The Global Superyacht Forum opened positively, with an emphasis on ‘Superyacht 2030’ (an industry wide mission to reduce the carbon footprint of yachting) along with a discussion around the future of superyachts. Craig Allen covers the key themes from the event.
COP26 and other climate change topics were central to discussions throughout the Forum, with thought given to how the UHNWIs of the future will act in respect of their carbon footprint. The question remains, 'what can yachts do to improve their presence on the ocean and help our planet, while still being the leisure product they are designed to be?'
The carbon footprint of superyachts must be reduced, not by choice, but because new or existing legislation demands it. The shipping and aviation sectors are implementing new technologies into their products to reduce fuel consumption and carbon footprint by 2030 and there was much debate about how the yachting industry can adapt and learn from these sectors. Methods of propulsion such as biofuels, LNG, methanol, solar and battery power to increase efficiency and move reliance away from fossil fuels were discussed and workshops were formed so that groups could gather and share ideas.
Separately, discussions addressed the positive impact that Covid-19 had on the wealth and purchase profile of HNWIs. It is believed that the number of UHNWIs in the $30m bracket has increased by 27-30% in the past two years and this is likely to continue to rise.
While the increased wealth of this target market combined with low interest rates has resulted in a surge in demand for superyachts (despite shipping and raw material costs tripling), unfortunately the supply chain is struggling to keep up. This problem extends to other luxury assets too, such as second homes and private jets. (In fact, second-hand aircraft are selling at 5-15% above asking price). However, there is limited understanding of the taxation considerations, particularly due to changing tax rules in certain jurisdictions, and this is causing issues for owners who are unknowingly failing to comply. This is an area that requires specialist care when considering a high-end purchase.
Supply and demand
Ship builders are working hard to meet high demands. However, achieving the deadlines of current build contracts while costs are escalating is naturally affecting profit margins. On top of this, some raw materials are becoming scarce. Even some of the aluminium components required to bond the metal are becoming harder to source, which is affecting the production line.
It was noted that much consolidation of shipyards and brokerage supply chain is taking place. MarineMax’s recent acquisitions of Fraser Yachts and Northrop & Johnson has positioned them as a powerhouse in the yachting industry. It is likely that other small yards will also merge to share the cost of new processes, technologies and sustainable materials, providing them with the competitiveness they need to stay in the game.
With regards to marinas, they will need to play their part with new technologies and supplying sustainable fuels to the yachts of the future, as well as reducing their carbon footprint and ensuring responsible disposal of material, whether its recyclable or hazardous waste. A spokesperson from D-Marin advised that they have introduced solar energy to their marinas in Turkey, in order to reduce their reliance on grid networks. Marina representatives appear keen to provide sustainable fuels to yachts. However, with many yachts still using fossils fuels, the demand will need to increase before investment is made on a large scale. Understanding the costs associated with the infrastructure and training requirements is key, and shipyards implementing these new fuels will need to work alongside the marinas to achieve their shared goal.
Safety on board yachts was another topic of discussion and it certainly ruffled a few feathers within the insurance sector when the fact that private yachts under 500GT are not regulated or built to the same standards as commercial yachts of under 500GT was highlighted. Both Class and Flag states believed their standards are adequate and that any changes should be through the manufacturing industry as a whole.
The availability of crew is becoming an issue within the superyacht sector. This is possibly attributed to the limited hours of rest, living conditions and the amount of work involved, especially on smaller crewed yachts, where crew have more than one role to perform. Other sectors, such as hospitality, are perhaps perceived as more attractive. Moreover, shows like ‘Below Deck’ are not helping to promote crewing in a positive light.
In summary, the industry is booming and demand for superyachts is greater than ever. However, changes must be made to reduce emissions, make yachting greener and meet the expectations of the younger, more technologically and environmentally minded generation of UHNWIs in addition to promoting crewing as a career of choice to ensure that supply meets demand.