New projects over 24 metres?
According to reports in December 2019 the global superyacht industry paused for breath with only 807 projects over 24 metres ordered (with deposit taken) against the 830 orders recorded in 2018. This slight dip can be interpreted in different ways:
- On one hand some reports saw it as a welcome steadiness of a potentially overheating industry
- On the other hand, others saw this reduction as an indication that customers and shipyards are bracing against macroeconomic headwinds.
During the year 2020 and due to the pandemic situation, many manufacturers have cancelled orders and several builders have managed to remain opened, particularly those who have military contracts.
Yacht sales during Covid 19
Many yachts that were used for charter in many destina- tions like the Balearic Islands are currently on sale due to the restrictions and high cost of mooring. Sales are looking slightly positive and they are looking to recover once the market is up and running. Some reports defend that for those who are looking to buy, now could be a good time as in general there is a 20 to 30% reduction on their usual price.
Covid 19 and its effects on yacht chartering
With most of Europe in quarantine and travel restrictions (some still in place) the summer 2020 is looking negative for the charter industry. Some experts predict that the situation could change in September subject to another outbreak of the disease. This pandemic situation could change the future of the yacht charter and there could be a much higher need for refundable bookings and added clauses in contracts and policies.
How has the pandemic situation affected crew changes and yacht captains’ enrolments?
Normally the yachting season starts in April. This is when captains and crew members start their job hunt all over the world. Due to this pandemic situation, yacht crews have not been able to get hired. At the same time, many superyacht crew members have been trapped on their vessels after lockdowns and travel bans were instated by their jurisdictions. The MLC (Maritime Labour Convention) as well as employment agreements and nation- al legislations, require owners of those yachts where de convention is applied, to provide their crew with adequate measures in order to protect their health.
Covid 19’s effects on Yacht building, refit and repair
The current circumstances will detonate a force majeure event in many yacht building and refit contracts. We need to remember that in general shipyards are not automatically entitled to claim a permissible delay and they will be asked to demonstrate the impact of the situation in every project as well as justify the reasons for the delay. Some legal counsels have recommended shipyards, to keep what they call a real-time, daily records of how each project is affected.
Top-tier builders and countries:
Azimut-Benetti continues to be the world’s largest shipyard, with roughly more than 3.5 km under construction ordered and since December 2019 it also has the most hulls in its order book.
Italy as a country remains in first place however with a slight decrease. Due to the pandemic situation in Italy, many shipyards have been bound to paralyze their projects. A clear example of this happened to Castoldi how- ever, recently due to some military contracts, obtained permission to operate again.
On the other hand, we have the example of the Ukraine largely unaffected by Covid 19, and the example of Brig HQ’s production is operating fully.
How will the pandemic situation affect the insurance market for megayachts?
- The marine equivalent to a possible business interruption insurance (especially for Charterers) would be Loss of Hire (LoH), however this type of insurance is not commonly procured in yachting as in general, LoH is only triggered by a physical/property damage event.
- Independently of Covid 19 the market continues to harden with rises in premium between 15%-30%. Very few risks have escaped these increases.
- Some Underwriters have expressed concerns that due to the international travel restrictions unfamiliarised officers will join and navigate large yachts this summer which they will not be sufficiently familiar with, potentially leading to increased casualties.
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