Global shipping has been through an interesting year in 2022. We saw a continued explosive increase in general shipping rates. This was caused by a combination of disturbed supply chains due to the coronavirus. The coronavirus created lack of port and supply chain workers who were home sick. Increased consumer demand supported by stimulus programmes around the world put great pressure on the available space on ships. This lack of available space was amplified by congestion in the main ports around the world. This meant that ships lay idle at ports awaiting discharge for as much as 4 weeks.
A relative minority of the yachts transported world-wide are dependent on shipping on container vessels. But those that are, saw their transport costs double. This of course was a big burden too for yachts produced in China. At Sevenstar we work hard to source alternative transport but this isn’t easy.
The lack of available tonnage to carry general goods in containers meant that some cargoes found their way to more conventional multi-purpose vessels (MPP). For example, the paper reels normally shipped in containers The fuel prices we saw in 2021 rose substantially in 2022. With fuel being around 60% of the operating costs of an ocean going vessel, this immediately influences the freight rates. And whilst fuel prices are now coming down it is unlikely we will see similar prices to those in 2020 and 2021 any time soon. found their way onto these MPP/General Cargo vessels. This meant a higher demand for MPPs and thus inevitably, their shipping rates started climbing fast too. These are the vessels mainly used for the carriage of yachts around the world. Recent months have seen these high vessel costs decline, but the current expectation is that they will start to increase again in the coming months.
The fuel prices we saw in 2021 rose substantially in 2022. With fuel being around 60% of the operating costs of an ocean going vessel, this immediately influences the freight rates. And whilst fuel prices are now coming down it is unlikely we will see similar prices to those in 2020 and 2021 any time soon.
EU EMISSIONS TRADING SCHEME
In 2024 the EU Emissions Trading Scheme (EU ETS) will come into effect. In practice this mean that ship owners must purchase rights to emit CO2. Currently the price is euro 70 per ton CO2. For a ship owner like ourselves this means the following per vessel.
30 tonnes heavy fuel oil per day equals 93 tonnes of CO2.
93 x 70 euro is €6,510 per day in additional cost when sailing between European ports. If the vessel is sailing to and from a European port this is halved.
Ocean going vessels are big, the numbers are big and whilst initially €6,510 doesn’t sound like a lot of money, a ship sails around 300 days a year. That means around €2 million per vessel in additional cost which of course needs to be covered by the freight rates that the cargoes pay.
Sevenstar Yacht Transport is part of the Spliethoff Group. A fantastic Dutch ship owner with a great history. But now imagine owning around 100 vessels, as we do, and having to deal with these new regulations and the additional cost. the Spliethoff Group has performed trials with Biofuels which limit the output of CO2. The network for Biofuels and other alternative fuels do however, need to expand globally and that is far from cost free. Meanwhile the Spliethoff Group has some new vessels in build which will sail on dual fuel. No meaningful progress without hard work and a bit of pain. Right?
HIGH DEMAND FOR VESSELS FOR THE WIND AND OFFSHORE WIND MARKET AS WELL AS OIL AND GAS PROJECTS.
The global demand for blades, nacelles, and other windmill equipment has been, and still is, growing substantially. In quantity but also in size. Windmill towers are getting much larger for better power output. This trend will continue to grow.
Just like yachts, wind blades and towers are often loaded on the deck of a cargo vessel and they require a lot of space. These wind cargoes often pay high freight charges since contracts for the delivery of the windmill equipment normally carry punitive late delivery penalties. In comparison to yachts, windmill equipment also is a much easier cargo to carry.
It is important to understand that the windmill industry is relatively new to the shipping market and due to its enormous growth, every year this wind segment is taking a larger part of the available space on board heavy lift and project vessels. This means that there is a high demand for the small fleet of heavy lift and project vessels needed to carry the windmill cargoes.
SO WHAT IS NEXT?
The glass of wine – We have touched on high demand, low vessel availability, high fuel prices, new regulations for emission costs and competing cargoes.
Is it just a lot of doom and gloom?
Sevenstar Yacht Transport is a global team of dedicated professionals. The costs for transport insurance have barely increased in the past few years as a result. Our premiums are 40% lower than the current industry standard. This saving is passed straight onto the clients. This is because of the high standards we set ourselves. It also means that Sevenstar Yacht Transport is the only shipping company whose high safety standards are recognised by Lloyd’s Register. All our cradles and securing devices are now officially certified.
Furthermore, transporting your yacht on a vessel is still an option which carries much less risk than sailing a yacht vast distances on their own keel with a delivery skipper. Wear and tear, engine hours, damage, weather delays and related costs mean that overall, yacht transport continues to be (in our view) a better means of getting your current or new yacht from A to B.
SO NOW IT IS UP TO YOU.
WHAT DO YOU DO?
WHAT CAN YOU DO?
LIVE A LITTLE!
If the last few years with an epidemic, lockdowns, missing family, no travel, war, energy crisis and now inflation have taught us anything, it should be that we don’t take time for granted. Time to enjoy ourselves, time to explore, have adventures, time to share with loved ones and to create memories and stories we can later tell our friends, whilst sharing a good bottle of wine in front of a roaring open fire.
When you find your dream yacht for sale in another corner of the world, we can bring her to you. If you are lucky enough to already own your dream yacht, we can take her to a new cruising ground for you. There is so much out there to discover and experience. From Asia and Australia to the West Coast and East Coast of the USA.
Whatever the shipping rates may do or what other challenges we have to face, we will fight your corner. Shipping yachts is what we do. It is something we feel deeply connected with and love doing.
Time to open google maps and zoom out. Or dust off that old atlas and don’t forget to sniff that musty smell. Pick a destination, have a chat with us, and don’t forget to tell us about your adventures over that glass of wine.