It turned out that the complexity of the order for the construction of trawler Barents Sea for the North-West Fishing Consortium was 40% higher than planned.
Foreign design projects and foreign equipment are believed to be the main problem causing rising costs and construction delays in Russia. As Alexander Soloviev explained, fishing vessels in Russia are being built to 16 different design projects, most of which are Norwegian.
The Federal Agency for Fisheries had repeatedly raised hopes that Russian designers would gain experience in adjusting foreign design projects to the Russian Register of Shipping’s requirements, after which they would offer their own products to Russian fishermen.
Alexey Rakhmanov, general director of USC, speaking in July of 2021, stressed that foreign concepts envisage the use of foreign equipment, including propulsion, deck equipment, and fishing gear. He stressed that localisation would not only let shipyards avoid delays but would also cut production costs.
Import replacement looks inevitable
The Russian government is mulling plans to embark on an import-replacement campaign in the fishing industry to cut dependence on foreign equipment and fishing gear. These plans are now being widely discussed in the fishing community.
Alexander Sapozhnikov, general director of the Russian Crab group of companies, commented that he is positive about the idea of raising localisation targets.
‘Russian shipbuilding should not depend on imports. Fishermen want a highly productive and safe fishing fleet, as well as high-quality ship repair,’ he said, adding that this task is complicated – but necessary.
‘As part of the investment programme, we have opted for Russian manufacturers of power supply systems, equipment for fuel systems, fire extinguishing systems, alarm systems, potable water systems, as well as hull materials, cables, coatings, and hull materials to outfit our vessels.’
Russian Crab is considering increasing still further the level of localisation of general and technical equipment, some elements of the propulsion systems, which have already been mastered by the Russian engineering industry, according to Alexander Sapozhnikov.
He admitted that matching the 50% localisation target would be challenging since most of the ship equipment for fishing vessels is either not produced in Russia at all, or exists in the form of prototypes.
‘For ships operating in Arctic latitudes, far from coastal technical bases, the reliability of equipment operation is critically important. In addition, this [higher localization] requirement will significantly increase the project costs – now the difference in the cost of imported and Russian equipment increases the cost of building a vessel by about €0.5-1 million,’ he said.
Still, import dependence in the fishing industry must be addressed. As Alexander Sapozhnikov explained, main engines and diesel generators, gearboxes, refrigeration compressors, radio navigation equipment, equipment for improving the environmental friendliness – all this is still produced abroad.
‘Accelerating import substitution of marine equipment would be facilitated by state support, starting serial production, as well as the desire of Russian science and industry to advance the development of their skills,’ he said.
Discussions about import substitution for the fishing industry have been taking place for more than a year, said Ilya Cheglakov, director of the Russian fishing gear company Fishering Service, adding that this concerns not only ship equipment but also fishing gear and fish-finding equipment.
‘One idea envisages the use of only Russian fishing gear in the Russian [special economic] zone,’ Ilya Cheglakov said.
‘Another idea involves subjecting ships entering a port with new foreign fishing gear to import duties,’ he said, explaining there is a widespread practice in which a trawl is purchased in Korea or delivered to a port in Korea where a trawler calls for repairs.
‘As a result, the owner does not pay import duties on fishing gear,’ he said and commented that basically, there is already more than one import substitution project in the fishing equipment industry. Fishering Service has been developing fishing gear production in Kaliningrad for some years, supplying not only Russian companies but also, exporting production.
‘The problem is that with the introduction of such restrictions, we could get [similar] counter measures from foreign states. As a result, fishing gear exports could actually be ended,’ Ilya Cheglakov said.
‘It’s easy to introduce restrictions, but this requires political will and understanding of the ultimate goal – why introduce these restrictions? If we talk about import substitution in shipbuilding, the goal is clear, and the transition period of 10-15 years is quite sufficient for such a transition.’
As Ilya Cheglakov explained, in the fishing gear sector, the solution could be similar, but there are no concrete plans yet approved by government.
He added that in his opinion, there has been no clear development strategy in the country in the field of research and development of new fishing gear. In such a context, taking any steps aimed at import substitution could be risky.
‘The country embarks on many regulatory restrictions that do not help the introduction of new technologies and limit the possibility of private research with a completely insufficient amount of public research,’ he said, commenting that ultimately, Russian fishing companies could completely lose some of these modern fishing technologies, without receiving adequate replacements.
‘In pelagic fishing gear, serious scientific developments are being carried out only by our company. In other areas of the fishing industry, the picture is way worse,’ he added.