Baltic Sea maritime transportation: the struggle is not yet over
By Michael Tuzhikov
As soon as the Baltic States join the EU, in favorable transportation position would be the companies and the countries that can organize good ferry lines.
The world maritime lines transported 4 billion tons of various foreign trade cargoes in 1990, already in 2000 there were more than 5 billion tons, and in 2020 the increase in the turnover of goods is expected to reach 6 billion tons. If that prediction is correct, then it means 1 ton of sea transportations for each citizen in the world.
Ferry routes on The Baltic Sea.
Scandinavian monopoly in the region
Considering that combined population in the countries surrounding the Baltic Sea is about 85 million people, then favorable perspectives of sea transportation development are becoming quite obvious. Moreover, the leaders already have been defined in the field of regional transportation service, i.e. Denmark and Sweden, the countries with the highest European income distribution and wide middle class with a purchasing capacity of about 34,5 thousand dollars per capita a year. Thus, the region turns into a huge market of commodities and services. Suffice it to say that annual economic benefits in the Baltic Sea container maritime transportation is estimated by experts at 4 million TEU (20-ft equivalent containers). In 2002 ferry passangers’ transportation between Karlshamn in Sweden and the new Baltic States have increased by 60%, without taking into account automobile and railway ferry lines.
Intricate development is taking place around the issue of ferry transportation, aimed to provide goods delivery for this sub-region. One can note a certain trend: Scandinavian countries are trying already to monopolize ferry transportation market. And as soon as Sweden and Finland “cover” all transport services in the transport corridor between eastern and western parts of the Baltic Sea, they do not need any competitors. A ferry route between Stockholm and Turku/Helsinki alone transports about 200.000 trailers a year. This ferry line’s increas in transportation facilities is more than 10% a year.
The second ferry in line by volume of auto-trailers’ transportation is the route “Helsinki-Tallinn” which transports about 70.000 trailers a year. The third is a ferry line “Stockholm-Tallinn” which handles approximately 25.000 trailers a year. Ferry transportations between southern Sweden, Denmark and Germany transports more than 800.000 trailers a year.
The passenger’s ferry communication is quickly developing as well: 17 million passengers use this kind of maritime transportation a year.
There are in total 22 maritime transportation companies in the Baltic Sea region from 9 countries, carrying both passengers and cargoes on 83 ferryboats.
Cargo transportation is the main perspective
After the EU legislation provided a couple of years ago for closure of duty-free shops on passenger ferry-lines, the shipowners moved to another direction, i.e. development of freight transportation. Although ferry companies Silja Line and Viking Line continue to transport passengers, having about 2 - 2,5 thousand places in their cabins, the Greek shipyards are building new ferries aimed at transportation of buses, trailers and personal cars. Thus, new type of ferries, i.e. Superfast Ferries are built according to passenger-freight transportation version. The number of places in cabins on those 10-decks’ ships does not exceed 1000 places, but the total length of cargo decks is about 2 kms (enough for140 lorries). Such ferries can develop a maximal speed of 30,4 knots (56,3 km per hour). The speed factor reflects a new trend in ferry transportation development.
It is necessary to mention that out of three Danish matitime transportation companies, i.e. DFDS Tor Line, DFDS Transport, and DFDS Seaways, only one ferry company DFDS Tor Line works in the Baltic Sea: from Lithuania to Sweden and Germany, and from Latvia, so far, only to Germany. Other Danish ferries work in Northern Sea and in the Atlantics (towards e.g. Norway, the Great Britain etc.). And we have here a strange situation: the new Baltic States want to increase ferry fleet while Denmark, on the contrary, does not know how to get rid of it. The matter of fact is that with the construction in the year 2000 of Oresund Bridge connecting Denmark and Sweden, Danes faced a problem of how to use the ferries that they did not need any more. Now the Danish shipowners want to expand to the eastern market and explore the opportunities there. Thus in April 2001 DFDS Tor Line "acquired" Lithuanian company Lisco Baltic Service which at present operates cargo and passenger’s lines from Klaipeda to Kiel and Mukran in Germany, and to Karlshamn and Аhus in Sweden. Latvia followed next, i.e. its company Latlines has“united” with Danes in December 2002.
