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TRANSCRIPT
TRANSPORT SECTOR RESTRUCTURING IN THE BALTIC STATES TOWARD EU ACCESSION
Proceedings of the 2nd Seminar held in Parnu on November 24-25, 2003
The Seminar was hosted by:
The Estonian Ministry of Economic Affairs and Communications
The World Bank
Edited by Lauri Ojala, Tapio Naula and Cesar Queiroz
March 2004
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The second seminar on transport sector restructuring was held in Parnu, Estonia, on
November 24 and 25, 2003 to review recent progress in this field in each of the Baltic States and to discuss
possibilities for further restructuring of their respective transport sectors in the near future. The seminar was a follow-up of the first seminar held in
Riga in 2000.
The proceedings reflect the significant progress that the Baltic States have made in modernizing their
transport sectors over the past few years. The Governments of Estonia, Latvia, and Lithuania
deserve to be congratulated for their achievements, which will help to promote economic growth in the
region.
The Governments of the three states participating in the seminar attached considerable importance to the
topic, as reflected by the high level of their delegations, led by the respective Ministers of Transport and
Communications.
The EBRD, EIB, NIB and ECMT joined the World Bank at the Seminar, and made a significant intellectual contribution to the proceedings.
TRANSPORT SECTOR RESTRUCTURING IN THE BALTIC STATES TOWARD EU ACCESSION
Proceedings of the 2nd Seminar held in Parnu on November 24-25, 2003
The Seminar was hosted by: The Estonian Ministry of Economic Affairs and Communications
The World Bank
Edited by Lauri Ojala, Tapio Naula and Cesar Queiroz
March 2004
2004 The International Bank for Reconstruction and Development / THE WORLD BANK1818 H Street, N.W., Washington, D.C. 20433, U.S.A.
Published for The World Bank byLogistics, The Turku School of Economics and Business Administration,
Rehtorinpellonkatu 3, 20500 Turku, Finlande-mail: [email protected]
All rights reserved. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior permission of The World Bank.
Printed in Paino-Raisio, FinlandFirst printing March 2004
This paper is published jointly to communicate the results of the recent seminar withminimum delay. The typescript of this paper, therefore, has not been prepared in accordance
with the procedures appropriate to formal printed texts and the World Bank accepts no responsibility for errors.
Some sources cited in this paper may be informal documents that are not readily available.The findings, interpretations, and conclusions expressed here are those of the authors and donot necessarily reflect the views of the Board of Executive Directors of the World Bank or the
governments they represent.
The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or
the endorsement or acceptance of such boundaries.
2
ISBN 951-564-181-0
CONTENTS
List of Attachments....................................................................................................................................................5
List of Figures............................................................................................................................................................6
List of Tables .............................................................................................................................................................7
List of Boxes .............................................................................................................................................................8
Acronyms .............................................................................................................................................................9
A. EXECUTIVE SUMMARY ......................................................................................................12
B. STATEMENTS OF THE MINISTERS OF TRANSPORT ..................................................28B.1 MINISTER ATONEN’S STATEMENT ..........................................................................................28B.2 MINISTER ZILE’S STATEMENT ................................................................................................29B.3 MINISTER BALCYTIS’ STATEMENT .........................................................................................34
C. SEMINAR OBJECTIVES AND PARTICIPATION .............................................................38
D. STRATEGIC CONTEXT ........................................................................................................40D.1 GLOBAL TRENDS IN THE TRANSPORT SECTOR .........................................................................40D.2 THE BALTIC STATES’ ECONOMIC PROFILES ............................................................................43D.3 TRANSPORT SECTOR HIGHLIGHTS IN THE BALTIC STATES ......................................................47D.4 TRANSPORT SECTOR PROJECTS AND INTERNATIONAL FINANCIAL INSTITUTIONS...................54D.5 EUROPEAN UNION ASSISTANCE TO THE TRANSPORT SECTOR IN THE BALTIC STATES.............58D.6 INSTITUTIONAL FRAMEWORK IN THE TRANSPORT SECTOR IN THE BALTIC STATES.................62D.7 TRANSPORT SECTOR RESEARCH AND EDUCATION...................................................................68
E. MERCHANDISE TRADE, FDI AND THE BUSINESS ENVIRONMENT .......................70E.1 MERCHANDISE TRADE............................................................................................................70E.2 TRANSPORT SERVICES TRADE.................................................................................................72E.3 FOREIGN DIRECT INVESTMENT...............................................................................................74E.4 MEASURING THE BUSINESS ENVIRONMENT IN THE BALTIC STATES........................................75
F. THE TRANSPORT SECTOR IN THE BALTIC STATES AND EU MEMBERSHIP......81F.1 EC’S ASSESSMENT ON ESTONIA .............................................................................................82F.2 EC’S ASSESSMENT ON LATVIA ...............................................................................................85F.3 EC’S ASSESSMENT ON LITHUANIA..........................................................................................87F.4 PLANNED TRANSPORT SECTOR INVESTMENTS INTO TEN-T NETWORK...................................89F.5 PREPARING THE ESTONIAN TRANSPORT SECTOR FOR EU MEMBERSHIP ..................................89F.6 PREPARING THE LATVIAN TRANSPORT SECTOR FOR EU MEMBERSHIP....................................90F.7 PREPARING THE LITHUANIAN TRANSPORT SECTOR FOR EU MEMBERSHIP ..............................90
G. ROADS AND ROAD TRANSPORT ......................................................................................93G.1 ROAD NETWORKS ...................................................................................................................94G.2 SAFETY ISSUES IN ROAD TRAFFIC ...........................................................................................94G.3 VEHICLE STOCK......................................................................................................................97G.4 MANAGEMENT OF ROADS AND ROAD CONSTRUCTION ............................................................98G.5 ECONOMIC ANALYSIS ...........................................................................................................100G.6 TECHNICAL ISSUES ...............................................................................................................101G.7 ROAD FINANCING .................................................................................................................105G.8 VIA BALTICA........................................................................................................................108G.9 ROAD TRANSPORT INDUSTRY ...............................................................................................109G.10 MARKET CHARACTERISTICS IN ROAD FREIGHT TRANSPORT..................................................110G.11 ROAD TRANSPORT PERMITS .................................................................................................114G.12 INTERURBAN AND INTERNATIONAL BUS TRANSPORT............................................................116G.13 REGULATORY ISSUES IN ROAD TRANSPORT SERVICES ..........................................................117G.14 CONCLUSION........................................................................................................................119
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H. RAILWAYS ............................................................................................................................121H.1 VOLUME OF RAIL OPERATIONS .............................................................................................122H.2 ORGANIZATION ....................................................................................................................124H.3 RAIL TRANSPORTS’ FINANCIAL PERFORMANCE ....................................................................124H.4 RAIL INFRASTRUCTURE ........................................................................................................126H.5 REGULATORY ISSUES ...........................................................................................................128H.6 PASSENGER TRANSPORT AND PUBLIC SERVICE OBLIGATION ISSUES ....................................129H.7 CONCLUSION........................................................................................................................130
I. MARITIME TRANSPORT AND PORTS ...........................................................................132I.1 PORT AND WATERWAY INFRASTRUCTURE ............................................................................132I.2 PORT ORGANIZATION AND ACTIVITIES .................................................................................133I.3 MARITIME SERVICES ............................................................................................................138I.4 REGULATORY ISSUES IN PORT AND MARITIME TRANSPORT...................................................144I.5 CONCLUSION........................................................................................................................145
J. TRANSSHIPMENT OF RUSSIAN OIL VIA BALTIC PORTS ........................................147J.1 MAIN EXPORT ROUTES OF RUSSIAN OIL................................................................................147J.2 ECONOMIC IMPORTANCE OF TRANSIT TRAFFIC TO THE BALTIC STATES................................148J.3 OIL EXPORT INFRASTRUCTURE IN THE BALTIC SEA REGION.................................................149J.4 OIL TRANSSHIPMENT VOLUMES IN THE BALTIC SEA REGION ...............................................151J.5 CONCLUSION........................................................................................................................154
K. CIVIL AVIATION .................................................................................................................156K.1 AVIATION INFRASTRUCTURE ................................................................................................156K.2 ORGANIZATION OF CIVIL AVIATION ADMINISTRATION .........................................................157K.3 AIR TRANSPORT MARKETS IN THE BALTIC STATES...............................................................157K.4 ORGANIZATION OF AIRLINE SERVICES .................................................................................159K.5 AIRPORT SERVICES ...............................................................................................................160K.6 REGULATORY ISSUES ...........................................................................................................161K.7 AVIATION INFRASTRUCTURE FINANCING..............................................................................161K.8 CONCLUSION........................................................................................................................162
L. GENERAL TRANSPORT SUPPORT SERVICES .............................................................164L.1 COST AND QUALITY OF LOGISTICS SERVICES MATTERS ........................................................164L.2 TENDENCIES IN EUROPEAN LOGISTICS MARKETS..................................................................165L.3 ASSESSING THE IMPACT OF JOINING THE EU ON LOGISTICS COSTS .......................................166L.4 THE ROLE OF FREIGHT FORWARDERS AND CUSTOMS BROKERS.............................................167L.5 CUSTOMS SERVICES..............................................................................................................172L.6 LOGISTICS CENTER DEVELOPMENTS .....................................................................................174L.7 CONCLUSION........................................................................................................................177
M. VIEWPOINTS OF LOGISTICS USERS..............................................................................179M.1 INTERNATIONAL FIRMS’ LOGISTICS OPERATIONS IN THE BALTIC STATES .............................179M.2 BALTIC WHOLESALING AND RETAILING FIRMS ....................................................................182M.3 SHIFTING FOCUS FROM TRANSPORT INFRASTRUCTURE TO EFFICIENT LOGISTICS ................185
N. URBAN TRANSPORT ..........................................................................................................188N.1 ORGANIZATION ....................................................................................................................188N.2 URBAN AREAS IN THE BALTIC STATES .................................................................................188N.3 SERVICE OPERATIONS...........................................................................................................189N.4 REGULATORY ISSUES ...........................................................................................................190N.5 FINANCING ...........................................................................................................................191N.6 CONCLUSION........................................................................................................................194
O. ENVIRONMENTAL ISSUES IN THE TRANSPORT SECTOR .....................................195O.1 AERIAL EMISSION IN THE BALTIC STATES ............................................................................196O.2 NATURA 2000....................................................................................................................198O.3 BALTIC 21 AGENDA FOR SUSTAINABLE TRANSPORT.............................................................198O.4 MARITIME ENVIRONMENT AND HELSINKI COMMISSION (HELCOM)...................................199O.5 CONCLUSION........................................................................................................................200
REFERENCES ...................................................................................................................................201
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List of Attachments
Attachment C.1. List of Participants ...................................................................................................................... 206Attachment C.2. Program of the Seminar .............................................................................................................. 208Attachment C.3. Questionnaire for the Seminar .................................................................................................... 210Attachment D.1. Map of the Baltic States.............................................................................................................. 218Attachment D.2. Estonia at a glance ...................................................................................................................... 219Attachment D.3. Latvia at a glance........................................................................................................................ 221Attachment D.4. Lithuania at a glance................................................................................................................... 223Attachment D.5. Transport sector balance of payments in the Baltic States .......................................................... 225Attachment D. 6. International transport agreements and conventions ratified by the Baltic States, Finland
and Poland................................................................................................................................. 226Attachment D.7. Domestic freight and passenger statistics for Lithuania ............................................................ 227Attachment D.8. EU’s priority transport projects by Van Miert Group and transport corridors in the Baltic
Sea Region as presented in Fall 2003........................................................................................ 228Attachment D.9. TEN, TINA and Helsinki transport networks............................................................................ 229Attachment D.10. Anticipated TEN-T Road and rail network densities in 2010 ................................................... 230Attachment D.11. The main population centres in the Baltic Sea Region ............................................................. 231Attachment D.12. Overview of organisations' transport research capacity in the Baltic States in 2000 ................ 232Attachment E.1. Main trading partners of Estonia, Latvia and Lithuania in 2000 and 2002................................ 233Attachment E.2. Number of exporters and importers by the value of exports and imports 2000 and 2002 ......... 234Attachment E.3. Foreign Direct Investments inward and outward the Baltic States in 1996 – 2002 ................... 235Attachment E.4. Data of Business Environment and Enterprise Performance Survey (BEEPS 2002)................. 236Attachment E.5. Data of the Logistics Friendliness Survey 2003. ....................................................................... 237Attachment F.1. TEN-T Investment in Accession countries................................................................................ 238Attachment F.2. The main Estonian transport projects with EU or World Bank loans or financial assistance ....240Attachment F.3. Lithuanian Railway reform ....................................................................................................... 241Attachment F.4. Cohesion Fund and ISPA projects in Latvia.............................................................................. 242Attachment G.1. Number of persons killed in road accidents per million private cars......................................... 243Attachment G.2. Transport data on the Baltic States 1980-99.............................................................................. 244Attachment G.3. Road fatalities in 1999 in selected countries. ............................................................................ 245Attachment G.4: Time series of fuel prices in Europe. Source............................................................................. 246Attachment G.5. Via Baltica traffic flows in 1999 ............................................................................................... 247Attachment G.6. Cargo and passenger transport by road in the Baltic States in 1996-2002................................. 248Attachment H.1. Statistics over rail transport in the Baltic States 1996-2003. ..................................................... 249Attachment H.2. Lithuanian railway and road infrastructure priorities 2004-2006 .............................................. 250Attachment I.1. Cargo traffic in major Baltic States’ ports in thousand tons 1996-2002. ................................... 251Attachment J.1. Oil transport infrastructure of the Baltic States and North West Russia.................................... 252Attachment K.1. Development of Estonian civil aviation organizations in 1991 – 2003 ..................................... 253Attachment L.1: Structure of the Balance Sheet of Estonian firms in supporting transport activities.................. 254Attachment L.2: Weekly schedule for shipments to and from Europe of an logistics provider in Estonia........... 255Attachment M.1. Evaluation of logistics environment by 15 international firms in manufacturing and trade ...... 256Attachment M.2. Wholesaling/retailing firms’ evaluation of regulatory environment and transport and
telecommunications infrastructure in the Logistics Survey On Wholesale Operations. ............ 257Attachment O.1. Transport Emissions in the Baltic Sea Region states. ................................................................. 258Attachment O.2. Transport’s share of emissions in 1998 and distribution by transport source in Estonia............. 259Attachment P.1. Slide presentations given at the seminar..................................................................................... 260
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List of Figures
Figure D.1. Unbundling of activities and the options for competition and private sector involvement, and theapproximate placing of transport service provision in the Baltic States in 2003................................. 41
Figure E.1. The Baltic States four most important trading partners by value in 1999 and 2002............................ 71
Figure E.2. General exports and imports by mode in 2002, percent of net weight of trade. .................................. 72
Figure E.3 Credits and debits of trade of transport services of Estonia, Latvia and Lithuania in 1996-2002. ...... 73
Figure E.4. Foreign investment stocks by sectors in USD million 1996-2002 ...................................................... 75
Figure E.5. The ranking of countries in the Logistics Friendliness Survey 2003 against their CorruptionPerception Index in 2003 .................................................................................................................... 79
Figure E.6. The ranking of countries in the Logistics Friendliness Survey 2003 against their GNI/capita in PPP terms in 2002........................................................................................................................... 80
Figure G.1: The roles of the private and the public sector in road infrastructure management.............................. 93
Figure G.2: The national road administration employees in Estonia, Latvia and Lithuania 1991-2002................. 99
Figure G.3. Actual fuel prices in Estonia, Latvia and Lithuania in US Cents per liter in selected years.............. 106
Figure G.4: Revenues from road users compared with road expenditures 1999. ................................................. 108
Figure G.5: The roles of the private and the public sector in road transport services........................................... 110
Figure G.6. Transport work in national and international road freight transport in million tonkilometers. ......... 111
Figure H.1. The roles of the private and the public sector in rail transport services. ............................................ 121
Figure H.2. Transport work in international rail freight transport in million tonkilometers................................. 123
Figure I.1. The roles of the private and the public sector in port infrastructure management and cargo-handling services in ports. ................................................................................................................ 132
Figure I.2. The number of passengers by shipping lines in Helsinki-Tallinn trade ............................................ 143
Figure J.1. Freight rate comparison Primorsk-UK Continent vs. North Sea-UK Continent, 80 000 ton vessel.. 153
Figure K.1. The roles of the private and the public sector in airport infrastructure and scheduled services . ...... 156
Figure L.1. The roles of private and public sectors in Transport Supporting Services. ....................................... 164
Figure L.2: Net turnover development of Estonian firms in transport supporting services by firm size.............. 168
Figure L.3: Turnover of the four largest road-based logistics firms in each Baltic State, main business areas ...171
Figure L.4: The structural change in demand for different load types in unitized and groupage international transportation in 2000-2003.............................................................................................................. 171
Figure L.5: The detected transition in logistics customer relationships in 2000–2003 ........................................ 172
Figure L.6. Conceptualization of logistics centers with examples of activities that they can perform. ............... 174
Figure M.1: The Framework of analysing strategies of logistics users................................................................. 179
Figure M.2: Changing physical distribution patterns of 15 international firms in the Baltic States...................... 180
Figure M.3: Distributing goods via a warehouse in one of the Baltic States serving all three countries.Comparison of the steps of the process before and after EU membership ........................................ 181
Figure M.4: Changing organizational patterns of 15 international firms in the Baltic States ............................... 182
Figure M.5: Primary and secondary marketing channels of Baltic wholesaling and retailing firms before andafter joining the EU in the Logistics Survey On Wholesale Operations. .......................................... 183
Figure M.6: Physical distribution channels of Baltic wholesaling and retailing firms in the Logistics Survey onWholesale Operations. ...................................................................................................................... 183
Figure M.7: Wholesaling/retailing firm’s evaluation of logistics providers firms in the Logistics Survey On Wholesale Operations ....................................................................................................................... 184
Figure M.8: The 15 firms’ main concerns during their stages of market presence against the four layers of freight transport. ............................................................................................................................... 186
Figure N.1. The roles of the private and the public sector in urban transport infrastructure and services............ 188
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List of Tables
Table A.1. Key data on the Baltic States’ transport sector in 1999 and 2002. ........................................................ 15
Table D.1. Structure of Gross Value Added by activities in 2002 in per cent of GVA in EU accession countries .47
Table D.2. Transport sector’s share of Estonian and Latvian GDP in 2001 and the approximate values forsubsectors in per cent and USD million ................................................................................................ 48
Table D.3. Freight transport work by land and air transport in 1999 and 2002 in the Baltic States, Poland,Hungary and Czech Republic, million ton-kilometers .......................................................................... 51
Table D.4. Passenger transport performance by mode in 1999 and 2002 in the Baltic States, Poland, Hungaryand Czech Republic, million passenger-kilometers............................................................................... 51
Table D.5. Number of employees in all sectors and in transport, storage, and telecommunications (TSC)............52
Table D.6. Number of employees in all sectors and in transport, storage, and telecommunications by subsectors 52
Table D.7. Transport, storage and communication sector’s and all sectors’ average monthly nominal salaries ..... 53
Table D.8. Transport, storage and communication sector’s and all sectors’ average monthly salaries in Latvia.... 53
Table D.9. Approved EBRD, EIB, NIB, and World Bank loans in Transport Sector in the Baltic States ..............54
Table D.10. EBRD’s commitments in 2003 in transport infrastructure projects in the Baltic States ....................... 55
Table D.11. EIB financed transport projects in the Baltic States 1994 – 2003, million euros.................................. 56
Table D.12. NIB’s total commitments to the Baltic Sea transition countries by sector – as of November 2003 ..... 57
Table D.13. NIB’s major commitments to transport projects in the Baltic States as of November 2003................. 57
Table D.14. World Bank/IBRD loans in the transport sector in the Baltic States in million USD........................... 58
Table D.15. Community co-financing from the EU in infrastructure related targets for the period 2004-2006....... 59
Table D.16. The bodies supervised by the Estonian MEAC .................................................................................... 67
Table E.1. Baltic States’ services and goods trade balance in 1996-2002 and balance of transport service trade ..73
Table E.2. Qualitative Assessments of the Business Environment of selected countries in the BEEPS 2002........ 76
Table F.1. Baltic States’ Investment in TEN-Transport network in 1996-2010 ..................................................... 89
Table G.1: The ownership and maintenance of road network in Estonia, Latvia, and Lithuania in 2002. .............. 94
Table G.2: Road traffic accidents and fatalities relative to traffic volume. ............................................................. 95
Table G.3. Number of Lithuanian road users injured and killed in road accidents, 1999-2002 .............................. 95
Table G.4: Vehicle Stock in Via Baltica countries 1995-2002, thousand vehicles.................................................. 98
Table G.5: Passenger cars per 1,000 population in Via Baltica countries 1995-2002. ............................................ 98
Table G.6. Road maintenance by force account and contracts in Estonia by road districts and their regions ....... 100
Table G.7: Basic unit costs of asphalt concrete, surface treatment and routine maintenance in 2002................... 104
Table G.8. Road User Revenues and Maintenance Expenditures in Accession Countries in 1999-2000.............. 105
Table G.9: Total expenditure in road maintenance and construction and the sources of funding in 2002. ........... 106
Table G.10. Road Network Comparison and Macroeconomic Indicators.............................................................. 107
Table G.11: Trucks, buses and coaches in international and national traffic ......................................................... 111
Table G.12. Truck fleet of Latvia’s national road carriers’ association in 2000-2002; actual number of trucks.... 112
Table G.13. Annual cost of operating a 20 ton truck in international traffic for 200,000 km per year in 2001...... 113
Table G.14. Emission standards EURO 1 to EURO 4 for heavy duty vehicles used in ECMT countries.............. 114
Table G.15: ECMT multilateral quota for 2003 in selected countries – number of licenses by type of vehicle .... 115
Table G.16: Number of TIR carnets issued by IRU to national associations ......................................................... 115
Table G.17. Example of Long-distance bus fares and approximate distances in scheduled traffic os a majoroperator, December 2003 .................................................................................................................... 116
Table G.18. Number of passengers, passenger-kilometers and average length of journey in Latvian bus transport in 2002 ................................................................................................................................. 116
Table H.1. Passenger and freight volumes on Baltic States’ railways in 1997-2002. ............................................ 122
Table H.2. Distribution of rail traffic by type in 2002 in per cent of freight tons. ................................................. 123
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Table H.3. Financial data for Baltic States’ railways 1997-2002, in USD million................................................. 125
Table H.4. Freight and passenger revenue data for Baltic States’ railways in 1999-2002. .................................... 125
Table H.5: Data on labor force of the Baltic railways, 1999 – 2002, number of personnel and labor cost. .......... 126
Table H.6. Passenger transport by rail in Estonia and Government subsidies in USD million 1997-2003 ........... 129
Table I.1. Cargo traffic in major seaports in Baltic States, and for reference the Ports of St. Petersburg andKaliningrad in 1995-2002, millions of tons......................................................................................... 133
Table I.2. Income statement data from major ports in USD million in 1999-2002.............................................. 134
Table I.3. Costs for one port call in euros in 2002 in selected Baltic Sea ports for different types of traffic....... 137
Table I.4. Merchant Fleet owned or registered by the Baltic States as of January 1st, number of ships and their gross tonnage (1,000 grt) in 1997-2002............................................................................................... 138
Table I.5. Merchant fleet by flag of registration of the Baltic States as of December 31, 2002, by their gross tonnage (1,000 grt) in 1997-2002........................................................................................................ 138
Table I.6. Main liner shipping routes in 2004 from the Baltic States. ................................................................. 142
Table J.1. The development of oil production, refinement and crude oil export in Russia in million tons in1997-2002; forecast for 2003-2010. .................................................................................................... 147
Table J.2. Oil and oil products cargo turnover 1997-2003 in million tons........................................................... 152
Table K.1. Passenger throughput (thousands), cargo volumes handled (tons) and number of aircraft movements at Tallinn, Riga and Vilnius airports. .................................................................................................. 157
Table K.2. Passenger traffic volumes by market area, indication for 2003........................................................... 158
Table K.3. The number of online destinations and the main airlines operating at major Baltic airports................ 158
Table K.4. Baltic States’ major airlines: passenger volumes and turnover 1996-2002. ........................................ 159
Table K.5. Net sales and profit, and no. of passengers of Tallinn Airport Ltd 1999-2002, and forecast for 2003.160
Table K.6. Passenger and landing fees in Baltic States’ major airports in 2003 in USD ...................................... 162
Table L.1. Turnover in billion euros and number of employees of selected European logistics firms in 2002 .... 166
Table L.2: The impact of the EU membership on logistics costs as identified in the ad hoc inquiry at theSeminar workshop on Transport Services and Trade Facilitation, Parnu, November 25, 2003........... 167
Table L.3. The share of customs clearances and domestic deliveries made on behalf of customer by a largefreight forwarder in percentage of all import shipments. .................................................................... 169
Table L.4: Development of customs number of employees, customs posts, customs warehouses, bordercrossing points and total number of import and export declarations processed by customs services .. 173
Table N.1. Key data on main cities and town in Estonia, Latvia and Lithuania in 2002........................................ 189
Table N.2. Passenger cars per 1000 inhabitants in major cities in the Baltic States in 1998/1999 and 2002/2003.189
Table N.3. Allocations for urban transport infrastructure and public transport equipment in 2002 ....................... 193
Table O.1. Transport fatalities, casualties and accidents in the EU by mode......................................................... 196
Table O.2 Emissions into the ambient air from Estonian sources of pollution, thousand tons per year............... 197
List of Boxes
Box E.1. Improving the business environment – the case of Latvia, ....................................................................... 77
Box F.1. Areas, where the accession countries were required enhanced efforts by the EC in November 2003....... 81
Box G.1. Road finance issues in Estonia ............................................................................................................... 108
Box I.1. Developments in small ports in the Baltic States .................................................................................... 135
Box I.2. Shipping markets of minor bulk cargoes in the Baltic States ................................................................... 141
Box M.1. Locating European Distribution Centers after EU Enlargement ............................................................ 187
Box N.1. Urban transport in Helsinki: savings through competitive tendering...................................................... 192
Box O.1. HELCOM data on airborne pollution in the Baltic Sea .......................................................................... 200
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Acronyms
AADT Annual average daily traffic volume, a measurement of traffic intensityAcquis Acquis Communautaire, the body of EU legislation accepted by membersAETR European Agreement on the Work of Crews in International Road TransportASYCUDA Automated SYstem of CUstoms Data management developed by UNCTAD ATA carnet A customs document for temporary import of items free of duties Baltic 21 An environmental agenda by Council of the Baltic Sea States Barrel Volume measure; when used in oil trade, 1 US petroleum barrel 159 liters BASA Bilateral Air Services Agreements, an international aviation convention BEEPS Business Environment and Enterprise Performance Survey (EBRD and WB) BMS Bridge Management SystemBPS Baltic Pipeline SystemCAA Civil Aviation AuthorityCAGR Compound average annual growth rate CBSS Council of the Baltic Sea States CEE(C) Central and Eastern Europe (-ean Countries) CIS Commonwealth of Independent StatesContinent Here in a shipping context = Continental EuropeCPI Here: Corruption Perception Index CSI Container Security InitiativeDwt Dead weight ton; unit of a vessel’s cargo carrying capacity in metric tons EASA European Aviation Safety AgencyEBRD European Bank for Reconstruction and DevelopmentEC European CommissionECA Europe and Central Asia, a World Bank regionECB Estonian Customs BoardECMT European Conference for Ministers of Transport; French acronym CEMTEDI Electronic Data InterchangeEEA European Economic Area EEK Estonian kroon, pegged in 2004 to euro at 1 EUR = 15.65 EEK EIB European Investment BankENRA Estonian National Road AdministrationERDF European Regional Development Fund of the EU EU European UnionEUR Euro(s), currency unit of the Euro countries EURO 0,1,2,3,4 An environmental classification of heavy trucks used in the EU EVR Eesti Raudtee Ltd, Estonian railwaysFDI Foreign Direct InvestmentFIDIC International Federation of Consulting EngineersFTL Full truck load (cf. LTL and FCL for Full container load)FWD Falling Weight DeflectometerGDP Gross Domestic Product GFP Global Facilitation Partnership for Transport and Trade by the World Bank GNI, GNP Gross National Income, Gross National Product GOST Soviet standard systemGT/ grt Gross (register) ton; unit of a vessel’s gross volume; 1 GRT 2.8 m3
GVA Gross value added; it measures the contribution to GDP made by a sector HDM Highway Development and Management System (version 4) HELCOM Convention on Baltic Sea Environmental Protection; Helsinki Commission IATA International Air Transport Association IBRD International Bank for Reconstruction and DevelopmentICAO International Civil Aviation Organization IFI International Financial Institutions
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IMO International Maritime Organization INTERREG An EU development program for Europe’s regions ISPS International Ship and Port Facility Security Code IRI International (Road) Roughness Index IRU International Road Transport Union ISO 9001,2002 Quality standards of the International Standardization Organization ISPA EU Instrument for Structural Policies for Pre-Accession countries JAA , JAR Joint Aviation Authority, Joint Aviation Regulations; in Europe. JSC Joint-stock companyLDz Latvian RailwayLG Lithuanian RailwaysLRA Latvian Road AdministrationLTL (a) Lithuanian litas, pegged to Euro; in January 2004: 1 Euro = 3.4528 LitasLTL (b) Less-than-truckload; the context of (a) or (b) is evidentLVL Latvian lats, pegged to 1 SDR = 0.7997 LVL, allowing fluctuation at +/-1%MEAC Ministry of Economics and Communications (in Estonia since 2002)MoE Ministry of EconomicsMOT(C) Ministry of Transport (and Communications)MOU Memorandum of Understanding n.a. Data not available NACE International classification system used e.g. by EU in sectoral statisticsNATO North Atlantic Treaty Organization NATURA 2000 A network of protected areas in the European UnionNGO Non-Governmental organization NIB Nordic Investment Bank OECD Organisation of Economic Co-operation and DevelopmentPAX PassengersPHARE EU’s development program for CEE Countries PMS Pavement Management SystemsPPP Purchasing Power ParityPSO Public Service ObligationPSSA Particularly Sensitive Sea Area, a definition used by IMORD Road DistrictsRo-Ro Roll on – roll off vessel SAD Single Administrative Document, a customs declaration formSchengen area Passport-free area of 13 EU countries, Norway and Iceland (in 2004) SICF State Info-Communications Foundation in EstoniaSME Small and medium-sized enterprisesSOE State-owned enterprise TARIC The Integrated Customs Tariff of EC, “Tarif Intégré de la Communauté”TEN Trans-European NetworksTEN-T Trans-European Transport NetworksTEU Twenty feet equivalent unit, a measurement for unitized cargo TINA Transport Infrastructure Needs Assessment of the CEE Countries TIR Carnet A document issued by IRU for duty free road transit in Europe TPL Third Party Logistics, a form of advanced logistics provision TRF Transit Flights; used in aviation as opposed to non-stop flightsTTF Trade and Transport Facilitation UK United KingdomUNCTAD United Nations Conference for Trade and Development USD American dollar VTMIS Vessel Traffic Management Information SystemVTS Vessel Traffic Service WS World Scale; a freight quotation system used in oil shippingWTO World Trade Organization
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Foreword
The Second Seminar on "Transport Sector Restructuring in the Baltic States" was heldin Parnu, Estonia, on November 24 and 25, 2003, for the purposes of reviewing recentprogress in transport sector restructuring in the three Baltic States and to discusspossibilities for further restructuring in the future, taking into account measuresrequired by the EU for accession to the EU this year.
This significant international seminar followed a somewhat similar, useful one heldthree years earlier in Riga, Latvia. Co-hosts for the recent seminar were the Ministryof Economic Affairs and Communications of Estonia and the World Bank.
The attached proceedings indicate that substantial progress has been achieved in therestructuring programs of each of the Baltic countries during recent years. In particular, excellent progress has been realized in meeting the transport restructuringrequirements of the EU related to EU accession of the three countries on May 1, 2004.
Participation in the seminar by representatives of several international organizations,particularly the EBRD, EIB, NIB and ECMT, demonstrate the strong interest of these organizations in assisting each of the Baltic States in the restructuring of its transportsector.
We are pleased that the Ministry of Economic Affairs and Communications of Estoniaand the World Bank had the opportunity to sponsor the productive seminar, which has been of great benefit to all three Baltic States and has provided directions for international organizations as they plan future financial assistance to these States in the transport sector.
Meelis AtonenMinister of Economic Affairs and Communications
Republic of Estonia
Roger Grawe Country Director, Central Europe and the Baltic States
The World Bank
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A. Executive summary 1
Useful insight into the transport sector was gained from the seminar in terms of realistic assessments of recent progress in restructuring and authoritative projectionsof promising future programs in the field. The outstanding qualifications of participants gave assurance of good results from the seminar. Among the participants were the Baltic States ministers responsible for transport sector activity. Also participating were other knowledgeable local officials and specialists. Attendees included representatives of the World Bank, European Bank for Reconstruction and Development, European Investment Bank, Nordic Investment Bank and the European Conference of Ministers of Transport.
The principal findings and conclusions of the seminar fall mainly into categoriesrepresenting each of the several principal means of transport, namely, roads and road transport, railways, civil aviation, maritime transport, pipelines, urban transport and transport support services.
Urgent needs for change in the roads and road transport sector are to expediteborder crossings, improve training for road transport operators, enhance road safety, and develop better road links between poorer areas and main centers.
Regarding railways, the principal needs are to reduce overcapacity, rationalize tariffs, raise levels of safety and improve railway service.
In aviation, there is a need to improve administrative procedures, improve air services, modernize aircraft fleets, privatize and restructure Tallinn airport operations,complete the reconstruction of Riga and Vilnius airports.
Concerning maritime transport, the principal requirements are to facilitate theanticipated significant expansion of maritime traffic at Baltic ports, improve safety in handling cargo and enhance environmental protection in ports and at sea.
In urban transport, the principal needs are to overcome the continuing deterioration of public transport facilities, alleviate traffic congestion on city streets and secure astable source of funding for urban passenger transport companies.
The quality of transport support services is good and their markets are competitive.
The Baltic States were essentially meeting the criteria for EU accession on transportinfrastructure and transport sector administration. However, administrative capacity needs strengthening in all countries and in all modes. Customs legislation is also in place for EU accession, but administrative and operational capacity of the customs needs strengthening in all countries.
Underlying these various basic conclusions are significant economic trends, various other determining or influential factors and a variety of problems that affect the performance of the transport organizations. A synopsis of conclusions is given in thesubsequent sections.
1 By Kenneth Clare, Cesar Queiroz (World Bank) and Lauri Ojala (Turku School of Economics )
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Strategic Context
Among the notable transport trends in the Baltic States is the rapid growth of demandfor transport, growth at a faster rate than that of the gross national product. There hasalso been increasing demand for consolidated transport related support services. Moreover, privatization has been widely used as a vehicle to restructure transport and transport infrastructure markets. Public-private partnerships have been introduced as a mechanism for providing good quality transport and infrastructure services at a reasonable cost. Meanwhile, the Baltic States have made considerable progress intheir preparations for EU accession.
The Baltic States have financed many of the major transportation sector projects with exclusive or partial funding obtained either from international financing institutions or from other international organizations such as the European Union. The main such organizations in this field include the EBRD, EIB, NIB and the World Bank. EBRD has financed mainly road and rail projects, EIB largely airports, ports and roads, NIB mainly road projects and the World Bank principally road and port projects.
Through its PHARE, ISPA and other programs, the European Union has had a substantial impact on institutional development of the transport sector in all threeBaltic States and in the closely related fields of trade and transport facilitationconcerning Customs and border crossing stations.
Foreign Trade
Each of the Baltic States has experienced substantial growth in the volume of merchandise exports and imports. This trend is partly a reflection of the rapid growth of transit traffic. The foreign trade of the Baltic States generally shifted toward the EU during the 1990s. Roughly 70 percent of Estonia's foreign trade, both exports and imports was with the 15 EU countries in 2002. The corresponding figure for Latvia is60 percent and for Lithuania is 50 percent.
In January-November 2003, 80 percent of Estonia’s and Latvia’s, and over 60 percent of Lithuania’s export is with the 25 old and new EU countries. 75 percent of Latvia’s, 65 percent of Estonia’s and 57 percent of Lithuania’s imports come from EU25.
Estonia’s trade is closely linked with Finland, Sweden and Germany while Latvia’s and Lithuania’s trade is closely linked with Germany, Russia and Britain. Intra-Baltic trade has been relatively limited, but it has increased substantially both in absolute and relative terms during the past few years. The relative share of trade with Russia has declined, while its absolute volume has increased.
Transport services trade is important for the Baltic States. Latvia has the highest netcash flow from trade in transport services, a situation mainly attributable to transitflow of oil and related products by railways and pipeline. By contrast, Estonia has the highest value of transport services sold to and bought from other countries, indicating the high degree of internationalization of the Estonian transport sector.
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Transport Sector in the Baltic States and EU Membership
According to The European Commission, the Baltic States – and especially Lithuania - have adopted the main elements of the acquis, but further progress is needed in somesecondary legislation and overall implementation of transport sector legislation. In addition, administrative capacity requires further strengthening, both in qualitativeand quantitative terms, in particular in the rail and the road sector.
Estonia is essentially meeting the commitments in view of the trans-Europeantransport networks, road transport, inland waterway and rail transport. It will be ableto implement the acquis from the time of accession, provided that the current pace of progress is maintained. However, Estonia must complete the adoption of the railway acquis and strengthen administrative capacity. In road transport, Estonia needs toadopt implementing legislation and further reinforce its administrative capacity.
Estonia is meeting the majority of requirements in air transport, where legislativealignment remains to be completed. It needs to accelerate efforts to become a full member of the Joint Aviation Authorities (JAA). Estonia is partially meeting the commitments in maritime transport, where legislative alignment is not complete.Action must be taken to improve the detention rates of Estonian flag vessels.
