The full-service shipyard
Are larger service propositions the answer to client retention and satisfaction?
Is the intersection between new-build shipyards and brokers becoming the superyacht industry’s most interesting battleground? With shipyards understandably looking to expand their service models to include ever more brokerage, are owners now able to benefit from the ideal turnkey solution, or is the market losing its objectivity as the shipyards continue to grow in size, power and influence?
While by no means a new concept, the notion of the ownership lifecycle and the management thereof has become an increasingly fashionable subject throughout the market in recent years. The theory is quite simple: in an industry that is primarily reliant on repeat business, one of the more effective ways to guarantee future income is to ensure that there are as many client touchpoints as possible throughout the superyacht lifecycle, thereby ensuring all business runs through a single entity and negating the ability of competitors to enter said lifecycle. It is at least partially for this reason that so many new-build shipyards are increasingly entering the refit and brokerage markets and why so many brokerage houses are looking to expand, both in terms of size and service breadth.
From the shipyard perspective, the first major move was to declare themselves open for refit. How this change in model has been applied has varied from yard to yard. In some instances, the new-build yards have only opened their doors to refitting projects that they themselves built, frequently using the ‘Mercedes Benz garage’ analogy to justify why owners, captains and other stakeholders should opt to return the vessel to its original place of build and delivery. Other shipyards, however, have made it clear that they are willing to conduct competitively priced refits on their competitors builds as a means of trying to turn owners towards conducting their next project at said yard.
The decision to conduct refits as a means of ‘balancing the books’ throughout a period that was largely characterised by unflattering and often declining new-build figures may seem like an obvious one, but it wasn’t really until the specialist refit yards started pushing the boundaries of refit that the new-build yards started to pay proper attention, at least publicly. However, such has been the growth of the fleet (as stagnant as the new build numbers may have seemed at times in recent years) that not too many eyebrows have been raised by the refit community because there is plenty of business to go around.
The same laissez-faire attitude, however, has not been applied to the desire on the part of new-build shipyards (or full-service shipyards) to increasingly control their own brokerage. Anecdotal evidence, at least, suggests that where new contracts are concerned the new-build shipyards are increasingly cutting brokers out of the deal and taking greater control of the process. The benefits of this are relatively clear for the shipyards. Firstly, those ‘pesky’ brokers’ commissions are no longer a concern, which may create more flexibility within the pricing model and bolster the opportunity for margin (and, to be fair, the shipyard should know the products better than anyone else). Through this model the shipyard becomes the primary point of contact for owners, very much buying into the idea of ownership lifecycle management. Furthermore, a number of shipyards are also growing their second-hand sales offering.
The success of this model is clear from the number of brokers and brokerage houses that have had their noses put out of joint. The full-service shipyard is a threat to the brokerage community, especially the houses where the majority of their fleet is production vessels. With the amount of information that is now available to buyers, rightly or wrongly, the sale of production vessels is becoming an off-the-shelf process, both in terms of new-build and second-hand sales.
There is, however, potentially a slight problem. The ceding of too much power to the shipyards removes the objectivity of the sales process. Good brokers act in the best interests of their clients and it is unfathomable that a shipyard can apply the same level of balance and objectivity to the sales process simply because they will only be promoting their own product. Perhaps, for experienced owners, the full-service shipyard poses less of a quandary, but for clients that are new to the market, you really can’t beat a good broker.
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