Market Potential and Competition Analysis for selected ports of the Amber Coast

122 Pages·2013·5.71 MB·English

“Market Potential and Competition
Analysis for selected ports of the
Amber Coast”

Final Report

Riga, 2/04/2013

Client: Freeport of Ventspils Authority
Prepared by: SIA "NK Konsultāciju birojs"
Market Potential and Competition Analysis for selected ports of the Amber Coast
Final Report, date: 02/04/2013

SIA "NK Konsultāciju birojs" Contacts:

Mūkusalas street 42 Normunds Lukša
LV 1004 Riga E-mail: [email protected]
Latvia Direct phone: [phone]

Phone: [phone]
Fax: [phone]
www.nkconsulting.lv

Report prepared by: Tobias Merten
Vladas Stūrys
Normunds Lukša

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Notice
This report has been prepared by SIA "NK konsultāciju birojs" (NK) with all reasonable skill, care
and diligence within the terms of the Contract with the client, incorporating NK’s General Terms
and Conditions of Business and taking account of the manpower and resources devoted to it by
agreement with the client. NK disclaims any responsibility to the client and others in respect of
any matters outside the scope of the above.
NK undertakes no obligation to notify recipients of events occurring after the date on the front
cover that might change the content or conclusion of this report.
In preparing this report NK has used data from both its own internal databases and from third
party sources, and has also interviewed representatives of the business community. NK can
accept no liability for the accuracy of data sourced in good faith from third-party sources.
This report is confidential to the client and NK accepts no responsibility of whatsoever nature to
third parties whom this report, or any part thereof, is made known. Any such party relies upon
the report at their own risk.
Limitations and Exceptions
This report is based upon the application of scientific principles and professional judgement to
certain facts with resultant subjective interpretations. Professional judgments expressed herein
are based on the currently available facts within the limits of the existing data, scope of work,
budget and schedule.
To the extent that more definitive conclusions are desired by the client than are warranted by the
currently available facts, it is specifically NK’s intent that the conclusions stated herein are
intended as guidance and not necessarily as a firm course of action, except where explicitly
stated as such. NK makes no warranties, expressed or implied, including, without limitation,
warranties as to merchantability or fitness for a particular purpose. In addition, the information
provided in this report is not to be construed as legal advice.
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Executive Summary
The Amber Coast ports Klaipeda, Riga, Ventspils, and Tallinn as well as Finnish ports Helsinki
and Hamina-Kotka, and the Russian greater port of St. Petersburg are playing a vital and
competitive role in the intermodal transport chains from and to (hub) ports in Northern Europe
and economic regions in Eastern Europe, in particular for industrial and consumption centers
around St. Petersburg and Moscow/Novgorod as well as around Minsk now and in the future.
In the past, the hinterland of a port was relatively well defined due to limited choices of market
accessibility. However, with increase efficiency of inland transport infrastructure the distance
from / to a market is no longer the unique criterion for port choice. It became a general rule, that
the port's potential hinterland can be defined as the area that can be reached at a cheaper cost
or shorter time than from another port. Furthermore, with the progressive integration of ports in
supply chains and an increasing complexity of transport networks (e.g. hub-and-spoke systems,
value-added logistics), the choice of a specific port focus much more on a package or bundle of
logistics services along the way to the market.
Figure 1: Analysed overland road routing options from/to port hinterland incl. feeder connections to North
European hub ports

Source: SIA "NK konsultāciju birojs"