Latvia is essentially meeting the commitments and requirements in the areas of trans-European transport networks, road, rail, inland waterway and maritime transport. It isexpected to be in a position to implement the acquis in these areas from the time of accession. However, Latvia must complete the adoption of the railway acquis. In theareas of road and maritime transport, Latvia needs to adopt implementing legislation and further reinforce its administrative capacity.
Latvia is meeting the majority of the commitments and requirements in the area of air transport. Latvia needs to strengthen administrative capacity and enhanced efforts arerequired in order to become a full member of the JAA before accession.
Lithuania is essentially meeting the commitments and requirements in the transportsector, and is expected to be in a position to implement the acquis from the time of accession. In completing preparations for membership, Lithuania must complete the adoption of the railway acquis, in particular as regards interoperability, and strengthen administrative capacity. In road, air and maritime transport, Lithuania needs to adopt implementing legislation and reinforce its administrative capacity. Lithuania needs to become a full member of the JAA before accession.
Economic Importance of Transport in the Baltic States
Transport and storage make over 10 % of GDP
Transport, storage and communications is an important sector in all current and newEU countries, but its share of GDP is the highest in the Baltic States. In 2002, 15.5%
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of the Gross Value Added2 in Estonia, 14.5% in Latvia, and 13.7% in Lithuania was produced by the transport, storage and communications sector.
About 35% of the sector’s GVA is produced in transport, 35% in storage and the remaining 30% by communications. In other words, transport and storage contributed 10% to 11% of the countries’ Gross Value Added or GDP in 2002. (Table A.1.)
Table A.1. Key data on the Baltic States’ transport sector in 1999 and 2002.
Unit 1999 2002 1999 2002 1999 2002 Sources
Value added and employment of Transport, Storage and Communications (TSC) sectorGross Value Added of TSC #) USD million 1 009 1 219 1 891 1)TSC in % of Gross Value Added % of total GVA 15,2 % 15,5 % 15,3 % 14,5 % 10,6 % 13,7 % 1)Employed in TSC thousands 63 55 90 86 105 87 1)TSC in % of total employment % of all employed 10,2 % 9,4 % 9,5 % 8,7 % 6,4 % 6,2 % 1), 2)Average salaries in TSC USD/month 356 455 321 373 299 300 1), 2)Average salaries in All sectors USD/month 285 394 242 297 247 258 1), 2)Balance of payments and FDI of the transport sectorBalance of transport services trade USD million 321 313 522 539 186 357 3) Goods and services trade balance USD million -258 -614 -691 -900 -1 099 -793 3)Inward FDI stock in the TSC sector USD million 687 906 329 385 420 680 3)FDI stock of the TSC sector % of all inward FDI 28 % 21 % 27 % 14 % 20 % 17 % 3)Transport work (excl. maritime transport)Total freight transport work Million ton-km 11 274 14 089 22 436 26 221 18 219 25 370 1)
Railway transport work Million ton-km 7 295 9 697 12 210 15 020 7 849 9 767 1)Transport work by road Million ton-km 3 975 4 387 4 161 6 120 7 740 10 709 1)
Oil pipelines transport work Million ton-km .. .. 6 055 5 071 2 627 4 892 1)Air transport work Million ton-km 4 5 10 10 3 3 1)
Total passenger transport work Million passenger-km 3 191 3 282 3 590 3 443 3 797 3 068 1)Railways passenger transport work Million passenger-km 238 177 984 744 745 498 1)
Road transport passenger work Million passenger-km 2 222 2 330 2 368 2 361 2 665 2 046 1)Air transport passenger work Million passenger-km 298 355 238 338 387 524 1)
Road and road transportRoad network of central Gov:t kilometer 16 430 16 443 20 329 20 279 21 161 21 335 4)Road density (all roads ##) in 2002 km/million people 4)Estimated Gov:t budget for roads USD million 47 77 64 46 116 159 4)Government road budget USD/km of Gov:t roads 2 861 4 701 3 148 2 278 5 482 7 471 4)Killed in road accidents actual number 232 224 604 518 748 697 4)Injured in road accidents actual number 1 691 2 852 5 244 6 300 7 696 7 427 4)Number of killed in road accidents per 100,000 vehicles 42 46 86 64 62 47 4)Passenger cars thousands 451 401 483 619 981 1 181 2), 4)Buses thousands 6 5 12 11 15 15 2), 4)Lorries and special vehicles thousands 81 80 85 103 115 116 2), 4)Road freight transported million tons 11,3 17,8 33,3 36,9 45,7 45,0 4)Passengers transported by road million passengers 171 171 167 174 273 182 4)Diesel fuel average actual prices US cents per liter 36 56 35 65 34 59 5)Super Gasoline average actual prices US cents per liter 45 58 55 70 51 69 5)Railways and rail transportRailways revenues *) USD million 92 117 147 189 149 232 4)Personnel in railways **) number of personnel 5 592 3 602 16 550 14 699 16 718 13 096 4), 6)Rail freight transported million tons 37,4 42,6 33,2 40,1 28,8 36,7 4)Rail passengers transported million passengers 6,8 5,2 24,9 22,0 10,6 7,2 4)Port traffic and merchant fleetPort traffic million tons 34,4 46,8 49,0 52,2 15,6 25,9 4)Merchant fleet 1,000 Gross ton (GT) 241 317 333 89 397 435 7)Air transportAir passenger throughput thousands 552 606 562 633 481 635 4)Air cargo handled (excl.mail) thousand tons 5 4 4 7 5 4 4)#) Roughly 1/3 of TSC's Gross Value Added is from transport, 1/3 from storage and 1/3 from communications ##) Excluding forest roads*) Lithuania in 1999 freight and passenger revenue only; Estonia: Eesti Raudtee only for 2002 **) Estonia: data for 2000 and 2002 on Eesti Raudtee only1) Statistical bulletins of EU Candidate countries 2003 2) Statistics Estonia, Statistical Bureau of Latvia, Statistics Lithuania3) National Banks of EST, LAT, LIT 4) Ministries of transport data; Pre-seminar Questionnaire5) Metschies 2003 6) Eesti Raudtee annual reports7) Ministers of transport for 1999, UNCTAD for 2002, For Latvia; 1998 and 2002
Estonia Latvia Lithuania
33 412 29 623 21 207
2 Gross value added (GVA) is a measure of the contribution to GDP made by an individual industry.
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Strong positive cash flow into the Balance of Payments
The transport sector generates significant positive cash flows to all three countries. In 2002, the positive flow of foreign currency in the trade of transport services was thehighest in Latvia at USD 539 million, followed by Lithuania at USD 357 million, and Estonia, USD 313 million.
TEN-T infrastructure investment in 1996-2001 almost 900 million euros
The three countries have invested substantially in their TEN-T transportinfrastructure. In 1996-2001, Estonia invested 235 million euros, of which almost half in ports. In the same period, Latvia invested almost 370 million euros, 2/3 of which into railways. Lithuania invested 270 million euros, half of which in roads.
For the period 2002-2010, Estonia intends to spend over 550 million euros, mostly on roads and ports. Latvia has plans to invest approximately 500 million euros, half of which on roads. Lithuania plans to invest up to 1,250 million euros mostly on railways and ports. Combined, this makes 2,300 million euros till 2010 even withoutthe proposed Rail Baltica project.
Roads and Road Transport
In the roads and road transport sector, the urgent needs are to enhance road safety, increase road maintenance and develop better highway links between poorer areas and main centers as well as to improve training for road transport operators.
Road traffic safety record is among the poorest in Europe
Road traffic safety in the Baltic States has improved but the number of fatalities and accidents in relation to the number of vehicles are still among the highest in Europe.The absolute number of fatalities has declined slightly from 1999 to 2002. However, the number of injured has increased by 69% in Estonia and 20% in Latvia. Only in Lithuania the number of injured has decreased slightly in that period. (Table A.1.)
Road investment activity is high, but the main problem is funds for maintenance
The Baltic States have invested heavily in their main road network. Road investmentis likely to continue at a rapid rate throughout the decade. While projects related to Via Baltica have a high priority, also projects with secondary roads will receive morefunds. As budgetary allocations in Estonia, Latvia and Lithuania are not fully sufficient to cover capital investments, road finance from external sources will beneeded in the future, including substantial assistance from EU’s RegionalDevelopment and Cohesion funds.
The Baltic States spend now less money on maintaining their road networks thanbefore.
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Systematic road maintenance may not be a glamorous undertaking for politicians or road administrations, but it is very good business for road users. Technicalpublications often cite the statistic that for every additional $1 a country spends on road maintenance, road users save up to $2 in developed countries and $3 or more in developing countries. Heavy trucks and buses benefit most from proper road maintenance, but also passenger car users benefit from reduced accidents, operatingcosts, and travel times.
Transferring tasks from Road administrations to the private sector
Road administration in all three countries – and especially in Estonia and Latvia – has undergone a rapid restructuring. Road construction, maintenance and design are now performed by the private sector. As a consequence, the number of employees in roadadministrations has decreased. This rapid change has even caused a lack of civilengineering skills in the ministries or road administrations.
Motorization is rapid, and private car usage increases fast
Motorization progresses rapidly as the number of passenger cars, buses and trucks has increased substantially. Also the fleet renewal has been profound, as Soviet-era vehicles have been replaced by western models, albeit partly with second-handvehicles. Only in Estonia, the number of passenger cars has not increased.
Rapid road freight growth, and in Lithuania road surpasses rail in ton kilometers
Demand for road freight transport, measured in ton kilometers has grown very rapidly in Latvia (+ 48%) and Lithuania (+ 39%) from 1999 to 2002. In Lithuania, road transport demand even surpassed that of rail transport in 2002. In Latvia and Estonia, rail transport performs roughly two times more ton kilometers than road transport.
In Estonia, transport work grew only modestly, even when the transported volumeincreased by 59% from 1999 to 2002. This indicates a growing demand on short-distance domestic transports, for example, in construction.
Slow growth in bus transport, but a dramatic downturn of rail passenger volumes
Demand for bus transport grew a little in Estonia, remained stable in Latvia anddecreased substantially in Lithuania in 1999-2002. This is partly due to the increase of passenger car usage, as passenger kilometers by rail decreased by 25% in Estonia and Latvia, and by 33% in Lithuania.
The most expensive fuel in Latvia, the cheapest in Estonia
Motor transport has also become more expensive due to increasing diesel and gasoline prices. Thanks to competitive markets, their price follows world market prices moreclosely now than in the mid-1990s. Fuel taxation differs between the countries, and Latvia has the most expensive diesel and gasoline, followed by Lithuania and Estonia.
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Railways
With regard to railways, the principal needs are to continue with railway restructuring, especially in Latvia and Lithuania, including efforts to separate commercialoperations from rail administration, and in all three countries to reduce over-capacity, rationalize tariffs, raise levels of safety, and improve railway service.
Rail transport propelled to strong growth by oil transit trade in Estonia and Latvia
Rail transport work grew between 23% and 33% in 1999-2002 propelled by oil transit trade. In the medium to long term, continued growth may be limited, as oil transport arrangements develop in Russian territory. Over 80% of Estonian and over 70% of Latvian rail freight traffic is oil and oil product transit trade through ports.
Transit traffic to Kaliningrad is likely to remain a substantial operation for Lithuania; in 2002, it accounted for 36% of the cargo volume carried by rail.
Rail passenger volumes at their lowest level since 1990
Passenger transport volumes were at their lowest level in 2002 since 1990. This is almost exclusively domestic traffic in Estonia and Latvia. In Lithuania, internationalservices - mainly connecting Kaliningrad and Russia – perform 20% of passenger kilometers. Developing passenger rail transport remains a challenge, as passenger cars and bus transport offer an increasingly competitive substitute to rail.
Railways have turned profitable, yet unit freight revenue shows no signs of increase
All railways have improved their management and have turned profitable. In 1999-2002, freight revenue per ton-kilometer remained unchanged in Estonia and Latvia, but increased slightly in Lithuania. Passenger services are operated at loss.
The number of railway staff has been reduced in all three countries. In Estonia, the privatization of railways has radically changed the management and organization of railways. However, total labor costs in railways have remained the same in Estoniaand Lithuania and increased substantially in Latvia despite personnel reductions.
Estonia privatized its railways, Latvia and Lithuania struggle with restructuring
Rail infrastructure ownership and railway operations remain the responsibility of the public sector in Latvia and Lithuania. Estonia privatized its railways in 2001. Railinfrastructure maintenance and construction is entirely run by the private sector in Estonia, and most of this work is privatized also in Latvia. In Lithuania, these duties are still carried out by the state-owned Lithuanian Railways.
Railway restructuring was politically a problematic process in Estonia. It has alsobeen one of the most difficult restructuring processes in Latvia and Lithuania.
Substantial investment in railways; the feasibility of Rail Baltica remains to be seen
Lithuania plans to invest 835 million euros in rail infrastructure in 2004-2015. This isfar more than Latvia.
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In Estonia, Government investment in rail is very small because rail infrastructure andoperations have been privatized.
The Baltic States have put considerable political weight to the Rail Baltica project. It is a blueprint for a new, European standard high-speed railway line between Berlin, Warsaw, Kaunas, Riga and Tallinn. The construction is planned to start in 2008.
If realized, it would be the biggest single transport infrastructure project in the Baltic States, estimated at 3.9 billion euros, of which over 2.5 billion in the Baltic States.
So far, preliminary studies have been prepared but no economic feasibility assessments have been presented. However, current volumes of cargo and passengers in the north-south direction by rail or other modes do not readily justify such a large investment.
Air Transport
Key findings of the seminar concerning civil aviation in the Baltic States were (a)aviation infrastructure and management remains the responsibility of the public sector; (b) the major airline in Lithuania is state owned, in Latvia government has a majority stake and in Estonia a minority stake; the airlines have recently turned profitable after several years of negative financial results; (c) several major airlinesoperate from the major airports; and (d) passenger traffic has steadily increased; cargotraffic, however, remains low.
While aviation infrastructure in the three Baltic States remains in the public sector, the organizations for infrastructure administration are quite different. In Estonia and Latvia, the airlines have been transformed into joint ventures with establishedinternational carriers and other investors.
The Civil Aviation Administration (CAA) in each of the three countries falls underthe Ministry responsible for transport. Estonia runs its Air Traffic Management(ATM) as a state-owned corporation, Lithuania as a state-owned enterprise, while thenational CAA is in charge of ATM in Latvia.
600,000 passengers in each country, and the demand is gradually picking up
There are about 600,000 air passengers per year in each of the Baltic States, of whichroughly ½ use national and ½ use foreign carriers. The volume has increased at all key airports, especially in Vilnius. Cargo traffic is modest in each country.
Major foreign airlines in many cases operate to the Baltic States through code-sharing arrangements. Important carriers serving the Baltic States are Finnair, Lufthansa, Scandinavian Airlines (SAS) and British Airways. The Baltic States have attracted some airline investments in anticipation of their EU membership.
The main investor in Estonian Air is Maersk Air after SAS sold its 49 per cent stake in Autumn 2003. The Estonia government has a 34 percent stake and an investor group has a smaller stake. The government provides no subsidies to Estonian Air.
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The Latvian Government has a 52.6 percent stake in the national airline, airBaltic. The other principal shareholder is Scandinavian Airlines. Transaero of Russia has a very small stake in airBaltic. AirBaltic receives no direct or indirect state subsidies.
In Lithuania, the national airline, Lithuanian Airlines, is owned and operated by the government. Several attempts to privatize this airline had been unsuccessful,including one in 2003. A new privatization scheme has been launched, and as part of it, Air Lithuania, a local carrier, was divested in February 2004.
Frequent helicopter passenger service in provided between Tallinn and Helsinki. The flight time between the two capitals is only 19 minutes.
Bilateral agreements used now, EU’s Single European Skies anticipated in 2005
The right of foreign airlines to operate air services in the Baltic States is based on bilateral agreements with various governments. This practice will continue with non-EU countries within the limits of EU regulation. For example, EU’s stringent noiseregulation will effectively ban non-complying aircraft from the main airports, and give only short transitional periods for traffic in some minor airports.
service is often granted freely.
The key regulatory issues for Baltic States civil aviation can be summarized as follows: (a) progressive liberalization (increased competitiveness) of air services in relation to EU countries; (b) airport slot allocation; (c) technical requirements and administrative procedures of the Joint Aviation Authority; (d) appointment of anindependent accident investigator; (e) need for improved statistics; (f) greater reliance on market forces vis a vis approval procedures at the CAA, and (g) harmonization of air navigation systems in view of EU’s Single European Sky initiative (expected to be implemented in 2005).
Substantial airport development with EU assistance and loans from EBRD and EIB
Tallinn airport has financed its reconstruction with EBRD and EIB loans, EU'sPHARE program, its own internal resources and some state budgetary assistance. Regional airports in Estonia mainly use state budgetary allocations for construction activity. A regional airport financial plan in Estonia for the period 2000-2006 hasbeen prepared.
In Latvia, the main source of funding for reconstruction and improvement at Riga International Airport is a passenger departure tax. Other sources of funds are international financial institutions and commercial banks. In Lithuania, reconstructionand improvement of airports are funded through the airports' own resources and loans from foreign investors.
Limited administrative capacity and fragmented markets among the key weaknesses
The main weaknesses identified in civil aviation of the Baltic States are (a) limitedadministrative capacity of regulators; (b) small and fragmented markets; (c) lack of individual strategies for particular markets; (d) large number of air carriers comparedwith the modest market size; (e) prevalence of "two aviation worlds" in terms of
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Intra-EU air traffic will stand for over 2/3 of all traffic. Assignment of slots for
technology and regulations; and (f) diminished access at EU airports for all aircarriers of the Baltic States.
Strengthening administrative capacity and legal harmonization among the key issues
The most important development areas in civil aviation of the Baltic States are: (a) in all three countries, strengthening administrative capacity, complete legalharmonization with EU, signing of the Common Market Aviation Area Agreement;(b) in Estonia, airport privatization and restructuring including privatization at Tartuand certain other airports and restructuring at Tallinn airport; (c) in Latvia, reconstruction of Riga airport including a new terminal, runway extension, category II facilities, and improving access road to the airport; (d) in Lithuania, CAArestructuring, fleet improvement, reconstruction of Vilnius airport including newterminal, runway extension, aprons, navigation facilities, and at Palanga airport runway rehabilitation, improved landing system, and a decision on the future of theex-military airbase.
Maritime Transport and Ports
Key findings of the seminar in this sub-sector were: (a) ports have shown strong economic results during the past few years; (b) stevedoring and shipping companieshave been almost completely privatized; (c) further strengthening of the maritimeadministration is needed; (d) the merchant fleets registered in the Baltic States need to comply to Paris MoU; (e) international regulation on maritime safety at sea and in ports need to be followed; and (f) environmental issues have grown more important.
Major ports are owned by Governments and they have been very profitable
Governments own the land occupied by large ports of the Baltic States while smallerports may belong to municipalities or, as in Estonia, may involve some privateownership of port land. Private companies generally carry out port work such asstevedoring and warehousing.
The only ports of the Baltic States handling a million tons or more of cargo annually are Tallinn, Kunda and Parnu in Estonia; Ventspils, Riga and Liepaja in Latvia; and Klaipeda and Butinge in Lithuania. Among these ports, only the port of Tallinn has significant international passenger traffic. The islands of Saaremaa and Hiiumaa in Estonia generate domestic ferry traffic.
The major ports of Tallinn, Riga and Klaipeda handle relatively diverse traffic whilethe traffic of Ventspils is mainly oil and chemicals, and the traffic of Liepaja comprises principally timber, metals and bulk liquids. The major ports as well as theprivately-run cargo handling operations in them have been very profitable.
Private sector participation in port operations has increased significantly in recentyears, driven by increased opportunities made available as the role of public authorities has become more limited. The countries adopting this new policy have been able to attract substantial amounts of private capital investment to refurbish
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infrastructure and modernize cargo handling equipment. Under private managementof certain operations, ports have improved performance in terms of improved quality of service and reduced cost of cargo handling.
The national merchant fleets have been declining, but Baltic seafarers still have jobs
The merchant fleets of the Baltic States in 2002 included 174 ships totaling about 898,000 gross tons. Some of these ships were inherited from the Soviet Union. Including small vessels and fishing fleet, Lithuania had 376 ships, Latvia 362 shipsand Estonia 160 ships. The fleet of Latvia has declined in recent years, whereas Lithuanian and Estonian fleet, measured in gross tonnage, has remained stable. Private companies own a major part of the fleets.
Seafarers from the Baltic States have found plenty of jobs in ships sailing under foreign ownership or flags. This applies especially to deck officers and engineers, butalso to able-bodied seamen, thanks to their comparatively good training and skills.
Over 100 million tons through Baltic ports, with unitized traffic increasing fast
The total seaborne trade in the Baltic Sea is over 400 million tons. Ports in the Baltic States handle about 30 percent of this volume. Individual ships in the Baltic Sea donot exceed 150.000 tons because of draft restrictions in the Danish straits. Also, lack of berths and limited cargo handling capacity limit the size of ships that can beaccommodated.
Operations of Ro-Ro ferry lines have increased significantly especially in trade with EU countries, where such use is common. Traffic in passengers and vehicles between Tallinn and Helsinki grew steadily till 2001 and volumes are well balanced in the twodirections. A number of EU-based shipping companies have formed joint ventures in the Baltic States, or opened liner routes with their Ro-Ro and container vessels.
New Vessels Traffic Systems are being implemented
Increased ship traffic in the Baltic Sea during recent years has increased the dangers of ship operations there. These growing dangers have led to the creation and implementation of an advanced system for control. A vessel traffic management and information system (VTMIS) is being implemented in the Gulf of Finland in 2004 jointly by Finnish, Russian and Estonian maritime authorities.
Safety at sea and in ports and related inspections is among key regulatory issues
In the maritime sector, the main regulatory issues include manning of the vessels,safety at sea and in ports, as well as keeping up with the inspection of the technical requirements of vessels. The inspection involves both national and foreign vessels through Port State Control. According to statistics for 2002 under the Paris Memorandum of Understanding (MOU), the percentage of vessels registered in theBaltic States detained following Port State control was over 6 %. This compares with an average for EU-flagged vessels of 3.5%.
However, there are strong indications that the situation is deteriorating, in that the number of Baltic States’ vessels being detained is rising sharply. The countries need to urgently address this issue with a view to reversing this trend of deteriorating
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detention rates. In 2003, both Lithuania and Latvia were removed from the black list to the grey list of the Paris MOU.
Information flow and safety among key development areas in the maritime workshop
The workshop on maritime and port issues in the Parnu seminar prioritized the mostimportant development areas as follows: (1) information flows and systems, (2) maritime safety issues, and especially ISPS, (3) infrastructure development and (4)environmental protection. Other issues that were mentioned included EU Transport Policy, transit traffic, cargo security, competition of ports and shipping as well asinstitutional development.
Transit of Oil and Oil Products in the Baltic States
The volume of transit oil and oil products handled at Baltic States and Russian BalticSea ports has increased from 50 million tons in 1997 to 100 million tons in 2003.
The economic impact of oil transit traffic through the Baltic States is quite significant to these countries. Transit revenues represent 5 to 8 percent of gross domestic product of the three Baltic countries. Each Baltic state earns a significant amount of revenues from this transit traffic. Russian firms, recognizing the importance of the transitrevenue through the Baltic States, have tried to obtain controlling stakes in companiesoperating oil export facilities in the Baltic countries.
The Polotsk-Ventspils crude oil pipeline leading to the port of Ventspils has an annualcapacity of 14 to 16 million tons of crude oil; parallel to the crude pipeline is an oil products pipeline with an annual capacity of 4 million tons. The Lithuania oil exportterminal at Butinge is served by a pipeline with an annual capacity of 13 million tons of crude oil. The terminal facilities at Butinge are owned by a company in which the Russian oil company, Yukos, has a controlling stake. Most of the crude oil and products brought to the port of Tallinn arrive by railway. For the ports of Riga, Liepaja and Klaipeda, railways are the only economically feasible means of transporting oil to the ports.
Capacity in Russian terminals is increasing, and tariff policy favors these terminals
Competition between the Baltic ports for transit traffic has intensified during recentyears. All the Baltic ports have modernized their facilities to attract that importanttraffic. At the same time, major Russian oil companies have successfully played off the Baltic ports against each other and thus pressed down transit fees. As a further measure favoring Russian interests, the volume of oil shipped on tankers fromRussian ports on the Baltic has increased sharply.
St. Petersburg has increased its oil shipping capabilities while a new, nearby Russianoil shipping port of Primorsk was developed and began shipping oil in 2001, and will reach a capacity of 40 million tons in 2004. Another Russian terminal in Vysotsk inthe Gulf of Finland goes operational in 2004 with an annual capacity of 10 million
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tons. Also, the Russian Federation has revised railway tariffs in such a way as to benefit railway shipments of oil through Russian ports.
Notwithstanding these negative influences on Baltic States oil transit revenues, it is expected that Russian oil exports will rise substantially in the years ahead and that the Baltic States will benefit from this trade through transit operations. In recent years,some 80 percent of Russian oil exports have gone to Europe. While the Russians are looking for other markets in the world, Europe will undoubtedly continue to be a major market.
Transport Supporting Services
Key findings of the seminar concerning transport related services are as follows (a) infrastructure limitations and regulatory issues are not major concerns of those firmsproviding transport related services in the Baltic States; (b) the supply of transportrelated services in these countries is adequate and generally of good quality; (c) advanced information technology is becoming increasingly important to companiesproviding transport related services in the Baltic countries; and (d) well over half of the transport related services in the Baltic States are provided by international firms.
The market for transport support services is competitive and service quality is good
The principal transport related services provided are freight forwarding, customsbrokerage, customs service, warehousing services, insurance, and banking. In all three of the Baltic States, these services are almost entirely privatized and the general quality of services is good and improving.
The various transport related services provided by specialist firms in this field areparticularly attractive to companies engaged in international trade. Expeditedclearance of imported goods often permits companies to reduce their inventories of such goods with consequent savings in cost and improved delivery times to their customers.
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Freight forwarding services in the Baltic States is dominated by ten companies. Thesefirms handle about half of the total market for these services. The freight forwarding market has been growing rapidly here. During the past five years, the net turnover in this market grew three-fold in Estonia. Most of the main freight forwarding operators are subsidiaries of major international logistics firms, and they offer a wide range oftransport and logistics services.
Throughout the three countries, buyers increasingly favor "one-stop-shopping" for the various transport related services such as customsclearance, warehousing and the like. The overall quality of these services in terms of timeliness, accuracy of documen- tation and the absence of fraud, has improved dramatically during the past ten years, especially since the mid 1990s.
Customs clearance volume has risen fast, but it is expected to fall in EU
The volume of customs clearances in the Baltic States has increased considerablywhile the number of people involved in customs clearance or processing has remainedstable. The quality of the custom services has also improved. The principal areas needing improvements are border crossings where excessive delays occur; dataexchange systems between ports and custom warehouses; and improved customsrelations between Baltic countries and Russia.
Much of customs clearance work will not be needed in intra-EU trade. As a consequence, many customs, customs brokers and freight forwarding staff willbecome redundant. Logistics firms and freight forwarding associations report that this has affected the work motivation, and caused delays.
Unreasonable delays at border crossings have been a common and persistent problem in all three Baltic States. Special efforts are required to minimize these delays. In late 2003, persistent borders crossing delays affected the trade with EU countries, which is increasingly depending on tight delivery schedules and dependable service. The change to EU customs procedures on May 1, 2004 is also likely to cause disturbances.
Customs practices have generally improved in the Baltic countries during recent years as procedures have been simplified. Each of the countries has adopted the AutomatedSystem of Customs Data Management (ASYCUDA). However, this system will not be used in intra-EU trade, so its main usage in the future will be in trade with non-EUcountries.
Reliable insurance, banking and related support services available
Reliable international insurance services as well as banking services are in place in all three Baltic countries. Some restructuring of these services is expected, especially in Latvia and Lithuania, in the near future. Competition in the provision of these servicesis increasing, a trend that has had the effect of reducing costs of insurance services.
Some firms providing transport related services have expressed some concern that their operating costs will rise as a result of the Baltic States joining the EU. Early indications, however, suggest that the overall impact of EU membership on those firms will be positive.
Urban Transport
In the urban transport sub-sector of the Baltic States, both infrastructure and serviceprovision essentially remain in the public administrative domain. Urban bus and trolley services are offered by a limited number of private companies. Their share ofthe overall market is for the time being small, but it will rise as EU rules enforcecompetitive tendering of routes in major cities.
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The dominance of publicly owned operators reflects in part the poor profitability of these services for private firms when required to maintain good service levels. Good quality service affordable to the public is clearly in the public interest.
Cost recovery and service level is at the core of urban transport’s problems
A persistent problem in urban transport in the Baltic States and elsewhere is that effective urban transport system needs subsidies in order to keep up a decent service level in terms of connectivity and frequency of services. This involves an integrated bus, tram, trolleybus and commuter train system. None of the cities in the Baltic States has an underground service. The pricing scheme needs to recover a high percentage of costs, while considering the Public Service Obligations or, for example,elderly people, children and the disabled.
In Estonia, both municipal and private companies operate urban, suburban and county services. There are two municipal companies in Tallinn. In Parnu, the bus company is 50 percent owned by the government and 50 percent owned by other investors. In Tartu, a private international firm is operating a large part of the city’s bus transport. Rail services are provided in Estonia to local and intercity passengers by a privatecompany and a subsidiary of Estonia Railways.
In Latvia, more than twenty bus companies, two tram and one combined tram and trolley company provide passenger services. Three of the companies are municipallyowned.
In Lithuania, there are 46 bus companies and two trolley bus lines, all under municipal ownership. In addition, private bus companies provide services in Lithuaniaboth within urban areas and beyond urban centers.
Regulatory environment is changing to allow competition in urban transport
A number of regulatory issues concerning urban transport face the Baltic States. In Estonia, parliament adopted the Public Transport Act in 2000 providing the legal basis for public transport activity including harmonization with EU requirements.Public transport was made part of the free market economy with local authoritiesissuing permits, under competitive bids, to private firms for bus services.
Latvia, too, has made provision for issuance of permits to private bus lines. Any licensed firm is allowed to compete for a permit to operate a bus service.Nevertheless, about 70 percent of the urban market is served by municipal companies.
The Lithuanian Ministry of Transport attempts to reach a fair balance betweenmunicipal and private companies in the provision of urban transport services.
Lack of public funds for urban transport is the main obstacle to increased effectiveness of services. In Estonia, for example, three fourths of the buses are morethan 10 years old and repair costs of buses have steadily increased as the buses haveaged. Inability to finance new buses is attributed to the decline in passenger trafficlevels and consequently revenue.
In the Baltic countries, the market for urban transport services is eroding at the same time that increased motorization-induced traffic congestion is exerting pressure on the
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operating costs and service quality of urban transport providers. Prevailing fares and financial assistance in the form of subsidies are insufficient to finance good quality services. No stable source of adequate funding has been found for urban transport.
Competitive tendering is coming; Tartu has embraced it already
EU membership also brings about the need to arrange competitive tendering of public transport services in major urban areas. This has already been exercised in Tartu, Estonia, where an internationally operating firm has won tenders for bus transport.
Since mid-1990s, private operators have rapidly gained market share from municipalenterprises in many EU countries, including Sweden and Finland. The tendering processes have typically provided lower costs for taxpayers and better service quality.
Environmental Issues
Improvement of environmental quality has become an integral part of policy makingin the transport sector in the three Baltic countries. Tighter emission controls onvehicles have already been imposed here on private and commercial vehicles and these controls will become more rigorous in the near future.
Further action is needed as the Baltic States have relatively high aerial emissions from transport vehicles relative to the volume of traffic. As environmental issues crossadministrative boundaries, a tightening cooperation between Government and research entities, both nationally and internationally, is called for. Active participationin international and regional bodies, such as NATURA 2000, Baltic 21 Agenda, Helsinki Commission, and maintaining a dialogue with non-governmentalenvironmental organizations will require more attention in the future.
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B. Statements of the Ministers of Transport
The chapter presents the abstracts of the speeches delivered by the three Ministers of Transport at the Parnu Seminar on November 24, 2003.
B.1 Minister Atonen’s statement
Dear ministers, honourable Secretary in General of ECMT, representatives of theWorld Bank, European Investment Bank, European Bank for Reconstruction andDevelopment, Nordic Investment Bank, business circles, my ladies and gentlemen.
Looking back to the subjects discussed in the last seminar, I would like to reflect on the reforms implemented meanwhile, and our common ambitions and interests in thecontext of the EU enlargement.
In the past years the Estonian transport policy can be characterized by comprehensive privatisation of operator services, regulation of competition between different modesof transport through prices and taxes, and the infrastructure policy that favours international transport links.
Road transport would not be thinkable in any country without an excellently developed and high-quality road network. During the last years large-scale roadreconstruction works have been started with the help of European Union’s ISPA and foreign loans, turning attention primarily to international transport links with the neighbouring countries, primarily in Tallinn- Ikla (Via Baltica), Tallinn-Narva andTallinn – Luhamaa directions. It seems that we are getting over the preliminarydifficulties in starting ISPA projects and in the forthcoming years most of theinternational transport links going through Estonia, roads which also play an important role in ensuring domestic connections, will be covered with a newpavement.
As to large-scale road works, the reform connected with the reorganizing of counties Road Offices’ management structures and road management work, started in 1998, has reached its final stage. During the last 10 years Estonia has implemented manysubstantial reforms for establishment of modern society based on market economy. Estonia has consistently involved private capital for ensuring high-quality road construction and maintenance. Currently the maintenance of roads has been given to private enterprises in half of Estonian counties. The procedures concerning arrangement of road construction and maintenance works need improvement.
Talking about big investments and developments of transport networks, cooperation between the Baltic States, which involves processes inside the European Union concerning TEN-T networks and development of legislation, cannot be avoided.
All the States around the Baltic Sea depend more or less on maritime transport. Economic development of the Baltic Sea region and our accession to the European Union is remarkably increasing trade flows transported by the sea. Currently thevolume of trade transported by the Baltic Sea has been estimated up to 700-800million tons and therefore it is very likely that this amount will be double in the year 2010. As to figures it should also be mentioned that 30 000 ships that headed to other
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ports in the Gulf of Finland passed our costal waters. After all, maritime transport is considerably more environmental friendly than land transport and it can be the cheapest transport mode in case it is well organized. Maritime transport will remainenvironmental friendly only in case we focus on maritime safety in cooperation withour neighbouring countries. At the same time this field is one of the priorities of the European Union. Mistakes on the sea will be expensive both directly and indirectly.
Ensuring maritime safety is expensive and requires big investments. Regrettably, Estonia alone within its possibilities is not able to achieve it all. Under the conceptionof the motorways of the Baltic Sea, which is in preparation in cooperation with the Member States and the European Commission at the moment, we hope to give our complementary contribution both to encourage trade by improving infrastructure andto invest measures guaranteeing safety.
In order to ensure safe shipping traffic in the Gulf of Finland, Estonia is planning to cover its whole coast with the Automatic Identification System (AIS) network during the year 2005. Also the Vessel Traffic Management (VTS), which covers the region of Tallinn, is planned to extend to other Estonian regions. Additional attention shouldbe paid to keep ports and shipping lanes navigable all the year round in order to implement the Motorways of the Baltic Sea conception. This presumes existence of modern ice-breakers and navigational marking.
We hope to maintain as safe passenger and merchandise traffic as possible on thesurrounding seas with support of technical and human resources and through different programs and funds in collaboration with the neighbouring countries and EU.
Our cooperation is getting a more explicit look because the three Baltic States and allthe Baltic region is involved in the EU decision making process in the near future. Today’s seminar is the next forum, where the above-mentioned subjects can be discussed.
Also I would like to take the opportunity and express my gratitude to my colleagues and representatives of international financial institutions for successful cooperationalready made towards the European Union. I hope that the two following days full of intensive exchange of ideas will make cooperation even more tight in the years to come.
Thank You!
B.2 Minister Zile’s statement
Dear ministers and representatives from the World Bank, ECMT and International Financial Institutions, ladies and gentlemen.
Today, when globalization, integration and liberalization processes are developing rapidly, it is very important to establish transport development strategies and create a basis for increasing the transport competitiveness in the years to come. The basicfunction of the Ministry of Transport and Communications of the Republic of Latvia,
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similarly to its counterparts in other European countries, is to raise the efficiency of transport, communications and information technologies, thus establishing basicprerequisites for growth of the national economy and social welfare.
Progress in implementation of acquis
The conclusion of negotiations between Latvia and EU resulted in Latvia’scommitment to implement fully the EU transport acquis with the exception of certain part regarding land transport for which the parties agreed on transitional periods. The Commission’s Progress report from 2002 and monitoring reports from 2003 haveindicated that Latvia has generally followed its commitments with some delaysoccurring in maritime sector and with some further efforts needed in road and railway sector. However, the report of the peer review carried out by Member States’ expertsin 16-18 June 2003 demonstrates that Latvia has taken considerable steps to close remaining gaps in maritime sector. Peer reviews’ reports also indicate that progress in aligning legislation and administrative practice in road and railway sectors will ensure that Latvia will be able to successfully implement the remaining parts of the relevantacquis. That means that Latvia is in position to fulfill its commitments following the requirements of transport acquis.
However, it is necessary to further strengthen administrative capacity of Ministry’sunits dealing with structural and other EU funds. The Government has approved additional budgetary funds for year 2004 which will ensure effective management ofEU funds. Different initiatives have taken place to improve maritime, aviation andother transport sectors including both - the increase of budget of relevant state agencies and recruitment of additional staff.