Germans are facing the problem of other sorts. The country is suffocating with inflow of cargoes and freight on railway and on roads. Presently about 1 million cargo’s TEU/containers is forwarded to Hamburg by road transport. Considering experts’ forecast about annual growth of container transportation at a rate of 10% a year, it is quite possible to expect in the near future jams on automobile and railway routs in Germany. With this in mind, the only alternative to the overloaded land routes could be maritime and ferry transportations. German shipowners have already properly reacted; at present the port of Luebeck serves 10 regular ferry lines with transport connections to Denmark, Sweden and Finland. The Luebeck’s port goods’ turnover exceeds at present 12 million tons a year. "As soon as the Baltic States join the EU, in favorable transportation position would be the companies and the countries that can organize good ferry lines”, acknowledged the general secretary of Latvian association of international autocarriers Paul Groshev.
Estonia: the state goes for it
In ferry transportation among the Baltic States Estonia occupies the leading position as the state renders to maritime companies all possible assistence and financial support. In October 2002 Estonians bought a new tipy of ferry “Romаantica” for a price of 145 million euro. A vessel is built according to special order of Estonian company TALLINK which is the most succesfull maritime company for the last five years in the Baltics; the company’s title is already well kmown both in the Baltic States and in Scandinavia.
Mr. Marek Mjagi, Tallink financial manager, told our magazine about his company’s work. "In May 2003 we have put to work 3 more ferries and now we cross the Gulf 9 times a day. In the long run, we plan opening in May 2004 a ferry line to St. Petersburg as somewere in April we’ll have a new ferry Romaantica that will be used for a new route. The only problem is that of visa regime in Russia: without daily visas for foreign tourists they can not leave the ship and enjoy sights of Russian “northern Venice” and are compelled to sit in their cabins. That would essentially reduce ferry’s profitability. If Russian authorities will not be able to solve visa problems, our company plans to open another ferry line Riga - Stockholm which, by our estimations, is more perspective than the route Tallinn - Stockholm".
In April 2003, according to Tallinn port Tallinna Sadam, 440.300 passengers used Tallinn Group ferry services. The company’s share of the market on a route “Tallinn – Helsinki” was 50%. Only during this April it transported 171.610 passengers. Ferries of maritime company Saaremaa Laeva Kompanii in the first quarter of this year have transported to the large Estonian’s western islands 150.880 passengers; and for the whole last year - 1,45 million passengers.
Maritime company Tallink Grupp AS was established in 1994 uniting small passenger carriers of the then Estonian State sea shipping company and Inreko AS. Today the company owns eight ferries, which serve routs to Sweden and Finland, crossing Gulf of Finland six times a day.
Latvia: a complicated situation
Quite different is ferry business arrangement in Latvia where (with a lot of troubles) only last year a ferry Baltic Kristina was bought from Norwegian company Goliat Shipping for 5,5 million dollars; Latvian company Rigas Juras linija (RJL) presently operates the ferry.
This ferry carries passengers on the route Riga -Stockholm. The company’s managers are going to buy another ship in order to make daily routs to Sweden. However the state refused to provide any help to ferrymen, as the goverment regarded the problem being of purely private business character. Therefore, Latvian transport minister Mr. Robert Zile explained BC in November last year: " I do not think, that the state should acquire ferries at present, or being otherwise involved in this business. If, for example, in Estonia the government supported ferry communication and transportation issues, so we do not have to forget that it all happened at a different time and in a completely different situation. Now in Latvia, I believe, the state capital’s involvement in ferry business would not bring essential benefits. I would not like to comment on a deal that Riga city council has acquired a ferry. This purchase in no way can be regarded a profitable deal. The question of state participation in ferry transportation could be discussed only in case when large companies, such as Silja Line or Viking Line would come to Latvia”.
For 4 months in 2003 ferry Baltic Kristina transfered 15.590 passengers; only in April - 6053 passengers. But still RJL’s losses for the last year have reached 2,93 million euro, with a general turnover of 2,2 million euro.
That means that Latvian ferrymen are deemed to so called “independent” survival. It has to be mentioned that they are not in a complete despair and continue somehow develop their business. In November 2000 Latvian company Latlines started regular passenger-freight transportation between Riga and Luebeck (Germany). At that time the help and support to latvians was rendered by one of the oldest Danish maritime company DFDS Tor Line having a 134-years operational experience. In December 2002 Danes united with Latlines’ company, having made it an affiliated company, and also started two new passenger-freight lines, i.e. Riga - Luebeck (Germany) and Riga - Kiel (Germany).