The delimitated Amber Coast zone of influence is part of a very dynamic economic environment
characterized by a lower level of current economic development connected with a strong rate of
annual GDP growth during recent years, with exception to the global economic crisis in
2008/2009 which hit the region especially hard. However, mid- to long-term projections indicate
a relatively fast recovery and continious economic growth even though on a somewhat lower
level than before crisis. Main driver remains the development of Russian economy. Principle
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challenges for the coming years to overcome are deficits in the transport infrastructure, structural
unemployment, relatively high inflation rates, shrinking population, shortage of qualified labour
and strong competetive environment for limited foreign direct investments.
Until 2030, maritime container traffic may increase overall by almost 140% in the Baltic Sea
region, RoRo traffic by almost 70% steered significantly by the development of Northern Russian
economy. At the same time and especially in the Baltic States and Russia, overland transport
volumes will grow in line and may increase by over 70% in case of truck transportation and by
over 40% for rail transports. The container demand for the determined region is projected to
grow from in total 967,000 TEUs in 2011 to about 2.59 – 2.73 mio. TEUs with a growth factor
between 2.67 and 2.83 depending on the applied scenario and not including transhipment
volumes and volumes handled at others than selected ACL ports. Northwest Russia and Belarus
volumes are expected to grow most with the economic regions of Moscow and Novgorod as
principle growth driver.
The assessment of relevant multi-modal networks, which are framed by maritime intermodal
infrastructure, land intermodal infrastructure, road infrastructure, and rail infrastructure reveals,
that terminal capacity problems of the past have been overcome. The great port of St.
Petersburg is rapidly increasing capacities for container and RoRo in order to cope with the
objective to handle Russian cargo at Russian ports. But also new capacities are being added in
the ports of Riga, Ventspils, Tallinn, Liepaja, and Klaipeda through new terminals or expansion
projects. Overall this will increase competition between ports and consequently between
competing corridors.
There are no significant structural changes foreseen in the road network, however, border
crossing points are and will remain important bottlenecks for road transport. The construction of
Rail Baltica and the improvements of existing rail infrastructure (e.g. electrical traction on main
corridors) will have mainly an influence on intra-regional trade of countries along the rail corridor
and thus effects the RoRo transportation pattern. It is not expected that oversea container trade
will be significantly affected by this project. A weak point in competitiveness of the ACL
intermodal range remains lack of logistic infrastructure in the hinterland of the ports (logistic
centres, dry ports etc), within which all activities relating to transport, logistics and the distribution
of goods - both for national and international transit, are carried out by various operators on a
commercial basis. At the same time the regional intermodal network faces and will face in a
future new challenges. Immediate challenges are caused from one side by accelerated
modernization of the global transport and logistics system, from other side – by growing
competition in the port range due to fast development of capacities and especially in the Great
port of St. Petersburg. This will require higher competitiveness of every port in the rage and their
tight cooperation with land transport and logistics developers and operators. The following table
provides an overview of main infrastructre and non-infrastructure related bottlenecks that have
been identified, considering the current situation and expected sitiuation based on projected
future cargo flows.
Table 1: Evaluation of ACL ports and hinterland bottlenecks
SUMMARY OF BOTTLENECKS Current evaluation Evaluation considering future
cargo flow forecasts
Infrastructural Maritime Not significant Not significant, considering planned
infrastructure developments in ports
(terminals)
Road network Not significant Not significant, considering planned
road projects
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SUMMARY OF BOTTLENECKS Current evaluation Evaluation considering future
cargo flow forecasts
Interoperability of rail Moderate Should be solved by planned rail
networks bottlenecks projects and through SMGS and CIM
harmonization
Rail rolling stock Moderate Remaining actual
bottlenecks
Block trains to Significant
hinterland bottlenecks
Hinterland logistic Significant for the Significant bottlenecks might emerge,
centres future since no exact strategies and
development plans are in place
Intermodal terminals Significant for future Bottlenecks can be minimised,
implementing modern technologies to
fasten modal shift operations
Non- Border crossing time Significant Will increase with rise of the cargo
infrastructural bottlenecks flow, if no actions implemented
Operational Significant Solving of the bottlenecks would
bottlenecks within bottlenecks smooth operational cargo flows and
train shunting optimize cost levels
operation in some
ports (e.g. Riga)
Source: SIA "NK konsultāciju birojs"

Today’s transport corridor profiles for the region consist of 16 container terminals with in total 95
gantry cranes and 101 dedicated berths operating at the 7 anaylsed ports. They are connected
to 10 hub ports in Northern Europe through 14 independent feeder operators and 80 services.
On the land side, besides countless independent truck operators, 5 rail operators offering 7
shuttle train services to the main economic regions. In respect of RoRo operation, the 7 ports
have 19 dedicated terminals with 43 fixed ramps which are connected with 32 ports in Northern
Europe and Scandinavia. There are 80 regular services offered by 11 ferry operators.
Being an important land/sea interface within the analysed transport corridors, a special focus on
market position and performance has been given to the ports. Efficiency and effectiveness of
container and RoRo terminals is an important factor for the port selection process as port
performance may influence the up- and downstream processes of the complete transport chain.
In the course of this study, only a high level assessment of important indicators have been done
due to limited data availability, however, more detailed results are expected from the study
“Operational Challenges to Port Interfaces in the Multi-modal Transport Chain” which is currently
elaborated within the Amber Coast Logistics project.
Although RoRo holds a major share of intermodal transportation within the Baltic Sea Region,
main focus of further analysis and simulation of sample shipments along the transport corridors
have been put on the container market. In terms of market shares, the great port of St.
Petersburg gained significant shares in recent years presumably due to infrastructure
development and capacity expansion followed by more favourable transport costs and times,
and supported by the Russian national transport development strategy. The three main ports of
the Baltic States are not impacted from this trend so far. Only the Finnish ports Hamina-Kotka
and Helsinki have experienced a significant decline of market share, leading to the assumption,
that especially cargo for and from the metropolitan area of St. Petersburg is being affected from
this shifting development.

