The changing seasons have always played a big role in shaping how we operate. The term “seasonality” in our supply chain simply means the ebb and flow of yacht and service demand throughout the year, like the surge in summer when yacht charters are at their peak.
While it’s natural to think of yachting as a seasonal pastime, this pattern brings its own set of headaches and hinders our growth and sustainability.
Let’s talk supply chain management in yachting.
Recently, BOATPro reported a dip in yacht sales during the first quarter of 2024 compared to previous years. Yet, some market segments have bucked this trend. Experts believe these numbers don’t paint the full picture, especially now that the industry seems to be moving away from predictable seasonal spikes towards sporadic bursts of activity.
The supply chain issues we’re facing aren’t just about fluctuating demand. The entire yachting industry, from builders and suppliers to maintenance teams, has been hit by the aftershocks of the pandemic. The pandemic highlighted the fragility of the supply chain, with raw material availability and prices for items like copper, engines, microprocessors, resin, stainless steel, and steel experiencing significant spikes. For instance, The Superyacht Report’s New Build Focus edition 220 noted that the top five engine manufacturers (MTU, Caterpillar, MAN, Cummins, Volvo) held 95% of the market share from 2000 to 2023. This concentration makes it clear how disruptions in parts or shifts in demand can impact the global fleet.
To tackle these issues, we need to rethink our approach. Shifting away from a seasonal mindset to focus on sustainability and efficiency is crucial. This means embracing continuous improvement, fostering innovation, and encouraging collaboration across the industry.
Around the world, shipbuilding hubs each bring their own unique strengths to the table. Whether it’s China, Germany, Italy, the Netherlands, Poland, or Turkey, these regions have carved out their niches. Take the Dutch, for example—they don’t just shine in crafting and designing superyachts, but also excel in refit and maintenance.
Building a yacht is no small feat. From sourcing raw materials to ensuring on-time delivery, managing resources like labour and machinery, and meeting strict quality standards, it’s a complex feat. Each yacht requires a multitude of manufacturing steps, some sequential and others that can happen concurrently. Adding to the complexity are constraints like time, physical space in the shipyard, and the availability of skilled tradespeople who can work on the project simultaneously.
Forecasting demand is crucial for supply chain management and planning. However, it is a tricky business influenced by seasonality, customs procedures, diverse regulations, marketing impacts, geopolitical tensions, economic ups and downs, trends, unexpected crises, weather changes, and competitor actions.
One of the key challenges lies in the intricacy of supply chains and the limited access superyacht companies have to comprehensive data, often restricted to export and sales reports. Leveraging these insights could provide a competitive edge, particularly in ensuring smooth supply chain operations and strategic marketing planning to accommodate seasonal demand shifts.
Sustainability is becoming an ever-growing priority in yacht building. European shipbuilders are now tasked with sourcing eco-friendly materials, minimising waste, and adhering to strict emissions regulations to reduce their environmental footprint. A 2023 sustainability report by the MB92 Group revealed that within their supplier network, 82% already had sustainability plans in place. However, the survey also found that 50% of suppliers lacked mechanisms to assess the impact of their activities, and 75% had no way to measure their own suppliers’ environmental impact.
The limited progress made by the supply chains of some equipment makers is also another key challenge. Industry players do however show strong interest in a broader assessment of their impact, with regard to Environmental, Social and Governance (ESG) criteria.
Tackling Supply Chain Inefficiencies Caused by Seasonality in Yachting
One major reason to address seasonality in the yachting industry’s supply chain is its impact on costs and pricing. During peak seasons, when the demand for yachts and related services soars, prices tend to rise as businesses strive to capitalise on the surge. This can lead to inflated costs for consumers and challenges in managing overheads for businesses.
By mitigating seasonality and advocating for fair and transparent pricing practices, businesses can build trust and loyalty among customers while maintaining operational efficiency during off-peak periods.
Seasonality also disrupts the supply chain, causing inefficiencies and bottlenecks that delay the delivery of yachts and services. Suppliers and vendors can struggle to keep up with demand, leading to delays and quality issues that can ultimately affect customer satisfaction and the industry’s reputation.
IGY Marinas illustrates that enhancing occupancy during the shoulder periods (both pre- and post-season) through special offers, events, and unique location benefits is a key strategy to counteract seasonal fluctuations. Increasing occupancy during quieter times benefits both charter and private vessel itineraries, boosts local economies by promoting longer vessel stays, and expands the range of superyacht-related products, services and refit projects available during these periods.
Moreover, seasonality causes economic disruption by creating uneven cash flows and market unpredictability, leading to financial losses and decreased stakeholder confidence. Businesses may struggle to maintain a stable workforce amid fluctuating demand, resulting in job losses and insecurity for skilled professionals. Addressing these challenges can help stabilise the industry and promote sustainable growth.
Understanding Consumer Seasonality and Its Impact on Sustainability
Seasons can be the bane of sustainability, and not just from a climate perspective. Since the pandemic, more yacht owners want to arrive at their vessels ready to go, with all necessary services and maintenance already completed. This shift has led to businesses driven by consumer demand for seasonal operations.
Yacht owners might not see their vessels as seasonal assets, given the year-round costs of ownership. However, service delivery in the yachting world is heavily influenced by seasonal demand, particularly in the charter sector. This can lead to inefficiencies, with businesses ramping up operations during peak times and scaling back when demand is low. Such seasonality not only affects business profits but also strains the entire supply chain.
Looking ahead, the next generation of yacht owners may be more interested in the lifestyle and experiences their vessels offer rather than just year-round ownership. The yacht charter market is already popular, allowing clients to enjoy the yachting lifestyle without the ongoing responsibilities of maintenance and refits.
There’s a deeper issue at play here, tied to our modern, mobile world where people can move freely and live independently of the seasons. Shifting away from seasonal thinking is essential, as it inflates costs, disrupts economies, puts pressure on supply chains, and leads to unfair pricing practices.
As an industry, we need to understand the core intentions of every business, foster strong partnerships with suppliers and vendors, and address service supply chain challenges. By doing so, we can create a more sustainable and efficient yachting industry for everyone.
We, at SEA Yacht Group, would like to hear your perspective about seasonal thinking and efficiencies in the supply chain in the yachting industry. Leave us a comment, or reach out to us via social media.
Author: Malcolm Moss | CEO & Founder of SEA Yacht Group