Position regarding modal shifts as flowing from White Paper on Transport
The need to promote modal shift as envisaged in the White Paper does not correspond the factual situation in Latvian transport sector. The situation in Latvia is quitedifferent from that of densely populated Western European countries and can becharacterised by two significant factors:
many areas in Latvia are scarcely populated, market shares for rail and road sectors in terms of figures are equal.
In addition, the problem, when road transport is dominant and roads do not have space to develop, is of importance only for Riga city and its surrounding areas. Development of road infrastructure is determinant for region development and social cohesion, and due to short distances inland railway transport is not profitable and thuscannot replace road transport services.
However, taking into account the new EU transport policy that orientates on developing environmentally friendly transport means, as well as the large share of transit traffic in the total amount of transport services, it is envisaged in the programming period for the years 2000-2006 to divert 45% of the ISPA and Cohesion fund financing to railway projects.
The initiatives from the market are complemented with the Government’s new priority to develop project Rail Baltica. This project envisages establishment of
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railway transport infrastructure, which corresponds to current European demands and which connects the Baltic States, on the one hand, and Central and Western Europe, on the other, in the direction South - North.
The work on Rail Baltica project has been commenced. Transport Ministers of three Baltic States and Poland have agreed to carry out common feasibility study. On September 5, 2003, Prime Ministers of Latvia, Lithuania, Estonia, Poland and Finland agreed on the need to establish common technical parameters for the project. Basedon that decision, the representatives of the Transport Ministries from these countries on September 15, 2003, agreed on such parameters and sent the document describing the project Rail Baltica to the European Commission with the request to include theproject in the Trans European Network’s priority list.
Road freight’s market share in average is 48% and the statistics shows stable development of rail and road transportation services without significant changes in market structure and without undesirable modal shifts.
The main goal of the Ministry in the area of the road transport development is to increase safety and comfort on the state road network and maintain a certain level of quality on the rest of the roads in the country, in accordance with existing financial potential. In addition the Ministry is attaching high priority to activities that are connected with TEN network development in Latvia
The development of Via Baltica is in process according to 2nd Via Baltica Investmentprogramme. It is envisaged that the reconstruction of present infrastructure will be completed by year 2008, including construction of Saulkrasti bypass. As it is envisaged in TINA process final report, TEN network every year receives financing that corresponds to 1.5% of GDP (including private investment in ports). After accession to EU this figure will increase along with the increase of EU financial aid.
The basis for improvements in different aspects of road traffic safety is National RoadTraffic Safety Program adopted January 25, 2000 by the Government and updated annually. It contains division of responsibilities over wide range of tasks amongdifferent institutions in Latvia. Road Traffic Safety Council is established with the aim of co-ordinating necessary efforts, ongoing activities and future plans.
Administrative capacity to implement EC and national legislation has always been a priority matter both for national and EC authorities The Road Traffic Safety Directorate is legitimately proud as being one of the most modern vehicle and driver registers in Europe. It allows receive information about drivers, vehicles, technical inspection data, vehicle duty payment, statistical data on traffic accidents etc. In future it is planned to register drivers’ penalty points for violating traffic regulations.
Truck replacement with technically more developed models is currently one of the main activities on the Latvian market. Now approximately 36 % of all Latvian trucks involved in international traffic comply with modern technical requirements and produce less impact on the environment with “Green and safe” as well as “Euro-3Safe” certificates.
Statistical data indicates that in freight market the railway transport plays an equal role with road sector, although there is a marginal tendency for road market share to
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increase. In terms of figures it means that the modal share of railways in the freight carriage is about 52% (inland waterway transport and transport via pipelines notincluded). Therefore, as mentioned above, the market share of railway does not cause concerns.
Completely different situation is in passenger market where road transportation hasabsolutely dominant position and railway transport in the field of passenger carriageoccupies 12% of market (urban transport excluded). The main reason for such situation is considerably smaller state subsidies (financing of public serviceobligation) in railway sector if to compare with road transport.
The amendments to the Law on Railways, which are currently submitted to theParliament for adoption, provides necessary legal basis for implementation of the 1st
railway package. As of today the functions of the infrastructure manager and freight operator are carried out by separate divisions of the state joint stock company“Latvijas Dzelzce š” (Latvian Railway). The budgets and accounting of thesedivisions are separated. Further reorganization of Latvian Railways is carried out step by step in order to reflect development of EU acquis and the needs of railwaytransportation market. In such situation in order to implement the requirements of the 1st Railway package the Law provides nomination of independent institutions responsible for allocation of capacity and setting up infrastructure charges. Such institution has been selected and currently is preparing to carry out these tasks.
The existing national legislation has created the foundation for liberalization of railway market. It creates the mechanism for private sector to enter the market and to provide railway transportation services and currently private capital is present in freight market. Beside the state joint stock company Latvian Railway, there are threeprivate operators which have received operator’s license. Two of them actually operate on the market since February 2003.
Transparent execution of functions of infrastructure manager and freight operator as aresult of the reorganization of Latvian Railways as mentioned above is seen as a good tool to foster competition. It is expected that such approach will strengthen theposition of private operators currently present on market and will promote new entrances.
Taking into account the fact that Latvian railway uses different rail gauge and that Russian railway standards are currently applicable, international railway transportoperations with the rest of European Union with the exception of other two BalticStates are not technically possible unless special technical solutions are applied.However, improvement of technical standards to increase safety is on going. It includes also modernization of existing infrastructure. The materials used to improvethe quality of infrastructure correspond to currently applicable EU standards. Theother railway project relates to improvement of signaling system where the applied technical principles will be able to ensure future interoperability with EU signalingsystem.
The development target for the air transport is to achieve a maximum increase of passenger, freight and number of flights in the Latvian airports by providing quality passenger and aircraft service. Riga International Airport which fully complies with the international civil aviation standards is still undergoing major modernization and
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expansion. Nearly 99% of all air passenger and freight transport in Latvia is carried from this airport.
The biggest air carrier in Latvia is Airbaltic. The Latvian Government’s share in the ownership structure is 51%, Scandinavian Airline System owns 49%. There have not been any cases of state subsidies, neither direct nor indirect in form of reduced airport or ATC charges. Airbaltic operates all scheduled air services from the Latvian side. During the last years Airbaltic’s financial results have improved significantly. The volume of services produced, though not very big, also grew steadily. The September 11 events and the following downturn in European air transport had minimal impacton Airbaltic operations due to the route network structure and effective costs reduction measures.
The law does not establish such status as “national carrier” and does not subordinateto such status any special rights. All carriers, which are licensed according to Regulation on Licensing of Air Carriers, have equal rights. The traffic rights which follow from bilateral agreements are to be tendered out, and a real route access for carriers depends on financial and operational capability.
After accession of Latvia to EU we see more opportunities then threats for our carrier.Our strength is flexible and effective management, still lower costs and access to newmarkets.
The intensity of maritime traffic increases year by year. And reasonably, the numberof international instruments regulating the field increases, thus enhancing the maritime safety, marine environment and costal protection. Latvia pays muchattention to joining international treaties and standards in maritime safety, seapollution control and prevention, as well as traffic efficiency.
Total cargo turnover in the 3 big ports (Ventspils, Riga, Liepaja) and 7 small ports is stable during the last years and increases 50 million tons per year.
The average detention rate of Latvian flag vessels in port state control is higher than that of average EU 3.14%. However, this does not give a correct picture regarding the actual safety standards of Latvian flag vessels. The number of vessels under Latvian flag which are operating in international traffic and thus are subject to port statecontrol is very small therefore each detention creates high level of detention rate in terms of percentage. Actually the situation has been steadily improving from 6 detained vessels in 1999 to 1 detained vessel in 2001 and 2002.
More than 7,000 foreign merchant ships are calling Latvian ports every year, some of them on liner service making regular calls. Therefore more than two thousand individual ships may be subject to Port State control inspections.
Maritime Administration of Latvia has been assigned by the Ministry of Transport to perform these duties and has started port state control inspections since 1996 based on IMO Resolution A.787 (19). Latvia has been applying for co-operative membership to Paris MoU since 1997. Following the longstanding training missions supported both by IMO and EC and taking into account better port state control records since 1997 the co-operative membership to Paris MoU has been granted in May 2002.
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In 2002 23.3% of ships calling Latvian ports were subjected to port state control. TheEU acquis on seafarers’ working hours as included in the Council directive 1999/63/EEC has been fully transposed in Latvian Maritime Code, which came intoforce on 1 August 2003.
The goal of the national transport policy is to provide a safe, efficient, multimodaland competitive transport system. Integration in the overall European transportationsystem is in progress, thus meeting the needs of people and the national economy forhigh quality freight transport services, as well as increasing the variety of options and flexibility in the carriage of passengers and cargoes. We try to promote regional development and create a favorable environment for the competitiveness of the Latvian businesses in the European and global markets.
Thank You!
B.3 Minister Balcytis’ statement
Dear ministers and representatives from the World Bank, ECMT and International Financial Institutions, dear ladies and gentlemen.
I would like to thank the World Bank and the Estonian Ministry of Economic Affairsand Communication for arranging this very important seminar.
There is no competitive economy without a well-developed transport system. A soundtransport system is one of the preconditions for successful development of other branches of the economy. At the same time transport services, especially transit ones are a profitable activity for the country.
Staying on the edge of the EU membership the transport system faces new tasks andnew challenges. It should correspond to the modern and high quality requirements andshould be supported by a multimodal approach. Therefore, Lithuanian long-termstrategy says that a modern multimodal transport system has to be created in thecountry by 2015.
Taking into consideration the recommendations of White Book of the European Commission, the forthcoming full membership in the EU and particularities of Lithuanian transport system the strategic long-term aims of the Lithuanian transport policy were defined. They are:
the modernization of the transport infrastructure;the improvement of compatibility of elements of various transport systems;the creation of logistics centres;the formation of a safe, environmentally friendly and accessible transport system;the completion of structural reforms;the development of short sea shipping with the aim of integration to the Baltic Sea Motorways network.
The geographical situation of Lithuania has caused that through its territory passes two Pan-European priority transport corridors, covering rail, road and maritime links.
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After enlargement of the EU, the Central European and Baltic countries, includingLithuania, will gradually obtain the double role of functioning as a part of the EU and as connecting chain between present EU members states, CIS and Mediterraneancountries. Therefore, to satisfy the growing transport demand in Lithuania, the significant infrastructural, administrative and operating developments are still needed.
I will start from infrastructural development. Firstly I will overview roadtransport. Despite well developed and sufficient road network in Lithuania, transportoperators raise high requirements for transport infrastructure. With the aim of efficienthandling of growing transport flows various international transport infrastructureprojects are under implementation.
The implementation of reconstruction and development of highway Via Balticaallows us to increase quality of road infrastructure on the North – South direction and at the same time to connect I Corridor with IX Corridor, which is serving the traffic flows on West – East direction.
It also should be noted that in Lithuania as in other European countries roads are increasingly getting overcrowded and overloaded, while the potential of railwayinfrastructure is not fully used. Therefore, the especially big importance gathers theseprojects which can unload roads and balance the cargo flows between different transport modes. As one of the projects could be mentioned project Rail Baltica,which has to promote fast and high quality transport of goods and passengers, connecting Eastern Baltic Sea coast countries with the rest of Europe.
Railway transport plays an important role in Lithuania. The amounts of freight transported by Lithuanian railways increased and in 2002 accounted for more than 36 million tonnes. The existing density of the railway network, would allow to handle up to 50 million tonnes of freight per year but this level cannot be reached mainly due to the unsatisfactory condition of the railway infrastructure: there is a need to renovate the tracks and to modernise the signaling and telecommunications systems.
Talking about maritime transport I would like to note that Klaipeda sea-port is the most important transport node in Lithuania. Consequently, the port may be proper indicator that shows success or failure periods of the entire Lithuanian transport sector. The total cargo turnover in Klaipeda sea port in 2002 was almost 20 milliontons. Much has been invested in the reconstruction of the port gates infrastructure, thedeepening of the approach channel and aquatorium, the extending of good storage conditions and the installation of modern loading equipment.
However, part of the infrastructure is still not in line with modern requirements. Themain works of infrastructure improvement are:
the reconstruction and construction of quays,reconstruction and development of the railway network of the portand the deepening of the seaport waters.
After the modernization of the infrastructure is completed, the capacity of the sea-port could reach to 32 million tonnes per year
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As far as air transport infrastructure is concerned, I would like to note that air infrastructure management remains in the responsibility of the public sector. All threeairports in Lithuania are profitable and that is related to the air transport growth, which is determined by European economic development and lower air fares. The development of a single European market combined with a general economicrecovery is a contribute to this trend.
In order to meet future requirements the biggest attention is paid to the projectsrelated with the implementation of Schengen acquis requirements. In this respect in Vilnius international airport a new passenger terminal will be built, while Kaunas and Palanga airports terminals will be reconstructed as well. Other major projects are modernisation of instrumental landing systems at Vilnius and Palanga airports.
It is evident that transport services directly depend on the quality and capacity of transport infrastructure. Nevertheless, an improvement of operational activities isalso crucial.
Seeking to liberalise the transport market Lithuania completed the creation of equal conditions for all companies and all operators. Much attention is paid to combinedtransportation, reduction of time spent at the border, simplification of proceduresand other questions. A significant event of this year was the launching of combinedtransportation train “Viking”. Since 2003 February the train “Viking” has been operating on the route Odessa - Klaipeda - Odessa.
Integrating to the EU economy, one of the high priorities of Lithuanian transport sector development is the creation of a network of new generation logistic centresproviding the whole range of transport services.
There are plans to create logistics centres in the regions of Vilnius, Kaunas and Klaipeda. The logistic centre of Vilnius will be established on the basis of the modernconcept of “freight village”. The foundation of the other two centres is in process as well.
As regards the administrative development the main tasks are to strengthen theadministrative capacity, to finish harmonisation of legislation with the EU ones, to complete structural reforms with a view to the European experience.
Road transport is the mostly developed, most liberal and privatised transport mode. In this field Lithuania fully applies the EU acquis on market access, professional competence, technical standards, traffic safety, social and fiscal requirements,transport of dangerous goods. Besides the legal approximation, which is almostfinished, Lithuania pays great attention to the strengthening of administrativecapacities. The implementation of social legislation and ensurance of road safety are the priorities in road transport sector.
The most political and technical efforts are needed for railway liberalisation. TheGovernment of Lithuania approved the strategy of Lithuanian railways reform untilthe year 2006 which foresees the liberalisation of railway transport, creation ofcompetitive railway sector, ensurance of equal legal and economical conditions for alloperators.
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The structure of the railways was reorganized gradually, in order to create units of clear responsibility and commercial activities. In the process of restructuring, accounting systems for new units are established, a system of fees for the use of the infrastructure is created, and the activities of auxiliary companies are separated.
The railways have entered the final stage of restructuring. Until 31 December 2003 there will be established 4 separate branches in JSC „Lithuanian Railways“
passenger transportation services,freight transportation services,infrastructure maintenance and management,infrastructure property,
On a later stage it is planned to establish a state enterprise which will be responsiblefor management of railway infrastructure and its development. (See Attachment F.3.)
In 2002 the Ministry of Transport and Communications approved the Lithuanian Shipping Development Strategy, which aims to introduce broad and fundamentalpolicy approach in the field of maritime transport. The Strategy covers thecommitment to adhere and to implement all international maritime safety regulations,to ensure fair competition in the shipping market, and further development of seafarers’ training.
Harmonization is taking place in the area of regulation and state control of safeshipping, certification of shipping companies and vessels, the preparation of qualitymanagement systems for staff training. Issues of maritime safety are very importantand are one of the priorities for Lithuania.
As regards civil aviation, I would like to mention that the state owns the air transportcompany Lithuanian Airlines, with the daughter company Air Lithuania. Recently allshares of Lithuanian Airlines belong to the State Property Fund. Earlier this year the privatisation has been announced but the process has failed due to complicatedsituation in aviation market. At the time being Lithuanian Airlines undergoesrestructuring. The main objective of the restructuring is to outsource some functions and daughter companies in order to be well prepared to operate in the liberalised European market.
Lithuania will further harmonize its legal basis with EU requirements and will seek to fully liberalize and restructure the transport sector, granting quality and availability of services, traffic safety and the reduction of negative effects on the environment.
Thank You!
37
C. Seminar objectives and participation
The Baltic States have made substantial progress in restructuring their transportsectors since they regained their independence in 1991. Progress in the various transport modes has varied, however, and the three countries have not all taken thesame approach. The World Bank has assisted in this process in some of the transportmodes, especially in the road subsector where the Bank has had projects in all three countries.
Discussions between the World Bank transport team and the Ministries of Transport of Estonia, Latvia and Lithuania had indicated that it would be useful to exchangeinformation on what has transpired in each country, and to see what lessons could be learned from their separate experiences. The Ministers of Transport in the threecountries expressed interest in participating in a seminar with this objective in mind,and the Minister of Transport in Latvia agreed to host the first seminar held in Riga in November 16-17, 2000 at the Ministry.
The first seminar aimed at discussing the progress made in the Baltic States towardsrestructuring their transport sectors, including the road, road transport services,railways, air infrastructure and services, ports, urban transport, and general transport support services. The proceedings of the 1st seminar were published by The World Bank in 2001, and distributed to the participants. The three Ministries also received astock of the book for their use. The report is also available at the website of The World Bank’s Europe and Central Asia region3.
The political and economical development since the 1st seminar has been very rapid. The Baltic States are about to join the European Union as well as NATO in spring 2004. The speed of the process was difficult to anticipate in 2000.
As a consequence, the content of the 2nd seminar also reflects transport sector issues in view of EU membership in addition to the themes addressed already in the 1st
seminar in Riga.
The objective of the two seminars has been to allow the personnel involved in each of the transport modes to exchange information on what they have accomplished in theircountries, to compare the degree of progress that they have made, and to assess what types of action have achieved the best results. This in turn provides a basis forgenerating constructive ideas for additional restructuring activity in the future,including those measures required by European Union member countries.
Participants in the 2nd seminar on transport sector restructuring in the Baltic States included Mr. Meelis Atonen, Minister of Economic Affairs and Communications in Estonia; Mr. Roberts Zile, Minister of Transport in Latvia; and Mr. ZigmantasBalcytis, Minister of Transport and Communications in Lithuania.
Several officials of the World Bank were involved in the seminar including Roger Grawe, Country Director for Central Europe and the Baltic States, and Cesar Queiroz,Transport Program Team Leader, Europe and Central Asia Region. Representatives
3
38
The report (Ojala and 2001 eds.) is available at: Queiroz, http://lnweb18.worldbank.org/ECA/eca.nsf/0/285b85155cb0455885256ab800689a2a?OpenDocument
European Investment Bank (EIB); Mr. Erkki Karmila, Executive Vice President,Nordic Investment Bank (NIB); Mr. Urmas Paavel, Head of Mission in Estonia,
Secretary General, European Conference of Ministers of Transport (ECMT).
Numerous other officials involved in the transport sectors of each state also participated in the seminar. The total number of participants was around 80, representing mainly transport sector administration. (Attachment C.1.)
The agenda included presentations by the Transport Ministries of each of the countries as well as those of the invited speakers; workshops, made up of personnel from each transport mode; and presentations of the results of the workshops. (Attachment C.2.).
Prior to the seminar, each country responded to a questionnaire outlining in somedetail what has been done in each mode in each country. The questionnaire used in the 2nd seminar was somewhat expanded from the one used in the 1st seminar. Thereplies of the questionnaire were prepared in a summary format and distributed in connection with the seminar. The material was also useful when compiling the seminar proceedings. The pre-seminar questionnaire is shown in Attachment C.3.
The 2nd seminar was held on November 24-25, 2003 at Ranna Hotel in Parnu, Estonia, which provided an excellent venue. The seminar was hosted jointly by the Estonian Ministry of Economic Affairs and Communications and the World Bank.
This seminar report was compiled by Professor Lauri Ojala and Mr. Tapio Naula of the Turku School of Economics and Business Administration, Finland, and Mr. Cesar Queiroz, The World Bank. The participation of Professor Ojala and Mr. Naula was funded through a research grant by the Finnish Academy of Sciences, which isgratefully acknowledged.
This seminar report and the slide presentations shown in the Parnu seminar are available in an electronic format at the transport the website of The World Bank’s Europe and Central Asia region4. Some of the slide presentations shown in Attachment P.1. have been edited to ensure readability in this report. They are available in full at the World Bank’s website.
In the Parnu seminar and during a subsequent mission to Lithuania, The World Bank representatives discussed the possibility to organize a third seminar hosted jointly by the Lithuanian Ministry of Transport, The World Bank and the European Conferenceof Ministers of Transport (ECMT). Both Minister Balcytis and Secretary GeneralShort were willing to continue preparations to organize a follow-up seminar in Lithuania.
4 http://wbln0018.worldbank.org/ECA/Transport.nsf
39
European Bank for Reconstruction and Development (EBRD); Mr. Jack Short,
from other international institutions included Mr. Sauli Niinistö Vice President,
D. Strategic context 5
D.1 Global trends in the transport sector
In an international comparison, the value added by transport lies within the rangebetween 3 and 5%, and public investment in transport typically amounts to 2-2.5% of GDP. For the Baltic States, the value added of transport alone6 is ranging between 5 and 7 percent depending on the country and the year of observation, underlining its importance for these countries.
Demand for transport in developing and transition countries typically grows 1.5 to 2.0 times faster than GDP. For the Baltic States, however, the performed ton kilometershave grown 3 to 4 times faster than their GDP during the past decade. At the sametime, the Baltic States economies have grown fast, at an average annual rate of 4.5 per cent in Lithuania, 4.7 per cent in Estonia and 5.7 in Latvia during 1998-2003, and even higher growth rates are anticipated for 2004 and 2005.
The main macro level factors defining the transportation trends include (i) thechanging trade patterns and globalization, (ii) the evolving role of the private sector, and (iii) sustainability concerns. The main micro level factors include (i) thechanging traffic patterns and behavior for passenger transport and mobility, and (ii) the changing logistical patterns and the impact of technological developments. Inaddition to these, a number of subnational challenges also need to be addressed.
Globalization and changing trade patterns mean, inter alia, that the value of trade in manufactured goods increases faster than that of raw materials. During the 1990s, economic growth was a very strong in most OECD countries, especially in the US, but in 2000-2002 the world economy has slowed down. In 2003 and onwards, thegrowth seems to have picked up again. A further feature of globalization is that tradein services grows rapidly7.
The evolving roles of the private and public sectors draw attention to the importanceof allowing the private sector to operate efficiently, and of finding better ways of implementing good governance. This has led to the identification of separate roles for public authorities and commercial operators, especially in infrastructure managementand in transport service provision. One of the measures taken is to “unbundle” theownership of infrastructure from the operations. This procedure, and the related regulatory issues, need to be planned carefully, irrespective of whether the service provider is a public or a private entity, or a combination of the two (Figure D.1).
Privatization has been widely used as a vehicle to restructure transport and transportinfrastructure markets. Consequently, public-private partnerships (PPPs) have been introduced as a mechanism for providing good quality transport and infrastructure
5 Prepared by Lauri Ojala (Turku School of Economics and Business Administration) and CesarQueiroz (World Bank)6 The entire transport, storage and communications sector accounts for 14 to 16 % of their GDP.7 Data on Baltic States’ trade in transport services in shown in Chapter E.
40
services at a reasonable cost. The World Bank experience of PPPs and transport sector governance include the following.
Government support is essential to mitigate the start-up risk for cautiousinvestors/lenders.Private capital works best when leveraged with public funds for highway development.An integrated transport policy approach includes the liberalization of truckingToll roads are not a substitute for a well-funded and managed public highway program.Private toll roads can exist only because of commercial revenue potential in specific highway corridors.
Competition
Monopoly
Initial status Industry structure Options for competition Object of regulationUnbundling
No Unbundling
Integratedstate-ownedmonopoly
Integratedmonopoly
Integratedmonopoly
Monopolyactivities
Competition forthe market viaconcession or
lease
Monopolyfacility
Competitionfrom
substitutes
Competitionin the marketwith entry of
new firms
Competitiveactivities
Businesspractices,
environment,safety, and
antitrust
Right of accessto monopolyfacility andaccess price
Prices, quality,and serviceobligation,via contract
Prices, quality,and serviceobligation,via statute
Road transport ShippingAir transport ESTStevedoring
Air transport LAT
Rail in Estonia
Major ports
Air transport LIT
Rail in Latvia
Rail in Lithuania
Figure D.1: Unbundling of activities and the options for competition and privatesector involvement, and the approximate placing of selected transport service provision in the Baltic States in 2003 (right). Source: WorldDevelopment Report 1994, The World Bank.
The Baltic States have made considerable efforts in their EU accession preparations(see also Figure D.1). The EU objective is to improve market access and functioning, particularly in the rail sector and ports, and to eliminate the obstacles which remain inother sectors (in particular civil aviation and public transport in large cities); to introduce fair and efficient pricing, with the aim of reducing the distortions ofcompetition between modes of transport and between Member States; and to monitorthe implementation of Community legislation, particularly on State aid and competition.
41
The approximate placing of the main transport service provisions in Figure D.1. indicate that the Baltic States have successfully opened up most transport services to competition. The placing is based on the synthesis of the findings in this report.
Sustainability concerns comprise, inter alia, (i) social sustainability such as traffic safety issues, and general work conditions, and safety at work; (ii) environmentalsustainability, such as minimizing the negative external effects of transport, e.g.accidents, emissions, noise, congestion, land use8; and (iii) financial sustainabilityboth within the public and the private sector.
The key points of the public sector’s financial sustainability comprise the following:
• reduction of fiscal deficit, • enhancement of public savings,• fiscal consolidation/restructuring of public finances,• achievement of the Maastricht target9 for government fiscal deficit; • reform of the revenue system, strengthening of tax administration, lowering of taxes.
Furthermore, the cross subsidies from freight and/or inter-city operations (road, rail) become increasingly difficult to maintain. In Public Service Obligation (PSO) agreements transparency is very important. In PSOs, governments and municipalities are to pay for un-economic services and for privileged passengers. Capital subsidies(i.e. money transfusions) need to be re-considered across transport subsectors.
The EU standpoint is that the needs of European citizens should be met, emphasizingthe quality of transport services. Most importantly, safety must be improved. The Commission has put forward proposals on safety in civil aviation and maritimetransport, and will ensure that the action program on road safety is implemented.
Since 2002, the safety of oil shipping in the Baltic Sea has emerged as an importantissue involving EU, International Maritime Organization IMO, and the countriesaround the Baltic Sea, including Russia.
Changing consumer preferences and business practices, and the impact of globalization on firms, has led the manufacturing and trading firms to search for more efficient strategic directions and operational practices. This is manifested in the rapid adoption of a range of new logistics solutions, such as the management of supply chains and outsourcing of logistics services.
These have given rise to a growing consolidation of logistics and transport markets in Europe and US through large mergers and acquisitions, and this consolidation islikely to continue. The process has also profoundly changed the logistics markets in the Baltic States.
Safety issues of international trade and transport have also emerged in anunprecedented way since September 11, 2001. As a consequence, a series of measuresto monitor transport operations, vehicles, cargo units, shipments and related
8 Chapter O. deals exclusively with Environmental issues in transport.9 The fiscal deficit less than 3.0 percent and public debt as a percentage of GDP within 60.0 percent.
42
documents have been introduced or will be introduced in the near future. These affectthe operations in transport terminals such as seaports, airports and in border crossings.
The unprecedented development of information and communication technologies has also profoundly changed the transport sector, both in passenger and goods transport. Vehicle and equipment technology has also developed rapidly during recent decades.
Today, the most lucrative logistics businesses deal with high value-added services and various electronic commerce solutions, especially in the so-called business-to-business markets. As a result, the most innovative firms in logistics business tend to come from outside the traditional transport or logistics operators.
In this setting, the role of the government in this sector needs to be reconsidered. At the same time, the subnational challenge involves issues such as increased motorization (with its attendant congestion, pollution, and accidents), and an intensifying polarization between the more developed and less developed regions in the country. The government is also expected to offer – or let somebody else offer - a good quality yet affordable passenger transport or mail delivery service throughout the country. In many cases, there is limited local – or national - government capacity to deal with the social, technical and environmental issues and with the financial demands. Often there is also limited access to external financing.
D.2 The Baltic States’ economic profiles
This section gives a brief introduction to the economies of the three Baltic States, and the economic importance of the transport sector in these countries. Extensive reports on general economic development can easily be found elsewhere, and as this reportaims at presenting the key findings in the transport sector, general country profiles are kept to a minimum.
A map of the three Baltic States and their main transport network is shown inAttachment D.1. Main economic indicators for each country are included in the attached “Country at a glance” tables in Attachments D.2. through D.4.
D.2.1 Estonia
Estonia was one of the first Soviet republics to declare independence in 1991. Sincethen, the country has enthusiastically embraced market reforms and has maderemarkable process in the transition to a market economy. Successive pro-reform governments moved rapidly to dismantle the old Soviet structures, push through monetary reform and privatize state companies for cash to strategic investors. Theseincluded the fixed rate of the Estonian kroon first to German mark, and then to euro.
A rapid and effective privatization program was largely completed by 1997. Morethan seven years of macroeconomic stability based on a strong convertible currency,
43
the kroon, has helped attract substantial foreign investment, at first from neighboring Finland, followed by Sweden, Denmark, other EU countries, and the US.
Estonia vigorously sought its place at the EU accession table. In the Luxembourgsummit in December 1997 European leaders named Estonia as one of the “fast track”candidates for EU membership, and in April 1998 Estonia presented a first version of its National Program for the adoption of the acquis.
On September 14, 2003, Estonia organized the first referendum on joining the EU of the accession countries. A clear majority approved the proposal, and Estonia will join the EU as from May 1, 2004. According to the Ministry of Finance, Estonia will get financing of 740 million euros from the EU in 2004-2006. At the same time, Estonia’s contributions to the EU budget will amount to 230 million euros and net position willthus be 510 million euros.
The August 1998 Russian financial crisis caused a temporary setback in Estonia’s successful transition and economic expansion. The industries to suffer most were those with traditional markets in the CIS in the food, textiles, and chemicals sectors. At the same time, this gave impetus for industries to streamline and reorient their exports, mainly to EU markets. The economic development after 1999 has been very rapid.
Statistics Estonia estimated the GDP to grow by 4.4 per cent in 200310. In 2002, Estonian GDP was 41.7 per cent of EU average on a purchasing parity basis. EU estimates that the compound average annual growth rate (CAGR) of Estonian GDP in 2003-2006 will be 5.5 per cent. In 2006, this would raise the GDP to an estimated47.6 per cent of EU average in PPP terms. By 2002, 65.3 % of the GDP wasproduced by the service sector. Unemployment is lower than in the other Baltic States, and in 2003 it was 8.6 %.
Estonia has rapidly attracted substantial foreign investments: in 1995, the FDI stock was USD 688 million and in 2002 it was already USD 4,226 million (according toUNCTAD data). The transport sector has attracted foreign investment both in rail, air and sea transport operations. Foreign partners are also engaged in stevedoring and storage activities in ports.
Annual inflation has decreased from around 5 per cent in 2000 to around 3 per cent in 2001 to 2002. In 2003, private consumer deflator was at 1.8 %.
In 2002, the Estonian parliament approved its first budget with a deficit since 1991. In 2003, budget expenditure is 2.5 billion euros, or about 8 % more in nominal termsthan in 2002. The budget deficit is 0.3 % of GDP, which is the lowest of all EU Accession countries. Budget expenditure increases come mainly from costs of NATOmembership, preparations for EU membership and costs from pension reform.
With practically no budget deficit and Government debt at 5.4 % of GDP in 2003 Estonia clears the Maastricht criteria by a wide margin.
10 EU Parliament has also compiled up-to-date data on the Baltic States economy at: http://www.europarl.eu.int/enlargement_new/statistics/default_en.htm
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D.2.2 Latvia
From the onset of its transition, Latvia has assiduously pursued closer relations with European and transatlantic structures, while carefully maintaining good neighborly relations with the Russian Federation. Latvia is actively participating in a number of international organizations, and pursuing regional co-operation in the Baltic Sea area. In December 1999 Latvia was invited to start EU accession negotiations.
Latvia is one of the most advanced transition countries, with a well-developed service sector accounting for 70.6 percent of GDP in 2002. The country’s prime location as a transit hub for east-west trade has led to a rapid expansion in transport and communications. The economy has a strong industrial backbone, inherited from the industrialization process initiated in the 1950s to supply the Soviet market.
Latvia’s transition to a market economy has been rapid. Price liberalization took place at the outset of the transition in 1992, and privatization of small and mediumterm enterprises, although begun only in 1994, was basically completed by mid 1998. Since 1998, Latvia has undergone the difficult final stages of transition.
The Russian financial crisis in 1998 brought more forcefully into focus the inherent problems in Latvia’s public expenditure management system, as well as the need to finalize the privatization process, and simultaneously to define the role of the state as a regulator of productive assets rather than as an owner.
After 1998, Latvia’s economy has expanded rapidly, and the real GDP growth hasbeen between 5 and 7 per cent per year. Growth has been strong in nearly all production sectors. Trade has increased at a double digit rate between 12 to 17 %, of which exports have grown by over 20 % on a year-to-year basis in 2001 to 2003.
GDP grew by 6.1 per cent in 2002, and in 2003 it is estimated to grow by 6.0 per cent, and forecast for 2004-2005 is over 5 % p.a. In 2002, Latvian GDP was 35.2 per cent of EU average in purchasing parity terms. EU estimates that the compound average annual growth rate of Lithuanian GDP in 2003-2006 will be 6.2 per cent. In 2006, thiswould raise the GDP to an estimated 41.2 per cent of EU average in PPP terms.
While industrial and trade sectors have grown fast, growth in transport sector has remained modest (at around 2 %) as oil shipments continued to fall in 2003. Thedifficulties were mainly caused as the Latvian oil company Ventspils Nafta and Russian oil exporters did not succeeded in agreeing on oil supply contracts for 2003.
Both domestic demand and exports growth have been behind the GDP growth. The rise in wages and increase in the number of employed persons have underpinned household consumption. Nominal wages have increased by 6 to 7 % per year, while the unemployment has remained high; it was 12.4 % in 2003.
The budget balance was -2.7 %, and Government debt was 16.7 % of GDP in 2003 which are under the Maastricht criteria.
45
Latvia has also rapidly attracted foreign investments: in 1995, the FDI stock was USD 615 million and in 2002 it was already USD 2,723 million (according to UNCTAD). However, the transport sector has attracted relatively little foreign investment.
Inflation has remained low in Latvia. In 2002, annual inflation rate was 1.4 % and in 2003 it reached 2.3 %, which is still the highest rate among the Baltic States.
Latvia voted for EU accession in a referendum on September 20, 2003. In the final negotiations, Latvia concentrated on agricultural and budgetary issues. Latvia isestimated to receive 1.1 billion euros in 2004-2006 from the EU, while paying in 0.3 billion euros to the EU budget.
D.2.3 Lithuania
Since regaining its independence in 1991, Lithuania has made considerable progress in restructuring its economy. It adopted a program of economic stabilization andcomprehensive market reforms. The initial tightening of fiscal policies was continuedby the introduction of the national currency, the litas, in 1993 and a currency board was established in 1994. The litas was pegged against the US dollar and then to euro.The parallel program for structural reforms began with extensive liberalization of domestic prices, financial markets, non-agricultural foreign trade, and capital flows.
The privatization program successfully transferred assets into private hands. A voucher scheme was followed in 1996 by a program of enterprise sales for cash, which has so far included several key utilities and infrastructure firms. Progress in privatization, combined with growth of new SMEs, raised the share of the private sector in GDP to around 70 percent.
1995-1997 was a period of rapid growth of exports and continued reorientation towards Western Europe. The growth of Foreign Direct Investment (FDI) has been very rapid: its stock was USD 352 million in 1995, exceeding USD 2,330 million in 2000 and USD 3,980 million in 2002. Accelerated privatization together with EUaccession is likely to boost FDI further. However, the transport sector has attracted very little FDI.
The rate of GDP growth was between 4 and 6 percent in 1996-98. In 1999, GDP fell around –4 percent as a consequence of the Russian financial crisis. Lithuania had substantial trade links with the CIS, and as a result in 1999, export and importvolumes fell, in spite of sustained trade flows to and from western markets. The government has managed to follow a moderate fiscal policy in 2001 and beyond, and has accelerated structural reforms. As a result, Lithuanian GDP grew at 4 per cent in 2000, and at over 6 per cent in 2001 and 2002.
EU’s provisional estimate of Lithuania’s GDP growth in 2003 is 6.0 %, whereas Statistics Lithuania estimated the growth for 2003 at 8.9 per cent. In 2002, Lithuanian GDP was 39.1 per cent of EU average in purchasing parity terms. EU estimates that the Lithuanian GDP will grow by 6.4 per cent (CAGR) in 2003-2006. This would raise the GDP to 46 per cent of EU average in 2006 in PPP terms.
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By 2002, 62.2 % of the GDP was produced by the service sector. Unemployment has been high, and in 2003 it was 12.3 %. The budget balance was -2.6 %, and Government debt was 23.3 % of GDP in 2003 which are under the Maastricht criteria.
In late 2002 and early 2003, Lithuania has experienced deflation approaching an annual rate of 1 per cent. Lithuania’s deflation is mainly due to a correction of exceptionally high food prices in early 2002, which have now come back. In addition,import prices in early 2003 remained steady due to the appreciation of the euro against US dollar. Consumer prices are expected to rise by 2.3 % in 2004.
D.3 Transport sector highlights in the Baltic States
D.3.1 Transport sector‘s Gross Value Added
Transport is an important sector in all EU Accession countries, but its relativeeconomic importance is the largest in the Baltic States. 15.5 per cent of the Gross Value Added11 in Estonia, 14.5 per cent in Latvia and 13.7 per cent in Lithuania wasproduced by the transport, storage and communications sector in 2002 (Table D.1.)
