Superyacht transport responds to fuel challenges
Matt Penfold, managing director of Peters & May USA, explains the market in response to COVID and Ukraine…
Superyacht transportation and logistics is a complicated undertaking, in even the most idealised of circumstances. The fuel crises caused by the COVID pandemic and the Ukraine conflict have made the task even more convoluted, and frequently expensive. For an inside perspective, and an honest appraisal of the outlook, SuperyachtNews speaks with Matt Penfold, managing director of Peters & May USA, from his base in Ft Lauderdale.
Matt Penfold, managing director of Peters & May USA
The high fuel prices are the elephant in the container, as Penfold starts; “Fuel rates are going through the roof at the moment, Saudi Arabia has said that they are going to ramp up production to take some of the strain off it, but it is hard to predict the outcome. And who is to say that the US will get any of that oil anyway?”
“We call it the BAF levels for fuel,” Penfold continues (BAF represents the floating price level of fuel in ocean freight shipping and is typically updated on a quarterly basis) “Recently we have seen some fairly heavy increases coming in. As a transport and logistics company, we have the issue of having a lot of our business booked in advance, before these increases had come in. This is challenging for us and requires careful contractual clauses to mitigate the damage.”
This increase in fuel prices has the most direct, and, at least from a lay perspective, obvious implications for the cost of shipping and superyacht transport. However, the implications of the sanctions are more complex. “A lot of insurers have pulled out of the Black Sea region, for example,” explains Penfold. “Then there are also the actual restrictions on the yachts themselves if they have a Russian influence.”
Speaking with a range of industry stakeholders, with each interacting with the new restrictions and sanctions in a different way, has been illuminating. Penfold outlines a complicated potential situation for a yacht transporter such as Peters & May: “There has got to be more transparency at the moment. Yacht ownership is complex and hard to define. We are in a position whereby we may be transporting a full deck of yachts back to the Mediterranean, ready for a full charter season, and we find out that one of the yachts is a sanctioned individual. This may affect everyone on the ship and our ability to get into European waters. The costs involved may be huge.”
“We saw a large hike in shipping costs last year as a knock-on from the pandemic. Now that the world has started to open up, with restrictions weakening in a lot of countries, including America, people are still spending a lot of money.” In what may not be the most welcome news, we may be forced to prepare for a new baseline for shipping and yacht transportation costs. The demand for goods from Asia has led a lot of the large vessel owners to concentrate on the Asia routes because it can command such high freight rates, with the market approaching unsustainably height freight costs.
“People are just getting used to these prices, and now, obviously, in the face of all that has happened with Ukraine and Russia, people may have to readjust again," explains Penfold. "A general example that can be given is a 40ft container from Asia to here, Ft Lauderdale, used to coat around 3 thousand dollars. Now that same container may cost you 20,000.”
Yachts, especially sailing yachts, are not the most efficient use of space in a transportation context. The high cost of containers, when translated into the quote for a yacht, puts the market into context. “A year and a half ago, a 70-foot vessel probably cost you $70,000 USD to ship to the US on a liner vessel. Now, we’re struggling to get a quote below $300,000. It's embarrassing to quote at times, but it’s the reality of the market.” Says Penfold.
“Before the Russian Ukraine crisis" concludes Penfold, "we foresaw that we would probably be dealing with these high freight rates and low availability for the rest of 2022, with the market stabilising by 2023. However, this has disrupted all of that. The next few weeks will determine the fuel price, with it hinging on the next Saudi Arabian decision.”
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