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Figure 2: Port share of total container throughput at selected ports, 2005 vs. 2011 in %

Source: SIA "NK konsultāciju birojs" derived from published port statistics

Furthermore, the simulation of sample container shipments along the corridors underlines the
initial assumption that changes of market shares are not only a sign for increased capacity or
improved infrastructure at a specific port, an aggressive pricing structure of an individual entity or
even political driven measures, but more an interrelation between various factors related to
overall performance and service quality as well as cost and time measures of transport corridors
as a whole.
In the context of this study, a virtual set of freight agreements and service contracts along the
corridors has been developed to simulate transports along the selected corridors under a user‘s
point of view and stored into a database which is part of this studie‘s delivery. For presentation
purposes, the in total 2,720 identified routing options have been clustered into 2 main directions:
from / to hub ports Antwerp, Bremerhaven, Hamburg, and Rotterdam to / from the economic
regions of Moscow and Novgorod (Table 2), and from / to the economic regions Minsk,
Daugavpils, and Kaunas / Vilnius (Table 3). Additionally, theoretical external costs per transport
mode and shipment size have been applied to each routing option.

Table 2: Total average cost (EUR) and timing (days) per TEU for inbound shipments to Moscow/Novgorod
avg. total transport cost incl.
avg. total transport cost avg. total
outport external cost
lead time
dry TEU reefer TEU dry TEU reefer TEU
Hamina-Kotka 2,775.28 3,308.61 3,506.34 4,039.67 8.5
Helsinki 2,831.87 3,449.22 3,616.39 4,233.75 9.5
Klaipeda 3,076.32 3,643.65 3,854.79 4,422.11 8.3
Riga 2,702.28 3,199.37 3,388.24 3,885.33 8.6
St. Petersburg 2,130.39 2,603,73 2,757.43 3,230.77 8.8
Tallinn 2,880.45 3,383.86 3,637.34 4,140.75 9.4
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avg. total transport cost incl.
avg. total transport cost avg. total
outport external cost
lead time
dry TEU reefer TEU dry TEU reefer TEU
Ventspils 2,899.43 3,422.42 3,641.40 4,164.38 8.2
Overall avg. 2,756.58 3,287.27 3,485.99 4,016.68 8.8
Source: SIA "NK konsultāciju birojs"

At this level, transport corridor costs through the ports Klaipeda, Tallinn and Ventspils are on the
higher side, whereas transport costs through the port of St. Petersburg is the cheapest option.
The fastest connection between hub ports and Moscow/Novgorod region is achieved through
ports of Klaipeda and Ventspils, transports via Helsinki and Tallinn take the longest.
Table 3: Total average cost (EUR) and timing (days) per TEU for inbound shipments to Minsk region (incl.
Daugavpils, Kaunas/Vilnius)
avg. total transport cost incl. external
avg. total transport cost avg. total
outport cost
lead time
dry TEU reefer TEU dry TEU reefer TEU
Klaipeda 1,514.83 1,723.02 1,832.98 2,041.17 7.3
Riga 1,467.90 1,682.98 1,790.98 2,006.06 8.0
Ventspils 1,618.78 1,832.35 1,985.99 2,199.56 7.7
Overall avg. 1,533.84 1,746.12 1,869.98 2,082.26 7.7
Source: SIA "NK konsultāciju birojs"

The clustered region of Minsk, Daugavpils, and Kaunas/Vilnius is served cheapest through the
port of Riga, the more expensive option is through the port of Ventspils. However, differences in
costs are relatively low between the analysed 3 options. With in average 7.3 days the option
through the port of Klaipeda is the fastest whereas the option through the port of Riga takes the
longest with in average 8 days.
The issues tackled in the Study are large scale by nature and go beyond borders of one
particular partner, so in order to address them and reach synergies, it is suggested to establish a
long-term collaborative approach in form of a project or a platform. The selection process of
users regarding a specific transport corridor for example is a complex topic which involves
various key factors such as port efficiency, geographical location, low port and transport
charges, adequate infrastructure, wide range of services, connectivity, among others. Results of
this study and especially the simulation of sample shipments provide important indications on
certain aspects, but would not allow detailed actions and thus recommendations for a specific
party.
At the end of the day an executive institution would be necessary to seek for synergies between
the logistics players in the ACL catchment area, to process and evaluate all finding of this but as
well up- and downstream Studies within the ACL project and support and coordinate the
implementation of these thereof.