Table D.1. Structure of Gross Value Added by activities in 2002 in per cent of GVA in EU Accession countries (in 2001 for Hungary and Slovenia). Based on NACE classification and current prices. Source: Canstat statistical bulletin 1/2003, Central Statistical Bureau of Latvia
Esto
nia
Latv
ia
Lith
uani
a
Pola
nd
Hun
gary
Cze
ch R
ep.
Rom
ania
Slov
enia
Slov
akia
Bul
garia
Cyp
rus
Agriculture,hunting,forestry, fishing 5.4 4.7 7.1 3.2 4.3 3.7 13.1 3.3 4.2 12.5 4.3Manufacturing 18.6 14.8 19.4 17.4 22.7 26.7 26.7 26.6 20.5 17.1 10.2Construction 6.6 6.1 6.5 6.5 5.1 6.6 5.6 5.8 4.9 4.4 7.4Trade and repair 14.3 19.9 18.0 20.9 11.4 14.7 12.1 11.5 13.2 8.2 12.9Transport, storageandcommunications 15.5 14.5 13.7 7.8 8.4 9.0 11.1 7.1 10.2 13.8 9.8Financialintermediation 4.5 4.6 2.3 2.2 3.5 4.1 1.6 4.3 5.6 3.2 6.6Real estate,renting, business activities 11.3 11.1 8.1 13.7 17.7 12.5 10.2 14.7 13.8 17.2 14.5Other activities 23.8 24.3 24.9 28.3 26.9 22.7 19.6 26.7 27.6 23.6 34.3GDP: USD billion 6.5 8.4 13.8 189.3 71.0 69.5 45.7 22.0 23.7 15.6 10.2
Transport, storagecommunications in USD million 1009 1219 1891 14764 5962 6256 5078 1562 2415 2148 999
11 Gross value added (GVA) is the value of output less the value of intermediate consumption; it is a measure of the contribution to GDP made by an individual producer, industry or sector.
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Roughly 35 % of the sector’s GVA is produced in transport, 35 % in storage and the remaining 30 % by communications. In other words, transport and storage produces10 to 11 per cent of the countries’ Gross Value Added or GDP. This can be seen in the breakdown of Estonian and Latvian data in 2001 (Table D.2).
Table D.2. Transport sector’s share of Estonian and Latvian GDP in 2001 and theapproximate values for subsectors in per cent and USD million. Sources:Estonian MEAC, Latvian Ministry of Economics 2002.
EstoniaGDP USD 5.5 billion
LatviaGDP USD 7.7 billion
Subsector Share ofGDP in %
Value inUSD million
Share ofGDP in %
Value inUSD million
Transport, of which 5.6 % 310 5.5% 425Road transport 3.1 % 170
Railway transport 1.4 % 75Land transport (+pipeline) 4.2 % 325
Maritime transport 0.5 % 30 0.8 % 60Air transport 0.2 % 10 0.2 % 20
Storage *) 5.5 % 305 5.5 % 425Post &Communications 4.9 % 270 4.6 % 350Transport andCommunications, total
16.2 % 890 15.3 % 1,180
*) including freight forwarding, warehousing, stevedoring and travel agencies.
While Lithuanian GDP breakdown is not available, the distribution of jobs betweenthe subsectors is very similar than in Latvia, so the subsectors are likely to produce approximately similar shares of GDP.
D.3.2 The transport sector in the Estonian Economy
Estonia is an important transit route for Russia in its trade with western markets.Providing transit services for Russian and other CIS clients has resulted in huge investment in the transport infrastructure. The transport sector partly suffered and partly profited from the Russian crisis: on the one hand, Russia considerably increased its exports of oil and other natural resources, which benefited Estonian operators in oil trade; on the other hand, the devaluation of the rouble led to an enormous decrease in Russian imports, which led to losses to firms engaged in exportto Russia. For Estonia as a whole, the increased oil transit revenues compensated forlosses in other transport operations, and for the oil transit sector the period from 1999 onwards has been an exceptionally good one.
Estonian GDP in fixed prices increased for the first time after re-independence in1995, but that of transport, storage and communications had been growing since 1993. This was due to the rapid development of road transport and port facilities. Since
48
1996 the transport sector has seen an especially fast growth, mostly due to rapidly advancing transit trade, where the value added in transport has been more than 50%.
Transport, storage and communications enterprises contributed some 12 percent to theEstonian GDP in 1999. In 2002, there were already over 7,000 enterprises in the sector, up from about 2,000 in 1999. Transport, storage and communicationsincluding the related government sector constituted 15.4% of GDP for 2000, and 16.2 per cent in 2001 (Table D.2). Trade in transport services is discussed in Section E.2.
Investment in transport infrastructure in Estonia is directed mainly to roads and ports (Attachment F.1.) According to this data, the most of port investment is already completed, whereas the big road investment outlays are planned in 2002-2010. Because of rail privatization, the Government-funded investment in the rail subsectoris low.
D.3.3 The transport sector in the Latvian Economy
Transport and communications is an important sector of the Latvian economy. In therecent years, it has contributed 15 to 16 per cent of the total value added in the country (Table D.2). The Ministry of Economics (MoE) estimates that some 2/3 of total demand for transport services is domestic demand and the remaining 1/3 isgenerated by external demand.
Furthermore, the MoE estimates that the revenues of transport and logistics services to east-west transit traffic corresponded to 6.4 per cent of GDP in 2001, down from10.2 per cent in 1996. This translates to approximately USD 500 million in both 1996and 2001 in current prices and exchange rates. According to the MoE estimates, 66 per cent of this revenue is generated by water transport (including ports), 22 per cent by supporting and auxiliary transport activities and the remaining 17 per cent by landtransport. Transit traffic issues are discussed in more detail Chapter J.
In its transport sector development, Latvia recognizes the need to play a vital part inthe development of EU’s integrated Trans-European Network (TEN). Against thisbackground, Latvia invested EUR 524 million in the main transport infrastructure in1996-2002, of which EUR 254 million in railways, EUR 159 million in ports(excluding private sector investment), EUR 71 million in state roads and EUR 40 million in Riga airport12. (See also Attachment F.1.)
12
49
As presented by Mr. Legdzins, Latvian MoT, in the Parnu seminar, November 24, 2003.
D.3.4 The transport sector in the Lithuanian Economy
In Lithuania, the gross value added (GVA)13 of the transport, storage andcommunication sector was 12.6 of the total GVA value in 2001 and 13.7 per cent in 2002. According to data in Table D.1., this equals approximately USD 1,890 million,which means that Lithuania has the largest transport sector of the Baltic States.
Economic activity is much more evenly located in Lithuania than in Estonia or Latvia, in which up to 75 per cent of economic activity is concentrated in the capital regions.In Lithuania, the main production and consumption areas are the Vilnius capital region, Kaunas and Klaipeda. These are all on the north-western Transport corridor IX, and well connected with road and rail and the main port of Klaipeda.
For the transport sector this means that the demand for domestic transport anddistribution is much higher than in Estonia or Latvia. Detailed data on domesticfreight and passenger transport in Lithuania is shown in Attachment D.7.
D.3.5 Transport markets in terms of transport work in the Baltic States
Actual transport performance and demand is conveniently called transport work14.Unlike the number of tons or passengers, it indicates the size of the transport market,as a given transport performance needs to be matched with a corresponding capacity.
From 1999 to 2002, the total freight transport work15 increased by 39 per cent in Lithuania, 25 per cent in Estonia and 17 per cent in Latvia. Compared with most EUAccession countries, the absolute size of the transport market is relatively small(Table D.3).
The market for rail transport increased most in Estonia, but went 24 per cent up also in Latvia and Lithuania. In the two latter countries, road transport increased veryrapidly, by 47 per cent in Latvia and 38 per cent in Lithuania from 1999 to 2002. In Estonia, the increase was only 10 per cent in that period.
Transport work through oil pipelines increased by over 86 per cent in Lithuania, while the Latvian market contracted by over 16 per cent (Table D.2).
In passenger transport, measured in passenger kilometers, road transport is by far the most popular means of transport. The declining usage of rail services for passenger transport is evident. Interestingly, air transport performed more passenger kilometersthan railways in Estonia and Lithuania in 2002 (Table D.4).
13 By comparison, the comparable GVA share in 2001 in Est .4 per cent and in Latvia 15.5per cent, which is almost identical as the GDP values in14 Transport work is typically measured as ton-kilometers for freight or passenger kilometers inpassenger operations, that is, as one ton of cargo or one passenger transported one kilometer.15 Excluding maritime transport; see Chapters on Maritime transport and ports and Transit traffic.
onia was 16Table D.1.
50
Table D.3. Freight transport work by land and air transport in 1999 and 2002 in theBaltic States, Poland, Hungary and Czech Republic, million ton-kilometers. Source: EU Candidate States database 2003.
Total Railways RoadOilpipelines Air
1999 11 274 7 295 3 975 .. 4Estonia 2002 14 089 9 697 4 387 .. 5
1999 22 436 12 210 4 161 6 055 10Latvia 2002 26 221 15 020 6 120 5 071 10
1999 18 219 7 849 7 740 2 627 3Lithuania 2002 25 370 9 767 10 709 4 892 3
1999 30 846 7 734 18 599 4 457 56Hungary 2002 29 838 7 752 17 143 4 912 31
1999 55 502 16 713 36 964 1 795 30CzechRep. 2002 62 580 15 772 45 059 1 717 32
1999 309 670 55 471 70 452 19 417 94Poland 2002 247 559 47 756 74 679 20 854 80
Table D.4. Passenger transport performance by mode in 1999 and 2002 in the BalticStates, Poland, Hungary and Czech Republic, million passenger-kilometers. Source: For Lithuania, Statistics Lithuania; other countries:Central Statistical Bureau of Latvia 2003, EU Candidate States database.
*) Data from Statistics Lithuania; only public transport
Total Railways Road Air1999 3 191 238 2 222 298
Estonia 2002 3 282 177 2 330 3551999 3 590 984 2 368 238
Latvia 2002 3 443 744 2 361 3381999 3 797 745 2 665 387
Lithuania*) 2002 3 068 498 2 046 5241999 24 332 9 514 11 265 3 513
Hungary 2002 26 102 10 531 12 097 3 4451999 19 957 6 954 8 649 4 354
Czech Rep. 2002 23 157 6 597 9 665 6 8951999 65 260 26 198 33 250 5 629
Poland 2002 56 903 20 749 29 295 6 672
There is virtually no passenger transport by sea in Latvia or Lithuania, whereas it is a very important activity in Estonia. This is mainly due to the strong passenger trade between Tallinn and Helsinki. Over 1.3 million domestic passenger travel by sea and 0.1 million by air to the islands of Saaremaa and Hiiumaa on the Estonian west coast.
51
D.3.6 Employment and wages
The transport sector (including communications) employs around 9 to 10 percent of the total employed persons in Estonia; the corresponding share is 8 to 9 percent in Latvia and around 6 percent in Lithuania (Table D.5). Both these shares and the actual number of persons employed in this sector have remained very stable during the period 1995-99.
The absolute number of employment overall and in transport, storage andcommunications has declined. This is partly because the number of self-employedpersons and entrepreneurs has increased. The used statistical base is also slightlydifferent.
Table D.5. Number of employees in all sectors, and in transport, storage, and telecommunications (TSC), NACE classes 60-64 in 1995-2002 in thousands. Source: 1995-1999: Statistical offices of Estonia and Lithuania, Latvian MoT; Central Statistical Bureau of Latvia 2003.
Estonia Latvia LithuaniaYear Transport All sectors Transport All sectors Transport All sectors1995 65,8 656,1 10,0 % 92,0 1046,0 8,8 % 95,1 1643,6 5,8 %1996 64,7 645,6 10,0 % 84,0 949,0 8,9 % 94,8 1659,0 5,7 %1997 59,4 648,4 9,2 % 82,0 990,0 8,3 % 95,6 1669,2 5,7 %1998 58,3 640,2 9,1 % 79,0 989,0 8,0 % 96,9 1656,1 5,9 %1999 62,7 614,0 10,2 % 82,0 968,0 8,5 % 105,1 1647,5 6,4 %2000 57,0 573,0 9,9 % 79,0 940,0 8,4 % 98 1518,0 6,5 %
2001*) 54,0 578,0 9,3 % 78,0 962,0 8,1 % 86 1352,0 6,4 %55,0 586,0 9,4 % 86,0 989,0 8,7 % 87 1406,0 6,2 %2002
*) Data for Lithuania in 2001 not fully comparable with other years
A breakdown by transport subsectors for 1999 is shown in Table D.6. The mainsubsectors are road and rail transport, but in addition the supporting and auxiliary services employ some 15 to 20 percent of the total. This latter group comprises, for example, freight forwarding, stevedoring, customs brokerage and warehousing staff.
Table D.6. Number of employees in all sectors, and in transport, storage, and telecommunications by subsectors, (NACE classes 60-64) in 1999 in thousands. Source: Statistical offices of Estonia, Latvia, and Lithuania
Estonia Latvia % Lithuania %All sectors 614,0 699,5 1647,5Transport, storage,communications 62,7 66,7 105,1
railways 16,3 24,5 % 18,3 17,4 % road and urban transport 20,1 30,2 % 44,6 42,4 %
water transport 0,6 0,9 % 3,0 2,9 % pipeline 0,4 0,6 % 0,3 0,3 %
post, cour
air transport 0,6 1,0 % 1,6 1,5 % supporting and auxiliary activities 14,4 21,6 % 16,2 15,4 %
ier, telecommunications 14,1 21,1 % 21,0 20,0 %
52
Transport se(Table D.7). is is x plified using data from Latvia in 1996-1998, which, of the three countries,
provides the best data for this purpose (Table D.8).
monthly nominal salaries (USD). Sources: for 1994-1999, Statistical
ctor wages are clearly above national averages in all three Baltic States There are, however, marked differences between subsectors. Th
e em
Table D.7. Transport, storage and communication sector’s and all sectors’ average
Office of Estonia; Central Statistical Bureau of Latvia, and StatisticsLithuania; for 2000-2002, Central Statistical Bureau of Latvia 2003.
Transport, storage,communication All sectors
Estonia Latvia Lithuania Estonia Latvia Lithuania1994 195 208 98 140 131 811995 271 253 148 207 167 1201996 301 273 191 240 198 1701997 309 301 234 249 203 1951998 382 327 275 308 234 2331999 356 321 299 285 242 2472000 355 319 292 289 247 2432001 370 319 292 312 254 2452002 426 352 326 367 280 281
ce: Statistical Office inLatvia.
ctor grows faster than labour costs. The total
890 1011 926Air 354 404 507
Supporting and auxialiry transport activities 384 437 475Post and courier activities 129 142 158
In Latvia, pipeline and water transport average wages are the highest, and they are almost twice as high as the following group, air transport average wages. The low-end subsectors include post and courier activities, rail and road transport (Table D.8).
Table D.8. Transport, storage and communication sector’s and all sectors’ average monthly salaries in Latvia (in USD/month). Sour
1996 1997 1998 Railway 236 267 297 Road and urban electrified 158 173 191Water 526 598 926Pipeline
An interesting phenomenon is that in Latvia, the average wages within transport tend to be higher in public sector entities than in the private sector. This is the case in all subsectors with the exception of water transport.
In Estonia, the wages in transport and communications grew more slowly than thenational average wages in 2001 and the growth rate slowed even more in 2002. However, productivity in the transport se
53
number of persons employed in transport has reduced from 48,600 in 1999 to 44,200 in 2001. The number of persons employed in the telecommunications sector has remained almost stable at 10,000 persons from 1992 to 2001.
One of the main reasons is that many of those who worked before as employees incompanies have decided to become sole proprietors or have established their own
In 1999 a to teredthe Commercial Register, but three years later the number had grown to 7,026,
cluding 3,060 sole proprieto nian MEAC).
tor Projects and I Financial
he Baltic States have financed many of the major transport sector projects with nstitutions (IFIs) or
in IFIs in this respectclude EBRD, EIB, NIB, and the World Bank (in alphabetical order). The role of
nd air transport. The involvement of the four main financial
orld Bank loans in Transport Sector in
small companies and thus do not appear in national statistics of employees any more.tal of 1,699 transport and telecommunications companies were regis
inin rs (Esto
D.4 Transport Sec nternational Institutions
Texclusive or partial funding either through International Financial Ifrom other international organizations such as the EU. The mainprivate sector finance also increased towards the end of the 1990s, especially in projects involving transport operations.
IFIs have typically been involved in the financing of transport infrastructure projects in road, rail, sea, ainstitutions in the transport sector in the Baltic States is presented in more detail in this section in alphabetical order. The total transport sector funding through loans from the four institutions amounts to approximately 780 million euros (Table D.9).
Table D.9. Approved EBRD, EIB, NIB, and Wthe Baltic States. Sources: EBRD, EIB, NIB, and The World Bank.
Loans PeriodEBRD 158 m EUR By end-year 2003 EIB EUR 19NIB 156 m EU NovWorld Bank (IBRD) 111 m USD 1993-200
365 m 94-2003ember 2003R By
5
D.4.1 e in the tra ort sector in the Baltic States16
BRD’s transport sector portfolio comprises mainly road and rail projects. Air ranspor hav s, followed by mu As of
December 31, 2002, E tted n of 78transport projects.
EBRD financ nsp
Et t and ports e had smaller share
BRD had commilti-modal projects.
euros in a total2,866 millio
16 This section is based on the presentation of Mr. Urmas Paavel, EBRD.The EBRD website is found at: www.ebrd.org
54
The v BRD finance transport proje ecuted in t tic States isshown in Table D.10. The total volume of EBRD commitments was 143.5 millioneuros by the end of 1999, and 158.2 million euros in 2003. This is about 5 per cent of
BRD’s total transport sector commitments.
EBRD Total Project Value
olume of E in cts ex he Bal
E
Table D.10. EBRD’s commitments in 2003 in transport infrastructure projects in the Baltic States (Source EBRD presentation in Parnu Seminar)
By subsector Number of projects Commitment (m EUR)
Rail 2 63.9 188.7
Road 3 44.6 170.6Air 3 26.1 28.6
Ports/Shipping 2 23.6 60.7
448.6Total 10 158.2
By country Number of projects EBRD Total Project Value Commitment (m EUR)
Estonia 3 37.1 63.5 Latvia 4 38.7 146.8 Lithuania 3 82.4 238.3 Total 10 158.2 448.6
s comprise mainlyTr
he project of the following. Railways projects support the estructuring broadly in line with EU Directives (Latvia), and facilitate sector
priva ssistance (Estonia). In Tallinn and Rii o region facilitating market-orien and to enta to airport operations.
V Public-private approach rt investments, and i ian and Lithuanian Road ects deal with opentendering for civil works, road sector budgeting and sector cost recovery utilizing r
D e transport sector in the Baltic States1
T nt Bank’s (EIB) mandate for the years 2000-2006 for CEECst , part of which is guaranteed by the EU. EIB’s own resources for pre-access projects for the years 2000-2003 nt to 8,500 ione re included in this amount, but no try quotas e t assuch. EIB’s transport sector loans in the Baltic States are sho Table D.11
tization with technical a ga Airports, the aim ted ecos to improve access t nomy implem
commercial approach
entspils Port Terminal project has ae. Latv
to pot will promote East-West trad Proj
oad user charges.
.4.2 EIB finance in th 7
he European Investmeotals 8,680 million euros
ionuros. The Baltic States’ a
amou millcoun xis
wn in .
17 This section is based on the presentation of Executive Vice President Mr. Sauli Niinistö, EIB.The EIB website is found at: www.eib.org
55
T financed transport projects in the Baltic Sta 94 – 2003, ion
EIB Project Year signedMil
euros
able D.11. EIB tes 19 milleuros. Source: EIB
lion
Estonia: Road Project 1999 15Tallinn Airport Project 1997 10Estonia- Railways Project 1996 16Upgrading Air Traffic Services (ATS) 1994 20Port of Muuga : Bulk Terminal 1994 15
Estonia total 76Latvian Transport Infrastructure 2002 33Riga International Airport Project 2000 10Ventspils Port - Project Phase II 1999 8Railways Project 1998 34Ventspils Port Upgrading 1997 20
Latvia total 105Lithuanian Highways Project 2001 50Klaipeda Port, Phase II 2000 10Lithuania -Railways Project 1999 18Roads ProjectLithuania -Railways Project
1998 401996 22
Via Baltica 1996 20Port of Klaipeda 1995 14Upgrading of Vilnius Internat. Airport 1994 10
Lithuania total 184 All total 365
inance in the transport sector in the Baltic StateD.4.3 NIB f s
The Nordic Investment Bank (NIB)18 gio ancial itut abli ndma Nordic countr in alp tical r), F , De k,Iceland, Norway, and Sweden. NIB´s total loan commitme to t tic c esas of March 2001 was approximately 400 million os, an Nov 200 asalre s.
NIB the Baltic States transpo ector been adprojects (Table D.12). NIB has been active in promoting Via a br ofCrete Corridor I. In 1995 the H vel Working Party of Via Baltica was established upon the initiative of NIB. The in re in I
rogram of Via Baltica at an amount of 200 million euros.
tica.The implementation will continue until the closure of EU/ISPA program in 2006.
is a re nal fin inst ion est shed aintained by the five ies ( habe orde inland nmar
nts he Bal ountrieur d in ember 3 it w
ady 620 million euro
’s involvement in rt s has mainly in rothe Baltic anch
igh Leitiative sulted the first nvestment
P
Upon successful implementation of this program, a second Via Baltica InvestmentProgram (Table D.13) has been developed for the years 2001-2006. It comprises EUR 553 millions for Via Baltica and EUR 102 million for access roads to Via Bal
18 The NIB website is found at: www.nib.fi; This section is largely based on the presentation ofExecutive Vice President Erkki Karmila, November 24, 2003
56
Table D.12. NIB’s total commitments to the Baltic Sea transition countries by sector – as of November 2003 (mEUR). Source: NIB
es Poland Russia TotBaltic Stat al %
Energy sector 189.0 158.2 0.0 347.3 34 %
Telecommunicationssport infrastructure 156.
14.4 37.7 17.01 0.0 0.0
20.5 20.0 78.0
69.0 7 %TranWater and sewage
156.1 15 %118.5 11 %
Total infrastructure 379.9 215.9 95.0 690.8 67 % Municipal financing 60.0 0.0 0.0 60.0 6 %Manufacturing 12.5 0.0 25.5 38.0 4 %Other 167.0 20.0 55.4 242.4 24 %TOTAL 619.4 235.9 176.0 1031.3 100 %
In the end-1990s, NIB was the main financier in the construction and activation of thenew letter- and parcel-handling terminal for the Estonian Post Office. This 13 million
EM project also involved the Finnish, German, Norwegian and Swedish Post.D
Table D.13. NIB’s major commitments to transport projects in the Baltic States as of November 2003. Source: NIB
Via Baltica Road Loan in Lithuania, 1996 USD 6.7 millionLithuanian Gravel Road Programme in 2001 EUR 67.4 million
ural Road Development Programme in 2001Estonian R EUR 45.0 millionarbour d
Klaipeda harbour development in 200 ion EUR 160 million
Tallinn h evelopment in 2003 EUR 40.0 millionEUR 4.3 mill3
Total
the th State ted to joi NIB, and the vesed the ess to e required parliamentary ss
tates o join the NIB by or around 20
Ba finance in the tr e Baltic States
the Baltic States is shown in “Country at a glance”- Attachments D.2.-4. They also show the volume of IFI loans in all sectors.
ransport(approximately 20 percent) and rail projects (approximately 8 percent) .
In late 2003,already expres
ree Baltic s were invi n the y hair willingn do
are likely tso. After th proce
in all member states, the Baltic S 05.
D.4.4 World nk ansport sector in th
Data for the World Bank’s program in
The World Bank transport sector portfolio in Europe and Central Asia (ECA) is dominated by road projects (approximately 65 percent), followed by urban t
19
19 For further information, see www.worldbank.org/ecspf/ecsin/transport.htm
57
Table D.14. World Bank/IBRD loans in the transport sector in the Baltic States in million USD. Source: The World Bank
Country Subsector/ type Projectperiod
IBRD loansin m USD
Total project cost in m USD
Estonia Highwaymaintenance
1993-1997 12.0 26.9
Estonia Transport 2000-2005 25.0 49.5Total Estonia 37.0 76.4Latvi Highways 1995-2000 20.0a 54.4Total Latvia 20.0 54.4Lithuania Highways 1994-2000 19.0 44.2Lithuania Klaipeda port 2000-2002 35.4 56.9Total Lithuania 54.4 101.0Baltic States Total 111.4 231.9
In the Baltic States, the Bank’s transport sector involvement is mainly in the roadsubsector, where the Bank has had projects in all three countries (Table D.14). Other important subsectors are ports and rail.
pervasive issue in numerous countries throughout the world, namely the obstacles to
documentary procedures and controls .
D an U io nsport sector in the Baltic S
T n U n ,e c and tec o n em s or initiat s 1990s have been the PHAR heidentification of specific v nt corridors within the Trans-Eur TransportN (TEN-T); Tran o he CEEC (TINA);and regional developmen r h as INTERREG21.
E ion also m s spor rei for the ne es. The funds from EU to transport i re before accession were EUR 28.9 million per year, of which EUR 24.1m om ISPA/ h d, and the remaining part from PHARE or European Regional Dev programs. After the accession, thefunds available for acce o oximately EUR 110 million per
ear, of which 80 million is from illion from ERDF.
The Bank has also been an advisor or facilitator in a number of small projects onTrade and Transport Facilitation or urban transport in all three Baltic States.
In 1999, the World Bank Group, together with the private sector and otherinternational organizations, launched the Global Facilitation Partnership forTransportation and Trade (GFP). This is an initiative to help in addressing a
trade and international transport arising from cumbersome, often redundant,20
.5 Europe
he Europea
n n assistance to the tra tates
nio has taken an active role in assisting the Baltic States in socialhn logi l ent in many sectors. In the traconomi ca developm sport sector, th
E program; topean
ain vehicle
etworks
ive during thede elopmesp rt Infrastructure Needs Assessment of tt p ograms suc
U access ean morecountrieconomic support in tran t infrastructu
nvestmentnfrastructuillion is fr
w member
Co esion funelopment Fund (ERDF)ssi n countries will be appr
ISPA/Cohesion fund, and 30 my
20 Its comprehensive website was updated in 2004; see: www.gfp.org21 A detailed evaluation of the multitude of EU assistance lies beyond this report; data on this can befound, for example, in EU’s websites through www.europa.eu.int
58
Table D.15. Community co-financing from the EU in infrastructure related targets forthe period 2004-2006.
Means ContributionEstonia: Transport infrastructure 138.1 million € Infrastructureand local development
Projects of environmental infrastructureReorganization of the hospital networkInformation society (e-government, e-citizen) Local development projects with socioeconomic impact
or 37 % of thetotal
Latvia:Promotion ofterritorialdecisions
TransportEnvironmentTourism
203.8 million € or 33 % of thetotal
Information and communication technologiesHealth careEducationSocial sectors when related to labor market
Lithuania:Social and economicinfrastructure
TransportEnergyHealthEducation
347.1 million € or 39 % of thetotal
Research institutionsLabor market institutionsRelated social affairs sectors
The Baltic States have also had access to the EU’s 4th, 5th and 6th Research
onal projects.
hen the Baltic States will become EU members in May 2004, the nature of EU’sassistance to the new member countries will also change. For example, for the period
y co-financing in all sectors will amount up to 895 millionmillion euros for Latvia and 371 million euros for Estonia.
nly part of these will be directed to transport or infrastructure projects. The full
There was a resident PHARE mission in the Ministries of Transport of each of the three states throughout the 1990s. Since 1991, there have been more than 100 individual transport-related PHARE projects in the Baltic States.
Framework Programs, the latest of which is running in 2002-2006. Their participation in these has been modest, indicating that research institutions and universities in the Baltic States still have a limited capacity to participate in internati
W
2004-2006, the Communiteuros for Lithuania, 626Outilization of these funds also requires active participation from the new membercountries. (Table D.15 )
D.5.1 PHARE
The PHARE program has had a substantial impact on the institutional development ofall three states. A large number of PHARE-funded projects have been carried out in all transport subsectors, and in closely-related fields such as trade and transportfacilitation, customs and border guard services.
59
D.5.2 TEN-T and TINA
In the pre-accession phase, transport was identified as a priority issue and this will continue beyond accession. Priority of alignment laid down in the EU acquis putsemphasis on harmonization of land, sea and maritime transport rules, and in particularon technical, social, environmental and safety aspects. Other key priorities are physical transport infrastructure links and, more particularly, extension of TENs, aswell as the negotiation and the conclusion of transport agreements between the EU
illion euros for roads and 11,000 million for rail ttachment F.1.)
s need to invest around 1.5% of GDP into transport infrastructure. Since the EU’s budget cannot meet all those needs, there is a need to resort to Public-
rivate Partnerships (PPPs), national budgets and IFI loans to meet the costs incurred.
for the ports. Ferry lines are included
and candidate countries to prepare for accession.
In the 1990s, most cases existing infrastructures in candidate countries were unable to cater for future needs. For the CEECs and Cyprus the EU undertook a TINA exercise (identifying a backbone network for extension of the TENs into the accessioncountries and additional network components). The length of the network assessedwas more than 18,000 km roads and 20,000 km rail; the main networks for road and rail transport according to TEN, TINA and the Helsinki meeting22 networks are shown in Attachment D.9. See also Attachment D.10.
Preliminary cost estimations under the TINA exercise, for the completion of the totalnetwork, indicated that 91,000 million euros up to 2015 was required: 44,000 millioneuros for roads, 37,000 million euros for rail, and the rest for inland waterways,airports, seaport, river ports and terminals. In the TEN-T Invest report (2003), the figure is around 38,000 m(A
Most countrie
P
All the Baltic Sea nations except Russia are included in the TINA project. In TINA and in TEN, important infrastructure links have been identified for both road and rail, whereas no comparable framework existsneither in TEN nor TINA. For the other East European States the land corridorsdeveloped at the Conference of Transport Ministers in Helsinki are relevant. However, no corridors across the Baltic Sea were identified which link the variousports and the land corridors. In 2003, the concept of Motorways of the Seas was introduced in EU’s transport policy to compensate for this handicap. For reference, amap showing some of the main population centers around the Baltic Sea is included as Attachment D.11.
22 The Helsinki meeting refers to one of three EU-sponsored Pan-European Transport Conferences(Prague 1991, Crete 1994, Helsinki 1997). These meetings have taken major steps in the formation ofthe main transport network in Central and Eastern Europe. The Crete Conference identified the ninePan-European Transport Corridors, where Via Baltica was named as the road component of Corridor I.The Helsinki Conference augmented these priority corridors i.a. by defining the east-west linksbetween Corridors I and IX in Estonia and Latvia.
60
D.5.3 ISPA
The European Union required all accession countries to draw up Strategies forStructural Policies for Pre-Accession (ISPA), outlining national policies for, interalia, transport infrastructure development.
An ISPA fund was established in June 1999 to provide additional finance for the
the Polandand the Baltic States, for investment assistance in the transport and environmental
o the Baltic countries, Poland and the Baltic Sea area.
ocuses on five priority sectors: economy and infrastructure, social issues (including education, training and public health), environment, nuclear safety and nateach ofindicates
The improvement of the transport infrastructure in the ND area is vital for theeconoma multi-mthe neigtransport and comm
frastructure, and the further realisation of the Pan-European transport network in
key objectives:
reinforcement of the pre-accession process of the candidate countries. The ISPAregulation covers the years 2000-2006 and provides 1,040 million euros annually for all candidate countries, of which about 500 million euros is designated for
sectors. When these countries enter the EU, the ISPA instrument will be phased out by the end of 2006, it will be replaced by, for example, European RegionalDevelopment Funds (ERDF).
D.5.4 EU’s Northern Dimension Policy and the transport sector
The European Union approved the first Action Plan for the Northern Dimension (ND)at the in July 2000 and the 2nd Action plan in October 200323 covering the period 2004-2006. Geographically, the Initiative covers the northern corner of Europe, from north-west Russia t
The 2nd Northern Dimension Action Plan sets out a framework of priorities, objectives and actions to be pursued in the implementation of the Northern Dimension in the external and cross-border policies of the European Union over the period.
The document f
ural resources, justice and home affairs and cross-border co-operation. Withinthese sectors, it sets out strategic priorities and specific objectives, and the priority actions to be pursued in achieving these objectives.
ic development of the region, with the key priorities being the development ofodal transport system improving the connections within the region and with
hbouring countries, the creation of an environmentally friendly integrated unications market, the promotion of an efficient use of existing
inpartner countries.
Safety levels within all modes of transport must be enhanced, in particular for maritime safety with regard to the use of double-hull tankers and sufficient safetyclassification in harsh ice conditions, including scientific research support. To help address the above priorities, ND partners will therefore work to achieve the following
23 The 2nd Action Plan at: http://europa.eu.int/comm/external_relations/north_dim/ndap/ap2.htm
61
To address bottlenecks and choke points in the Northern Dimension region, creating at thesame time an environmentally friendly transport network integrating accession coThe basis for such a work will be provided by the Commission revision of the Guidelin
untries.es for
the Trans-European Transport Network (TEN-T) and the Commission White Paper"European Transport Policy for 2010".
be attributed, inparticular, to maritime safety, with a view to protecting the marine environment fromaccidents that threaten sea and coastal ecosystems as well as the socio-economic life of
sinau and tolexandropoulis), as well as the links from Kaliningrad and Klaipeda via Vilnius to
Areas concept will be revised as, aftereas will be inside EU territory.
ents briefly the governance of the transport and communicationector and adherence to international transport conventions and inter-governmental
ot covered in this report.
have madextensive bilateral agreements mainly in road and rail transport issues with Russia and
other CIS u inAttachment D.
In rail tra ers of the Organization for theCollaborat an intergovernmentalorganizatio m rethe same rail g
In air trans rthe Chicago, Hague, Geneva, Rome, Montreal and Warsaw Conventions, but not necessarily all the related protocols. 25
To increase safety levels within all modes of transport. High priority will
populations involved. Scientific research will support such activities.
The Northern Dimension action plan 2004-2006 aims at strengthened implementationof Pan-European Corridors and Areas, notably Pan-European Corridors I and IA (Helsinki to Warsaw and to Gdansk, via Tallinn, Riga and Kaunas), and Corridor IXHelsinki to St Petersburg, Moscow and Pskov, Kiev, and on to Chi(
AMinsk. The Pan-European Corridors andenlargement, two thirds of the Corridors and Ar
D.6 Institutional framework in the transport sector in the Baltic States
This section pressorganizations. It also indicates the adherence main non-governmental organizations.
In all three countries, the Ministry responsible for transport is also dealing withtelecommunications, but these activities are n 24
D.6.1 International transport conventions
The Baltic States have joined, generally speaking, all the main international transportconventions. In addition to multilateral conventions and treaties, theye
co ntries. The adherence to main land transport conventions is shown6.
nsport, all three countries are membion of Railways (ORC, a.k.a. OSJD), which isn ainly for Russia and CIS countries. The Baltic States and Finland sha
auge as the Russian railways.
po t, the Baltic States have ratified or signed the main conventions, such as
24 Estonia: www.mnt.ee/atp/eng/ ; Latvia www.lra.lt/index_en.html ; Lithuania
62
Latvia and Lithuania are members of OTIF,26 which oversees the Convention
- CIV - and freight traffic -CIM);
ds and the adoption of uniform technical
admission of railway vehicles and other railwaymaterial used in international traffic (ATMF).
maritime conventions, the Baltic States have ratified or signed the mainonventions27, but not necessarily all the protocols on:
MARPOL); and
portunities to develop policies in particular areas,
and EC, EIB and
tions, data, policy analysis,
concerning International Carriage by Rail (COTIF) and the contracts on:
the international rail transport law (passenger
the carriage of dangerous goods (RID); the contracts of use of vehicles (CUV);the contract of use of railway infrastructure (CUI); the validation of technical standarprescriptions for railway material (APTU);the procedure for technical
As regardsc
(i) Maritime safety, such as: Safety of Life at Sea (SOLAS); Training, Crewing andWatchkeeping (STCW 78); ships’ Load Lines; Collision Prevention (COLREG);Safe Containers (CSC); and Search and Rescue (SAR),
(ii) Maritime Pollution (
(iii) Other subjects, such as: Suppression of Unlawful Acts Against the Safety ofMaritime Navigation (SUA);
D.6.2 The Baltic States’ participation in ECMT
The European Conference of Ministers of Transport28 is formally part of the OECD. It is a Forum where Ministers discuss transport policy with all 40 members. WorkingGroups on different topics allow opand to prepare Ministerial decisions. Seminars and Conferences give opportunities to keep up with developments.
A recent example of this is the work on Pan-European Transport Corridors and Areas that has continued at the seminar jointly organised by the ECMTUNECE on ”Transport infrastructure development for a wider Europe” in Paris on November 27-28, 2003. At this event it was decided that the EC will take the lead in proposing a new Corridors and Areas concept in 2004.
ECMT also collects statistical data that allows the development of harmonizedindicators, and output includes policy and research publica
For details, see ICAO’s website at: http://www.icao.int/cgi/eshop_conv.pl?GUESTguest25
26 The Intergovernmental Organisation For International Carriage By Rail www.otif.org27 For details, see IMO’s website at http://www.imo.org/Conventions/mainframe.asp?topic_id=148;Latvia accessed SOLAS and Estonia SUA Protocol on January 2004. 28 Based on the presentation of Mr. Jack Short of the ECMT. ECMT website at: www.oecd.org/cem
63
and political conclusions. A concrete benefit is the Multilateral Quota, which allowsultilateral trucking.
he Baltic countries have been active in ECMT work. Ministers frequently take the
conomists and others, where there does not seem to be as wide a choice as in other
long these lines ought to be considered.
