VILNIUS - Following a year of record-breaking cargo handling, Klaipeda port posted significant reductions in trade in January. The Minister of Transport and Communications now says the downward trend could last up to two years.
In 2008 the port handled around 30 million tons of cargo, including oil from Mazeikiu Nafta (Mazeikiai Oil Refinery) and fertilizer from Lithuania and Belarus.
The port is now being scrutinized to find ways to sustain its huge growth since independence. Last year the port contributed around 12 percent of the country's GDP.
Despite an 8.7 percent decrease in port activity, Transport Minister Eligijus Masiulis said he is not panicking.
"We are watching the whole process and we can see that the cargo is decreasing. The packages of cargo are getting smaller in size, [but] oil is not going down and fertilizers aren't going down. Nine percent isn't a critical amount because if we look at the world economic problems, it isn't that dramatic," the minister told The Baltic Times.
Despite his calm attitude towards the downturn, Masiulis said that among other reforms the ministry would bow to industry pressure and probably reduce tariffs on the port to encourage trade.
"The tax for the port and the collecting of the tax will not be increased, but will stay the same or go down. We are going to investigate all the parts of the port and we will only invest into those parts that are going to bring us an increase in cargo," he said.
Fertilizer, grain and cruise passengers are doing well and oil products had increased year-on-year in the first month of 2009, Kestutis Voveris, a statistics specialist at Klaipeda State Port Authority (KSPA), confirmed to TBT.
"The only category that is growing is oil products because of growing demand and the good potential of the Mazeikiu Nafta 's they are importing crude and exporting oil products. Agriculture and grain [are increasing] because it was a good harvest last year," he said.
A domino effect of pricing is making business at the port difficult. Some of the port's customers have begun demanding price decreases.
"Everything is in the process because they are asking for prices to drop down on our side, but we are a state enterprise and we are under the Ministry of Transport 's it isn't as easy as it seems. If we make discounts for one company, we must do it for all. Everybody in our enterprise is looking at this and we are doing an analysis on how it will reflect on the transportation change. We are interested in preserving the ro-ro [Roll on, Roll off]," said Geda Marozaite, marketing manager at KSPA.
"We can't say that passengers aren't important, but the main thing is cargo 's we only have one cruise terminal at the moment," she added.
Therein lies the problem, Masiulis explained. While his ministry is looking to reduce tariffs, the whole Lithuanian transport industry needs reorganization before it would be possible.
"In order to keep the cargo in good numbers and keep us at a traveling market that sees us as a transport country, we have to keep the taxes and prices at a good level 's it will be lower than right now," the minister said.
"When I started as minister, there were two different negotiations between the rail and the port and they weren't integrated and have a lot of disagreements with each other. My goal is to put all the water port and train sides connected in a friendly way with easy taxes because one without the other would not exist. For a perfect result, all payments have to be easy," he said.
Lithuanian Railroad Operator Lietuvos Gelezinkeliai, which is controlled by the state, wanted to follow Belarus and Russia and increase the tariffs from Jan. 1, but the minister blocked the proposal.
Ceslovas Siksnelis, head of the Ministry of Transport and Communications Railways Division, said prices wouldn't change yet.
"We think that it will stay at 2008 prices for half of the year. All countries are going up, Latvia, Belarus, Russia, Poland, but we are keeping the same level. It may be in July that we will look at the traffic, but I don't think that it will go down," he told TBT.
Masiulis committed himself to reducing bureaucracy for the sake of efficiency.
"This is a question that has been going on for years with previous ministers and I will do my best. Both the railways and the port are in our hands. Most the problems are about how they are administered 's at the moment there are two different divisions for this, but we will put them together. I am going to change the way the ministry works. This will help transport people understand that the business here is a big chain and that one can't work without the other."
"This is part of this goal that all the cargo and all transport will be integrated and be made [in the highest] quality and most efficient way," he said.
Ensuring the integration of rail and sea is seen as a key priority to keep Klaipeda cheap and competitive, Klasco, the country's biggest stevedoring (ship loading) company, told TBT.
"For trade it is most important to have the cheapest way for goods, including everything with the railway and shipping and ports. We want the ships that call Klaipeda port to have lower costs and regarding railways we would like to find some way to decrease the rates, but they are keeping them at the same level," said Vytautas Kaunas, Klasco's commercial director.
"Of course if you look at our company, 80 percent comes or leaves by rail transport. We have a very big relationship with rail," he added.
A 25 percent reduction in rail cargo in Lithuania was recently reported, though most of the decrease was in cars bound for Kaliningrad, not Klaipeda.
Voveris said that this year, with all factors included, there could be a consistent 9 percent drop compared to 2008, with the minister even predicting a 15 percent fall.
"All cargo comes by rail and road 's 80 percent comes by rail. We expect to handle 27 million tons of cargo 's last year was about 30 million. This is because of the economic situation," Voveris said.
"I think 2009 will see our cargo going down by 10 or 15 percent, but it's not a big problem because Klaipeda is a very diverse port 's it doesn't have one sort of cargo, it has many. We have to change the marketing of the port, change the tax policy and concentrate on investment in the important infrastructure," Masiulis said
While most trade is going down, cruise liners are bringing in more tourists.
Recent renovation work at the port has enabled cruise ships to come to Klaipeda through the Butinge cruise ship dock. While Klaipeda port is seeing a reduction in passenger numbers, cruise ship passenger numbers are growing.
Masiulis attributed this to one of the ministry's recent projects 's to deepen the shipping lanes to allow large cruise vessels to enter port.
KSPA is expecting at least 20 percent more passenger cruisers to come to the region than in 2008.
"By preliminary data, 63 cruise liners and about 40,000 passengers of cruisers shall visit Klaipeda port town in 2009. Particularly big number of large ships [more than 200 meters in length] 's even 22 large liners 's will enter our seaport this year," KSPA said in a press release.
Marozaite said cruise liner passengers were the statistics' saving grace.
"We have had an annual increase of passengers for three of four years. The ships are getting bigger and bringing more passengers. We were expecting fewer passengers, but the cruise companies' data shows that it will be rising," she told TBT.
Oil product loadings at the port increased by 21.6 percent year-on-year to reach an all time high for independent Lithuania of 953,000 tons for January, the KSPA reported.
Year-on-year, the total volume of liquid cargo handled at the port rose by 8.4 percent. However, the handling of bulk cargo fell by 22.6 percent to 616,000 tons and general cargo volumes decreased by 26.9 percent to 547,000 tons.
Container traffic declined by 27.5 percent to 21,100 units and the handling of ro-ro (Roll on, Roll off) units was down by 27.2 percent to 11,700 units.
Passenger numbers at the port also dropped by 10.5 percent to 12,710 year-on-year.