Yacht Transport Issues in a Post Lockdown Economy

In the past few months we have seen shipping delays in the yacht transport industry lead to many issues and even litigation. The worldwide supply chain and shipping delays are not letting up in this post lockdown world. Economic uncertainty is growing daily, and shipping problems continue to escalate, especially with yachts. So how can you, as a professional in the industry or an owner seeking timely transport of your vessel, avoid unhappy customers and untenable delays? Read on.

In a time where the world is slowly transitioning back to normal, a prominent indicator of the lasting effects of Covid-19 era policies is revealed in the shipping industry. Factors such as shortages of workers needed to unload and transport cargo and surges in the demand for moving goods post-lockdown have continued to impact the global supply chain. The increased traffic exceeding the space available at docks along with shipping container shortages has led to a mass congestion of ships waiting to be unloaded at the ports. Routine delays in shipping as well as an increased cost in both freight rates and goods is the new normal.

During lockdowns, the yachting industry boomed as travel restrictions and mandates limited the accessibility of traditional vacationing. People increasingly saw the value in yachting given the less restrictive nature of traveling aboard one’s own ship, which has sparked a surge in purchases. More people are buying yachts than ever before. In fact, some research in the United States has shown a 300 percent increase in boat ownership since COVID restrictions were put in place. The supply and demand issue has seeped into the yacht world where materials used by boat manufacturers are growing scarcer and buyers are left waiting months and even years for deliveries of new purchases.

This boom in the yachting industry has implications for yacht transport as well given that the primary means of delivering new builds is via yacht transport. As demand continues to grow, owners and brokers are faced with prolonged periods for delivery as the shortages in crew members, space in transport ships and disruptions at ports continue.

What happens when a broker promises a delivery date for a yacht, but the vessel remains stranded on a transport ship for months? One unavoidable consequence is an unhappy owner. However, with foresight and strategic contract drafting, losses and litigation can be avoided. Remember, verbal contracts are enforceable and breach of a material term of a contract can amount to termination. If you verbally promised a delivery date and time is of the essence, failure to deliver the yacht by said date can amount to a breach and an unwanted lawsuit.

When making promises during the sales process, be careful agreeing to things that are outside your control. Strategic and precise contract drafting can help avoid otherwise unnecessary litigation. It is also important in this current shipping crises to anticipate potential issues that may arise and be up front with the buyer.

Besides contracting around these delays, what can you do to decrease potential logistical snags and ensure timely delivery? Say you are shipping your yacht to the Mediterranean to cruise for the summer and you need it to arrive within a particular window. You’ve hired a transport company and your contract provides you with a delivery window. You paid upfront and everything is set. Two weeks before delivery, you reach out to the transport company for an update and… crickets. A week goes by and you learn from the transport company that it has failed to secure a booking for your vessel. You request a full refund but don’t receive it. What do you do?   

Well in the above all too common and frustrating scenario, most yacht owners or captains book transport of yachts with transport companies known as Non-Vessel Operating Common Carriers (NVOCC). This is a type of shipping company that does not operate or own the shipping vessels itself, but rather purchases space from carriers and sells it to shippers. When booking through an NVOCC be sure to do your due diligence on the company, and check to make sure it is up to date on its licensing and bonding requirements. If the transport of the yacht brings it in or out of the United States, consider reaching out to the Federal Maritime Commission to see whether any complaints have been filed against the company. A little due diligence these days goes a long way! 

Yachting is a booming industry and by taking proactive measures, the post Covid-19 delays can be avoided and do not have to hinder your ability to enjoy what yachting has to offer.  

*This article is provided for informational purposes only and does not constitute legal advice. Please contact an attorney to discuss the specifics of your circumstance

Hannah McFarland is an attorney in the Litigation and Yacht Law Departments of Robert Allen Law, an international boutique law firm with a dynamic practice in the yachting industry.

Also written by Christina Caristo, a second-year law student at Florida International University College of Law and joins Robert Allen Law as a summer law clerk.