Yes, the application is tracking your movement on land but no location data is being logged in this scenario.
Also, the other members of the flotilla will not be able to see your location while on land.
The application needs to differentiate when the user is on land or on water in order to accurately log only nautical miles.
This way, your personal bests are always correct and the highest speed shown is actually from the period you spend on a boat not in a car for example.
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