The Baltic challenge

Throughout 2009, all the Scandinavian and Nordic ports battled against the recession, with 10% fewer cargoes being handled across the Baltic Sea region, but this did vary from port to port.

The Swedish-Danish venture Copenhagen Malmö Port (CMP), for instance, endured a 17% drop in cargo volumes on the previous year, handling 15m tonnes, but the biggest fall was within car distribution and ferry traffic, which CMP chief executive Johan Röstin has attributed to the ‘structural crisis within the automotive industry’.

As a result cost reductions, write downs and redundancies (13% of its full-time workforce) were a feature of the port, although CMP will continue to invest in infrastructure development projects such as the new SEK900m ($125m) intermodal harbour facility at Norra Hamnen in Malmö and a new €7.5m ($10.1m), 1,100m long cruiseship quay in Copenhagen's Nordhavnen harbour district. A new container terminal is also earmarked for the 245 acre area.

Similar market conditions prevailed up Sweden’s west coast, at the Port of Gothenburg, the largest of the Scandinavian ports, which recorded a 5% drop in container traffic, a 19% reduction in ro-ro units, and a 7% decrease in oil cargoes.

Norway’s Port of Oslo too had to contend with a reduction in cargo volumes following a 15.8% deficit in the total tonnage that visited the port in the first six months of 2009.

The Ports of Helsinki and Kotka also reeled from the impact of the economic downturn and resultant retraction of seaborne trade. But the Port of Helsinki, whose new Vusoaari Harbour terminal had opened for business in November 2008, just when the crisis took hold, was hit particularly hard. As managing director Heikki Nissinen admits, Vuosarri’s first year of operation was spent in the ‘shadow of recession’, and the harbour’s three terminal operators handled less cargo that they had actually planned to cope with.

Over all, the Port of Helsinki saw last year’s volumes drop by 21% compared with 2008 figures, handling 8.6m tonnes of unitised cargo and 357,000 containers, almost 100,000 teu down on the previous year. However, although the port has noted a slight upswing this year, with January’s throughput of unitised cargoes tallying 705,000t to provide an 8% increase on the same month 12 months earlier, significant challenges do remain.

Speaking in the latest issue of its in-house magazine, Mikki Kortelainen, the new and youthful chairman of the Port of Helsinki, says that while transit traffic today does pose a challenge, "it’s the same situation everywhere in Finland. We still have no major turn for the better in sight....Everyone wants to know what Russia is going to do next and where it will send its containers."

In 2009, freight from Russia fell about 40%, more steeply than the decrease in forest industry traffic, although Russian maritime transportation of both wet and dry cargoes is expected to grow exponentially over the next few years. Oil transportation through the Gulf of Finland alone is forecast to exceed 250m tonnes by 2015.

Among other open issues is the restructuring of the domestic forest industry – a major Finnish export – and its impact on the country’s transport sector. Finland’s forestry products are expected to decrease substantially due in part to the advance of electronic media.

Kimmo Naski, the managing director of the Port of Kotka, one of the fastest growing ports in northern Europe and which now handles almost 40% of Finland’s container traffic, is particularly concerned with the reductions in Finland’s foreign trade. And although forestry exports picked up between August and October last year, with a growth rate of 30%, reductions in the industry’s capacity are presenting a big challenge, he says.

Finland’s pulp and paper industry production has been forecasted to decrease by up to a third and its wood processing production by a fifth in the next few years.

However, any immediate volume concerns that not only Finnish but all the Baltic Sea Ports may have could be offset by increased vessel traffic pursuant to the building, commissioning and maintenance of the 1,200km offshore gas pipelines that will run the length of the Baltic Sea, connecting Europe to Russian gas.

Nord Stream started construction on the two piplines in early April and the Port of Kotka is to be one of the logistics centres for the project. It has already invested in its Jänskänlaituri quay to accommodate service and pipe transhipment vessels and has rented 35ha area to Nord Stream for the construction and coating of pipes and other equipment.

Mr Naski hopes that once gas pipline shipments get start, the port could see several additional visits a day. However, he is concerned that pilotage in Finnish waters is insufficient given recent government cuts.

Another burning issue, one that will impact on all the major ports of the Baltic Sea, is the amendment to the European Union Sulphur Directive, which entered into force at the beginning of year. The provisions stipulate that from 2015 ships berthed on quays in EU ports for more than two hours will not be permitted to use fuels with a sulphur content exceeding 0.1% or the ship must be connected to shore-side power.

All the ports that Port Strategy contacted, however, have yet to install ‘cold-ironing’ facilities, hoping that IMO will develop a set of international standards. The Copenhagen-Malmo Port, while happy to invest in any initiative to reduce the environmental burden of its operations, believes compatibility issues are at stake which will deter ports from immediate implementation.

CMP’s marketing coordinator Soren Balkan says the new cruiseship quay will be prepared for for a cold-ironing solution, but "we just don’t know [what kind of system] to prepare for".

Similalry, the Port of Oslo is looking into providing shoreside power at its Sjursøya Container Terminal and is working with Color Line to this end, but until specific requirements are in place is reluctant to invest immediately.

The Port of Gothenburg, meanwhile, already has a high-voltage onshore power supply for vessels visiting the port. The facility at its ro-ro terminal was set up in 2000 after collaboration with Stora Enso. Currently there are two quays at the ro-ro terminal that can offer shoreside power. Six Stora Enso vessels and one Stena Line ship are frequent users of the connection.

For many port operators (and shipowners) the problem is that the ruling is likely to result in an increase in freight charges and port fees amounting to hundreds of millions. Indeed, according to some studies the cost of transportation by sea in the Baltic Sea will increase dramatically, by 30%-50% for some freight types, creating a modal backshift from sea to land and, therefore, potentially increasing emissions.

The Baltic Ports Organisation, whose members number more than forty of the most significant ports in nine Baltic Sea states, believes "the dramatic increase in transport costs will make the Baltic transport and industry much less competitive compared to those from other European regions.

"Unfair competition rules will be applied in the European internal market positioning Baltic ports and shipping lines in a disadvantageous position. The matter is significant, as hinterland of the Baltic ports is still taking its shape and after introducing the new IMO regulations Baltic ports appear in a low competing situation when compared to other regions in Europe.

"Furthermore, development of the Baltic Sea region and industries would face a substantial barrier, which is in contradiction to the goals of the EU Baltic Sea Strategy."