India’s big catch

India’s seafood export has been registering continuous growth and seaports are coming in a big way to boost the trade. However, there is a need to address some challenges like development of reefer container services and exporters’ concerns about high freight rates. Jasleen Kaur...

There is always an ocean to be trapped,” said India’s agriculture minister Radha Mohan Singh on the World Fisheries Day in November 2014, suggesting that fisheries can be an engine of growth due to high growth rates of 7.9 percent in inland fisheries the year before. He added that India ranks world number two in fish production and is also the second highest aquaculture country in the world. “India with a fishermen population of 14.5 million and a coastal line of 8,118 kilometers can rise to be a major player in the world fisheries. India also has a fleet of 200,000 fishing vessels and India’s seafood export is worth $5 billion,” Singh said. The contribution of fisheries to India’s GDP is around 1.4 percent. From 0.75 million tonnes in 1950, the fishery sector has grown to the production level of 6.4 million tonnes worth Rs 320,000 million, and an export of nearly Rs 70,000 million. The target is to increase the fish production from the current level of 60 lakh tonnes to about 95 lakhs tonnes by 2020. According to the minister, the country is poised to usher in a Blue Revolution to tap the huge potential of aqua resources in the country. According to The Marine Products Export Development Authority (MPEDA), during the financial year 2013-14, exports of marine products reached an all-time high of $5,007.70 million. Exports aggregated to 983,756 tonnes valued at $5,007.70 million. Compared to the previous year, seafood exports recorded a growth of 5.98 percent in quantity, 60.23 percent in rupee and 42.6 percent growth in dollar earnings respectively. Frozen shrimp continued to be the major export value item accounting for a share of 64.12 percent of the total dollar earnings. The US is the largest market (95,927 MTs) for frozen shrimps exports in quantity terms followed by European Union (73,487 MTs), South East Asia (52,533 MTs) and Japan (28,719 MTs). Fish, has retained its position as the principal export item in quantity terms and the second largest export item in value terms, accounting for a share of about 32.97 percent in quantity and 14.15 percent in dollar earnings. Ports coming in big way As per the MPEDA figures, exports improved from Visakhapatnam (Vizag), Chennai, Krishnapatnam, Tuticorin and Mangalore ports compared to the corresponding period during the last year. Pipavav is the major port in terms of quantity (25.27 percent) and Vizag is the major port in terms of dollar value (22.59 percent). In 2014, Vizag emerged as the leading port in marine exports by realising 23 percent share in terms of value and 22 percent in dollar realisation from April to December 2013. Exports through the port in rupee terms were Rs 4,951 crores, whereas during the corresponding period last year was Rs 2,617 crores. According to M T Krishnan Babu, Chairman, Visakhapatnam Port Trust, sea food exports have been a major contributor since the start of container shipping at Visakhapatnam. In the beginning, Japan was the principal buyer of the product, and later the US and West European countries took turns in taking the prime position. Today, apart from the above mentioned destinations, seafood is exported to China, South East Asia and to the Middle East. The catch of the seafood exports from Vizag comes from Bhubaneswar, Cuttack, Vizag and Bhimavaram. As a part of initiatives taken up by the terminal to boost the trade, Visakha Container Terminal (VCT) had extended free-days for storage of containers. VCT is fully equipped to store, plug and monitor the reefers with the help of 132 reefer plugs and competent and experienced reefer technicians. In addition, the terminal also has a backup generator of 1250 KVA capacity to attend to any unforeseen disruption in power supply. Pipavav is the leading port through which exports were made in terms of quantity (21 percent) during the period. The port handled 1.46 lakh tonnes, fetching revenue of Rs 2,075 crores. The figures released by MPEDA reveal that seafood exports through the major ports of Vizag, Chennai, Tuticorin and Mangalore have shown a marginal improvement during the period. Exports through Kochi port also witnessed a marked improvement, with value-wise exports touching Rs 3,297 crore, constituting a 15 percent share in the total seafood exports of Rs 21,829 crores. However, there was not much difference in the quantity of exports through the port compared to the corresponding period, with figures at 1.21 lakh tonnes against 1.26 lakh tonnes in April to December 2012.

