Baltic's grand port of Tallinn continues to dominate

  • 2006-04-05
  • By Kairi Kurm
TALLINN - The rise of intense Russian competition has forced Baltic ports to adjust their development strategies 's often radically and on the fly 's in order to retain their market share. With 12 percent of the cargo traffic in the Baltic Sea/Gulf of Finland region, Port of Tallinn is the third largest, but its managers know that they will need ingenuity and resourcefulness to maintain that position.

Last year, the combined market volume of the Baltic Sea's eastern coast was about 328 million tons, 39.5 million of which were handled through Port of Tallinn.
Fast cargo growth continues in Russia's ports, as political restrictions favor a transfer of goods through national ports and pipelines by setting higher railway tariffs on foreign exports. Heido Vitsur, the Estonian minister of economics and communications' economic advisor, believes that tariffs will equalize once Russia joins the World Trade Organization.
"When railway tariffs equalize, new opportunities will open up for Port of Tallinn," said Vitsur. "Estonia should gain a competitive advantage on the market with a better service and expenditure level."

Along with growth of global oil production, the harbor expects an improvement in trade from Russia.
Port of Tallinn showed a 6 percent increase in cargo volumes last year, despite intensifying competition from Russian ports (St. Petersburg and Primorsk). Liquid cargo made up 66 percent, dry bulk 20 percent and rolling stock 8 percent. But this structure is likely to change.
"The company is planning to decrease the large dependence on liquid cargo and increase the share of container traffic," said Vitsur.

This is also Muuga Port's main drive, Ratassep added.
In terms of passengers, Tallinn is far and away the regional leader. In fact, Port of Tallinn is the third largest in north Europe after Southampton and Copenhagen.
"The Tallinn Port is ice-free all year round and does not require regular deepening. Unlike in Latvia and Lithuania, our ports 's especially Muuga and Paldiski 's have the potential to expand and develop. We are planning to increase the area of Muuga port by 50 percent in a five-year perspective," said PR manager Sven Ratassepp.
What's more, Port of Tallinn owns four smaller ports: Vanasadam (Old City Port), the passenger terminal located in the center of Tallinn, a commercial port in Paljassaare, Muuga Port and Paldiski South Port. In 2006, another terminal is planned to be opened in Saaremaa for cruise ships.

In terms of passenger traffic, 7 million people passed through the ports of Tallinn last year, which is a 4 percent increase. The ferries take passengers to Helsinki, Stockholm, Kapellskar, Rostock and St. Petersburg. But no high growth is expected in the near future, said Ratassepp.
"Our main task is to serve line passengers in the best possible way. We cannot influence growth much. It is the opposite regarding the cruise ships 's here Port of Tallinn itself introduces Tallinn as a city of destination to international cruise operators and you see the results," he said.
The number of cruise passengers increased by 22 percent to 250,000 in 2005, and a 10 percent increase is expected this year due to the opening of a harbor on Saaremaa Island.

According to Ratassepp, cruise passengers come mainly from the United States, United Kingdom, Germany, France and Italy. But he also said the share of tourists from Asia and Africa is increasing.
In 2005, Port of Tallinn consolidated net turnover increased by 7 percent to 72 million euros, mainly thanks to an increase in port dues and rental income. The company's operating margin dipped slightly below 50 percent, leaving its net profit around 26 million euros, most of which were paid as dividends to the government.