States’ participation in TEDIM
TEDIM teson elim bettertranspo Programre Ministries of transport of Estonia, Finland, Germany, Latvia, Lithuania, Poland
ublic institutions and private companies.
orting logistics and creating an integrated informationetwork within the framework of EU’s Northern Dimension Policy. The TEDIM
lematics in transport and logistics.
he TEDIM Program also has links with the European Union’s Northern Dimension
international m
Tfloor at the Ministerial, and staff has attended. Indeed all the Baltic Countries havequickly reached the maximum number of licenses by changing their fleets to the best quality vehicles from the safety and environmental viewpoints.
One area in which some strengthening seems to be needed is in the number of experts, ecountries. According to ECMT, there seem to be few independent institutes of transport research and reflection in the Baltic region and perhaps some joint venture a
D.6.3 The Baltic
was set up in 1995 as a public-private partnership program that concentrainating barriers to international trade and business, and promoting
rt links in the Baltic Sea region. The official members of the TEDIMaand Russia. Denmark and Sweden also participate in TEDIM projects.29
Over the years, TEDIM has developed into an extensive cooperation networkinvolving national ministries, p
The Mission of the TEDIM Program is to strengthen the positive development of the Baltic Sea region by suppnmission includes:
• acting as a development forum for logistics cooperation between the EU andRussia, as well as between EU member states,
• developing common Northern Dimension information management platforms,• education about new regulations and best practices in transport and logistics,• supporting development and use of te
TEDIM’s strategy for 2004-2008 covers TEDIM’s mission, implementation of thatmission, definitions of TEDIM development areas, and a description of theresponsibilities of the member countries. The strategy as well as other publications are found in TEDIM’s homepage.
TPolicy (See section D.5.4.).
29 TEDIM is an acronym of Telematics, Education, Development and Information Management.Tedim’ homepage is at: www.tedim.com
64
D.6.4 Estonian Ministry of Economics Affairs and Communications
incorporated in the Ministry of Eco m since its structural reform in 2000 - 200 I f Economy and the Ministry of Transport and Communications formed the new MEAC.
ME 's economic policy and economicevelopment plans in the fields of: industry, trade, energy, housing, building and
er the Minister and the
ment
e CAA; established in 2001
D.6
The Ministry of Transport and Communications of Republic of Latvia includes six officials and 36 contract employees.
The ma
nt
o
o portOrganize exchange of road carriage licenses with other countries
i
l organizations and cooperates in civil aviation safety issues.
o irements.o Prepares and promotes reforms in the field of railway transport.
In Estonia, transport and communications affairs areno ics Affairs and Communicati
oons (MEAC)
1. n the process the Ministry
AC elaborates and implements the statedtransport. Following Deputy Secretary Generals sort undSecretary General of the MEAC:
Deputy Secretary General of European Union and International Co-operationo European Union and International Co-operation Depart
Deputy Secretary General of Economic Development Economic Development Depao rtment
Deputy Secretary General of Maintenance of Transport o Transport Development and Logistics Departmento Aviation and Maritime Departmento Road and Railways Department
Flight Accident Investigation Departmento Independent from th
.5 Latvian Ministry of Transport and Communications
departments. In 2004, the staff comprises 112
in tasks of the Departments are as following:
Road Transport DepartmeThe largest departmeo nt in the Ministry. It works out and implements state policies in the fieldsof road transport, roads and traffic safety. The main tasks of the department are: Development of the road network, international routes, cargo and passenger carriageElaboration of strategic and state polico ies in traffic safety
o Work out and coordinate road finance policies and legislationCooperate with foreign official institutions in the field of the road trans
o
Av ation Department o
Issues and annuls commercial licenses for air traffic services.Determines the order of using the airspace.
oWorks out air cargo regulations.o
o Deals with internationa
Railway Department o Prepares and implements railway policies.
Prepares legislation in compliance with Latvian and EU requ
65
Maritime Departmentquirements of
ipping safety, pollutionprevention and sea traffic efficiency.
o The Department has three units, which correspond to the main work directions: (i) Shipping
ransportationo Works out legislative acts regulating domestic passenger transportation
Investigates the existing interaction and coverage of bus and rail route networkstance bus routes; approves schedules
s
ingansport, communications and informaticsents
D.6.6 Lithuanian Ministry of Transport and Communications
Civil Aviation Department
In the three countries, the cen r road, railway, civil aviation and m unde sport.g r offi s ntsG ch are M
C tion bodies ms. For examR n (ERA) is a government institution un agreat extent involves private business in road managemen Lithuania, theR te enterprise (LRA).
A nt in E corpor ion, and in Lithuania it is a state-owned enterprise.
o Implements state policies in maritime processes, taking into account reinternational conventions, EU legislative acts and standards on sh
safety and hydrographic; (ii) Ports; and (iii) International agreements.
Department of Passenger T
oo Issues and annuls route certificates in long-diso Calculates distribution of subsidieo Registers bus stations
nDepartment of Strategic Plano Plans, administers, organizes and coordinates tr
development policies and strategies and implem
The Ministry of Transport and Communications of the Republic of Lithuania consists of following departments:
Transport Policy and Investment Department Waterways Transport DepartmentRailways Transport DepartmentRoad Transport Department
Information and Communication Department
D.6.7 Central administration in the transport sector
tral administrations for the Ministries of tranaritime are organized In addition, the Ministries
. preseovern a number of otheovernment bodies whi
ces which concern transportsupervised by the Estonian
ector. Table D.16EAC.
entral administra have different legal for ple the Estonian oad Administratio der the MEAC, which to
t (ERA). Inoad Administration is a sta
ir Traffic Manageme stonia is a state-owned at
66
Table D.16. The bodies supervised by the Estonian MEAC. Source: Estonian MEAC
Boards Public institutions FoundationsEstonian Civil Aviation Administration
Estonian Motor Vehicle Registration Centre
Estonian Credit and ExportGuarantee Fund KredEx
Estonian National Road Administration
Estonian Informatics Centre Enterprise Estonia
Estonian Railway Estonian Patent Library Estonian Accreditation Administration CentreEstonian Maritime Administration
State Infocommunication Foundation
Estonian Competition Board Inspectorates Estonian Centre for Standardisation
Estonian Patent Office Technical InspectorateEstonian National Estonian Energy Market Communications Board InspectorateEstonian ConsumerProtection Board
In Lithuania, the State Road Transport Inspectorate and State Railway Inspectorate have been strengthened through personnel increases and the training to improve the qualification of staff in the Road Transport, Civil Aviation and Railway Transport
epartments of the Ministry of Trand sport and Communications has started.
The actual division of work between regulating and enforcement bodies is found in sector specific organizations30.
D.6.8 The main transport industry associations and labor unions in the Baltic States
Well-organized industry associations exist in road transport31. They represent a large number of carriers and entrepreneurs, and they also have an institutional role in issuing IRU’s road transport documents. The issuance of TIR Carnets andmembership fees generate a steady cahs flow for the national associations.
Trade unions have traditionally not been strong operators in the Baltic States, and this applies to the transport sector too. Their importance is, however, anticipated to increase in the future.32
In maritime, rail or air transport, there are no major national industry organizations, as the number of firms is small, and the market structure is very concentrated. In stead,there are strong lobby groups advocating transit traffic issues that cut across transport modes in each country.
30 In road transport, ECMT, in maritime transport IMO and in air transport ICAO and IATA websites.31 Association of Estonian International Road Carriers (ERAA) at www.eraa.ee ; Latvijas Auto at:www.lauto.lv/ ;and LINAVA at: www.linava.lt32 See, for example: Confederation of Estonian Trade unions at www.eakl.ee; Free Trade UnionConfederation of Latvia (LBAS); and Lithuanian Workers’ Union.
67
National freight forwarding associations were established in 1993-1994. Estonian stonian Freight Forwarders Association (EFFA) has currently 59 corporate members
ers (LAFF) has 78 corporatembers . Lithuania has two freight forwarding associations: The Lithuanian
rokers’ Association has currently 24 corporate34
embers. Lithuania does not have a specific logistics association. Active Shipe
sely
Eand the Latvian National Association of Freight Forward
33meNational Freight Forwarders Association (LINEKA) based in Vilnius, and The Freight Forwarders Association in Lithuania based in Klaipeda. All four associationsbelong to international freight forwarders’ association FIATA.
The Latvian Logistics and Customs Bmembers, and it is also starting to have individual members . The Lithuanian Association of Customs Brokers is a member of the Confederation of Lithuanian Industrialists. National logistics associations for individual members are only beginning to emerge, except for Estonian association which has several hundredmbrok rs’ associations exit in all three countries.
D.6.9 Other relevant initiatives in the Baltic Sea region
Since the Baltic States’ regained independence, a large number of business andpolicy-making initiatives in the region and in Denmark, Finland, Germany, Iceland, Norway and Sweden (in alphabetical order) have contributed to the economic and political development in the region.
Transport sector development has been an important issue in the work of a number of these regional initiatives. These initiatives include, among others, (a) the Baltic Development Forum; (b) the Baltic Sea Forum, and (c) the Baltic Economic Forum.35
D.7 Transport sector research and education
Vocational and higher education in the transport sector has traditionally been clolinked to transport subsectors in the Baltic States. In some areas, such as in maritime,aviation and in railways, this is a feasible arrangement.
In the Baltic States, the educational system – especially in higher education - has undergone a profound restructuring since the regained independence. At the sametime the attractiveness of teaching and university-connected research has declinedmarkedly compared to other options available in the job markets for aspiring students.
In some cases, government allowances for funds have not been adequate to maintaininstitutes, that have installed relatively high tuition fees, and some institutions ofhigher education have also funded their operations on private finance. As a result, theeducational system has become more complicated. In areas where technological development is rapid, or which require relatively expensive training equipment, such as aviation and maritime education, it has been difficult to keep up with the increasingcomplexity and technicality of the issues (See Attachment D.12.).
33 Estonia: see www.effa.ee Latvia: see www.laff.lv34Latvia: www.lmba.lv Estonia: www.logi.ee35 a): www.bdforum.org/ ; b): www.baltic-sea-forum.org/en/ ; c): www.balticeconomicforum.com
68
In the Parnu seminar it was also mentioned that outsourcing of, for example, road and rail construction planning and execution, has created a severe shortage of civil engineers within the ministries and central administration. It was anticipated thatuniversities or polytechnics can not produce enough civil engineers in the near term.One solution could be to reconsider the funds allocated to infrastructure projects, and to strengthen the engineering capacity in government entities through attractive terms
nical University that has started to
ering such
ogistics research and education that goes beyond transport, nd which deals with manufacturing or trading firms’ operations. In Europe, logistics as become available in both technical universities and business schools. In the Baltic
tics research and education needs to be strengthened considerably. The transport
telematics applications in particular are other areas that needs considerably moresearch efforts and dissemination of findings.
a changing world.
ects offered within EU’s Framework
ctively36.
of work.
In transport-related research, the Baltic States’ universities still lag behind inparticipating in international scientific communities in their respective fields. Thenumber of research published in international conferences, journals or in books is very small. Most of the research is conducted in national languages, or within the Russian-speaking research community. The use of English is taking pace only gradually, as exemplified by Gedimino Techpublish one issue out of six of the journal Transport (formerly Transport Engineering)in English.
There existing university entities traditionally focus on mechanical engineas vehicle and engine mechanics and construction. Such entities can be found e.g. in mainly technical universities in Riga, Jelgava (Motor vehicle institute) (Vilnius(Gedimino) and Tallinn. Civil engineering has traditionally been well represented too.The number of students and new teachers in both areas has, however, remained smallcompared to the demand.
There is a clear lack of lahStates, logisuse of information technology in transport and logistics in general, and
re
While educational and research entities need funds and support from the Ministry of Education, they also need to work more closely with other state agencies and privatefirms to be able to deal with relevant research issues in
In international contacts and research contribution, every effort should be made totake full use of available research grants and projprogram for R&D and other instruments for research available for accession the newmember states. Also grants that allow teachers and researchers to spend time in universities abroad need to be utilized effe
36 For further references on educational systems, see e.g. http://www.euroeducation.netor The Estonian Ministry of Education at: http://www.hm.ee , Latvian Ministry of Education andScience at: http://www.izm.gov.lv, and Lithuanian Centre For Quality Assessment In HigherEducation at: http://www.skvc.lt/wwwskvc/en/about_us.htm
69
E. Merchandise trade, FDI and the Business environment 37
light theactual level (stock) of FDI in the three countries.
EEPS survey and from surveys among international freight forwarders.
ts.
trates differences in trade orientation of the three countries in 1999 and 2002 igure E.1, see also Attachment E.1). While Estonia is closely linked with Finland,
weden and Germany, Latvia trades most with Germany, United Kingdom and
rade between the Baltic States has been relatively limited, except between Latviand Lithuania. Since 1999, intra-Baltic trade has constantly intensified.
ost traders are small firms measured by value of traded goods. In 2002, over 90% ofand importers traded for less than one
illion USD, and accounted for less than 17% of the total value of the national exports and less than 27% of imports in each country. (Attachment E.2.)
In Estonia and Latvia, exporters and importers trading from USD 1 to 10 millioncreased their foreign trade share in 2000 - 2002. In Lithuania, traders exporting
more than USD 50 million accounted for about 38% of the total exports in 2002. In stonia the respective share of these large exporters was 17.8 % and in Latvia 11.5%.
The most recent data on FDI in the transport sector is given in order to high
Business environment is highlighted by data from B
E.1 Merchandise trade
Each of the three Baltic States shows substantially higher figures for merchandiseimport than export. This is partly due to the extensive arbitrage trade and related transit traffic.
Trade orientation shifted towards the European Union during the 1990s. Roughly 70 percent of Estonian foreign trade (export + import) is with EU countries; thecorresponding figure for Latvia is around 60 percent and for Lithuania 50 percent. After the EU accession, this share increases at least by 10 percentage poin
Russian trade faltered after the devaluation of the Russian rouble in 1998, but in 2002, exports to Russia increased from all three countries.
A breakdown of trade relations with the most important trading partners clearlyillus(FS
Ta
MEstonian, Latvian and Lithuanian exportersm
in
E
Prepared by Lauri Ojala and Tapio Naula, Turku School of Economics and Business Administration37
70
Merchandise trade and trade in services are shown in monetary terms, and the major
trade towards western markets. trading partners are identified. Foreign trade data shows a rapid reorientation of
Lithuania; most Lithuanian trade is with Russia followed by Germany and UK.
Figure E.1. The Baltic States four most important trading partners by value in 1999
SWE
BLR
FIN
RUS
POLGER
18.8 %
8.7
%
19. 5%
22.8%
9.2 %
9.3 %
13.5 %
9.3 %
EST
SWE
and 2002. Source: National statistical offices; trade by origin of theproducts and by value
Exports from the Baltic States largely depend on sea transportation. This is especially the case of Estonia and Latvia. Over half of Estonian and Latvian imports, and almosthalf of Lithuanian imports by weight is carried by rail, as shown in Figure E.2. Thedata excludes pipeline transport, which accounted for 46 % of Lithuania’s and 4 % of Latvia’s total imports by weight in 2002.
GBR
BLR
FIN
RUS
POLGER
10.7 %
7.5%
16.4 %
16.9 %
9.1%
15.2 % 7.3%
10.5 %LAT
SWE FIN
GBR
BLR
RUS
POLGER
DEN 6.2 %
16.0 %
4.2 %
18.1 % 5.7%
20.1 %
12.8
%
7.0 %LIT
SWE
BLR
FIN
RUS
POLGER
7.4
%
24.8%
17.1 %
9.9 %
9.5 %
7.4 %
11.2 %
EST15.3 %
SWE
BLR
FIN
RUS
POLGER
10.5 %
GBR
8.4%
14.6 %
15.5 %
8.0 %
17.2 % 9.8%
8.8
LAT%
SWE FIN
BLR
RUS
POLGER
14.1 %
10.5 %
4.2 %
17.2 % 4.8%
21.9 %
9.7
%
11.3 %LIT
GBR
ITA
4.9%
1999 2002
SWE
BLR
FIN
RUS
POLGER
18.8 %
8.7
%
19. 5%
22.8%
9.2 %
9.3 %
13.5 %
9.3 %
EST
SWE
BLR
FIN
RUS
POLGER
GBR
10.7 %
7.5%
16.4 %
16.9 %
9.1%
15.2 % 7.3%
10.5 %LAT
SWE FIN
GBR
BLR
RUS
POLGER
DEN 6.2 %
16.0 %
4.2 %
18.1 % 5.7%
20.1 %
12.8
%
7.0 %LIT
SWE
BLR
FIN
RUS
POLGER
7.4
%
24.8%
17.1 %
9.9 %
9.5 %
7.4 %
11.2 %
EST15.3 %
SWE
BLR
FIN
RUS
POLGER
10.5 %
GBR
8.4%
14.6 %
15.5 %
8.0 %
17.2 % 9.8%
8.8
LAT%
SWE FIN
BLR
RUS
POLGER
14.1 %
10.5 %
4.2 %
17.2 % 4.8%
21.9 %
9.7
%
11.3 %LIT
GBR
ITA
4.9%
SWE
BLR
FIN
RUS
POLGER
18.8 %
8.7
%
19. 5%
22.8%
9.2 %
9.3 %
13.5 %
9.3 %
EST
SWE
BLR
FIN
RUS
POLGER
GBR
10.7 %
7.5%
16.4 %
16.9 %
9.1%
15.2 % 7.3%
10.5 %LAT
SWE FIN
GBR
BLR
RUS
POLGER
DEN 6.2 %
16.0 %
4.2 %
18.1 % 5.7%
20.1 %
12.8
%
7.0 %LIT
SWE
BLR
FIN
RUS
POLGER
7.4
%
24.8%
17.1 %
9.9 %
9.5 %
7.4 %
11.2 %
EST15.3 %
SWE
BLR
FIN
RUS
POLGER
10.5 %
GBR
8.4%
14.6 %
15.5 %
8.0 %
17.2 % 9.8%
8.8
LAT%
SWE FIN
BLR
RUS
POLGER
14.1 %
10.5 %
4.2 %
17.2 % 4.8%
21.9 %
9.7
%
11.3 %LIT
GBR
ITA
4.9%
1999 2002
71
82 % 80 %
48 %
54 %
30 %
40 %
50 %
50 %
12 %
1218 %
34 %26 %
59 %
%
3 %6 %
0 %
80 %
0 %% 16 % 15 %
00 %Exports Imports
9
3170 %
25 % 26 %10 %
20 %
0 %Estonia Latvia Lithuania Estonia Latvia Lithuania
Air
Road6
Rail
Sea
Figure E.2. General exports and imports by mode in 2002, percent of net weight of trade (excluding pipelines). Source: Statistics Lithuania (2003, 71).
E.2 Transport services trade
The transport sector generates significant positive cash flows to all three countries. In
highest in LaEstonia, USD
he positive balance is particularly important since the deficit in goods trade hasrapidly grown larger, and in 2002 it was USD 1.1 billion in Estonia and around USD 1 billion in Latvia and L n
T ex r tra r s e s ces ank thsubstantia e b pe an il, ens roa ns t op tionbetween third countries (of especially L an car ), an Esto an s pingcompanies arke ar the l at els -Ta tra Tab .1.
Lithuania has increased its positive balan e t: fr SD m n in 6 tUSD 357 million in 20 t m o t m ib atvia’s balance remained almost unchanged. The development in Lithuania is mainly achie y an e ran pe s anCIS, and by rapidly increasing international road transport business. Detailed data is shown in Attachment D.5.
2002, the positive capital flow (balance) in the trade of transport services was thetvia at USD 539 million, followed by Lithuania at USD 357 million and 313 million.
T
.4 ithua ia.
he countries are netl
porte s of nspo t and torag ervi th s to etransit trad y pi line d ra ext ive d tra por era s
ithu ian riers d ni hip’ dominant m t sh e in ucr ive H inki llinn de. le E
ce th mos om U 59 illio 199 o02. In he sa e peri d, Es onia al ost doubled its pos tive
alance, whereas Lved b rail d pip line t sit o ration with Russia d
72
Table E.1. Baltic States’ services and goods trade balance in 1996, 1999 and 2002in million USD, and the balance of transport service trade. Source:Statistics Estonia, Latvia and Lithuania
Estonia Latvia Lithuania1996 1999 2002 1996 1999 2002 1996 1999 2002
Balance of transport, of which 174 321 313 533 522 539 59 186 35services trade 7
S 388 306 335 88 91 137 ea transport 109 192 232Air transport 4 27 30 -15 -11 -4 1 16 26
4
3
Other transport 60 103 50 160 227 208 -30 79 19All Services tradebalance 519 564 489 380 336 545 121 305 54All Goods trade balance -1 019 -822 -1 103 -791 -1 027 -1 444 -896 -1 405 -1 337Goods and services
trade balance -501 -258 -614 -411 -691 -900 -775 -1 099 -793Transport services of allservices trade, % 34 57 64 140 155 99 49 61 66
The development of cash flow balance is only part of the story. The development of
It also bought over 2.8 times more
transport sector’s credits and debits reveal a markedly different pattern. While Latviahas the largest positive balance, the size of its internationally exposed transport sectorhas remained virtually unchanged in 1996-2002. Estonia has the lowest positivebalance of the three, but its internationally exposed transport sector generated almost2.5 times more cash flow in 1996 than in 2002.transport services from abroad in 2002 than in 1996 (Figure E.3).
-1000
1500Credits = Cash inflow from other countries
500
1000Estonia Latvia Lithuania
0
SDM
-500
Debits = Cash outflow to other countries
1996
1997
1998
1999
2000
2001
2002
1996
1997
1998
1999
2000
2001
2002
1996
1997
1998
1999
2000
2001
2002
Figure E.3 Credits and debits of trade of transport services of Estonia, Latvia and Lithuania in 1996-2002 in USD million. Source data from the Banks of
Uill
ion
Estonia, Latvia and Lithuania.
73
A few remarks on the structure and background of the data may be required. The net income (balance) is the sum of freight credits (earnings) received from abroad, lessfreight service debits paid to other countries.
Othertransport”. Data for port and stevedoring trade is found under the heading Sea
in the national accounts. This means that the nationality of the carrier, e.g. the ship or truck, is the deciding factor in whether a payment is recorded as a credit or a debit – irrespective of the route of the vehicle or vessel.
Latvia has a high value of services sold but the lowest value of services bought. This is mainly attributable to the rail and (now closed) pipeline transit flow of oil and oil products, as indicated in the Sea transport “Other” class. The substantial flagging out of Latvian tonnage after 1998 can also be seen in the balance of payments data.
Tourism – by sea, road, or air - is also an important source of services trade. Between Tallinn and Helsinki more than 3 million passengers make a trip every year, and about 3/4 of these are Finns38. As over half of the shipping market is in Estonian control, this has a very positive impact on the Estonian balance of payments. In Latvia and Lithuania maritime passenger transport is very limited.
E.3 Foreign Direct Investment
certain counmainly firm tical and social stability.
ds to accumulate into profitable industries, industries or firms with a high level of FDI tend to be more
in these countries. The FDI stock in 1991 was extremely low, but it has grown rapidly after 1998 (Figure E.4.). In 2002, the inward FDI stock was
ringin all three countries and in financial intermediation in Estonia have grown very fast.
The data includes all forms of international freight services such as sea, road, rail,pipeline and air transport. Data on rail and road transport services trade is notavailable separately in the statistics, but they are included under the heading “
transport and under the subgroup “Other”.
The data is sensitive to the way in which certain debits and credits are accounted for
The level of Foreign Direct Investment (FDI) indicates the economic potential that atry possesses, but it also reflects the confidence that outside investors –
s – have in a country’s poli
Through growing FDI the firms and industries in the receiving country also usually receive new technological and management know-how which is difficult orimpossible to gain in other ways. Furthermore, because FDI ten
profitable than peer firms or industries with less FDI.
The development of the FDI stock in the Baltic States demonstrates vividly theeconomic potential with
equivalent to 66 % of Estonian, 32 % of Latvian and 29 % of Lithuanian GDP.
The transport sector was among the first industries to receive FDI, followed bymanufacturing and telecommunications. After 1999, FDI in trade and manufactu
38 Since most passengers are taking a round-trip, the Port of Tallinn handles over 6 million passengers.
74
4000
5000
-1000
0
2000
3000
1000
19
96
19
97
19
98
19
99
20
00
20
01
20
02
19
96
19
97
19
98
19
99
20
00
20
01
20
02
19
96
19
97
19
98
19
99
20
00
20
01
20
02
Estonia Latvia Lithuania
Primary production and publicadministration*)
Trade, Hotels and restaurants,Real estate, renting
Mining, Manufacturing, Electricity,gas, water, Construction
Financial intermediation
Transport and storage andcommunication
Total outward stock
Figure E.4. Foreign investment stocks by sectors in USD million 1996-2002. Sources: Central Banks of Estonia, Latvia and Lithuania. For detaileddata, see Attachment E.3.
The FDI stock in transport, storage and communications includes investment in lecommunications, which accounted for a substantial share of FDI in the late 1990s.
However, this can not be distinguished from the available data.
In Estonia, FDI in telecommunications, railways, airlines and terminal operationscreased the FDI stock in the transport, storage an communications which was USD
37 million in 1998 and reached USD 906 million in 2002. This is equal to 14 % of
atvian FDI stock in transport, storage and communications has remained at USD 320
The correspoUSD 680 mLithuanian shipping and airlines are bound to increase FDI even further.
Trade and transport facilitation is an issue of high priority in all three Baltic States.Public administration both at national and regional levels and the business communities have set in motion a number of projects to facilitate trade and transport.
te
in1Estonian GDP in 2002.
Estonia also has a sizeable outward FDI stock. In some cases it is foreign-owned firms operating in Estonia that have re-invested abroad, but also domestic firms have
which USD 144 million was in the transport, storage and communications sector.
Lto 390 million in 1996-2002. This equals 4.5 % of GDP in 2002.
nding stock in Lithuania jumped from just USD 78 million in 1996 to illion in 2002, which was 4.9 % of GDP. The privatizations of the
E.4 Measuring the business environment in the Baltic States
75
started to internationalize. Total outward FDI stock in 2002 was USD 673 million, of
The section presents key results of Business Environment and Enterprise PerformanceSurvey (BEEPS) that was conducted jointly by the World Bank and EBRD.
A Logistics Friendliness Survey was conducted for the purpose of this report by the Turku School of Economics and Business Administration in 2000 and in a revised form in 2003. Results of the 2000 survey were presented in the Riga seminar report.
Results from both studies indicate that firms’ perceptions on the business environmentof the Baltic States have become more positive towards 2002, and they are currentlyon the average level of the other EU accession countries.
E.4.1 Business Environment and Enterprise Performance Survey (BEEPS)
The BEEPS survey examines a wide range of interactions between firms and the state. The data was collected from over 4,000 firms in 22 transition countries. Based on face-to-face interviews with firm managers and owners, BEEPS was designed togenerate comparative measurements in such areas as corruption, state capture,
rld Bank Institute 2003).
1.87 1.55 1.70 1.55 2.10 1.43 1.55 1.24 1.90 1.41
4 1.73 2.59 1.93
lobbying, and the quality of the business environment, which can then be related to specific firm characteristics and firm performance (The Wo
Table E.2. Qualitative Assessments of the Business Environment of selected countriesin the BEEPS 2002 Survey, averages of country ratings with a scale of 1 (a minor obstacle) to 4 (a major obstacle). Source: The World Bank Institute (2003)
Country Estonia Latvia Lithuania Poland Russia Belarus SlovakiaYear 1999 2002 1999 2002 1999 2002 1999 2002 1999 2002 1999 2002 1999 2002Finance 2.84 1.99 2.84 1.91 3.24 1.81 2.86 2.91 3.32 2.26 2.85 2.62 3.37 2.53change 1999/2002 0.85 0.93 1.43 -0.05 1.06 0.23 0.84Infrastructure 1.62 1.54 2.10 1.38change 1999/2002 0.08 0.72 0.32 0.15 0.67 0.31 0.49Taxation 2.70 1.99 3.27 2.80 3.36 2.78 3.15 3.17 3.47 2.64 3.35 2.95 2.96 2.43change 1999/2002 0.71 0.47 0.58 -0.02 0.83 0.40 0.53Regulation 1.79 1.79 2.19 1.95 2.66 1.74 2.17 2.32 2.29 1.77 2.17 2.32 2.08 2.05change 1999/2002 0.00 0.24 0.92 -0.15 0.52 -0.15 0.03Judiciary 2.10 1.85 2.61 1.56 2.71 2.16 2.35 2.47 2.38 1.88 2.30 1.98 2.26 2.50change 1999/2002 0.25 1.05 0.55 -0.12 0.50 0.32 -0.24
rime 1.99 1.70 2.37 1.62 2.90 1.91 2.43 2.26 2.70 1.80 2.3Cchange 1999/2002 0.29 0.75 0.99 0.17 0.90 0.61 0.66Corruption 2.04 1.69 2.64 1.94 2.88 2.15 2.52 2.50 2.83 1.99 2.91 2.14 2.59 2.50change 1999/2002 0.35 0.70 0.73 0.02 0.84 0.77 0.09Average 2.15 1.79 2.57 1.88 2.80 2.01 2.46 2.45 2.73 1.97 2.50 2.14 2.54 2.19change 1999/2002 0.36 0.69 0.79 0.01 0.76 0.36 0.35
The BEEPS survey instrument is structured around multiple objectives: 1) to measuremanagers’ perceptions of the investment climate and their interactions with the state;2) to develop quantitative indicators of various obstacles to business and aspects of market structure based on the direct experiences of firms, and 3) to obtain simple
76
measures of firm performance across a variety of dimensions that can then be related back to varying perceptions and experiences (Hellman and Kaufmann 2002, 7)39.
The business environment is divided into 7 different “factors” in the BEEPS Survey.
tachment E.4.Between e two BEEPS surveys, the improvement in the business environment has been most
oticeable in the Baltic Sea region, especially in Lithuania, Russia and Latvia. a favorable perception in 1999, saw less
provement by 2002 compared with Latvia and Lithuania.
ry comparisons.
The respondents were asked to evaluate on a 4-point-scale how big of an obstacle a particular factor in the society is to their business. The scores between the Baltic States and other countries are presented in Table E.2 and in AtthnEstoni , which had already achieved aim
The data indicates surprisingly similar levels of perceived obstacles in the business environment. For example the average score for Russia (1.97) is almost the same as for Lithuania (2.01), for Latvia (1.88) and for Estonia (1.79). A likely explanation can be found in the methodology of the survey. The respondents were not asked to evaluate the business environment of other countries, so each respondent replied only to his/her own country. Thus, the BEEPS results indicate the improvement in each country separately rather than give representative data for cross-count
Box E.1. Improving the business environment – the case of Latvia,Until 1998, the impact of administrative and regulatory procedures upon business environment inLatvia was not consistently monitored. As a result, complaints arose from both foreign investors and local entrepreneurs about recurring juridical problems in conducting business. In order to address theseissues, the Ministry of Finance of Latvia and the Latvian Development Agency (LDA) commissioned aStudy on Administrative Barriers to Investments in Latvia, prepared by the Foreign InvestmentAdvisory Service (FIAS) of the World Bank. The Study evaluated problems related to employment,immigration, taxation, customs, purchase of real estate, construction, inspections, and other issues ofimportance to entrepreneurs.
The LD n ves and governm tifiedA i vited business representati ent officials to seek solutions to the idenproblem ablished a Sts. The Prime Minister of Latvia est eering Group, which developed the first ActionPlan to I nt.mprove the Business Environme
The Action Plan is based upon the “cycle of reforms” consisting of: 1) identification of problems; 2)dialogue between government and business community; 3) decision-making; 4) assessment andevaluation of impact. The Plan includes amendments to legal acts, revision and simplification ofprocedures, improvement of co-ordination among different institutions, preparation and publication of information as well as training of state officials. The Plan is a "live" document, as it is regularlyupdated by including new items and deleting those which have been implemented.
The most significant results since 1999 have been achieved in the areas of enterprise registration, taxadministration, inspections, customs and border-crossing, construction, real estate as well as expatriateresidency. By October 5, 2003, 79 of 89 tasks included in Action Plan have been implemented. Thelatest ”self assessment” study on administrative barriers was conducted by the LDA with the assistanceof World Bank consultants in 2002.
Source: Latvian Development Agency at: http://www.lda.gov.lv/eng/inner/aboutagency/fias/
Firms in transition economies are rapidly adopting more demanding business patternsand the improvements in the regulatory environment may therefore be perceived inadequate, even if they constantly improve, as indicated by Naula and Ojala 2002.
39 The BEEPS dataset is available in the Internet at: http://info.worldbank.org/governance/beeps/
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A detail from the BEEPS data deserves to be brought out. The perception on judiciary environment in Latvia improved by 1.05 score points during 1999-2002 (see TableE.2). Background to the very positive development is shown in Box E.1.
Government owned agencies - such as the Estonian Investment Agency, the Latvian evelopment Agency and the Lithuanian Development Agency have an important
role of monitoring and promoting the business environment.40
.4.2 Logistics Friendliness Survey 2003
ow “easy” or “difficult” individual countries are perceived to be as trade andrt partners can be analyzed in a number of ways. Trade and transport
perations invariably involve numerous partners both in the public and the privatesuch as banking and insurance agents, in addition to various logistics service
roviders. In addition, the trading partners (buyers and sellers or consignors and onsignees) evaluate the practicalities often on a case-by-case basis.
ogistics Friendliness Survey 2003 was conducted among international freight rwarders in order to illustrate how “easy” or “difficult” individual countries are
erceived to be from a logistical point of view. The results are well in line with the ported in Ojala and Queiroz 2001.
2003 - January 2004 by approaching 3,300 eight forwarders through e-mail around the World. Each respondent linked to a
questionnaire website containing a group of nine (9) predetermined countries out of
D
E
Htranspoosector,pc
Lfopfindings with the earlier survey re
The survey was conducted in Novemberfr
68 countries in the study. They were asked to evaluate seven statements in view of:
40 Estonia: www.investinestonia.com Latvia: www.lda.gov.lv Lithuania: www.lda.lt
TTiIn costsDomestic collection and delivery costs
Overall evaluation of logistics friendliness
totally disagree). The statements were
ransport timemeliness of shipmentsternational freight
Customs proceduresProfessionalism in freight forwarding
The respondents answered on a 7-point scale according to whether they agreed with the statement (7 = totally agree…1 =formulated positive by nature, such as "Overall, I consider these countries logisticallyeasy to cope with”.
Incidentally, 68 usable responses were received, which is 2.1 per cent of the total sample. It is a low figure, but response rates in large web-based surveys seldom exceed 5 per cent. As a result, each country received up to nine ratings.
78
Figure E.5 presents the survey results of the overall evaluation “logistics friendliness”of countries against the data of the Corruption Perception Index (CPI) collected by Transparency International41. In the CPI, the lowest level of perceived corruption isassigned 10, whereas the highest level is assigned 1. The average results show that the
altic States rank among other EU accession countries.
data).
e overall evaluation “logistics easiness” of
asier it is to arrange the logistical practicalities with that country. Similarly, the higher the level of GNI per capita, the
me occurs. This is no surprise, but the strong correlation between the logisticalfriendliness and CPI (0.716); and GNI/capita (0.821, respectively) is noteworthy42.
B
Figure E.5. The ranking of countries in the Logistics Friendliness Survey 2003 against their Corruption Perception Index in 2003. Sources:Transparency International 2003 (CPI data); Naula and Ojala 2004 (survey
Figure E.6. presents the survey results of thcountries against the PPP corrected data on GNI per capita. The placement ofcountries is very similar as in Figure E.5.
Despite the simplified concept used, the correlation between logistics friendliness and the CPI on one hand, and the GNI per capita on the other, is striking. The lessperceived corruption there is in a country, the e
sa
see: http://www.transparency.org The correlation in the 2000 survey between the logistical friendliness and CPI was (0.845); and
GNP/capita (0.784, respectively). In the 2000 survey, the question was formulated slightly differently.See Riga seminar report, Ojala and Queiroz, eds. 2001, 44-47.
41
42
1
2
7
1 2 3 4 5 6 7 8 9 10
The Baltic States
EU
Other accession countries
CIS
Other countries
Least corrupt
"Logistically easy to cope with"
Correlation coefficient = 0.716
Estonia
LithuaniaLatvia
6
5
4
3
79
The results are indicative, since they are based on a small number of observations (p
68s onses, up to nine evaluations per country), which are subjective assessments by
rofessional freight forwarders. The data is shown in Attachment E.5.
Figure 3PPP terms in 2002. Sources: The World
Accord ed as fairly easy countries in o eBaltic have receivedsub n publics. On the other hand, theBaltic S
rep
1
2
3
4
6
0 0
7
Correlation coefficient = 0.821
"Logistically easy to cope with"
Estonia
E.6. The ranking of countries in the Logistics Friendliness Survey 200against their GNI/capita inBank, Data and Statistics (GNI data); Naula and Ojala 2004 (surveydata).
ing to the survey results, the Baltic States are perceiva l gistical sense. Compared against the CPI ranking and GNI/capita data, th
States show exceptionally good performance, and theysta tially higher marks than other former Soviet Re
tates lag behind the typical EU countries.
5Lithuania
Latvia The Baltic States
EU
Other accession countries
CIS
Other countries
GNI per capita 2002Purchasing Power ParityInternational dollars
5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 00
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F. The Transport Sector in the Baltic States and EU Membership
This section presents European Commissions latest comprehensive standpoint of the progress that the Baltic States have made in meeting the requirements in the transportpolicy and customs chapters of the acquis. It covers the sectors of road transport, railways, aviation, maritime transport, inland waterways; and that of the customs.
