the Panama Canal, which can only take ships up to 51.5 meters in width, and must instead sail around Cape Horn if they are being redeployed from America’s East Coast to the West Coast or South Pacific.
Private islands
Another limiting factor on the growth of the industry is the availability of suitable destinations.
As well as the limits created by ports and bridges, local towns and cities must be able (and willing) to cope with thousands of tourists descending upon them. The demand for safe, luxurious Caribbean cruise destinations in particular exceeds the supply in existing nations. Indeed, the number of suitable destinations is decreasing, owing to disorder and political instability.
The peninsula of Labadee in Haiti is a regular destination for Royal Caribbean cruises. Though geographically part of Haiti, it is leased to Royal Caribbean International and the cruise line assumes responsibility for the security of guests by providing its own armed guards. Although these stops were suspended in 2024 after the gangster Jimmy Chérizier (nicknamed Barbecue for his practice of incinerating his victims’ bodies) toppled the elected prime minister, they resumed seven months later.
In response to the unmet demand for island paradise experiences, cruise companies have created their own Caribbean destinations. Royal Caribbean cruises now stop at Perfect Day at CocoCay, an uninhabited island leased from the Bahamian government and renovated at a cost of $250 million with a waterpark and reclaimed white sand beach. At least ten private islands and peninsulas dotted around the Caribbean are owned or leased by cruise lines to provide the safe experiences their customers demand.
How the cruise industry has managed to keep costs down
Large cruise ships have enormous infrastructure challenges relative to hotels. They must desalinate seawater onboard to provide potable water. They must sort recyclable waste and provide onboard sewage processing to treat gray water (wastewater from sinks, dishwashing, showers, and so on) and black water (waste from toilets). Larger ships incinerate nonrecyclable waste on board and Icon of the Seas even has its own waste-to-energy system. On modern ships power usually comes from liquified natural gas: enough to drive the ship and provide electricity for thousands of passengers. These ships can burn $200,000 worth of liquefied natural gas each day, consuming up to 250 tons, or 80,000 gallons. Ships as large as Icon of the Seas typically incur daily operating expenses around $880,000.
Passengers pay a premium for newer ships, and accordingly large cruise ships have a designed life of only around 30 years, after which they fetch too low a price to afford the fuel and staffing. At the end of their designed life, they can be sold to be used as floating hospitals or hotels, like the former Cunard liner Queen Elizabeth 2, now permanently docked in Dubai as a luxury hotel. Other ships are scrapped at the end of their working life. The two-billion-dollar construction cost of Icon amortized over 30 years works out to around $66 million a year.
Despite these costs, cruises compete on price with hotels. A two-week Canary Islands cruise departing from Southampton, UK, aboard P&O’s Iona starts at around £900 per person for a basic room with all meals and entertainment included – similar to most package deals flying from the UK to a Canary Islands hotel for a two-week stay. A weeklong Caribbean cruise departing from Miami costs around $1,200 per guest for a balcony room, similar to an all-inclusive stay at a Caribbean resort including flights.
Cruise ships can compete because being at sea grants them some big cost advantages over hotels. As already described, they don’t have to deal with land use rules and scarce, expensive land. They can also hire their workers as they like from anywhere on Earth.
A Floridian hotel can only hire staff with the legal right to work in the United States and must pay them at least the state minimum wage of $12 an hour. A cruise ship departing from Miami can hire anyone on Earth – including people who can’t necessarily get a visa to move to the USA or another rich country – and is bound by minimum wage laws set by the International Labour Organization (ILO).
As of January 2024, ships like Icon that are registered in Nassau, Bahamas, need only pay at least the ILO seafarer’s minimum wage of $666 per month. Below-deck staff like cleaners and kitchen porters can earn well below the US hourly minimum wage but often triple the average wage in their countries of origin – often India, Indonesia, and the Philippines, where average wages are around two dollars an hour. Combined with free room and board, jobs aboard cruise ships are attractive to people from low-wage countries. This allows the cruise industry to hire selectively from a large pool of workers.
But it is not all plain sailing. Anyone aboard, crew and passengers alike, who commits a serious crime while in international waters could end up in a Bahamian prison, where prisoners are often crammed six to a cell without mattresses or flushing toilets. Cruise ship workers have the right to work and reside onboard for as long as their employment lasts, but do not have an unqualified right to remain if they lose their job or commit a crime. Because they hire from a range of poorer countries, cruise ships tend to be diverse in nationality, race, and culture and highly unequal in wealth, with large disparity between the lowest-paid staff and both the wealthy guests and better-remunerated Western workers.
Blanket CCTV coverage onboard provides reassurance that lawbreakers will be caught and ejected from the ship or thrown into the next port’s prison cell. Workers value their opportunities onboard and selective hiring filters out most untrustworthy applicants. On land, inequality and diversity are often purported to increase crime rates, but the incidence of serious crimes on cruise ships is estimated to be about 30 times lower than in the average US city.
Density and agglomeration help to reduce costs
Large cruise ships are built to take advantage of dense living and agglomeration. Even on a ship as large as Icon, travel from a cabin to anywhere else on the ship is designed to take no more than ten minutes and to be accessible to people in wheelchairs or mobility scooters. Cramming 5,000 people onto a ship brings competition for sunbeds, but also allows for a dense number of other amenities. For evening entertainment, a large land-based Canarian hotel like Radisson Blu, Lanzarote, can offer live music from local musicians to play for a crowd of dozens in a bar area. P&O’s Iona, docked in Lanzarote for the day, can secure West End–style acts like the official Take That musical, in a 1,000-seat tiered theater spanning two decks.
Some find the idea of life at such high density unappealing, comparing the 20 decks of Icon of the Seas to ‘human lasagne’. But even older people, often seen as the biggest skeptics of high density living, enjoy cruise ships’ walkable, high-density, and diverse environments. Safety and accessibility may be the real concerns people have with urban living, rather than density or diversity per se.
Conclusion
The cruise industry is often derided as unfashionable and criticized for its environmental footprint, but it continues to thrive and offers valuable insights into how dense, diverse urban environments can be attractive even to elderly visitors.
The industry is producing some of the most impressive pieces of large physical infrastructure this century. European shipbuilders are constructing ever-larger, more sophisticated and luxurious ships without the rocketing costs and permitting obstacles that face new land-based infrastructure.
The growth of the cruise industry probably doesn’t mean we can just up sticks and start new societies at sea: seasteading has failed to take off, attempts to build new towns in remote locations usually fail, and charter cities have faced serious legal challenges. What the cruise industry’s rapid progress does illustrate is that stagnation is not inevitable. We haven’t lost our ability to build at scale or to create safe, dense, walkable urban environments that are filled with amenities. On the high seas, at least, a bigger and better world is possible.