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Baltics' largest port beset by row over fees

  • 2004-07-28
  • By Aleksei Gunter
TALLINN - While on the surface the state claims relations between the Port of Tallinn, the largest in the Baltics, and its operators are sound, last week's scandal showed that they are anything but.

According to operators, the port management broke its promise when raising fees earlier this month for a number of services due to take effect on Sept. 1. The move outraged the Estonian Association of Port Operators so much that should the port go through with the new price system, the association may turn to court.
Ago Tiiman, head of the association, says that port operators want a special commission of experts to investigate reasons behind the approximate 25 percent port service price increase and present its conclusions by November.
"Increasing prices in the middle of a fiscal year reflects on the instability of the port and the mess in its management," an emotional Tiiman says.
One port operator who spoke on condition of anonymity, claims part of the new fee scheme is unique to the industry.
"The so-called 'cargo fee' is the fee for handling cargo that we, along with forwarding and shipping companies, attract to the terminal without any help from the port," the source explains.
In this operator's opinion, a situation where the company has to pay more cargo fees to the port as cargo turnover grows is absurd.
"In 2003 we paid the Port of Tallinn more than we invested into terminal development," says the source. "Our company is still developing, and at this point we need enormous funds to buy the equipment and to upgrade the IT system. But instead we have to pay the fee that does not exist anywhere else in Europe."
The port operator also complains that the government's poor timing in updating veterinary control points for refrigerator containers in accordance with EU regulations caused many cargo flow to switch to Lithuania - business that will be difficult to win back.
"Estonia got itself the necessary control points several months after the EU accession. Both the terminal and the forwarding agencies can ask 'Why did that happen?' It is very difficult to understand the logic of cooperation between various state institutions," the operators says.
Port of Tallinn management, meanwhile, is focusing on modernization, optimization and security.
Tiina Liitmae, who works in the port's marketing department, said that from July 2004 the port meets the requirements of the International Ship and Port Facility Security Code, which features tighter security measures. "This brings additional security to the ships calling the port, to passengers and to goods passing the port," he says.
In terms of long-term development, Liitmae says that the port's goal is to diversify cargo and passenger flow and bring in new added-value industries like the steel galvanization facility that opened in Muuga several years ago.
During the next five years the port plans to invest about 5.4 billion kroons (345 million euros) in its infrastructure and general improvement. About 80 percent of infrastructure development will be concentrated in the Port of Muuga, while Paldiski Port will receive the rest.
Specifically, Paldiski will get a new wharf for servicing bulk wheat shipments and a terminal for wood shipments.
"The largest long-term projects in the Port of Muuga are, for example, the construction of the coal and metal terminal, a breakwater in the eastern part of the port, expansion of the container terminal and creation of a technological park," says Liitmae.
"The Port of Tallinn wants to offer operators and cargo owners the best quality and modern technology that will provide the port with a competitive advantage in the tight competition environment," he continues.
Regarding the current conflict, Liitmae stresses that low port fees are not the key to a port's success.
"In terms of port fees, we are already more expensive than the nearby Russian ports. We have to compete not with low price but with service quality and flexibility provided by the terminals, the access to the wharves and harbor depth," he says.
Anti Moppel, head of the transport development and logistics department of the Ministry of Economic Affairs and Communications, says that vital transit flows will be supported by the state through the option of using EU funds to launch projects such as improved road and railroad access to the port.
"It is also important to provide winter navigation that would fit the schedule of the port terminals through proper ice-breaking work," Moppel adds.
Estonia will also establish strategic alliances with ports of the Northern Sea and the Scandinavian countries, he says.