German Zverev: “Fishing companies are ready to invest in new ships but it depends on shipbuilding”
Russia’s fishery segment embarks on large scale fleet renovation. German Zverev, President of the All-Russian Association of Fishing Industry, Businessmen and Exporters, tells IAA PortNews about this process and challenges thereof.
– Mr Zverev, Russian fishing companies annually catch about 5 million tonnes of aquatic bioresources with the top ten companies taking up 99% of all catch quotas. What is the main trend: will the consolidation continue in the future under the Segment Development Strategy till 2030?
– There are more than 4,000 fishing companies in Russia. Consolidation is the recent trend of the industry, indeed: large companies absorb smaller ones and create holdings. It is a positive trend. The consolidation has a synergetic effect.
The market is consolidating but small companies still exist. There is a need for them – they have a specific specialization. A lot of small companies are focused on catching a certain type of bioresources. They are quite stable being not subject to consolidation. A certain balance between large and small companies has been achieved already.
The process of merging was intense up to 2008 when quotas were set for a 10-year period. In my opinion, the process has slowed down over the recent decade. This year will see setting of quotas for the next 15 years. All companies wishing to acquire other ones have completed it and I don’t expect any large scale mergers.
– What is your opinion about the technical level of Russia’s fishery fleet?
– According to different estimates, the wear degree of Russia’s fishery fleet is about 90%. However, I would disagree. In 2017, average age of vessels was 30 y.o. Most of vessels operating today were built in 70-80-ies. However, the state of fishing fleet depends on company policy. If owners invest in their fleets, old but upgraded vessels are no less efficient as compared with new ones. That is the general trend throughout the country.
– What is the recent fleet renovation dynamics?
– The dynamics is slow. Between 2010 and 2015, the number of newly built fishing ships was 14. That is not enough. It is expected that the number of newbuildings will grow with the application of state support measures (investment quotas). When speaking at the International Fishery Forum (15 September 2017, Saint-Petersburg), Ilya Shestakov, head of Rosrybolovstvo (Russia’s Federal Agency for Fishery) said the following: 82 ships will be built in 2016-2024, 68 ships – in 2025-2030. Time will show if this state support mechanism proves its value.
– Large capacity trawlers for catching pollock and herring prevail in the country today. Is it reasonable to build vessels of medium capacity? Do the market needs correlate with the law on investment quotas?
– Medium - and large capacity vessels would contribute to the development of on-shore processing. If cooled catch was delivered by small- and medium size vessels the products could be processes by on-shore plants. Besides, state-of-the-art technologies of delivering live fish could be applied as well. Deputy Prime Minister Yury Trutnev has twice emphasized the necessity to build mid-size ships. In April 2018, RF Ministry of Agriculture submitted amendments to the draft order of RF Government with new objects of investments – У-type, a mid-size vessel (55 to 70 meters long) intended for catching pollock and herring in the Far East Basin.
– The “investment quota” campaign of 2017 numbered 33 applications for construction of fishing ships with total investments into the industry estimated at RUB 110 billion (24 applications for the Northern Region and 9 –for the Far East). Does it reflect the demands?
– Those figures reflect the specific features of fishery basins. Well developed on-shore processing in the Northern Basin cause the demand for small- and mid-size ships able to deliver live fish and cooled products to the on-shore processing plants. The geography matters as well. Cooled cod is delivered from the Northern Basin to Moscow. The Far East Basin is different. Pollock and herring are usually processed and frozen on board. Some investment quotas cover the construction of processing trawlers of 80 to 105 meters in length.
– The new phase of the campaign foresees the construction of about 20 small- and mid-size vessels as well as about six processing trawlers. Are the fishing companies ready to apply?
– I think they are quite ready. Some member companies of our Association have embarked on construction of fishing ships for the Northern Basin and are ready to continue with the construction of ships the Far East Basin. We have addressed the RF Government and Rosrybolovstvo with a request to include pollock and Pacific herring into the list of aquatic bioresources covered by investment quotas of 2018. We have been heard and the document has been drafted.
– Among the shipyards involved are Admiralteiskie Verfi, Yantar Shipyard, Vyborg Shipyard, Yaroslavsky Shipyard, Pella, Severnaya Verf. What determines the choice?
– First of all, the choice is determined by quite a limited proposal. To build fishing ships, especially large ones, a shipyard should have certain capacities and experience. Unfortunately, Russian shipyards do not fully comply with those requirements. Well-known Russian Fishery Holding (RRPK) has placed an order for a series of six large capacity vessels having announced that the lead ship will be built outside Russia.
– Why doesn’t the list include Far East shipyards?
– They do not have the required capacity. At the last year’s Eastern Economic Forum Primorsky Territory Administration and Pella signed an agreement on construction of a shipyard in Primorye. Yet, the shipyard will be able to build vessels of up to 80 meters in length.
– Does the ship repair industry of Russia meet the demands of fishing companies?
– It absolutely does not. The government has just approached this issue.
– The head of Rosrybolovstvo has recently announced the plans on construction of three “conceptually new” research ships with total cost of RUB 10 billion. Is it necessary?
– It is necessary, of course, to monitor the reserves of aquatic bioresources, to study promising target species like sardine and mackerel. The existing research ships are both worn-out and obsolete.
Interviewed by Yevgeny Pankratyev