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Contents

Executive Summary .................................................................................................................... 4
List of Acronyms ........................................................................................................................ 12
Introduction ............................................................................................................................... 13
1 Macro-economic development, economic outlook and cargo flows .................................... 14
1.1 Geographical delimitation and general overview ......................................................... 14
1.2 Macro-economic development and outlook ................................................................. 16
1.2.1 Global outlook ...................................................................................................... 17
1.2.2 The Baltic Sea Region (BSR) ............................................................................... 18
1.2.3 Amber Coast zone of influence – insight to selected countries ............................. 19
1.3 Trade pattern and cargo flows ..................................................................................... 23
1.3.1 General context .................................................................................................... 23
1.3.2 Status quo of freight flows .................................................................................... 24
1.3.3 Projected scenarios until 2030 ............................................................................. 27
2 Delineation and assessment of relevant multi-modal networks ........................................... 29
2.1 Maritime infrastructure ................................................................................................. 29
2.1.1 Port of Hamina-Kotka ........................................................................................... 30
2.1.2 Port of Helsinki ..................................................................................................... 31
2.1.3 Port of Klaipeda .................................................................................................... 33
2.1.4 Port of Liepaja ...................................................................................................... 35
2.1.5 Port of Riga .......................................................................................................... 35
2.1.6 Great port of St. Petersburg ................................................................................. 37
2.1.7 Port of Tallinn ....................................................................................................... 41
2.1.8 Port of Ventspils ................................................................................................... 43
2.2 Road infrastructure ...................................................................................................... 44
2.2.1 Lithuania .............................................................................................................. 45
2.2.2 Latvia ................................................................................................................... 45
2.2.3 Estonia ................................................................................................................. 46
2.2.4 Finland ................................................................................................................. 47
2.2.5 Russia .................................................................................................................. 48
2.3 Rail infrastructure ........................................................................................................ 49
2.3.1 Lithuania .............................................................................................................. 49
2.3.2 Latvia ................................................................................................................... 50
2.3.3 Estonia ................................................................................................................. 51
2.3.4 Finland ................................................................................................................. 52
2.3.5 Russia .................................................................................................................. 52
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2.4 Intermodal transfer points in the hinterland of ACL ports ............................................. 54
2.4.1 Intermodal terminals ............................................................................................. 54
2.4.2 Logistic capacities ................................................................................................ 56
2.5 EU-CIS border crossing points .................................................................................... 60
2.5.1 Road freight ......................................................................................................... 60
2.5.2 Rail freight ............................................................................................................ 62
2.6 Summary of bottlenecks ACL countries ....................................................................... 63
2.7 Development of the transport network of the ACL range ............................................. 65
2.7.1 Global dimension of eastern ACL ports hinterland. ............................................... 65
2.7.2 EU TEN-T network development .......................................................................... 65
2.7.3 Baltic Transport Outlook 2030 .............................................................................. 66
2.7.4 NDPTL network .................................................................................................... 66
2.7.5 EU policy for transport neighbourhood ................................................................. 67
2.7.6 Rail Baltica ........................................................................................................... 67
2.8 Conclusions and assessment of relevant multi-modal networks .................................. 68
2.8.1 Terminals ............................................................................................................. 68
2.8.2 Road and rail network .......................................................................................... 69
2.8.3 Intermodal transfer points and hubs ..................................................................... 69
2.8.4 Border crossing .................................................................................................... 70
2.8.5 EU dimension ....................................................................................................... 70
2.8.6 ACL Eastern Baltic multimodal network: full scenario ........................................... 70
2.8.7 Wider approach .................................................................................................... 72
3 Transport corridor profiles, sample shipments and business community feedback ............. 73
3.1 Individual transport corridor profiles ............................................................................. 73
3.1.1 Ports as gateway and interface between sea and land transport .......................... 74
3.1.2 Short sea shipping network (maritime leg) ............................................................ 81
3.1.3 Overland transport profiles ................................................................................... 88
3.1.4 External cost and MARPOL.................................................................................. 92
3.2 Simulation of sample shipments .................................................................................. 94
3.2.1 General approach ................................................................................................ 94
3.2.2 Dry and Reefer container transport on selected corridors ..................................... 97
3.3 Business community feedback .................................................................................. 109
3.3.1 Introduction ........................................................................................................ 109
3.3.2 Summary of the results ...................................................................................... 110
4 SWOT – Analysis for selected transport corridors ............................................................ 112
4.1 Amber Coast Ports and Belarus ................................................................................ 112
4.1.1 Klaipeda – Belarus corridor ................................................................................ 112
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