With war now raging in Ukraine and international governments posing heavy sanctions on Russian companies and oligarchs, questions are being raised about how this war in Europe may impact the superyacht industry. With superyacht crew already being displaced and the supply chain coming under pressure, we take a look at the possible toll on the superyacht industry and all of those who work within it.

Russian owners made up 9% of all superyacht owners in 2021, making them the second largest ownership country behind the United States. While by region Eastern European owners, including Russian and Ukrainian, make up 18%. Russian owners are also the second largest owners of new-build yachts, with 13.2% of the market share of new-build superyachts over 40 metres in 2021-2025 (according to SYT iQ). The Head of Intelligence at SYT wrote in 2021: “The US, Russia, Turkey and the UK remain the most important buyer nations for in-build superyachts over 40 metres,” and this is thrown into a stark light when we consider the possible impact of this war on the yachting industry.

With 9% of the market share and some of the largest superyachts in the world (14.7% by volume in 2021), clearly their financial contribution to the industry is significant, particularly in the case of Northern European shipyards. As further sanctions are introduced, will they be able to continue the build of yachts due for launch in the coming years? If not, will we see a number of partially completed 60 metre-plus hulls returning to the market in an echoing of the events following the 2008 financial crisis? There is also an ethical question here about whether shipbuilders will choose to continue their work with Russian owners.

But it is not only the new-build market that could be hit. As yachts prepare to return to the water in the coming months ahead of the Mediterranean season, some are speculating that refit yards will be burdened with yachts whose refits have not been paid for. As of today, a number of the largest Russian yachts in the world are sitting in harbours and shipyards across the Mediterranean and questions about their possible seizure continue to raise concerns.

Brokers are also concerned about the knock-on impact this could have on the market as a whole, and whether uncertainty about the world economy will make potential owners more cautious of investing in superyachts.

So what are the sanctions and how else could they impact yachting?

While the list and severity of sanctions on Russia are changing, the nations within NATO and the EU, as well as Japan, Switzerland, Australia and Taiwan, have all hit Russia with injunctions. Among the most severe sanctions is the banning of the Russian banks from the SWIFT payment network. As a consequence the Russian stock market and currency has plummeted, with the Ruble dropping by more than 30% in value. 

While this is happening, many countries are freezing the assets of Russian owned companies and oligarchs. The White House tweeted this statement on Wednesday "This coming week, we will launch a multilateral Trans-Atlantic task force to identify, hunt down, and freeze the assets of sanctioned Russian companies and oligarchs - their yachts, their mansions, and any other ill-gotten gains that we can find and freeze under the law." As a result, many Russian-owned superyachts are leaving contentious waters and heading for locations where they are less likely to face seizure, including the Maldives. 

As these actions progress they could impact the charter market, where a number of Russian owned vessels are among the most coveted charter yachts in the world. A discussion currently on the table among charter brokers is whether owners will put yachts into charter in order to pay crew and vessel fees. Whether charterers will wish to charter Russian-owned yachts is another question.

On the ground

Recent events have raised concerns about the position of superyacht crew, many of whom come from Eastern Europe and may have family and friends directly impacted by the war. We have already seen a Ukrainian crew member act against a Russian owner this week when the chief engineer aboard Lady Anastasia opened the sea valves in an attempt to sink the 47.73-metre vessel. Elsewhere stories are emerging of yachts being abandoned by crew.

There are also questions being raised about how best to protect crew working on Russian and Ukrainian yachts in the case of owners falling into financial difficulties. The Nautilus International institute, the union for seafarers, is urging crew members to get in touch in the case that sanctions imposed on owners impact their salaries. 

Beyond possible payment issues caused by sanctions, it is also likely that crew from all over the world will no longer wish to work on Russian owned yachts. Facebook groups dedicated to Russian-speaking crew have been inundated with messages of support for Ukrainian colleagues, but also with Russian crew looking for new positions. One Facebook group called ‘Russian speaking yacht crew’ has shut down, with the founder citing “In light of recent events, this group should no longer exist.” 

Crewing agencies have widely bemoaned the lack of experienced crew over the past year; the possibility that Russian owned yachts will have even greater difficulty finding crew members raises concerns about whether some yachts will be operable. Crew safety is also in question and the publication of yacht owners’ occupations, home addresses and yacht names is adding kindling to the flames. With vandalisation of Russian owned assets beginning to be seen, some crew members may be at risk. 

With the condemnation of Russian supporters being widely shared across the globe and international corporations shutting down business with Russia, other firms have begun to boycott Russian owned yachts. Stories are emerging of companies refusing to distribute supplies to superyachts. If true, this will impact those yachts put into charter as owners and management teams attempt to use charter as a means to allay costs. 

While this story continues to develop, the implications – both ethical and practical – for the superyacht industry and all those who work within it will become pronounced and possibly more divisive.