In interview to BC the Latlines’ company marketing manager Mr.Ajvar Oshs acknowledged that: "Ferries draw autocarriers’ attention intesively. It is connected with the fact that first Germany and later Poland have toughened tachometer’s control (devices fixing alternation of driver’s work and rest), which do not permit drivers on a long distance drive to stay for more then 8-hour behind the steering wheel. And more then that, Poles have introduced a rigid limit on fuels, i.e. at border crossings there should not be more than 200 litres of fuel in a trailer’s tank. The Poles’ position can be understood – before entering the EU they adjust all spheres of life to EU standards. In this regard Danish Latlines owners have decided to close in March 2003 a ferry line to Kiel (Germany) and to start two ferry lines to Luebeck (Germany) by ferries Merimaid and Transparaden ".
So far the results of Latlines’ operations have been rather modest: during 4 months in 2003 the two passenger-freight ferries serving the routs between Riga, Kiel and Luebeck, transported about 8.000 passengers and 7.700 motor vehicles.
Three passenger-freight ferries work presently on two lines in Liepaja, i.e. Liepaja - Rostock (Germany) and Liepaja - Karlshamn (Sweden). Liepajas port Terrabalt’s stevedore company serves both ferry lines. According to port data, for the first quarter of this year it transported 1711 passengers (25% less, than for the same period last year).
Only one ferry line works in Ventspils, i.e. Ventspils- Nuneshamn (Sweden); the line operator - the company VV Line LV presently brought a court action against Ventspils free port (VFP) management in Kurzeme district court. VFP’s claim is based on the fact that VV Line LV did not return in time 4,1 million dollars loan received from harbour’s authorities.
In June 2003 VentLines opened a new ferry line on route Ventspils-Travemunde (Germany). The operator of a ferry line is Latvijas kugnieciba, and the shiping agent is the company Latvian Finnish Maritime Agency.
Lithuania: all hopes put on “2 K”
Lithuania occupies an intermediary position in ferry transportation between Estonia and Latvia. It is due to a favorable coincidence of circumstances. On the one hand, the country’s inherited from the USSR a working ferry line towards Germany; on the other side, there were generous investments from Danish company DFDS Tor Line. In the year 2002 the Danish company invested 21 million dollars, this year they plan to invest 70 million dollars. Lithuanian company LBS, having already eight ferries, intends to buy a new Danish ship Dana Gloria for 48 million dollars, and put it on line Klaipeda - Kiel.
An assistant to Lisco Baltic Service’s general director Mrs. Tatyana Remezova in interview to BC acknowledged: "Danish company DFDS Tor Line owns 86% of LBS’s shares and consequently defines the perspectives of ferry business development. The company’s general director Arturas Gedgaudas intends to buy a new ferry, but finally this question is still under discussion".
The LBS ‘s cargo transportation activities in 2003 have not been somehow revealed; data for the last year have been presented in square meters (a unit of containers or trailers’ measurement). Threfore, the yearly’s company account is presented in the following way: the company has transported 1,11 million sq. meters of cargoes and 45.400 passengers.
The Lithuanian ferry businessmen assign their aspirations to the project " 2 K ", or as it is called "the Amber corridor " which connects Klaipeda port to Kaliningrad port (hence two “K” letters). In view of the future Lithuania’s accession to the EU this project becomes very interesting, promissing great perspectives. Therefore it’s not at all surprising that Lithuanian auto-carriers are going to buy their own ferry.
And the latest news at the conclusion. Klaipeda State seaport authority has opened in January 2003 its new representation office in Minsk. Thus, Byelorussia has become the third country, after Russia and Germany, where Lithuania’s transportation interests are represented. The matter of fact is that Byelorussian cargoes occupy second place in turnover of goods at Klaipeda port after Lithuanian’s cargo suppliers. And we have to take into account the fact that a new cargo container’s train "Viking" between Odessa and Klaipeda just started its transportation activity (through territory of Byelorussia). This will add essentially to the freight transportation facilities; and therefore will increase the importance of Lithuanian’s representation office in Minsk. As experts say, if there are goods to deliver, there would be functioning transportation routs.