Port of Tallinn continues to languish

  • 2008-03-12
  • By TBT staff
TALLINN  - Cargo handling at Tallinna Sadam (Port of Tallinn) continued to plummet over the first two months of the year as one of the Baltics' largest port continues to feel the impact of last year's decision to move a Soviet war memorial.

In January and February the port handled 5 million tons of cargo, a fall of 33 percent year-on-year. Liquid cargo was down 20 percent to 3.5 million tons, while bulk cargo did a free-fall of 70 percent to 641,300 tons. Coal and fertilizer account for most of the losses, dropping 96 and 58 percent year-on-year, respectively.
The numbers attest to a concerted effort by Russian exporters to divert shipments to other Baltic Sea ports 's particularly St. Petersburg, Ventspils and Klaipeda 's after Estonia's government last April relocated the Bronze Soldier statue from a prominent downtown square to a military cemetery. 

The decision sparked riots that left one dead, over a hundred injured and a thousand detained or arrested. Russia's leadership was irate and promised Estonia would regret its decision.
When asked at a recent forum in Riga about what happened to Estonia's share of the transit market, Vladimir Yakunin, head of Russian Railways, said, "There are two reasons: The first is that insufficient handling capacities in this direction, so the priority has been given to Lithuania and Latvia."
But then he added, "You don't have to be a rocket scientist to understand the second reason."
Where has the transit gone? "Look to the right of me," said Yakunin, gesturing toward Ugis Magonis, head of Latvijas Dzelzcels (Latvian Railway).

Indeed, Latvian Railway saw its cargo shipments increase 7 percent last year to 52.1 million tons, and then 30 percent in January and February this year to 9.6 million tons, according to company data. 
Overall, Latvian ports in 2007 handled 4.9 percent more cargo than in 2006.
The trend, however, is intensifying. Turnover at the country's three ports 's Riga, Ventspils and Liepaja 's jumped 26.5 percent in January year-on-year. Coal handling skyrocketed 44 percent, while liquid cargos soared 29 percent.
Latvian politicians are aware that Estonia's woes have amounted to their benefit. "When taking a political decision, one should understand what impact it'll have on the economy," Transport Minister Ainars Slesers told MK Estonia in a recent interview.

Cargo handling in Klaipeda, Lithuania's only port, has also been robust, soaring 21.5 percent over the first two months of 2008.
For its part, Lietuvos Gelezinkeliai (Lithuanian Railways), took on 6 percent more shipments in 2007 year-on-year.
Financially, the Port of Tallinn is feeling Russia's pinch. Though revenues were down only 1.3 percent to 1.1 billion kroons (70.5 million euros), profits sunk 44 percent to 335 million kroons.
The port admitted in a statement that the poor financials were the result of the "foreign and economic policy factors" related to the April events in Estonia.

"In 2007, the results of operations were shaped by unexpected circumstances whereby growing cargo volume in the first half of the year declined sharply in the middle of the year, as a result of which cargo volume decreased 13 percent for the year," the company said Feb. 29.
After the dust settled from the two nights of rioting last April, Prime Minister Andrus Ansip expressed confidence that Estonia could endure any sort of economic pressure from Russia. "Not a lot of people are engaged in the transit sector, and possible job losses would be modest and the effect on the Estonian state budget practically non-existent," he said in the beginning of May.

Other government leaders and analysts said that any major shift in Russian transit away from Estonia would only backfire, since Russian capital is heavily invested in the Baltic state's transit sector.
"Roughly speaking, the transit blockade would not affect the Estonian economy but rather specific businessmen, above all Russian entrepreneurs as well as Russian state budget revenues," Economic Affairs Minister Juhan Parts said at the time.
Though it is still early to assess the long-term impact of these changes, the Port of Tallinn will lose its leading position among Baltic ports if current trends, including increasing cooperation between Russia and Latvia, continue. 

Slesers, for his part, thinks that the business will return to Estonia. "I think it is a matter of time," he told MK Estonia.
"Right now our ports are handling an enormous amount of cargo, and we're not in any condition to take on those cargos that many Estonian terminals used to handle," he said.
On the bright side, a deal between the Port of Tallinn and China's Ningbo port looks set to proceed. CEO Ain Kaljurand told a transit commission meeting on March 10 that the port hoped to sign investment agreements this fall.

Plans include building a container terminal at Muuga that would require two kilometers of wharves capable of receiving ships carrying up to 8,000 containers.