The text is based on the latest comprehensive monitoring reports on Accession countries made available by the EC in November 200343. The monitoring reports were a continuation of the extensive final progress reports published in 200244.
Box F.1. Areas, where the accession countries were required enhanced efforts by the EC in November 2003
Free movement of goods, services, persons and capital and related internal market acquis;particular efforts are required in Estonia, Latvia, Poland, the Czech Republic and Slovakia.Market surveillance - an essential component of the functioning of the internal market -must continue to be strengthened in all countries.EU public procurement rules have not been put in place in the Czech Republic, Estonia, Latvia, Hungary, Malta and Poland.In financial services, Poland, the Czech Republic, Latvia, Lithuania, Slovakia, Estonia andCyprus in particular need to make enhanced effortsIn competition policy, Latvia, Slovenia, the Czech Republic, Malta, Poland and Slovakiamust accelerate preparationsIn agriculture and fisheries, all acceding countries must give greater priority to thecompletion of preparations, in applying common market organizations, in setting up PayingAgencies and implementing the Integrated Administration and Control System andagricultural trade mechanisms, in applying EU-funded rural development measures, and in the veterinary and phytosanitary field.In taxation, Latvia, Poland, Slovakia, Estonia, Malta, Slovenia and Lithuania mustaccelerate preparationsFinancial control shows deficiencies in the Czech Republic, Cyprus, Hungary, Poland,Latvia, Lithuania, Estonia, and Slovakia.In social policy and employment, the Czech Republic, Malta, Poland and Estonia havemore work to do on one or another aspect of this broad field.In environment policy, Estonia, Malta, the Czech Republic, Cyprus, Hungary, Poland,Slovakia and Cyprus all have gaps to be filled through enhanced efforts.Source: EU’s weekly note, November 11, 2003 at:http://europa.eu.int/comm/enlargement/docs/newsletter/latest_weekly_fi.htm#B
43 Based on EU’s Comprehensive Monitoring reports in 2003; at:Estonia: http://www.europa.eu.int/comm/enlargement/report_2003/pdf/cmr_ee_final.pdfLatvia: http://www.europa.eu.int/comm/enlargement/report_2003/pdf/cmr_lv_final.pdfLithuania: http://www.europa.eu.int/comm/enlargement/report_2003/pdf/cmr_lt_final.pdf
44 These are available at:Estonia: http://europa.eu.int/comm/enlargement/report2002/ee_en.pdfLatvia: http://europa.eu.int/comm/enlargement/report2002/lv_en.pdfLithuania: http://europa.eu.int/comm/enlargement/report2002/lt_en.pdf
81
EC transport legislation aims at improving the functioning of the Internal Market bypromoting efficient and environment- and user-friendly transport services. MemberStates are required to adopt and implement legislation concerning technical and safety standards as well as social standards. In order to further develop the European Single Transport Market, EC legislation also includes rules on market liberalization. Animportant aspect of EC maritime policy is the establishment of Union-wide maritime
il and the road sector.
s. In other areas, enhanced efforts were required by a number of countries. See Box F.1.
ultural goods and onmutual administrative assistance in customs matters as well as Community
re remitted to the EU ratherthan national governments. This also means that the procedures are subject to
necessary implementing structures in this area are in place, the administrative capacity
gislation is in place and in line. Alignment with the fiscal and social pleted, except for checks of driving time and rest periods. The
olume of the checks has to be increased for volumes to reach acquis requirements. In the technical field, legal alignment is largely complete, except for some implementinglegislation. Further alignment is needed with regard to technical road-side inspection,
safety standards.
In summary, the Baltic States – and especially Lithuania - have adopted the mainelements of the acquis, but further progress is needed in some secondary legislation and overall implementation of transport sector legislation. In addition, administrativecapacity requires further strengthening, both in qualitative and quantitative terms, in particular in the ra
In November 2003, alignment in the transport chapter was reportedly delayed in Estonia and Latvia, together with six other accession countrie
The Customs Union acquis consists almost exclusively of legislation which is directly binding on the Member States and does not require adoption into national law. It includes the Community’s Customs Code and its implementing provisions; theCombined Nomenclature, Common Customs Tariff (Community Integrated Tariff(TARIC) system) and provisions on tariff classification, customs duty reliefs, duty suspensions and certain tariff quotas; and other provisions such as those on customscontrol of counterfeit and pirated goods, drugs precursors and c
agreements in the areas concerned, including transit.
Member States must ensure that the necessary enforcement capacities, including linksto the relevant EC computerised customs systems, are in place. It should also be noted that customs duties collected at EU’s external borders a
Commission inspections, and are not governed by national legislation.
F.1 EC’s assessment on Estonia
The extension of the trans-European transport networks has been defined. While the
requires further strengthening, both in qualitative and quantitative terms, in particular in the rail and the road sector.
In the land transport sector, Estonia is completing the implementation of itscommitments with regard to legislative alignment with the road transport acquis.Framework leacquis has been comv
82
transportable pressure equipment as well as speed-limitation devices. Implementingmeasures in the road transport area are proceeding as foreseen. The necessaryadministrative structures in this area are in place. Estonia has agreed to a transitionalarrangement put forward by the EU concerning gradual reciprocal access to thecabotage market in the road haulage sector (for a maximum duration of five years).
Adoption of the revised rail transport acquis of February 2001 is taking place, and theprocess remains to be completed with regard to track access charging, capacity
ivatized integratedrailways.
to complete alignment with the acquis. The administrative capacity is satisfactory. Full membership of the Joint Aviation
uthorities remains to be achieved, and particular efforts should be made in order tobecome a full member before accession as required by the acquis and irrespective of
opean Aviation Safety Agency (EASA).
ia Maritime Administration needs to continue. According to statistics for 2002 under the Paris Memorandum of Understanding, the
is largely in line with the acquis as it stood in 2001. Implementation of the provisions in the 2002 and 2003 acquis will take place upon
le of accession and
greements on mutual administrative assistance in customs matters are to be amendeds necessary.
allocation and the interoperability directives. In light of the imminent transformationof the Railway Administration, procedures and task allocation should be reviewed and training of staff should be pursued. The independence of the allocation and charging functions remains to be ensured, in particular with regard to the pr
On inland waterways transport, legislative alignment has been completed.Administrative structures in this area are in place and satisfactory.
In the area of air transport, all relevant framework legislation has been adopted and is essentially in line with the acquis, but some modifications are needed, notably with regard to ground handling, slot allocations and accident investigation. Implementinglegislation is still being adopted in order
A
the setting up of the Eur
In the field of maritime transport, framework legislation is in place and in line withthe acquis. However, the adoption of implementing legislation needs to be accelerated, in particular in relation to the acquis adopted under the “Erika” packages,and with regard to the latest amendments to the acquis on passenger ships, fishing vessels, marine equipment and port reception facilities.
The relevant administrative structures in this area are in place. The strengthening of the management system of the Eston
percentage of Estonian flag vessels detained following Port State control was 6.7%. This compares with an average for EU-flagged vessels of 3.5%. However, there are strong indications that the situation is deteriorating, in that the number of Estonian flag vessels being detained is rising sharply. Estonia needs to urgently address this issue with a view to reversing this trend of deteriorating detention rates.
Estonia’s customs legislation
accession, when the EC customs legislation becomes directly applicable. Nationaprovisions superseded by the acquis are to be repealed at the timaa
83
Adm nistrative and operational cai pacity of the customs is partly in place. Although a nctioning customs administration is in place, the current absence of duties on
industrial products does not allow Estonian customs to function in the same way as in
ecessary and ongoing.
t Aviation Authorities before
fu
EU Member States. Such duties will be introduced only at the time of accession. As a result, tariff classification, rules of origin, customs procedures with economic impact,temporary admission and duty reliefs are major areas where expertise is lacking.Therefore, in these areas extensive training is n
Estonia should continue to carry out its plans for reorganisation in terms of closure of customs offices, and redeployment of staff as a result of accession, when the volumeof customs work will decrease as a result of the conversion of external to internal trade and the land frontier with Latvia becomes an internal border.
Measures to complete the development and implementation of the computerisedcustoms system and solve all the other interconnectivity-related issues are ongoing and on track. However, the Estonian authorities must ensure that the remaining work,including delivery of hardware and software and testing, is completed according toschedule, especially as regards the integrated tariff system and adaptation of thedeclaration processing system which needs to be connected to it. Attention should be paid to ensuring that the Estonian authorities are fully able to manage and maintainthese systems effectively after accession.
Conclusion on Estonia
Estonia is essentially meeting the commitments and requirements arising from theaccession negotiations in the trans-European transport networks, road transport,inland waterway and rail transport, and is expected to be in a position to implementthe acquis from the time of accession, provided that the current pace of progress is maintained. In completing preparations for membership, Estonia must complete thetransposition of the railway acquis and strengthen administrative capacity. In the area of road transport, Estonia needs to adopt implementing legislation and furtherreinforce its administrative capacity.
Estonia is meeting the majority of commitments and requirements in the area of air transport, where legislative alignment remains to be completed. Estonia needs to accelerate its efforts to become a full member of the Joinaccession. In addition, Estonia is partially meeting the commitments and requirementsin the area of maritime transport, where legislative alignment remains to be completedand remedial action must be taken without delay in order to improve the detention rates of Estonian flag vessels.
Estonia’s customs legislation is largely in line with the acquis, but the administrativeand operational capacity customs is only partly in place.
84
F.2 EC’s assessment on Latvia
As far as the trans-European transport networks are concerned, the necessaryadministrative capacity (in both qualitative and quantitative terms) needs to bereinforced beyond its present level in order to prepare for the significant investmentsthat will be needed in transport infrastructure.
Within the land transport sector, the transposition of the road transport acquiscontinues. The framework legislation has been transposed. Some implementing
lway Inspectorate and theailway Administration, as well as the relevant department of the Ministry of
trengthened further. However, in particular as regards track apacity allocation, procedures and task allocation should be
datory surveys for the safe
legislation, especially in the social and technical fields, remains to be adopted. Twotransition periods have been granted to Latvia in this area. The installation oftachographs for vehicles registered before January 2001 and operating exclusively onthe domestic market is to be accomplished before January 2005, and the introductionof the financial standing criterion for domestic road transport operators needs to be completed by January 2007. Latvia has agreed to a transitional arrangement put forward by the EU concerning gradual reciprocal access to the cabotage market in theroad haulage sector (for a maximum duration of five years). Administrative capacity is essentially good, although improvement is required in several areas such asroadside technical inspections, dangerous goods transport and social regulations.However, as regards roadside checks and roadside enforcement, Latvia still has to implement its concept on control in road transport. In particular the staffing structures and the coordinating role of the Ministry of Transport needs to be clarified, and an adequate number of specialist roadside units need to be put in place.
In the field of rail transport, transposition is taking place according to schedule, butthe interoperability acquis remains to be transposed and existing legislation needs to be modified regarding charges, cross-subsidy and licensing. In the framework of the ongoing reorganization process, the capacity of the RaiRTransport, should be saccess charging and creviewed and training of staff should be pursued. The independence of theinfrastructure allocation and charging function remains to be ensured.
On inland waterway transport, legislative alignment is completed. Administrativestructures in this area are in place and satisfactory.
In the area of air transport, the relevant legislation has been transposed and is essentially in line with the acquis, but some modifications are needed, notably with regard to ground handling. Implementing legislation is still being adopted. Administrative capacity needs further strengthening. Full membership of the Joint Aviation Authorities remains to be achieved through the implementation of the ActionPlan. Enhanced efforts are needed in order to become a full member before accessionas required by the acquis and irrespective of the setting up of the European AviationSafety Agency (EASA).
In the field of maritime transport, framework legislation is now in place and in line with the acquis. However, the adoption of implementing legislation remains to be completed, notably as regards Flag State and Port State control, Vessel Traffic Management Information System (VTMIS), system of man
85
oper tion of regular Ro-Ro ferry aa nd high-speed passenger craft services, marinequipment and fishing vessels The reinforcement and reorganization of the maritime
administration must be pursued and must lead to a more effective oversight of the
llowing Port State control was 6.25%.
emedial action is taken, Latvia will not meet the requirements for
otiations in the areas of trans-European transport networks, roadtransport, rail transport, inland waterway transport and maritime transport, and Latvia
ress is maintained. In completingpreparations for membership, Latvia must complete the transposition of the railway
atvia is essentially meeting the commitments and
e
work of classification societies, to an upgrading of Port State Control and to a better division of tasks between the Maritime Department and the Maritime Administration.According to statistics for 2002 under the Paris Memorandum of Understanding, thepercentage of Latvian flag vessels detained foThis compares with an average for EU-flagged vessels of 3.5% in 2002. The Latvianflag has now been moved from the black list to the grey list of the Paris MOU.
As regards customs legislation, Latvia is essentially meeting the commitments and requirements arising from the accession. Implementation of the remaining provisionswill take place upon accession, when the EC legislation becomes directly applicable.
Serious concerns remain concerning operational and administrative capacity of Latvian customs. This involves especially the area of computerisation andinterconnectivity, where significant delays endanger the correct operation of thetransit system, with effects for the entire Community as well as partner countries in the Common Transit System. The Latvian authorities must take urgent action toensure the necessary transfer of knowledge and experience by the time of accession to enable them to avoid disrupting the operation of the customs union. The computerisedtransit system must be made operational, including connection to traders, in time for accession. The number of specialised staff must be increased significantly,particularly for a short-term period of testing and deployment training. The existing computerised entry-processing system must be upgraded to an EC-compatible version that can be linked at least to the Master tariff system by the date of accession. Unless immediate rmembership in this area and there is a serious risk of disruption of the smoothoperation of Community systems at the time of accession.
Conclusion on LatviaLatvia is essentially meeting the commitments and requirements arising from the accession neg
is expected to be in a position to implement the acquis in these areas from the time ofaccession, provided that the current pace of prog
acquis, in particular as regards interoperability. In the areas of road and maritimetransport, Latvia needs to adopt implementing legislation and further reinforce itsadministrative capacity.
Latvia is meeting the majority of the commitments and requirements arising from theaccession negotiations in the area of air transport. Latvia needs to strengthenadministrative capacity and enhanced efforts are required in order to become a fullmember of the Joint Aviation Authorities before accession.
As regards customs legislation, Lrequirements arising from the accession, but serious concerns remain with theoperational and administrative capacity of Latvian customs, especially in the area of computerisation and interconnectivity of customs systems.
86
F.3 EC’s assessment on Lithuania
As far as the trans-European transport networks are concerned, the necessaryadministrative capacity (in both qualitative and quantitative terms) needs to bereinforced beyond its present level in order to prepare for the significant investmentsthat will be needed in transport infrastructure.
Within the land transport sector, the transposition of the road transport acquiscontinues. The framework legislation has been transposed. Some implementinglegislation, especially in the technical field, remains to be adopted, notably for technical road side inspections and transportable pressure equipment. Two transition
on the domestic market is to be accomplished by December 2005, and the introduction of the financial standing
errengthened.
sport, legislative alignment is completed. Administrative
cquis and irrespective of the setting up of the EuropeanAviation Safety Agency (EASA).
the “Erika” packages,
periods have been granted to Lithuania in this area. The installation of tachographs for vehicles produced before 1987 and operating exclusively
criterion for domestic road transport operators needs to be completed by January 2007. The necessary administrative structures in this area are in place, with the State Road Transport Inspectorate performing key supervisory and control functions.However, as regards the implementation of social rules, the level of checks has to be increased in order to meet acquis requirements, and attention needs to be paid to the co-operation with the Labour Inspectorate and the Police. Administrative capacity should be strengthened in the Ministry of Transport, the Road Administration, the State Road Transport Inspectorate and the Labour Inspectorate. Lithuania has agreedto a transitional arrangement put forward by the EU concerning gradual reciprocal access to the cabotage market in the road haulage sector (for a maximum duration of five years).
Transposition of the rail transport acquis remains to be completed with regard to therevised railway acquis of February 2001, in particular the provisions such as separation of accounts between infrastructure manager and operator(s), charging, capacity allocation and rail regulatory functions, as well as the interoperabilitydirectives. In the framework of the ongoing reorganization process, the capacity of the State Railway Inspectorate and the other railway administrations needs to be furthst
On inland waterway transtructures in this area are in place and satisfactory.
In the area of air transport, the relevant framework legislation has been transposed and is essentially in line with the acquis, but some modifications are needed with regard to licensing. Implementing legislation is still being adopted. Lithuania has been granted a transitional arrangement on the use of Kaunas International Airport by noisy aircraft until the end of December 2004. Administrative capacity needs some furtherstrengthening. Full membership of the Joint Aviation Authorities remains to be achieved, and efforts will need to be made in order to become full member beforeaccession as required by the a
In the field of maritime transport, framework legislation is in place and in line withthe acquis. However, the adoption of implementing legislation remains to becompleted, in particular in relation to the acquis adopted under
87
and with regard to the latest amendments to the acquis on passenger ships, fishingessels. The relevant administrative structures in this area are in place, and the ship
tainedfollowing Port State control was 6.25%. This compares with an average for EU-
list to the g 3 aomplement
gged ships.
L a’s cus islation is largel line with the acquis except, among others, with regard to t tion of simpl procedur
C a tive and op onal capacity, a functioning customsadministration is in place; however, some significant delays have occurred in the development of interconnectivity and operational capacity. Lithuania should continue to out its s Strategy and rational M gement Plan for 2003, which already involved reducing the large nu er of small customs posts. The action plan for reorganisation in terms of closure of customs offices and redeployment of staff as a result of accession, when the volum of customs work decreases owing to econversion of external to internal trade, been appr d and shou e carried o
Enhanced measures must be taken to complete the development and implementation
.
rogress is maintained. In completing preparations for membership, Lithuania mustp cular as regards
teroperability, and strengthen administrative capacity. In the areas of road and
Lithuania’s customs legislation is largely in line with the acquis up to 2002 except, among others, with regard to the application of simplified procedures. A functioning customs administration is in place; however, some significant delays have occurred in the development of interconnectivity and operational capacity.
vinspection system has been set up. However, the Lithuania Maritime Safety Administration needs further strengthening. Lithuania has increased systematic port state control inspections. According to statistics for 2002 under the ParisMemorandum of Understanding, the percentage of Lithuanian flag vessels de
flagged vessels of 3.5% in 2002. The Lithuanian flag has been moved from the blackrey list of the Paris MOU. In addition, Lithuania adopted in January 200ary action plan in order to further reduce the detention rate of Lithuanian c
fla
ithuani toms leg y inhe applica ified es.
oncerning dministra erati
carry Busines Ope anamb
e thhas ove ld b ut.
of the computerised customs system and solve all other interconnectivity-related issues. In particular, Lithuania must speed up the development, procurement and implementation of the contingency solutions for two accession-essential projects,namely the Tax Calculation Module and the Tariff Quota and Surveillance System:apart from the contractual arrangements needed to procure the necessary services,which have been finalised, work on these contingency solutions had not begun during the reporting period. In addition, the software necessary to link the entry-processingsystem to the integrated tariff system must be developed or procured without delay
Conclusion on Lithuania Lithuania is essentially meeting the commitments and requirements arising from the accession negotiations in the transport sector, and is expected to be in a position toimplement the acquis from the time of accession, provided that the current pace of pcom lete the transposition of the railway acquis, in partiinmaritime transport, Lithuania needs to adopt implementing legislation and furtherreinforce its administrative capacity. In the area of air transport, Lithuania needs tostrengthen administrative capacity and become a full member of the Joint AviationAuthorities before accession.
88
F.4 Planned Transport sector investments into TEN-T network
One key element in preparing for the EU membership is investment in transportinfr ntial investments have already been made in practically all transpo is still major investment need in the near future in esp a il and port infrastructure (Table F.1).
Tab F tment in TEN-Transport network in 1996-2010 (actual996-2001). Source: PLANCO 2003-TEN-Invest report 2003.
astructure. While substart subsectors, there
eci lly roads, and to lesser extent in ra
le .1. Baltic States’ Invesdata for 1
1996-2001 2002-2005 2006-2010 TotalRoads Estonia 60 196 130 386
Latvia 24 100 150 274Lithuania 126 144 45 315
Railways Estonia 42 24 10 76Latvia n.a. n.a. n.a. n.a.Lithuania 90 328 340 758
Ports Estonia 102 128 60 290Latvia 66 n.a. n.a. 66Lithuania 42 108 210 360
Airports Estonia 30 4 5 39Latvia 24 8 0 32Lithuania 12 36 45 93
All total 618 1,076 995 2,689
A recent study commissioned by the EC (TEN-T Investment 2003) summarized the frastructure investment needs and projects for all accession countries. The data
ontained in the report was partially collected in 2002 and early 2003. After the data e of which are
ot included in the TEN-T Invest report. These include projects that include privatesector investments, or investments made by state-owned enterprises in e.g. ports and
main part of realized and planned investments is in roads, followed byrail y t is not significant in landlocked countriessuc s but airports tend to need rathersub n ia also Attachment F.2.)
F.5 P U membership45
operator services and the infrastructure, regulation of competition between the modesof transport through prices and taxes and infrastructure policies favoring international connections.
inccollection, a number of projects have been prepared and initiated, somn
airports. However, the magnitude of the investments is covered well in the study.
Compared to investment in other Accession countries, the pattern seems to be rather similar: the
wa s. Understandably, port investmenh a Hungary, Slovakia or the Czech Republic,sta tial investments. (See Attachment F.1; for Eston
reparing the Estonian transport sector for E
The Estonian transport policy is characterized by extensive privatization of the
45 Based on the presentation given by Mr. Andres Tint, Deputy Secretary General of the Ministry of Economic Affairs and Communications, Estonia. Parnu seminar, November 24, 2003.
89
In anticipation of the EU membership, Estonia has revised its transport sectorlegislation, and as of December 2003, the following Acts have been passed:
Latvian transport sector for EU membership46
tion such as the Program for Port Development. The keygoal of the National Transport Development Program is to ensure the planned
ble to meet the constantly
its
Road Transport ActPublic Transport ActRoad Traffic Act Railway Act (adopted 19.11.2003)Maritime Safety Act Port Act Aviation Act
Estonia has also committed itself to a number of transport infrastructure projects inthe short term, as shown in Attachment F.2.
F.6 Preparing the
The Government has initiated a National Transport Development Program for 2000-2006 and specific plans of ac
development and maintenance of an efficient, sustainable, integrated, environmentallyfriendly, well balanced, multi-modal transport system, agrowing demand of the national economy, of international trade, and of its citizens for a transport service, whilst at the same time ensuring quality, safety, firm guarantees and reasonable costs.
F.7 Preparing the Lithuanian transport sector for EU membership47
Lithuania will join the European Union in May 2004, and the country will use this time for full completion of preparations for the membership. While preparingtransport sector for the EU membership Lithuania had to achieve the followingobjectives:
full harmonisation of EU legislation;implementation and enforcement of regulations; alignment with EU technical and quality standards; preparation for management of EU funds;preparation for participation in the EU work.
Talking about the harmonisation of legislation it should be mentioned that this process in Lithuania is almost completed and the national legislation is in line with the EU
46 Based on Mr. Vigo Legzdins, State Secretary of the Ministry of Transport, Latvia. Presentationgiven in the Parnu seminar, November 24, 2003.
47 Ms. Liudmila Lomakina, Secretary of the Ministry of Transport and Communications, Lithuania.Presentation given in the Parnu seminar, November 24, 2003.
90
legislation. Nevertheless, there are still some fields where the harmonisation should be finalised.
In the railway sector the priority is given to the reform – the restructuring of railways
of non-discriminatory access to the railway infrastructure. The adoption of all these
ithuania’s preparations for membership
t has
y the improvement of capacity of the Lithuanian Maritime Safety Administration.
peration in the European Community market means not only a free and unrestrictedservice delivery, but also equal conditions to all operators, meeting the same technical
and to the implementation of the first railway package. For the successfulimplementation of the reform it is necessary to improve the legal basis, therefore until the end of this year it is planned to approve the Law on the Railway TransportReform, as well as to supplement the Railway Transport Code. At the level of the secondary legislation the legal acts on railway infrastructure charging and capacity allocation should be adopted taking into account the requirements
documents will create legal conditions for the liberalisation of railway market afterthe completion of the railway sector restructuring by 2006. (See Attachment F.3.)
In road transport there remains to be adopted only some implementing legislation in the technical field.
The main issues of development of the air transport remain the objectives of marketliberalisation, flight safety and security intensification and decreasing of the negativeimpact on the environment.
In the maritime sector at present the implementation of maritime safety requirementsfrom Erika I and Erika II packages is of great importance.
In the Comprehensive Monitoring Report on Lpresented by the European Commission in this year it was stressed that Lithuania is essentially meeting the commitments and requirements arising from the accessionnegotiations in the transport sector, and is in a position to implement the acquis fromthe time of accession. Nevertheless, Lithuania must complete the transposition of therailway acquis, in particular as regards interoperability; adopt implementinglegislation in the areas of road, maritime and air transport and further reinforce itsadministrative capacity. For the elimination of these gaps we have not much time left, but we believe that in transport sector we will successfully meet these challenges.
Besides the legal approximation Lithuania pays a great attention to theimplementation and enforcement of the legislation. For this reason the administrativecapacities are strengthened, in recent years a number of new staff has been hired, the numerous training courses for staff are held each year as well. Particular attention is given to the implementation of social rules in road transport and increase of checks in order to reach the required level of 1 percent of working days. At present time the checks reach about 30 percent of the required level.
Maritime transport is of great importance to Lithuania. Issues of maritime safety are very important and implementation of Erica package is one of the priorities for Lithuania. Since 1999 Lithuanian flagged vessels’ detention rate has fallen from 10 percent to 6 percent in 2002. The rate of ships inspected in Klaipeda State Seaporrisen from 9 percent in 1999 to more than 22 percent in 2002. This result was attained b
O
91
and quality standards, standards for opra
erational activities as well as standards forf structure. Implementing the quality, traffic safety and environmental measures
odes is important.
Following the terrorist attacks that shook the world over the recent years, travellers and cargo shippers are selecting routes and places of destination very carefully. They want to be sure that the place, where they are going to step or to which their consignment of goods will arrive, is reliable and safe. Therefore, a great attention ispaid to security matters, as well as to application of modern information technologiesin transport, thus enhancing the competitiveness and efficiency of transport.
There is no doubt that not only transport operators have to meet the high requirements. For reaching the common efficiency of activities the whole transportchain has to meet equally set standards. Therefore the infrastructure development is a
ery important aspect for meeting the EU standards. Lithuania can be proud of itseveloped transport network. This field was always paid a great attention in
Lithuania. In 2002 many important investment projects were implemented many of them are still undergoing. A further improvement and upgrading the Via Baltica, implementation of Rail Baltica and other transport development projects towardsinternational quality standards is justified not only due to increasing traffic orenhanced national and regional development but also in a wider European context.High quality transport routes through Poland and the Baltic countries are vital for the trade with Eastern Europe and will enhance competitiveness, economic growth and employment.
After joining the EU, Lithuania will implement the EU regional policies and will be able to receive the support from the EU Cohesion and Structural Funds. Following the experience of countries receiving the support of the EU Funds one may notice a particular focusing on the infrastructure development, where a lion’s share of resources from the Cohesion Fund and a part of European Regional Development
transport infr ects.
eeasures, which are necessary for the regional local development, it means that they
ver after joining theU and under the open market conditions transport will become a much moreportant sector enabling sustainable free movement of people and goods, giving new
pportunities to operators and consumers for access of higher standard services.
infor all transport m
vd
Fund are allocated for the financing of transport infrastructure programmes.Preliminarily, in 2003-2006 it is foreseen to allocate about 300 million euro for the
astructure proj
Therefore, the management of EU funds is a very important aspect of the membershipaccession. From the Structural Funds it is planned in transport sector to finance thmshould enable a good approach to the trans-European transport corridors, improve anaccess of remote regions to industrial, business and tourism areas, regulate urbantraffic, reduce transport congestions, improve transport infrastructure so that it would meet the proper requirements of tourism and small and middle scale business.
Transport plays an important role for Lithuania’s economy, howeEimo
92
G. Roads and road transport 48
Figure G.1: The roles of the private and the public sector in road infrastructuremanagement
The first sections in this Chapter deal with the road administration and road frastructure sector, and the latter part presents findings on road transport services.
shift towards more efficient workingractices, and both organizational and institutional arrangements in the road sector in ll the three countries. Whereas the maintenance of the road infrastructure is still
l ity, the design and construction is today entirely arr ed out by the private sector (Figure G.1). These contracts are increasingly being
Key findingsTraffic safety has improved but fatalities and accidents still at a high level.Road design and construction work is carried out by the private sector. The private sector is gaining share in road maintenance.Second Via Baltica Programme 2001-2006 has a budget of 655 million euros.Other road projects in 2002-2010 may exceed 200 million euros.Rapid fleet renewal of both private and commercial vehicle stock.
Road freCompetition on international road transport intense, less so domestically.
ight transport is fully privatized.
PRIVATE SECTORPUBLIC SECTOR
2000
1990
MAINTENANCE OF ROADINFRASTRUCTURE
ESTONIA LATVIA LITHUANIA
2003
2000
1990
DESIGN AND CONSTRUCTION WORKOF ROAD INFRASTRUCTURE
ESTONIA LATVIA LITHUANIA
2003
in
In road administration, there has been apamain y a public sector responsibil
icawarded through competitive bidding (or equivalent) procedures.
48 Prepared by Lauri Ojala and Tapio Naula (Turku School of Economics and Business Administration)and Cesar Queiroz (World Bank). Unless otherwise stated, the source is the pre-seminar questionnaire.
93
G.1 Road networks
each country, approximately 20,000 km of roads is owned and maintained by the national road authorities, which are part of central government. Local government,which means primarily the municipalities, owns and operates 21,243 km of roads in Estonia, 38,968 km in Latvia and 52,097 km in Lithuania (Table G.1).
The length of the road network and its reach is, generally speaking, adequate, but thequality of the road network is not. Especially rural and secondary roads and someaccess roads are in need of maintenance and upgrading.
Table G.1: The ownership and maintenance of road network in Estonia, Latvia, and Lithuania by end of year 2002, by road length in kilometers.
Since 2002, the share of road ma the private sector has ed rapi spe in nia.
G.2 ssues oad c
Traffic safety is a serious concern in al thr oun and nu oftalities in road traffic is very high. Compared with other European countries, for
traffic accidents in relation to traffic volumes. Table G.2 presents key indicators on road traffic accidents versus selected traffic volume variables.
In
Ownership MaintenanceEstonia km kmCentral Government 16 443 7 778Local and Town Government 21 243 21 243Private Sector 7 622 national roads: 8 665
private owners: 7 522Other roads (forest and land roads) 9 860All road network 55 168
LatviaCentral Government 20 279 20 279Local and Town Government 38 968 38 968State forest industry 6 320 6 320Private Sector 3 500 3 500All road network 69 067 69 067
LithuaniaCentral Government 21 335 21 335
PrivateAll roa ector 73 432
Local and Town Government 52 097 52 097Sector < 1000 km -
d network excl. private s
intenance that is contracted out toincreas dly e cially Esto
Safety i in r traffi
l the ee c tries the mberfaexample, Sweden and Finland, the number of deaths in road accidents per 1 millioninhabitants is three to five times higher (Attachment G.1.)
Slight overall safety improvement can be seen when exploring the statistical data on
94
Table G.2: Road traffic accidents and fatalities relative to traffic volume. Source:Dominic Haazen, The World Bank.
Number ofkilled
Number ofinjured
Number per100 M kmtravelled
100 M kmtravelled
100,000vehicles
100,000population
100accidents
10,000 kmof roads
Estonia1999 232
Fatalities and Injuries: Fatalities per:
1 691 23 3,64 42 17 16 49
2 1002000 641 6 960 67 7,35 50 18 11 86
2000 204 1 843 23 3,17 37 15 14 432001 199 2 444 29 3,04 40 15 11 422002 224 2 852 - - 46 16 10 47
Latvia1999 604 5 244 - - 86 25 14 962000 588 5 449 59 7,76 79 25 13 942001 517 5 852 57 6,16 67 22 11 822002 518 6 300 63 6,45 64 22 10 83
Lithuania1999 748 7 696 66 7,73 62 21 1
2001 706 7 103 60 7,13 51 20 12 952002 697 7 427 45 5,18 47 19 11 94
The time series of road fatalities in the three Baltic State and the CEE countries average from 1980 to 1999 in Attachment G.2. shows a downward trend that hascontinued till 2002 in average terms- except for the increase in Estonia in 2002 (see also Attachment G.3.) Despite this overall downward trend, road safety record is poorespecially in Latvia and Lithuania. Table G.3. shows the Lithuanian example of the
2001 2002
distribution of persons killed and injured between different types of road users.49
Table G.3. Number of Lithuanian road users injured and killed in road accidents,1999-2002, Source: Ministry of Transport and Communication of Lithuania (2002, 20)
1999 2000Road users Killed Injured Killed Injured Killed Injured Killed InjuredDrivers 226 2056 173 1779 192 1878 194 1951 Passengers 161 2700 155 2398 163 2435 162 2651 Pedestrians 269 2328 235 2116 253 2141 239 2091Bicyclists 62 512 72 629 94 614 94 699
8 35 Other 5 50 6 38 4 35Total 723 7646 641 6960 706 7103 697 7427
Reviewing the Lithuanian data in T berf vehicles, a tendency of decreasing accident rate can be observed, particularly in
s been the result of the implementation of
able G.3. and considering the increasing numoreference to pedestrians. The decrease ha
49 A comprehensive analysis on traffic accidents in Lithuania is “Road Traffic Accidents in Lithuania - 2002”, published by the Ministry of Transport and Communication.
95
traffic safety measures, especially traffic safety campaigns promoting reflectors.However, there has been an increase in accident rate involving cyclists.
In Estonia, pedestrian-motor vehicle collisions account for 28% of the total accidents. Roughly two thirds of these accidents occur in the dark. In 2002 every third
d under age of 15. Drunken walking, red light ors are common causes of pedestrian-motor
, almost every sixth driver of a motor vehicle was ving is prohibited but it is a very
2 stonians under the age of 15 were involved in traffic accidents (227 in 0 ccident (169 in 2001). The
also increased, partly because children safety equipment is rarely used. Multiple vehicles accidents presently
More than a quarter of the Estonian fatalities occurred on the main roads, whichccount for 3.1% of the total road network. Almost every sixth accident on the main
. The number of accidents is the highest on the Tallinn–Narvaad and on the Tallinn–Tartu–Voru–Luhamaa road.
he main roads and urban area traffic regulation and organization. More detailed information about the program is available on Estonian Road
ers:
Since 1997 the number of killed and injured bicyclists increased by 20% average.
pedestrian collision victim was a chilinfringement and insufficient use reflectvehicle accidents. Of all accidentsunder the influence of alcohol. Drinking and driserious problem.
In 002, 255 E20 1), including the 180 cases of children causing the anumber of children injured as passengers in a vehicle
account for one fourth of all the accidents and the number is increasing because ofdeficient traffic enforcement and escalating traffic volume. This type of accidents is commonly associated with traffic violations in crossing intersections, passing and driving speed. Young drivers 21 to 34 of age are at the greatest risk.
The number of bike and motorbike accidents in Estonia increased by 19% in 2002from the previous year. Every third biker or motor biker causing the accidents wasunder 15 years of age.
aroads was a fatal onero
The Estonian National Road Safety Program for the years 2003 – 2015 targets atdecreasing the number of fatalities on the roads down to 100. The program includesdevelopment of community road safety programs and states of measures forimproving the road safety combining development of traffic education, campaigning,drivers’ education quality improvement and different planning and constructional measures for t
Administration’s web site at www.mnt.ee.
In Latvia, about 50% of all serious accidents in 2002 were collisions of vehicles with vulnerable road users (pedestrians, bicyclists, moped riders and motorcyclists). Theseaccidents usually have serious and fatal consequences for vulnerable road us
34.9% of all killed and 26.9% of all injured were pedestrians;11.4% of all killed and 10.9% of all injured were riders of motorcycles, mopeds and bicycles;
96
In Latvia, the targeted number of maximum road traffic deaths (457) was not reached registered). The National Program on Road Traffic Safety suffers fromin 2002 (518
adequate funding, which hinders implementing the planned safety improvementmeasures:
Education and training of road users Various campaigns on the traffic safetyImprovement of the road qualityImprovement of the road traffic safety in darkness Safety improvements for vulnerable road users Control of road traffic usersRoad audit Technical control, registration and certification of vehiclesRescue service and emergency in road traffic accidents
In Lithuania the National Road Traffic Safety Program has been adopted for 2002-2004. New Road Traffic Regulations came into force April, 1 2003. The Regulationsinclude mandatory use of headlights in autumn-winter period, prohibition to use summer tires in winter, mandatory seat belts for passengers seated on the rear seats
obile phones during driving. Each year, traffic safety ampaigns are held targeting to influence on road users’ behavior. Pedestrian
Vehicle stock
Table G.4). tock has actually declined after year 2000, hich is mainly attributable to the withdrawal of old cars from
comparison, mo rizatio and proc been ut it start r(Table G
The num f passenger c s risen particularly fast in Lithuania. In 2002, there were 34 enger cars pe 00 populatio his is close to the EU level: therewere 350 cars per 1,000 population in Denm 380 in Finl and 420 in S nand over 500 in Germany. Also the absolute number of pas er cars in Lit iahas grown from less than 0.8 ion in 1996 t ost 1.2 mi in 2002
r 93,000 first registrations of brand new ad vehicles were recorded in Lithuania in 2002. The figures for new registration in
and prohibition of using mcwalkways, cycle tracks, metal crash barriers, reconstruction of dangerous intersections and lighting dangerous road sections are examples of technical measures to improvethe road safety.
