Painting a rosy picture

The majority of ports that responded to the Baltic Port Organisation’s (BPO) port barometer study in the summer were expecting some growth in their cargo handling volumes next year; expectations averaged out at 7.5% growth, while 16% of the ports were predicting “strong growth”.

Now, in the midst of the credit crunch, such a positive outlook might seem but a distant fairy tale. “The survey was carried out some weeks ago, so the opinions of port managers were not influenced by the financial crisis,” says BPO secretary general Bogdan Oldakowski. “Nevertheless, the Baltic ports are expecting growth in cargo volume. One of the main driving factors is, of course, Russia with its big consumer market and export of natural resources.”

Having said that, the Baltic States cannot claim a monopoly on Russian transit cargo – many of their neighbours are also getting in on the act.

“The ports that are handling Russian cargo range from Finnish ports even to Poland – Gdansk is handling new cars going to Russia,” says Mr Oldakowski. “Moreover, cargo handling in some of the ports is also stimulated by rather high economic growth and increasing trade in Central Europe – Poland, the Czech Republic and Slovakia.

“However, we also have to take into account that the future is very unpredictable and it is rather hard to say what will happen in trade and cargo volumes in the Baltic. It is rather obvious that the tempo of cargo volume growth in the ports will be lower but by how much? The future will show.”

So far the BPO has not heard of any investment projects being suspended or postponed, and Mr Oldakowski says he does not expect the impact of the financial crisis on port investment to be huge.

“On the other hand, we have to remember that the container business to/from Russia, and also new car imports, depends strongly on Russian demand for consumer goods. In this respect, the state of the Russian economy is very important.”

An obvious trend in many Baltic ports is the shifting of port operations away from city centres to locations away from residential areas – Helsinki’s Vuosaari Harbour being a clear example. “A similar trend is observed in Tallinn, Riga and Klaipeda,” says Mr Oldakowski.

Most of the investment projects around the Baltic are focused on extending or providing new capacity.

“In general, Baltic ports do not have the problem with congestion like North Sea European ports,” he says. “In general, the investment programmes are well planned and exceed demand.”

However, while the Baltic ports have gained from the lack of capacity and congestion issues at St Petersburg, the imminent opening of Russia’s new container terminal at Ust-Luga will provide new competition for volumes.

Ports such as Tallinn have had to adapt to serving multiple markets and this process will continue.

Ain Kaljurand, a member of the supervisory board of the Port of Tallinn, said recently: “We have to make maximum use of the existing infrastructure and provide this to considerably larger markets than we have up to now.

“We have to look in the direction of Ukraine, Kazakhstan, Belarus and others. In terms of cargo volume, we have to gather piece by piece everything that once used to be one and came from one place. We have to be more courageous and take more risks to win new markets and through this secure our activity not only in the intermediary years but also in the long-term.”

In the current climate, those risks are higher than before, he said, and the port would have to be more careful in assessing them.

But things have been changing for Tallinn for longer than that. “The general business environment has changed fundamentally,” he said. “If three years ago we directed our activity largely towards servicing of bulk cargo from east to west, then today the situation has changed. If then our cargo flows were quite certain and simply better possibilities for their servicing had to be found, now we have to search for these cargo flows more actively.”