Reefer container Last year, Paradip Port started refrigerated container service in Bhubaneshwar, which brought a reason to cheer for seafood exporters. Seafood exporters were undergoing several difficulties by exporting through Kolkata and Vizag port which are 500 kilometers away. However, there are some challenges prevailing in reefer container service. For the maritime industry, refrigerated cargo is lucrative. As a refrigerated container costs nearly six times as much as a dry container to fabricate and maintain, but freight rates for refrigerated cargo are nearly 3.5 times that for ordinary dry cargo. “The additional cost (extra freight rates) involved in shipping reefer cargo compared with the nonperishable cargo - freight of reefer container is 5 to 6 times more than a normal container. Even the port charges are 5-6 times higher,” said Harpreet Singh Malhotra, Chairman & Managing Director of Tiger Logistics. Most of the ports of the country including Nhava Sheva, Pipavav, Mundra, Krishnapatnam, Vizag and Kolkata Port have adequate infrastructure to support the burgeoning reefer cargo segment. Even the inland container depots have also developed reefer infrastructure to support the growth momentum. “Vizag Port has a dedicated yard for reefer containers at the Visakha Container Terminal with 192 plug points with capacity to handle double the present reefer volumes. VCT offers pre-trip inspection (PTI) facility inside the terminal, saving cost for shipping lines. Besides, it provides more-than-required power back-up ensuring that there is no power shortage at any given point of time and 24x7 temperature monitoring,” said Krishnan Babu from Visakhapatnam Port Trust. “When it comes to temperature-controlled goods, a dedicated team looks after the complete shipment. We have to ensure that even during inland transport temperature has to be maintained in container otherwise it may lead to cargo damage,” Malhotra of Tiger Logistics said adding that “We also have to make sure that containers are working properly at the time of gate-in and pick up as incase of any malfunction it has to be dealt then and there. Because of the multiple parties involved the responsibility continues to shift from one service provider to another.”

The challenge of cost All the shipping lines operating from Indian coasts have unilaterally announced an increase of $1,500 in freezer container freight rates irrespective of the size of the container and port of destination. All ocean freight carriers carrying goods to the US ports are required to file their tariff rates with Federal Maritime Commission (FMC). However, these rates are not the actual tariff collected from the shippers. The rates vary from shipper to shipper based on a special contract signed between individual shipper and the freight carrier. All other shippers will be subject to the open tariff rate filed with FMC. “The tariff rates between the contracted rate and the open tariff rate for the US East Coast may be as high as $1,500 or more. The lack of effective legislation for fixing the freight rates to specific destinations have contributed to this unhealthy practice of bargaining for the freight rates by the shippers. Application of an across the board increase of $1,500 for all destinations and sizes of containers clearly indicates that the increase has been applied without proper methodology, justification or without supportive documentation,” said A J Tharakan, president, Seafood Exporters Association of India. Moreover, the terminal handling charges at Indian ports have also been going up. A major hurdle faced by the seafood export industry in India is the exorbitant Terminal Handling Charges (THC) levied by Indian terminal operator. “Although the scale of rates for the THC is fixed by Tariff Authority for Major Ports (TAMP), the shipping services sector pays little heed to the regulatory body knowing fully well that no penal action will be taken against them. The THC in Indian ports today are very high compared to ports in the neighboring countries including Sri Lanka and the Middle East region,” Tharakan added.

The silver lining India has plans to double seafood exports to $10 billion by 2020, and the launch of the Blue Revolution is expected to play a key role in it. However, India does not have a consistent Deep Sea Fishing policy and faces increasing phyto-sanitary scrutiny in importing countries. Addressing these gaps and encouraging aquaculture will be crucial to help achieve the targets. Moreover, there is a need to focus on more infrastructural development and reducing high cost levied for terminal handling and container rates.