G.3
Motorization of the Baltic countries has been rapid: the number of vehicles grew by
In Estonia, the passenger car s(w the vehicle stock. By
slower bto n in Pol ess has ed earlie.5.).
ber o ars ha0 pass r 1,0 n. T
ark, and wedeseng huan
mill o alm llion
According to data gathered by ECMT, overoEstonia was 14,700 and 8,200 in Latvia in 200250.
50 ECMT Quartely statistics at: http://www1.oecd.org/cem/stat/conjonct/3rdQ.htm
97
continued especially in Latvia and Lithuania60% - 80% in 1992-1998, and it has
Table G.4: Vehicle Stock in Via Baltica countries 1995-2002, thousand vehicles. Source: Estonian, Lithuanian, Polish statistics offices and Latvian Road Transport Safety Directorate
Passenger cars per 1,000 population in Via Baltica countries 1995-2002.
Estonia Latvia Lithuania Poland
Passengercars Buses
Lorries andspecialvehicles Motorcycles
Trailers andsemi-trailers
Estonia 1996 406,6 6,7 71,3 4,7 29,31998 451,0 6,3 80,6 6,1 35,82000 463,9 6,1 82,1 6,7 37,52002 400,7 5,3 80,2 7,3 37,4
Latvia 1996 379,9 17,3 72,9 18,4 45,91998 482,7 11,5 84,9 19,4 51,62000 556,8 11,5 97,1 20,7 55,52002 619,1 11,2 102,7 22,2 59,0
Lithuania 1996 785,1 15,5 * 104.6 19,4 -1998 980,9 15,2 * 114.5 19,3 -2000 1 172,4 15,1 * 110.4 19,8 -
1 180,92002 15,4 * 115.8 21,0 -*) Lorries, road tractors, special purpose vehicles
Thousand vehicles
Trends concerning the stock of commercial vehicles are mixed. The number of buses and coaches has actually declined from the peak of 1990, while the number of trucks and other goods vehicles has increased. Vehicle fleet renewal is discussed in Section G.10.2.
Table G.5:Source: Estonian, Lithuanian, Polish statistics offices and Latvian Road Transport Safety Directorate
1995 265 131 197 1951996 285 152 217 n.a.1997 304 174 246 n.a.1998 324 200 275 230
325 272
1999 333 219 308 2402000 338 234 334 2592001 298 2482002 294 264 340 289
G.4 Management of roads and road construction
This section focuses on the ownership, private sector participation, institutionalarrangements, and economic analysis in the road sector.
98
0
4000
5000
60
uania
0019912000
1000
2000
3000
Estonia Latvia Lith
2002
apital improvement. Contractors are selected by a process of international competitive bidding. The capacity of the local construction
dustry is reportedly adequate to ensure competition. In IBRD projects, the standard bidding documents are in accordance with the policies and procedures laid down in
ent under PHARE or ISPA is carried out according to C
Figure G.2: The national road administration employees in Estonia, Latvia andLithuania 1991-2002.
Road construction companies have been privatized entirely in Estonia, Latvia andLithuania. Privatization of road administration has been a clear trend in the 1990s in the three countries. At the same time, the number of employees in roadadministration has declined (Figure G.2). In Latvia and Lithuania, the structure has changed very dramatically. However, the effects of the improved efficiency of the personnel and higher competence in the road network administration can now be seen in better quality of the works done and more efficient planning and managementinstruments.
Road maintenance in Estonia and Lithuania has been so far within the responsibility of regional road administrations, whereas in Latvia, some municipalities also havetheir own maintenance enterprises for routine maintenance.
Competitive bidding in contracting out is used almost exclusively in rehabilitation,reconstruction and new construction in all three countries. In Estonia and Lithuania, international tenders are organized for projects bigger than 5 million euros.
Practically all rehabilitation, reconstruction and new construction work is carried out on the basis of competitive bidding in all the three countries.
The force account has traditionally taken care of almost all maintenance, whereas contractors have carried out c
in
the IBRD Guidelines. ProcuremIDI rules.F
99
Table G.6. Road maintenance by force account and contracts in Estonia by road districts and their regions, from December 1, 2003. Source: ENRA
Force Account Contracted(km) (km) %
Contracted
1. Harju Road District (Harju *, Jarva, Rapla) 0 3 495 100 %2. Kagu Road District (Voru, Polva, Valga) 1 246 2 271 65 %3. Laane-Viru Road District (Laane-Viru, Ida-Viru) 1 141 934 45 %4. Parnu Road District (Parnu, Laane, Viljandi) 1 424 2 010 59 %
Saarte Road District (Saare, Hiiu) 1 088 473 30 %5.6. Tartu Road District (Tartu, Jogeva) 1 257 1 104 47 %Total: 6 156 10 287 63 %* Harju County is the Tallinn Capital region, and also the head office location
In Estonia, the former 15 Road Districts (RD’s; one in each county in Estonia) were onsolidated into seven RDs as of January 1, 2003. In April 2003 the RDs were
reduced to six. The RDs carry out summer and winter maintenance both by force with private contractors (and, in one case, a joint stock
ompany). In mid-2003, about 58 percent of the national roads (in terms of km) haveutine maintenance contracted out, but this share will reach 63 % in December 2003
Latvia, a five year contract for the routine maintenance has been applied from the
road
anies were privatized just after the
for
U Phare program.
c
account and contractcro(Table G.6.).
Inyear 1998, based on unit cost (performance-based contract for the winter maintenanceof main roads since the winter 1999/2000). In Latvia, contractors take care of both maintenance and capital improvement. The procurement of road works is madeaccording to the law “On Public Procurement” and all contracts above 50,000 LVL are procured using competitive bidding. The contract is normally awarded to the bidder who has passed the qualification criteria and who has offered a technically acceptable bid at the lowest price. Competition in 2000 has increased substantiallydue to the over capacity of industry in comparison to the annual budget forrehabilitation.
In Lithuania, routine maintenance is mainly carried out by the force account ofregional road administrations. In addition, for the performance of some works, regional road administrations have sub-contractors, selected on a tender basis usingunit cost contracts. Road construction comprestoration of independence, and at present they are private companies with fairly modern equipment and technologies. In competitive bidding, the Lithuaniancompanies often have a priority in that they are able to offer lower pricessufficiently high quality works.
G.5 Economic analysis
In Estonia, a Pavement Management System (EPMS) is used for economic analysis of new road construction and reconstruction but not for rehabilitation or routine road maintenance. The system was developed in co-financing with the E
100
It uses HDM which provides a priority list of road sections to be repaired. Thepriorities have criteria for IRI, traffic density, defects and modules of elasticity. The
of priorities and the feasibility factor. Astudy o
In Latvtro anish Road Directorate. Presently, methods
ctions should beof methods are
ed: HDM 3, HDM 4, Bridge Management System (BMS), and DAVASEMA. In002, economic analysis was used to evaluate all new road construction and 90 % of
d the rehabilitation reconstruction.
in road technology since
cement-bitumen stabilization is becoming more essential. Theally halt concrete, depending on
sphalt (SMA) has been usedt c of th . Geotextiles and geonets for
re e cr r rehabilitative roads.
constructed in Estonia during 2000-2002 to study surface
in pavement and traffic conditions.
TheRoads purchased a US-origin software PONTIS in 2002, which is now in trial use.
In since 2000.
eperfina
PM ecent improvements include:
sections are prioritized on to figures: the sumf the Estonian road user costs will be concluded by the year 2004.
ia, Pavement Management System (PMS) Bellman and Road Data Base werein 1996 in co-operationin duced with D
of economic analysis are only applied for new road construction. Road sections to berepaired are selected on the basis of pavement damages and traffic intensity.
In Lithuania, economic analysis is used to determine which road sepaired and what level of repair should be done. Following typesre
su2the periodic road maintenance an
G.6 Technical issues
G.6.1 Implementation of new techniques
In Estonia, no significant changes have been implemented2000. In road rehabilitation, a cold stabilization with bitumen emulsion or oil shale bitumen, using RAP, was introduced by the year 2000. As result of the growing trafficvolumes the cement orstabilized base is usu overlaid with 5-10 cm of asptraffic volume. On high volume roads the stone mastic aas he wearing oarse e asphalt pavement since 2001prevention of flectiv acking are planned to be used fo
Several test sections weredressings with different bituminous and stone materials in order to find the mostappropriate and economical technology for certaThe tests will be concluded for final analysis by the year 2007 when the constructed test sections will be worn out under the traffic.
development of a BMS has started in Estonia. The Technical Center of Estonian
Latvia, no significant technical improvements have been introducedRecycling, remixing and cold emulsion methods have been introduced earlier in the pr vious 5 years. The Road Administration is ready to use the PMS. However, no
taining information is being collected on the road network due to the lack of nce. The Bridge Management System is at a stage of implementation.
In Lithuania, technologies such as recycling of old pavement, pavement remixing,cold emulsion, have also been implemented before 2000. Further development of
S has also been carried out. More r
101
A secondary use of milled asphalt concrete: Remixing in special mixing plants and adding 2-3% of special bitumen emulsion for simple asphalt pavementAdding milled asphalt concrete mixture granulate up to 30% in the production ofasphalt concrete mixture
Setting up wearing courses of slurry seal
a ain and basic roads (up to 1,500 km) every
suringsu evice m easuring results of Finnish roughness a values are calculated and calibration
rt by e ant company.
verage roughness values of Estonian State road network in 2003 show a notable
basic roads IRI = 4.4 mm/m (4.1 mm/m in 1998);mm/m in 1998);mm/m in 1998).
0 m step (all roads where AADT is over 500 vehicles/day). E modulusis calculated and used as one criterion for evaluation of the pavement condition. Data is
ory is done every spring for 4,000 km of paved roads.
Pavement recycling with complex binder (concrete+bitumen emulsion and foamingbitumen) for setting up subgrade courses
Setting up stabilized subgrades through the use of cement Lime stabilizing of extremely wet soils when setting up embankments
G.6.2 Road quality measuring
In Estonia, roughness is me sured on myear, on basic roads (2,400 km) every second year and on local roads (4,600 km)every third year. One Roadmaster unit is used for measuring the roughness. Thedevice and the measuring vehicle are annually calibrated in Finland. Meare lts of the d are co pared to the mme surement devices. Necessary calibrationce ificate is issu an ind pendent consulted
Apositive development:
main roads IRI = 2.9 mm/m (3.7 mm/m in 1998);
local roads IRI = 4.9 mm/m (4.9all roads IRI = 4.4 mm/m (4.5
Roughness values on the roads to be rehabilitated are usually between 4.0...8.0 mm/m.In Estonia, other performance measures used are:
bearing capacity, measured with Dynatest FWD device. Currently 5,500 km of roads are measured with 10
used in project, program and network level.
rut depth is measured since 2001 and it is used as criteria for pavement conditionevaluation. Rut depth is also a criterion for higher summer speed sections.
manual pavement distress inventDuring the inventory a detailed data is collected about different distresses (transfer cracks, narrow and wide longitudinal cracks, narrow and wide joint cracks, alligator cracking, potholes, raveling and edge break). Based on collected distresses a defect sum iscalculated and it is used for evaluation a pavement condition;
Ground Penetrating Radar (GPR) is used for project level analyses before and afterrehabilitation/reconstruction actions.
102
In Latvia, regular IRI was performed on the state roads till 2002 but due to the lack ofeasuring was interrupted. The Latvian Road Administration is
ut on motorways (400 km)
is made on test sections. The standard IRI values are defined in Lithuanian road onstruction standards. After arrangement of new pavement the following values shall
not be exceeded:
5 mm/m
district roads: IRI = 3.5 mm/m
ther performance measures in Lithuania are pavement strength, road defects, cracks, ent leakage, edge cracks and cross-profile defects.
ent, ground penetrating radar for quality
n
insp
In Lithuania, independent consultants carry out the supervision of road and bridgejects since the year 1997. The
bridgeed. All
finance this mperforming calibration of roughness measuring devices independently. Mean IRIvalues in the state main road network are about 3 mm/m, 1-2 mm/m for newpavements, and 4-7 mm/m for road sections to be reconstructed, in dependence of the traffic intensity at a road section (AADT). Visual inspection is also used to detect eight various damage types.
In Lithuania, a regular road roughness survey is carried oevery year, on other main roads (1,430 km) every second year and on national roads(4,880 km) every third year. A laser prophilograph is used. The calibration of device
c
main roads: IRI = 1.national roads: IRI = 2.5 mm/m
A typical IRI of new pavement on motorways is about 1.0 mm/m and on national roads about 2.0 mm/m. Typical IRI values of pavement to be rehabilitated are:
motorways: IRI = 2.5 - 3.5 mm/m.main roads: IRI = 3.5 - 4.5 mm/m.national roads: IRI = 4.0 - 5.0 mm/m.
Opotholes, patches, ruts, pavem
G.6.3 Improvements in quality control
In Estonia, certified supervisors manage all works for state roads. Two third of them are independent consultant companies or independent supervisors. The improvedequipment, technical standards and procedures have also contributed to improvedquality control (asphalt tons managemmeasurements etc).
In Latvia, a quality system certified in compliance with the ISO standard has beenintroduced. Building supervisors, project managers and subcontractors work iaccordance to it. Hence, building supervision provides a recording of regular quality
ection.
works during the implementation of investment proindependent consultants give a lot of practical advice for road andconstruction. Since 1991, a substantial quality assurance level has been achievmain contractors have set up modern quality control laboratories with adequatequality control systems. They aim to be certified for ISO 9001 and ISO 2002.
103
G.6.4 Cost and quality development of road maintenance
There are significant differences in road maintenance unit costs between the threecountries (Table G.7.) The unit costs have increased since 1991. For example in Lithuania the increase for surface treatment was 50 % and 108 % for routine
anagement from 1991 to 2002. However, the unit cost for asphalt concrete was 20%lower in 2002 than in 1991. The increase results partly from a general increase of
creased quality requirements.
m
prices and partly from the in
Table G.7: Basic unit costs of asphalt concrete, surface treatment and routinemaintenance in 2002.
Estonia Latvia LithuaniaAsphalt concrete, USD/m3 112 138 96Surface treatment USD/m2 0.92 1.28 3.00Routine maintenance of paved roads USD/km 1,260 2,644 2,700
In 1991, the Latvian Road Administration changed its requirements on periodic maintenance works within the state road network when moving from the Soviet standard system GOST to the Swedish system ROAD 94. The adoption of this system was completed in 2001. The cost level remained the same for 10 years and fell from998 to 2000 due to increased competition within Latvian road construction industry
.6.5 Research and innovation in road m
In stonia, research an n in nto t ofTechnical Policy, a part of E ian Roa inistration since 2001. The main taskof is to dete the practi eed of the r related research, need of hnical st s and pro res and to develop annual and long-ter h and development programs. R rch projects given out for res horganizations for implementation.
Th earch partners are the Transportation Institute of the Tallinn TechnicalUniversity, the state owne nical Cen f Estonian ds Ltd. and a p teen bureau “Stratum urrently following projects are under compilation:
ent of the Estonian flexible pavem design procedure with incorpor fthe Falling Weight Deflectometer measurement dataImplementation of Ground Penetrating Radar for pavement design and quality control
1and improved technical equipment used. After year 2000, costs rose 15 % mainly due to the increased quality requirements of ROAD 94.
anagementG
E d innovatio activities are corporated i he Departmentston d Adm
the departmenttion tec
rmineand
cal nce
oad-compila ard dum researc esea are earc
e main resd Tech
”ter o Roa riva
gineering . CDevelopm ent ation o
improvementEvaluation of different surface dressing technologiesHarmonization of terminology of existing Estonian road related legislative actsNorms and procedures including the upgrade of Estonian highway design norms.
In Latvia and Lithuania, universities, State-owned companies and private firmsparticipate in road research.
104
Road design standards have been adopted from various sources. All three countries increasingly apply standards, such as the Eurocode, used in the EU. In addition,
ational standards and to some extent old Soviet codes are used. Compared to national
main effort to mobilize revenues from road users has occurred in countries seekingdmission to re heading
toward reachgeneral, road user reven n wouldbe o carry out adeq aintenance of their roads (Table G.8.), which is also the e EU countrie
comparison between road expenditures and the gross national product in 36
able G.8. Road User Revenues and Maintenance Expenditures in Accession Countries in Million USD in 1999-2000. Source: Queiroz, Cesar (2002) A review of alternative road financing methods, The World Bank, databased on: NEI Road Transport Charges, Country Reports.
Road User Revenues
MaintenanceExpenditure
MaintenanceExpenditure
Actual per Required in %
nstandards, the EU codes allow more detailed road design and improved road safety, such as in the form of constructing wider intersections in relation to traffic intensity.
G.7 Road financing
Aa the EU (the accession countries
f). All accession countries a
ing the minimum EU levels oues ccession cou
fuel and annual vehicle taxation. In tries arein a much higher than what
needed t uate mcase in th s.
Acountries shows that, on average, road expenditures were about 1.2 percent of GNP in 1998. The percentages in that year, for the Baltic States, varied from 0.9 to 1.3 percent. Thus, of the Baltic States, only Lithuania compares favorably with the average for those 36 countries in terms of this measure. There is a significant 56 percent difference between the percentages for Estonia and Lithuania.
T
Actual RequiredBulgaria 597 43 213 20Czech Republic 1,939 165 533 31Estonia 94 10 45 22Hungary 342 153 341 45Latvia 105 59 53 111Lithuania 176 48 69 70Poland 4,907 364 933 39Romania 1,279 115 213 54Slovakia 121 72 171 42Slovenia 310 72 64 113
fter Lithuania abolished its Road Fund in 2002, Latvia is the only one to have a Afunctioning Road Fund. Its State Road Fund is regulated by the Cabinet of Ministers, which determines the main principles for planning of the State Road Fundexpenditures. The Advisory Body of the State Road Fund includes several road userorganizations, such as the Latvian Public Bus Transport Association, the AutomobileOwner Union of Latvia and the Latvian Automobile Dealers Association. The Road
105
Fund is however considered not effective, because it can cover only one third of therequired financing.
In the Baltic States, fuel tax is the biggest source of funding for road maintenance andconstruction (Table G.9.). Vehicle tax is presently not collected in Estonia (since
share
2003) or in Lithuania.
Table G.9: Total expenditure in road maintenance and construction and the sources of funding in 2002.
Expenditure on road maintenance Sources of funding - %and construction in 2002, m USD Fuel tax Vehicle tax Other taxes
Estonia 77.3 11.9%88.1% -Latvia 46.2 83.4%
nia16.6%-
-49.1%Lithua 159.4 50.9%
The income fr tax ot fu cat road i tructure .E atio Ad stratio ece to 75% this incoo maini to t centra adm tion, which manage einvestm nts. The local organizations eive aining 30% for roads m (S G.1. shari en the al and lo sis sim % loca and Lithuania (75% central / 25 % local).
om fuelnal Road
is nmini
lly allon can r
ed forive up
nfrasof
purposesme. 70 %stonian N
f the ree
ng goes he l roadrec
inistrathe rem
s all th
aintenanceilar in Latvia (72 % central/28
ee Box ) The ng of fundsl)
betwe centr cal level
01995 1998 2000 2002
10
20
30
40
50
60
70
80
Estonia
Latvia
Lithuania
World market crudeoil
Normal sales price
Figure G.3. Actual fuel prices in Estonia, Latvia and Lithuania in US Cents per literin selected
10
20
30
01995 1998 2000 2002
40
50
60
70
80
years. Diesel = left graph; Super Gasoline = right graph. Numerical data shown in Attachment G.4. Source: Metschies 2003
While the tax rate in June 1999 on gasoline was the equivalent of USD 0.22 per liter in both Estonia and Lithuania, it was USD 0.27 per liter in Latvia. Latvia also has the most expensive diesel fuel (See Attachment G.4). Estonia has had the cheapest Super Gasoline. Diesel prices were almost identical till 2000, but in 2002, Estonia has the cheapest diesel fuel and Latvia the most expensive.
106
The tax rate on fuel, however, is not indicative of the sum, which the roadadministration will be allotted for its road network. Although Lithuania had thelowest overall tax rate on fuel of the three countries, Table G.10. shows that it has the largest network in kilometers and the highest comparative budget per kilometer.
Although the 1990s brought an increase in private sector involvement in infrastructureinvestments in many countries, such a development has not occurred in the road systems of the Baltic States, as there are no toll roads in place in these countries.
Table G.10. Road Network Comparison and Macroeconomic Indicators. Source:Road administration publications from respective countries, 1999, Lithuanian MoTC amendments (November 2, 2000).
roadnetwork
Length of
Estimatedbudget for Budget per GNP
per Average annual Road density,
National network,1999 (km)
roads,1999(USD
million)
km of road,1999
(USD/km)
capita,1998
(USD)
GNP growth,1997-98, (%)
1998(km/million
people)
Estonia 30,57616,430 47 2,861 3,390 6.4
Latvia 20,329 64 3,148 2,430 6.1 27,188
Lithuania 21,161 116 5,482 2,440 5.6 19,909
Two tolled facilities, however, are currently under consideration for private sectorfinancing in the Baltic States: a fixed link to the island of Saaremaa in the Baltic Sea(Estonia's largest island), and an additional crossing of the Daugava River at Riga, in
he funding of governmentalctivities other than roads. This is illustrated in Box G.1.
e BalticThe data is not fully comparable, since the Estonian
gures comprise the entire road network, whereas data from Latvia and Lithuania over public roads only.
Latvia. Tunnel and bridge options are being discussed in both cases. However, the willingness of users to pay has not yet been fully assessed for either of these projects. Furthermore, the economics of these projects do not seem very robust: the Saaremaafixed link, for example, would yield an economic rate of return of 10 percent at best.
Finally, it is significant that the governments in the Baltic States have been using the considerable revenues collected from road users for ta
evenues collected from road users with the expenditure on roads in the threRStates are shown in Figure G.4.fic
107
$200
$50
$100
$150U
S$ m
illio
n
Total revenue fromroad users
$0
Estonia Latvia Lithuania
Total roadexpenditures
Figure G.4: Revenues from road users compared with road expenditures 1999; Estonia = entire road network, Latvia and Lithuania = public roads.
nion (ISPA)
Sources: For Estonia, MOTC data April 2001; for Latvia andLithuania: Road administration publications, 1999.
Box G.1. Road finance issues in Estonia In Estonia, the road budget is composed of state treasury allocations, European Uall cations, and loans from International Financial Institutions (IFI), namely the World Bo ank, NordicInv stment Bank (NIB), and European Investment Bank (EIB). The Road Act’s §16 ae nd §45 provisionsestablish earmarking of 55% excise tax revenues in 2001 to be used for roads, 65% in 2002 and 75% in 200 . However, tight fiscal policy of the Ministry of Finance has n3 ot allowed for increase of thetreasury allocation for roads according to the Road Act provisions.
In 2000, out of the total road budget of 795 million kroon (USD 47.3 million), 599 million was used for routine maintenance of the network. Out of total 2001 budget of 777 million kroon (USD 43.9 million),only 485 million was used to maintain the network, as more funds were dedicated for local counterpartfinancing to IFI loans. The 2002 maintenance situation was even more difficult. The 2002 totalallocation for roads increased significantly to 1,118 million kroon (USD 74.8 million) while only 464 million kroon was used for maintenance. The 2003 total allocation also increased significantly, to 1,513million kroon while only 465 million kroon was used for maintenance. The total 2004 allocation offunds for roads is projected as 1,739 million kroon, including 488 million kroon for maintenance,which is lower than the 2000 road maintenance expenditures.
Note: Currency conversion to USD is indicative. As kroon is pegged to euro, the changes in allocationsfrom one year to another reflect real changes in disposable budget allocations in euro terms.
Source: Estonian Road Administration
G.8 Via Baltica
Via Baltica stretches from Helsinki to Warsaw and is part of Corridor 1, which is one of nine priority multi-modal transport corridors linking Central and Eastern Europewith Western Europe. The Corridors were identified at the second Pan-European Conference of Ministers of Transport in Crete in March 1994. Via Baltica has been
108
numbered E67 in the Pan-European road network. The total distance of Via Baltica is 930 km. (See Attachment G.5.)
In January 1996, the High Level Working Party on Via Baltica, set up on the initiative of the Nordic Investment Bank at the request of the G-24 Transport Working Group under an authorization of the Prime Ministers of the Via Baltica countries, i.e. Estonia, Finland, Latvia, Lithuania and Poland, recommended a five year investmentprogram for up-grading and reconstructing of the Via Baltica route. The estimatedcost for the Program was USD 180 millions. The Program was approved in principleby the governments concerned.
A Monitoring Committee was set up accordi g to the Memorandum of Understandinggned by the Transport Ministers of the Via Baltica countries and the European
esoncerned a
anship for the Committee and the Finnish Government the secretariat.
110 km of new roads have been built and 333 km of existing roads have been rehabilitated or resurfaced,
d or strengthened,all countries have initiated specific traffic safety programs,signing of Via Baltica as E 67 has been arranged, and
is for investmentsin access roads to Via Baltica.
ost of them are private, butapproximately 15 % are owned by municipalities or which are joint-stock companies.Over 50 entrepreneurs operate long-distance bus services, of which over 15 on international routes.
nsiCommission in order to monitor and co-ordinate the joint work of Programimplementa countrition. The Committee has consisted of representatives of the
nd the European Commission. The Swedish Government provided the cchairm
The First Investment Program 1996-2000 is estimated to cover investments of a total cost of about EUR 200 millions, or about 15% more than originally estimated. Work under the Program came to an end in year 2002. The following is a summary of what has been achieved under the First Program:
28 bridges and viaducts have been constructed, repaire
roadside services have been developed along the route by the private sector.
Via Baltica is developing well and is often cited as an example of a successfulregional co-operation on the development of transport facilities. Via Baltica hasembarked on its Second Investment Program, including investments amounting to 655 million euros for a period of 2001-2006, of which 112 million euros
G.9 Road transport industry
Road transport services for freight have been fully privatized in all three Baltic StatesFigure G.5.). All long-distance bus services are operated by private firms in Estoniaand Latvia, whereas in Lithuania, municipalities operate some long-distance busservices.
In Latvia, the whole inter-urban road transport industry of freight is privatized. Morethan 100 companies perform regular commercial passenger services on urban,regional, inter-city, and international routes. M
109
110
(Long-distance bus services and ro
Lithuanian goods transport by road is now fustate transport companies. Bus and coach companies were separated from state
100 of stohave been op
countries, the demand for domestic and especially for international roadfreight transport tends to grow faster than GDP. This has definitely happened in the
G.6.) While domestictransport work has grown more modestly in Latvia and Lithuania since 1999, it has
G.10.1 Market structure and firms size in road transport
Road freight companies in all EU and EU Accession countries are typically small or micro firms having one or a couple of trucks. They are often run by entrepreneurs
tructure in road transport is such that the most efficient size of the firm occupied in
pure road haulage is often limited to what a single entrepreneur can operate. If a firm
2000
1990
ROAD FREIGHT TRANSPORT
ESTONIA LATVIA LITHUANIA
2003
2000
1990
LONG-DISTANCE BUS SERVICES
ESTONIA LATVIA LITHUANIA
2003
Figure G.5: The roles of the private and the public sector in road transport services.ad freight transport services)
lly privatized, after the reorganization of
transport companies and were initially owned by municipalities (municipalities hold ck) - there were 47 companies of this kind in 2000, but since then, mosterated by private firms.
G.10 Market characteristics in road freight transport
In most
Baltic States. Especially in Lithuania, the performed transport work in internationalroad transport has grown substantially since 1999. (Figure
grown extremely rapidly in Estonia since the third quarter of 2002.
employing a handful of people in addition to themselves. The cost and markest
has ten to fifteen trucks, that number may not be enough to sustain the administrationand office staff needed to run the firm of that size. The necessary economies of scale after often reached with a fleet of 30 or more trucks.
3000
2000
2500
EST nationalLAT nationalLIT national
0
500
Q1-
1999
Q3-
1999
Q1-
2000
Q3-
2000
-200
1
-200
1
-200
2
-200
2
-200
3
-200
3
1000
1500
Q1
Q3
Q1
Q3
Q1
Q3
EST internatLAT internatLIT internat
international road freight transport in 03. National transport
excluding, international transport including cabotage. Source: ECMT.
) and in the EU (5.2) (see Table G.11). In 2003, bout 1,600 road freight companies were active in Estonia, and they employed 9,700
wnedompanies, 162 of which operate internationally (IRU 2003).
stonia a ia d om the one in L ; da com .
Estonia Latvia LithuaniaTrucks in international traffi 4 600Tru al traffic *) 3 20 80Tru ge per company 6,1 3,4Bu s in international traffic 43 89Bu s national traffic 2 155 1 093 40Bu aches, average per 2 1
Figure G.6. Transport work in national and million tonkilometers by quarters in 1999 - Q3/20
In Estonia, companies own 6.1 trucks on average, which is well above the average in the other EU accession countries (4.4apeople.
In Estonian passenger transport market there were 306 private and 3 municipal-oc
Table G.11: Trucks, buses and coaches in international and national traffic. Source:IRU (2003) Road Transport Fact Files: Estonia, Latvia and Lithuania
he definition used in E nd Latv iffers fr ithuania ta is not parable
c 5 455 12 707cks in nation 0 3 868 131 1cks, avera 4,4
ses/coache 5 693 5ses/coache 16 4ses&co ,0 2,9 ,8
*) T
In Latvia, road freight companies are of the same average size as in other EU candidate countries. Small companies operate especially in the domestic market (IRU 2003). In 2003, 1,100 firms were licenced for international and 1,300 for domesticroad freight transport.
111
Over 200 Latvian firms were licences for international bus transport and over 110 firms for domestic transport. In 2002, the Latvian road transport sector employed24,800 persons, of which 10,700 in road freight transport.
were 2,490 road freightfirms, which employed 19,900 persons in Lithuania. At the same time, there were 48
ublic bus transport firms that employed 6,500 persons.
rity of small and medium size carriersith a high level of competition. Baltic road freight carriers face fierce competition
G.10.2 Fleet r
ccording to data gathered by ECMT, almost 7,700 first registrations of new goodsansport vehicles were recorded in Lithuania in 2002. The figure for Estonia was
2,400 and 1,900 in Latvia in 200251.
Table G.12. Truck fleet of Latvia’s national roa iers’ iati 000 ;mber ks. e: Th tic C Ma da
Association o an tio d Ca an as
Lithuania’s truck fleet in international traffic is almost three times the size of Estonian and over two times the size of Latvian fleet. In 2003, there
p
The regional market is characterized by a majowespecially from Polish, Russian and other CIS carriers.
There is a clear differentiation of services and equipment between firms that areengaged in western traffic and the firms that are engaged in eastern traffic. Technicalregulation in western traffic requires up-to-date and more expensive equipment. This constitutes a cost differencial that typically makes the most modern trucksuncompetitive in eastern trades.
enewal through tighter environmental regulation
Atr
d carr assoc on in 2 -2002actual nu of truc Sourc e Bal ourse gazine, ta from
f Estoni Interna nal Roa rriers d Latvij Auto.
Estonia LatviaTruck type 2000 2001 2002 2000 2001 2002EURO 1 180 180 170 398 437 446EURO 2 1,100 1,450 1,600 1,049 1,185 1,269EURO 3 0 350 600 0 738 1,196Other 2,070 2,180 2,240 3,919 3,079 2,632Total no. of trucks 5,350 4,160 4,610 5,366 5,435 5,543
The enforcement of tighter environmental standards has effectively pushed thecarriers to renew their vehicle fleet used within the EU and in trade with EU. Theeffect is achieved through multiplicators for more environmental friendly vehicles andthe additional bonuses awarded for these. Table G.12 shows the rapid fleet renewal in
51 ECMT Quartely statistics at: http://www1.oecd.org/cem/stat/conjonct/3rdQ.htm
112
In Estonia, in 1999 and 2000 were only 1,400 new goods vehicleswere registred. The
the three first quarters in 2003 in Latvia and Lithuania.pace of fleet renewal had stayed roughly the same throughout1999 - 2002, and during
Latvia. According to the MEAC, over 52 per cent of Estonian trucks in internationalaffic were in class EURO 2 or higher in 2003.
, such as Moldova, for example, over 95 % f trucks were in EURO 0 class, and only a handful were in the EURO 2 class in
nders Moldovan carriers to utilize their
t from one firm to
tr
In the least developed countries in Europeo2003. EURO 0 class vehicles can still be used in CIS trades.
G.10.3 Cost competitiveness in road transport
Cost competitiveness is a crucial issue for road haulage firms, and competition hasreduced cost differentials to a minimum. This is seen in Table G.13., which indicatesoperating costs for carriers from the Baltic States, CEE and the EU. For reference, data for Moldovan carriers is also shown, as their operational costs are among the lowest in Europe because of the very low wages. However, the lack of finance, equipment and transport permits effectively hicost advantage.
Table G.13. Annual cost of operating a 20 ton truck in international traffic for200,000 km per year in 2001 (2002 for Moldova) in euros. The figures do not include overhead costs as they vary a loanother. Sources: IRU and for Moldova: Ojala 2003.
Costs in euros/year Estonia Latvia Lithuania Moldova CEE EUPersonnel 11 500 13 000 12 000 6 400 16 000 56 600Depreciation 14 000 16 000 14 700 14 000 16 200 11 500Tax/toll/licenses 6 600 7 500 7 000 10 600 4 100 2 400
2 100 2 300Insurance 2 200 3 600 2 400 3 000Interest 2 500 2 800 2 600 7 000 3 200 3 600Fuel 23 00 0 18 700
2 0 1Repair/Maintenance 1 700 1 1 700 3 000 2 100 4 800
0 200s overheads) 81 700 00 7 0 69 000 000 121 00
20 600 500 21 7 18 00 600 21Tyres 2 100 800 2 20
9003 000 200 1 800
Other 20 600 12 200 13 90 3 400 16 15 600Total (les 82 0 8 00 80 0
As carriers from EU accession c tries enjoy distinct cost ntage overtreaty bans rriers from accession countries from entering in
ember state for a period o up to five years
n, the trucking industry g the Baltic
uropean trades with equipment complying to higher EURO standards, (ii) operatorsith aging equipment in non-EU trades using bilateral permits, (iii) domestic
operators with modern equipment for efficient distribution or heavy transport and (iv)omestic operators with old equipment.
Competition is intense in all groups, and overcapacity is persistent at least in groups (ii) and (iv). Despite low operational costs, profitability is usually poor. Operators in group (i) are often subcontractors to major international logistics firms.
oun a adva EUcarriers, the accession cacabotage traffic in old m s f .
In a rough simplificatio in CEEC’s – includinStates - comprises four types of operator: (i) operators with multilateral permits inEw
d
113
G.11 Road Transport permits
G.11.1 Usage of ECMT transport permits
The so-called CEMT52 permits allow trucks to engage in international transports inECMT countries. These permits are issued by European Conference of Ministers of
hich is organized under OECD. ECMT comprises all European and CISenia being an observer member.
Transport, wcountries, with Arm
CEMT permits are needed to engage in international road transport between themember countries of the ECMT. This does not apply to road transport of EU carriers within the EU, since intra-EU road transport has been liberalized for membercountries53. The permits are mostly used in traffic between EU and non-EU countries.
In addition to the CEMT permits, non-EU countries use bilateral agreements to regulate the volume of traffic between them.
The CEMT permits are issued either for one year or as a short-term basis for single roundtrips. The permits are either multilateral, which allow for traffic within the entire ECMT area, bilateral for traffic between two specified countries, or for transit, which allows for passage through an ECMT country to another country.
Furthermore, the permits are tied to the emission standards of the vehicles. These are ass of vehicles. EURO 0 is the least environmentally
iendly category, and EURO 3 the “best” category now effective (See Table G.14). called EURO 0, 1, 2 or 3 clfrThe even tighter EURO 4 class will be effective on June 1, 2005.
Table G.14. Emission standards EURO 1 to EURO 4 for heavy duty vehicles used in ECMT countries. Source: ECMT
EURO 1 EURO 2 EURO 3 EURO 4 ECMT scheme “Green” “Greener and
safe”“EURO 3 safe” “EURO 4 safe”
Date of application Oct. 1, 1993 Oct. 1, 1996 Jan. 1, 2000 June 1, 2005CO g/kWh 4.9 4.0 2.1 1.5
0.46x 3.5
Small particl 0.02Multiplicator for basic quota
2 4 6 n.a.
HC g/kWh 1.23 1.10 0.66No g/kWh 9.0 7.0 5.0
es; g/kWh2 0.4 0.15 0.1
Bonus % on top basic quota
10 % 20 % 40 % n.a.
Note: EURO 0 class is the least environmentally friendly category below EURO 1 standards
52 In the industry, the licence is generally referred to as CEMT permit, using the French acronym.53 However, cabotage traffic will not be allowed for new members for a period up to five years.
114
Table G.15. presents the number of Multilateral road transport permits for the Baltic tates and selected other countries. The EURO 0, 1, 2 or 3 class permits are issued by
the European Conference of Ministers of Transport (ECMT). The permits allow
opean Conference of Ministers of
G.11.2 Usage of Carnet TIR
T e TIR et is s rant ocume sed in d tra Eullow truc cross bord ithou argo in ction by cu
he TIR system is maintained by the International Road Transport Union (IRU).
TIR Carnet and the ATA 54
Table G.16: Nu nets issued by IRU to national associationsSource: UNECE iv/carnets.h
1997 1916 500 32 000 41 000 000 77 0 1 500 79 6027 40 45 100 71 40 200 111 3 8 500 127 50031 62 000 105 70 000 195 0 8 000 247 000
138 90 87 950 66 0 450 41 4 4 750 32 550nland 4 300 9 200 28 200 65 500 36 500 20 700 17 000
Germany 109 400 95 000 77 200 67 500 41 500 31 250 41 400Hungary 307 600 313 500 267 300 261 450 234 000 180 400 150 600Poland 215 950 291 700 367 300 317 350 323 100 293 000 244 500Russian Federation 121 000 110 000 145 000 191 500 218 000 174 350 236 800Sweden 15 000 17 000 19 900 6 700 7 600 5 300 4 900
S
trucks to engage in international transports in ECMT countries. However, vehicles in the EURO 0 class are no longer allowed into EU countries.
Table G.15: ECMT multilateral quota for 2003 in selected countries – the number of licenses by type of vehicle. Source: EurTransport, Multilateral Quota, CEMT/CS/TR/(2002)14/Final, 2002
Estonia Latvia Lithuania Poland Russia Belarus Ukraine FinlandGreen lorries
Annual licences (x2) - - - - - - - -Short term licences (x2) - - - - - - - -Bonus 10% - - - - - - - -
Greener and safer lorriesAnnual licences (x4) 428 222 - 590 451 509 392 176Short term licences (x4) 48 336 - - 2304 - 480 480
% 72 42 - 98 107 85 72 36r lorriesences (x6) 313 578 1075 252 840 294 31
Bonus 20EUR3 and safe
Annual lic 9 874Short term licences (x6) 72 720 - - - - -B s 40% 182 7 7 240 84 9 250
Total lA 107 842 8 711 50
hort - - - 480
onui
91 30 2 1cencesnnual 741 800 5 1291 03 10
S term 120 1056 2304 480
h Carn a custom gua ee d nt u roa nsport in ropethat aT
s the k to the er w t a c spe the stoms.
The TIR guarantee practices with customs were very diverse during the 1990s in all Baltic States, and only after 1997-98, these arrangements have found smooth and well-functioning forms. It could be mentioned that theCarnet were not recognized by the Latvian customs as late as 1997, even though Latvia had ratified these conventions much earlier.
mber of TIR carhttp://www.unece.org/trans
1994
/new_tir/d
1998
tm
99 20001995 1996Estonia 63 00 6 0Latvia 0 0 106 00 8Lithuania 700 0 177 00 17Czech Republic 0 50 63 00 3Fi
115
G.12 Interurban and international bus transport
There is competition on both domestic and international routes, which helps keep
alfare for a 600 km ride between Tallinn and Vilnius is USD 27, which is equivalent to
S 4.5 cents/passenger km.
Table G.17. Example of Long-distance bus fares and approximate distances in
frequency and quality relatively high and prices low. The equipment used iscomfortable, typically 5 to 10 years old long-distance buses bought second hand in, for example, Germany or from other EU countries.
Table G.17. gives an indication of interurban bus fares between some major cities in this region. The cost of a bus ride is relatively affordable. For example, the norm
U
scheduled traffic of a major operator, December 2003. Source:www.eurolines.ee (1 USD = 12.96 EEK in December 4, 2003)
Distance kmTallinn 110 305 375 415 495 550 605
USD 5.0 Parnu 195 265 305 385 450 495one 15.4 6.9 Riga 70 110 150 230 300
way 18.5 10.8 3.1 Bauska 40 120 190 23020.1 13.1 5.0 2.0 Pasvalis 80 150 19021.6 15.4 6.6 3.5 1.4 Panevezys 70 15023.9 18.5 8.5 5.4 3.5 2.1 Ukmerge 8027.0 22.4 13.5 8.5 6.2 4.8 2.7 Vilnius
In Latvia, the number of domestic lines has remained rather stable since 1999. Bycontrast, 52 international bus lines existed in 2002 compared to just 37 in 1999
atvian Transport Statistics 2002). See also Table G.18.
umber of passengers, passenger-kilometers and average length of ourney in Latvian bus transport in 2002. Source: Latvian Transport
Statistics 2002
(L
Table G.18. Nj
Year 2002 Number ofbus lines
Passengers carried(thousands)
Millionpassenger-km
Average lengthof journey
International bus lines 52 593 170.3 287Interurban bus lines 374 18,149 858.3 47Suburban bus lines 1,091 28,604 409.9 14Urban bus lines n.a. 126,187 921.9 7
54 ATA Carnet is a document that exempt goods of customs duties in temporary import; these includee.g. items sent for repair, trade fairs or demonstration purposes.
116
Apart from scheduled traffic, chartered long-distance bus travel has become a popular form of tourism in the Baltic States. The destinations are typically in Western Europe, and the annual passenger volumes have increased rapidly during the past years.
d bus traffic in year 2000, and the volume is increasing. By contrast, some 6.0 million passengers traveled on domestic
G.13 Regulatory issues in road transport services
es in road transport deal mainly with safety, environmental effects and arket entry and exit. These issues are also at the heart of the regulatory discussions
etween the EU and the accession countries.
Lithuania entered the INTERBUS agreement regulating
iness, and these requirements are the same for both Estonian and foreign companies. To start a regular passenger service, an
g distance bus service and international bus service can be operated only with line permits issued by the Ministry
.
Estonia, the town council, according to the proposal of City Government, setscommon bus ticket prices of urban passenger transport. On county and parish bus lines the kilometer tariff, i. e. price per kilometer, is set respectively by the county government or the parish council.
In Estonia, for example, there were over 3.0 million passengers in domestic and 0.4 million passengers in international non-schedule
highway lines in scheduled bus traffic, but only 0.3 million traveled in international scheduled bus traffic. The most important destination or origin in scheduledinternational bus transport is Russia (Estonian quarterly transport statistics 2000).
Regulatory issumb
Tariffs for the carriage of goods are a contractual issue between the shipper and the carrier, and it is not regulated in any of the three countries. The entry of foreign vehicles is regulated through bilateral agreements in all three countries. There are no transit fees in the Baltic States. Country-specific regulatory issues are described in the following subsections.
By April 28, 2003 Latvia andinternational bus services together with other 11 signatories including mainly CEE countries. Estonia is planning to join INTERBUS too in the near future. After the EU membership, bus operators from the Baltic States are allowed to operate within the Territory of the EU practically unrestricted, provided they have an operating licensefrom their own country.
G.13.1 Estonia
The establishment of goods and passenger transport enterprise in Estonia takes place according to the laws of setting up a bus
entrepreneur either must have a commercial line permit from the city, parish, orcounty governments to operate urban, parish or county bus lines, or must conclude a public service agreement with them. A regular lon
(MEAC). The carrier can operate regular international bus lines only if he has at least two years’ experience in international occasional passenger services
In
117
On national long distance lines and on international bus lines, as on commercial lines, the carrier sets the kilometer tariffs. The operators also set the tariffs for taxi services.
the freight. Policemen or road
of passengers requires a special authorization (a license). This is issued by the Road Transport Administration for international and domestic long-
sport companies freely set the tariffs and fees for freight services. The maximum fares on regular passenger services (except on international routes) that are
orregular passenger services within international routes are established by a carrier in
ares for the carriage of passengers and luggage by taxi car shall be established by the
The opening of new routes (lines) or the alteration or closure of existing ones requires an authorization by the MoT on intercity or international routes; or by the respective
eighing stations are used.
There are relatively low registration or road user charges for heavy vehicles in the Baltic States. In Estonia, the Heavy Vehicle Tax Act entered into force on January 1, 2003. Before that, heavy trucks were not taxed.
According to the current legislation, overweight freight can only be transported in the case of an indivisible load. For transportation of such loads, one must apply and pay for the permit of the Estonian National Road Administration, the fee depending on the weight of load, axle load and other peculiarities ofofficials carry out the checking of vehicles with 15 mobile and 2 stationary weighing machines in border stations.
G.13.2 Latvia
The entry to the road transport market is basically free in Latvia, but registrationrequires a sound financial situation, a good reputation, and professional skills. Thelicense to deal with international conveyances is given only to companies registered in Latvia. Carriage
distance carriage; and by a City or Regional Council for the carriage within thecorresponding city or region.
Latvian tran
subsidized from the state or the special state budget are established by the Minister ofTransport. Fares (tariffs) for regular passenger services within urban and regional routes are fixed respectively by a City Council or a Regional Council. Fares f
conformity with international agreements and in co- operation with a partner companywithin the framework of the contract. All other fares for regular passenger servicesare set by the carrier.
Frespective City, or a Regional Council.
City, or Regional Council on urban and regional routes.
There are certain dues for heavy vehicular transport that are decided by the Cabinet of Ministers. Both mobile and permanent w
118
G.13.3 Lithuania
In Lithuania, there are no restrictions on the establishment of a road transport
free.
ehicles, according to the total (maximum
axle load
weight checks are
load and/or net weight of vehicle is
rement of road carriers, (according to the
G.14 Conclusion
Traffic safety is a serious concern in all the three countries and the number of fatalities in road traffic is very high. Compared with other European countries, for example, Sweden and Finland, the number of deaths in road accidents per 1 millioninhabitants is three to five times higher.
Slight overall safety improvement can be seen when exploring the statistical data on traffic accidents in relation to traffic volumes.
company. The companies wishing to obtain licenses to engage in internationaltransport have to fulfill the corresponding EU and ECMT requirements.
In passenger transport, the municipalities set tariffs for the carriage of passengers on local regular routes, whereas the carrier sets the tariffs on long distance routes in agreement with the State price and energy control commission. Tariffs for thecarriage of passengers on occasional routes are
The charge of LTL 50 (USD 12.5) per year as a stamp duty is applied for the issue ofa license. The owners of goods vehicles (trailers and semi trailers included) pay an annual road user charge for the vpermissible) weight ranging from LTL 100-300 for up to a 3.5 ton vehicle to LTL1,000-3,000 for vehicles over 24 tons.
Up until 2002, one of the sources of the Lithuanian Road Fund was the road user taxfor vehicles exceeding the permitted dimensions (with or without a cargo),or the total weight. The tax was paid on each occasion, upon obtaining the relevantpermission from the State Road Transport Inspectorate. The weight control is fairlyeffective since stationary scales are used, and in addition, randomalso carried out.
In January 2002, the Government approved the new amounts and payment procedure of the charge for road transportation with the vehicles exceeding the permissibledimensions or when the permissible axle exceeded.
By the end of 2002, the Government Decree on Rules on the licencing of road transport activities were amended so that a road transport firm may not increase its vehicle stock by more than 20%. This provision is applicapble until 30 April 2004.
As regards the financial standing requi
vehicles operating excusively in the domestic market.
119
EU Directive 96/26), Lithuania was granted a transitional period until 2007 by the EU for
Motorization has bei
en very rapid in Latvia and Lithuania. The number of vehicles g stered in Estonia has even diminished slightly, but in effect the vehicle fleet has
een radically renewed in all three countries.
The Baltic States have organized distinctive individual road administrations and havehas chosen a different means for the collection and distribution of the funds requiredto maintain the national road networks. While Latvia and Lithuania established road funds in 1994 and 1995, respectively; Estonia does not have a road fund. Lithuanian Road Fund was abolished in 2002. The Latvian Road Fund has an advisory board, which includes representatives of the public.
In 1999, road expenditure per kilometer in Estonia and Latvia was at about the samelevel (USD 2,861/km and USD 3,148/km, respectively), while in Lithuania they were about twice as high (USD 5,482/km).
Nevertheless, a common concern in the three Baltic States is that the current level offunding for roads is lower than that needed to maintain their national road networks.
adequate funding is not available, it is likely that there will be an increased backlog
all three Baltic States, road transport services for freight have been fully privatized.All long-distance bus services are operated by private firms in Estonia and Latvia. In Lithuania, municipalities operate some long-distance bus services, but private operators predominantly run the services.
In a rough simplification, the trucking industry in CEEC’s – including the Baltic States - comprises four types of operator: (i) operators with multilateral permits in European trades with equipment complying to higher EURO standards, (ii) operatorswith aging equipment in non-EU trades using bilateral permits, (iii) domesticoperators with modern equipment for efficient distribution or heavy transport and (iv)domestic operators with old equipment.
Competition is intense in all groups, and overcapacity is persistent at least in groups i) and (iv). Despite low operational costs, profitability is usually poor. Operators in
reb
Ifof periodic maintenance, resulting in a greater need for reconstruction later.
Another main concern in the Baltic States is that resources have been concentrated onthe main corridors at the expense of secondary and rural roads.
In
(igroup (i) are often subcontractors to major international logistics firms.
120
H. Railways 55
in rail transport services.maintenance and construction of rail
cess where Edelaraudtee was transferred to sti Raudtee (Estonian Railways) was
ent retaining a 34 % share in were problematic, and the developments
agency. Theprivatization n Railways. Railway restructuring has been a politically
Railway restructuring has been prepared in all three countries, including privatizationin Estonia. In Latvia a small part of freight and passenger transportation on state owned infrastructure has been performed by newly established private companies.Railway services in Lithuania are owned by the public sector (Figure H.1).
Figure H.1. The roles of the private and the public sector (left: freight and passengers) and in infrastructure (right).
Estonia has privatized its railways in a proprivate ownership by February 2001. Eeeventually privatized in 2001, with the GovernmEstonian Railways Ltd. Both processes seriously affected the working of the Government and the Estonian privatization
political debate at that time was close to reverse the anticipatedof Estonia
problematic process also in Latvia and Lithuania.
55 Prepared by Tapio Naula and Lauri Ojala, Turku School of Economics and Business Administration
Key findings on Rail transport: Infrastructure and operations remain the responsibility of the public sector in
dominates inEstonia and Latvia, transit over land is significant in Lithuania.
EstoniaLabor c Lithuaniaand increased substantially in Latvia despite sizeable personnel reductions.
Latvia and Lithuania, whereas Estonia has privatized its railways.The Railways have improved their management and have turned profitable. Cargo traffic has increased almost entirely thanks to transit traffic. Transit traffic of mainly Russian oil and oil products to ports
Performed passenger kilometers are at their lowest level in 2002. In 1999-2002, freight revenue per ton-kilometer has remained unchanged in
and Latvia, but has increased slightly in Lithuania.osts in absolute terms have remained the same in Estonia and
PRIVATE SECTORPUBLIC SECTOR
2000
1990
RAILWAY SERVICES
ESTONIA LATVIA LITHUANIA
2003
2000
1990
MAINTENANCE AND CONSTRUCTIONOF RAILWAY INFRASTRUCTURE
ESTONIA LATVIA LITHUANIA
2003
121
H.1 Volume of rail operations
Cargo traffic shows a downward trend for both Latvia and Lithuania for the period
volume of 42.6 million tons in 2002. The increase in freight traffic comes solely from
same peri .1.)
Table H.1. Passenger and freight volumes on Baltic States’ railways in 1997-2002.
33,0 30,1 24,9 18,2 20,1 22,0Passenger transport work Million passengerkm 1 182 1 148 1 057 984 715 706 744
it 1996 1997 1998 1999 2000 2001 2002illion tons 29,1 30,5 30,9 28,8 30,7 29,2 36,7
eight transport work Billion tonkm 8,1 8,6 8,3 7,8 8,9 7,7 9,8
1997-1999. From year 2000 on, both the volumes and the transport work performedhave picked up and have clearly exceeded the record levels in 1997.
In Estonia, cargo traffic has increased continuously from 1996, and reached a peak
transit traffic. Domestic and other international rail traffic has declined during theod (Table H.1 and Table H.2, see also Attachment H
Source: Estonian, Latvian and Lithuanian Ministries of Transport and Communications and The Baltic Times (Dec 11-17, 2003, 7)
unit 1996 1997 1998 1999 2000 2001 2002EstoniaFreight transported Million tons 24,8 29,0 31,9 37,4 39,7 38,9 42,6Freight transport work Billion tonkm 3,9 4,8 5,8 12,2 7,8 8,2 9,3Passengers transported Millions 6,7 5,6 6,7 6,8 7,3 5,5 5,2Passenger transport work Million passengerkm 309 262 237 238 263 183 177
Latvia unit 1996 1997 1998 1999 2000 2001 2002Freight transported Million tons 35,3 41,0 37,9 33,2 36,4 37,9 40,1Freight transport work Billion tonkm 12,4 14,0 13,0 12,2 13,3 14,2 15,0Passengers transported Millions 35,1
Lithuania uneight transported MFr
FrPassengers transported Millions 13,2 11,2 10,6 10,6 8,9 7,7 7,2Passenger transport work Million passengerkm 889 766 715 693 611 533 498
Transit traffic has been the backbone of rail operations in all three countries. The ma ctransit ined by thedev palso ca
in ommodities transported are crude oil and oil products. The demand for rail of these products over Baltic States’ territory is, however, determ
elo ments in Russian oil exports and the routes suitable for that traffic. This has used substantial variations in Latvia rail volumes (Figure H.2; See Chapter J).
122
5000
500
1500
3000
4500
3500
4000
EstoniaLatviaLithuania2000
2500
1000
0
Q1-
1999
Q3-
1999
Q1-
2000
Q3-
2000
Q1-
2001
Q3-
2001
Q1-
2002
Q3-
2002
Q1-
2003
Q3-
2003
Figure H.2. Transport work in international rail freight transport in milliontonkilometers by quarters in 1999 - Q3/2003. Source: ECMT quarterly
ForEstonian R ransit traffic. In 2002, 75 % of its turnover was geographically related to Russian Federation (Estonian Railways Ltd, 2003, 48). Estonian transit traffic from Russia and other CIS countries goes solely to ports, as does 90 % of Latvia’s transit traffic.
In Lithuania, the pattern is markedly different. 57 per cent of Lithuanian railways’ freight traffic is transit from Russia or other CIS countries. Only 21 per cent of thetraffic is to ports, and 36 per cent is inland transit to and from Kaliningrad. Lithuaniaalso has a much higher percentage of domestic rail transport than Latvia or Estonia.
Table H.2. Distribution of rail traffic by type in 2002 in per cent of freight tons. Source: Estonian, Latvian and Lithuanian MoTCs
statistics.Transit traffic generates 84 per cent of cargo volumes for Latvian railways.
ailways Ltd., 83 per cent of traffic volume in 2002 was t
2002
Freight
('000 tons)
inland export import inland
transit
transitthrough
ports
Passengers
('000s)
inland internatio
nalEL
stonia 42 613 9 % 1 % 6 % 0 % 83 % 5 185 98 % 2 %atvia 40 100 6 % 2 % 9 % 10 % 74 % 21 960 98 % 2 %
Lithuania 36 650 18 % 12 % 13 % 36 % 21 % 7 234 80 % 20 %
In 2002, passenger traffic measured in passenger kilometers reached its lowest levels in all three countries since 1996. In Estonia and Latvia, passenger traffic is almostentirely domestic traffic. 20 % of passengers in Lithuania are in international traffic.
The downward trend in passenger traffic is caused by a combination of factors. In most interurban routes, bus and coach transport offer more departures at affordableprices, while private car ownership has increased in all countries. The level of rail service in terms of schedules, wagon quality and speed of transport is inferior to road-
123
based alternatives. Especially in Estonia, a number of lines have been also been closed after the railways were privatized.
H.2 Organization
In Estonia, rOperating lic ovisionof railway transport services have been granted to ten enterprises , the most
portant of which are the following:
Ltd.
inves
Latvian Railway (LDz) is the state joint-stock company, the Government of Latvia owning all shares; ownership rights are exercised via the Ministry of Transport, Shareholders Meeting and the company. Since 2002, a small part of passenger transportation has been performed by a private company “Gulbenes-Aluksnes banitis”. Since February, 2003 freight transportation has been performed also by private operators “Baltijas ekspresis” and “Baltijas tranzita serviss”.
JSC Lithuanian Railways (LG) is a joint stock company, and all its shares belong to the State. The ownership rights are exercised via the Ministry (MoTC), Supervisory Board, and Managing Board of the Company.
stonian Railways, LDz and LG are members of UIC57. Because they have limited58
was USD 540 million comparedapproximately USD 350 million in 1999. Revenues of railway companies in all
ree countries have steadily increased and operations have recently been profitable
ail operators pay track access charges, unless they own the rail network. enses for the management of railway infrastructure or for the pr
56
im
Estonian Railways Ltd. (Eesti Raudtee Ltd.) owns track to the Eastern, South-Easternand Western direction and operates freight traffic on that infrastructure. Edelaraudtee Ltd. operates passenger traffic on Eastern and South-Eastern directionand pays fees to Estonian Railways Ltd. It also has freight traffic over its own infrastructure from Tallinn to Viljandi and to Moisakula on the Latvian border.Elektriraudtee Ltd. mainly operates local passenger commuter traffic in the Tallinnarea and it pays fees to Estonian RailwaysEVR Express which operates passenger traffic to Moscow and St. Petersburg; 49 per cent of its share belong to Estonian railways, and the remaining 51 per cent to private
tors.
Ecombined transport of road units by rail, none of the railways belongs to UIRR .
H.3 Rail transports’ financial performance
In 2002, the aggregate turnover of the three railwaystoth(Table H.3).
56 Only enterprises, which are providing infrastructure management or transport services are railwayundertakings in the sense of the Estonian Railway Act. 57 International Union of Railways http://www.uic.asso.fr58 International Union of combined Road-Rail transport companies, www.uirr.com
124
Table H.3. Financial data for Baltic States’ railways 1997-2002, in USD million. Source: The Ministries, Estonian and Lithuanian railways
1997 1998 1999 2000 2001 2002 2003 Estonian railways Ltd. revenue - - 91,6 94,9 91,3 117,3 - Estonian railways Ltd. net profit 0,1 3,1 7,3 2,2 8,1 14,0 - Subsidies to passenger transport* 4,8 10,2 13,3 13,7 10,8 14,2 12,9 State budget investments** 4,7 4,5 5,3 0 - - - Latvian railways revenue - - 146,7 159,3 161,2 188,6 Latvian railways net profit 1,5 0,8 -2,0 5,7 4,0 14,3 Subsidies to passenger transport 1,2 1,6 2,1 2,0 2,0 3,2 3,7 Latvian State budget investments 0 1,7 3,4 0 - 5,3 0,8 Lithuanian railways revenue - - - - 151,6 232,4 - Lithuanian railways net profit 11,8 0,2 -6,4 1,7 - 1,6 - Subsidies to passenger transport 3,3 6,0 3,5 1 1,2 1,2 - Lithuanian State budget 6,8 12,3 1,8 0,9 - - -*) operations and infrastructure**) without investment to rail Administration
Despite the positive development, freight revenue/tonkm in Table H.4 is a very low figure in international comparison. The numbers reflect the nature of the traffic:practica tonian f nue is from transit traffic of liquidbul w es ma . Here, the Estonian and Latvian railways do not perform any vities. The revenue is more like a tran
lly all Es and Latvian reight revek, hich us inly Russian rolling stock
cargo handling actisit fee rather than freight in a traditional sense.
More domestic traffic and “genuine export/import” and a higher reliance on its own rolling stock are reflected in almost double as high relative revenues in Lithuania.
Table H.4. Freight and passenger revenue data for Baltic States’ railways, in USD million and USD per ton or passenger kilometer in 1999-2002, Sources: Estonian, Latvian and Lithuanian MoTC, Estonian Railways Ltd.
1999 2000 2001 2002Freight revenue mUSD 91.7 95.3 * 91.8 ** 91.3USD/ tonkm 0.013 0.012 0.011 0.012Passenger revenue mUSD 3.4 3.5 2.4 n/aUSD per passenger km 0.014 0.013 0.013 N/AFreight revenue mUSD 119.9 136.1 146.4 170.0USD/ tonkm 0.010 0.010 0.010 0.011Passenger revenue mUSD 20.6 19.4 17.6 19.1USD per passenger km 0.021 0.027 0.025 0.026Freight revenue mUSD 122.3 133.7 127.0 199.0USD/ tonkm 0.016 0.015 0.016 0.020Passenger revenue mUSD 18.4 15.6 13.9 16.9USD per passenger km 0.024 0.020 0.020 0.025
*) of which Estonian Railways Ltd contributed m USD 7
Lithuania
0.0**) Estonian Railways Ltd only, Source Annual report 2002, http://www.evr.ee/files/eng_fin.pdf
Estonia
Latvia
125
Data for revenue/passenger kilometer in Table H.4 shows relatively low figures in international comparison – especially in Estonia. More interestingly, the absolutevalue of revenue/passenger kilometer has not changed much during 1999 and 2002.
traffic are
2, number of personnel, labor cost in USD million and the percentage share of revenue. Source: Pre-Seminar questionnaire, Estonian Railways Ltd.
28.7 31.3 16550 44.3 30.2 16718 58.7 n/a2000 5592 27.6 29.1 15319 53.1 33.3 15618 52.4 n/a
Estonia Latvia Lithuania
This reflects a situation where the modest raises in ticket prices have not compensatedthe declining railway usage. This is partly due to the rapidly increasing car ownership and competition of long-distance bus transport. Subsidies to passengerdiscussed in more detail later in this Chapter.
Table H.5: Data on labor force of the Baltic railways, 1999 – 200
Numberof
Personnel
Laborcosts
m USD
Laborcosts as
% ofrevenue
Numberof
Personnel
Laborcosts
m USD
Laborcosts as
% ofrevenue
Numberof
Personnel
Laborcosts
m USD
Laborcosts as
% ofrevenue
1999 n/a
2001 5013 27.1 29.7 15193 51.6 32.0 14334 52.2 34.42002 3602*) 27.5*) 23.4*) 14699 55.6 29.5 13096 53.0 22.8
*) Only for AS Eesti Raudtee; Source Annual report 2002, http://www.evr.ee/files/eng_fin.pdf
Wage level has increased rapidly in all three countries, and this affects the railways
r costs decreased by 10 per cent from 1999 to 2002. In Estonian and Lithuanian railways, aggregate labor costs in USD have decreased slightly. During
37.4 km per 1,000 km of land area, which is a fairlyhigh figure for a European country. The corresponding figure for Lithuania is 26.0
Lithuania plans to invest 835 million euros in rail infrastructure during 2004-2015.
T Invest report. TEN-T investments by transport form are presented in Attachment F.1.
too. In Lithuania, for example, the workforce was reduced by 22 per cent whileaggregate labo
the same period in Latvia, however, labor costs rose by 26 per cent while the numberof employees decreased by 11 per cent (Table H.5).
H.4 Rail infrastructure
Rail network density in Latvia is 2
and for Estonia 21.4 km per 1,000 km2. .
H.4.1 Rail infrastructure projects
This is more than five times the amount to be invested in roads. In Estonia, the emphasis is different; rail transport investments during the period accounts only for 15 per cent, or 22 million euros, of the investments in road infrastructure.
Latvia has invested 264 million euros in its railways in 1996-2002, but its future investment plans were not shown in the TEN-
126
Rail Baltica is a blueprint for a new, European standard high-speed railway line between Berlin, Warsaw, Kaunas, Riga and Tallinn, linking also Helsinki via ferry. The construction is planned to start in 2008 in three phases. The first section (Warsaw– Kaunas) is scheduled to be completed in 2010, the second section (Kaunas-Riga) in 2014, and the third section (Riga-Tallinn) - in 2016.
s following:
Estonia 800 million EURLatvia 950 million EUR
Poland 1,360 million EUR
rection by road, air or rail, it is not obvious, that there will be enoughansport demand to justify such a large investment.
ggested for financing. Only 13 projects will be chosen for plementation starting before 2006 (See Attachment D.8. on projects proposed by
by outside cocompanies ha se works are partly contracted out as well.
According to the Latvian Railways, LDz: “Regulation on ordering works, supplies and services”, all works, supplies and services, the value of which exceed 5,000 LVL(USD 8,350), should be ordered through tender.
Lithuanian railways (LG) performs track replacements and maintenance as well as track relaying and upgrading. Own labor force at the depots repairs LG rolling stock:the same applies to assemblies, whenever possible, but certain types of repairs arecontracted to local and foreign contractors.
Separation of rail services from infrastructure maintenance is near the finish; thecreation of a unit of infrastructure maintenance and management and a unit of
cture property were planned to take place on December 31, 2003.
n summary, outside contractors are used in Estonia and Latvia, whereas own staff is
If realized, the project would be the biggest single transport infrastructure project in the Baltic States. According to preliminary estimates the total investment needed is approximately 3.9 billion EUR, of which over 2.5 billion in the Baltic States. Theinvestment estimates per each country’s territory are a
Lithuania 800 million EUR
So far, pre-project studies on Rail Baltica have been prepared but no proper economicfeasibility study exists. Judging by the current volumes of cargo and passengers in the north-south ditr
The European Commission ranked the Rail Baltica project on the 27th position of the29 most urgent projects suimthe Van Miert group). Rail Baltica is mentioned in the Trans-European transportnetwork (TEN-T) as the only project plan involving the Baltic States.
H.4.2 Rail infrastructure maintenance
In Estonia, major maintenance and reconstruction works on the track are carried outntractors. For overhauls and repairs of the rolling stock the railwayve their own depots but tho
infrastru
Ipredominantly performing rail infrastructure maintenance in Lithuania.
127
H.5 Regulatory issues
The Estonian railway companies are free to set their own rates for freight transport but the tariffs for passenger transport are approved by Estonian railway Administration,which is under the supervision of Ministry for Economic Affairs and
ays inEstonia, if they either establish a subsidiary in Estonia or conclude an appropriate
wnfreight tariffs.
ucture.
2003, Lithuanian railway companies are able to set their own rates for goods transportation. The public authority – The State Commission of Prices and Energy –
odology for setting of maximal levels of tariffs for passenger ansportation.
2003. Later on,and after creating the necessary legal and financial conditions, there is a plan to create
Currently, no foreign railways use the infrastructure of the national railways in
ly up to 50 km for freight nd up to 80 km for passenger trains.
ailansport sector is still ongoing. Overall, the administrative capacity and regulatory
Communications.
Foreign railways are allowed to use the infrastructure of the national railw
agreement with an owner of the infrastructure. One such operator is the Russian rail transport firm LinkOil, which carries heavy fuel oil from Russian oil refineries (for example from Kirisi) to the port of Tallinn.
According to the Latvian Railway Act, a railway company is allowed to set up its o
The Latvian rail operations and infrastructure have been separate units within the LDzrailways company. According to the Restructuring program of LDz, a completeseparation of the two entities will take place after 2003. This will also allow other operators to enter the markets for rail operations and infrastr
The Latvian Railway Act allows foreign railway operators to use the national railinfrastructure, but before operating on railways, each has to receive the license foroperation from the Railway Administration, and a certificate of safety from therailway infrastructure authority.
In
approves the methtr
In 2003, JSC „Lithuanian Railways“ is still under restructuring process. In early 2004, it performs both activities: transportation by rail and infrastructure management. Two structural units, one for infrastructure maintenance and management; and another unit for infrastructure property were about to be formed by December 31,
the State Company of railway infrastructure.
Lithuania. LG undertakes the transportation of freight of the customers of foreign railways within the national railway. However, the agreements with the neighboring railways allow them to enter the territory of Lithuania but ona
EU membership is reshaping the regulatory framework for the Baltic States’ railways.It affects especially Latvia and Lithuania, since the process of restructuring the rtrbodies need to be strengthened in all three countries.
128
H.6 Passenger transport and Public Service Obligation issues
All three Governments provide subsidies for the railway operators. Subsidies for
an government that specifies theonditions and rates for the subsidy. Local authorities do not subsidize railway
or Edelaraudtee in 1999, the average ticket revenue was 1.7 US cents per passenger
triraudtee, 41 per cent of costs(4.9 cents/passenger) were covered by ticket revenue (2.0 cents/passenger) in 2001.
003.
Railway Act envisages the State and municipalities to put orders oncially required passenger transportation and to cover the difference between the
perator’s expenses and revenues. Since many inland passenger transportation routesre socially necessary but are unprofitable railway operators cannot compete with ad carriers who have been receiving state subsidies for a number of years. A proper
echanism should also prevent cross-subsidies from freight transportation. In 003 the State budget has allocated USD 0.99 million (US cents 4.4 per passenger) as
a subsidy to the inland transportation of passengers.
ted USD 5.3 million for the repair and odernization of the passenger rolling stock. In 2003, USD 0.8 million was allocated
for this purpose. Latvian municipalities do not finance passenger rail transport.
In Lithuania, the Railway Transport Code introduced the PSO concept in 1996. ecause of limited financial sources of state and municipalities budgets, it is not fully
implemented yet. The losses of Lithuanian railways in passenger transport are about
Total 4.8 10.2 13.3 13.7 10.8 14.2 12.9Passengers (millions)
Edelaraudtee AS 3.1 3.2 3.6 1.7 1.5Elektriraudtee AS 3.4 3.4 3.6 3.6 3.4
Total 6.5 6.6 7.2 5.3 4.9Train kilometers, millions
Edelaraudtee AS 2.5 2.5 2.5 1.3 1.3Elektriraudtee AS 1.1 1.1 1.2 1.2 1.3 1.5
Total 3.6 3.6 3.7 2.5 2.6
passenger traffic in Latvia and Lithuania have been 1 to 2 per cent of revenue, and 10 to 15 per cent of turnover in Estonia including certain infrastructure expenditures(Table H.3).
The basis for the subsidies is the decision by Estonictransport. (see Table H.6.)
Fwhereas the costs per passenger were 9.3 cents. In 2001, the ticket income was 1.9 cents while the cost was 15.0 cents per passenger. In other words, only 12 per cent of costs were covered by ticket revenue in 2001. For Elek
Table H.6. Passenger transport by rail in Estonia (million passengers and trainkilometers) and Government subsidies in USD million 1997-2Source: Estonian MEAC
Subsidies USD Million 1997 1998 1999 2000 2001 2002 2003Edelaraudtee AS 4.8 7.9 9.6 9.4 7.3 10.3 9.0
Elektriraudtee AS 0.0 2.2 3.6 4.4 3.5 3.9 3.6
The Latviansooarosubsidy m2
The Latvian state budget in 2002 allocam
B
129
90-100 million Litas (USD 27 to 30 million). According to the Law on Transport Privileges USD 1.2 million in 2001 and 2002 was covered from the state budget.
With aim to revitalize passenger transportation by rail services, the project „Creationf well-balanced passenger transportation system in Lithuania“ will take place in
m of Netherlands grant. The main objectives of is project are to assist Lithuania to implement the PSO concept; to eliminate cross
ote passenger transportation by rail.
e t of passenger transportation by railwaysecision on the Order on Organizing of
ompetition for Selection of Operators to Implement Public Services Obligations andn Conclusion of PSO Contracts and its Cancellation are currently under preparation.
H.7 Conclusion
With regard to railways, the principal needs are to continue with railway restructuring in especially in Latvia and Lithuania, including efforts to separate commercial
perations from rail administration, and in all three countries to reduce over-capacity,
was propelled by oil and petroleum transit trade. Continued rowth may be limited, as oil transport arrangements develop in Russian territory.
Passenger transport volumes were at their lowest level in 2002 since 1990. Developing passenger rail transport remains a challenge, as private cars and bus transport offer an increasingly competitive substitute to rail.
All railways have improved their management and have turned profitable. Freight revenue per ton-kilometer remained unchanged in Estonia and Latvia, but increasedslightly in Lithuania. Passenger services are operated at loss in all three countries.
The number of railway staff has been reduced in all three countries. In Estonia, the privatization of railways has radically changed the management and organization of railways. However, labor costs in money terms have remained the same in Estonia
in Latvia despite personnel reductions.
public secto ilways in 2001. Railfrastructure maintenance and construction is entirely run by the private sector in
Estonia, and most of this work is privatized also in Latvia. These duties are still
also
o2003-2004. It is funded by a Kingdothsubsidies, and to prom
Aft r Lithuania will join to the EU, the markewill be liberalized. The Draft Government DCo
orationalize tariffs, raise levels of safety, and improve railway service.
Rail transport demandg
and Lithuania and increased substantially
Rail infrastructure ownership and railway operations remain the responsibility of the r in Latvia and Lithuania. Estonia privatized its ra
in
carried out by the state-owned Lithuanian Railways.
Railway restructuring was politically a problematic process in Estonia. It hasbeen one of the most difficult restructuring processes in Latvia and Lithuania.
130
Lithuania plans to invest 835 million euros in rail infrastructure in 2004-2015. This isr more than Latvia. In Estonia, Government investment in rail is very small because
een privatized.
So
farail infrastructure and operations have b
The Baltic States have put considerable political weight to the Rail Baltica project. It is a blueprint for a new, European standard high-speed railway line between Berlin, Warsaw, Kaunas, Riga and Tallinn. The construction is planned to start in 2008.
If realized, it would be the biggest single transport infrastructure project in the BalticStates, estimated at 3.9 billion euros, of which over 2.5 billion in the Baltic States. far, no economic feasibility assessments have been presented. Current cargo and passengers volume in the north-south direction do not readily justify the investment.
131
I. Maritime transport and ports 59
his Chapter outlines the structure and operations of the m ritime and ports secBecause of its great importance for all Balti es, tr raffic ssiadiscussed in Chapter J.
rivate and publi tor in t infr cturemanagement and cargo-handling services in ports.
Private companies carry out the port work tevedoring, warehousing). The situation has remained unchanged since 2000.
1 Port and waterway infrastructure
Klaipeda and Butinge in Lithuania. (Table I.1., See also Attachment I.1.)
T aansit t
tor.n oil isc Stat of Ru
Figure I.1. The roles of the p the c sec por astru
The Government owns port administrations in the large ports of the Baltic States,whereas smaller ports or harbors may belong to municipalities, or as in Estonia, they may be privately owned (Figure I.1).(s
I.
Ports are important transport nodes for all three Baltic States, especially in transit traffic, yet despite the relatively large volumes, there are very few major ports in theBaltic States. The only ports with a cargo turnover of 1 million tons in 2003 are Tallinn, Kunda and Parnu in Estonia, Ventspils, Riga and Liepaja in Latvia, and
59 Prepared by Lauri Ojala, Turku School of Economics and Business Administration
PRIVATE SECTORUBLIC SECTOR
2000
1990
ORT INFRASTRU
ES TVIA ANIA
P
P CTURE
TONIA LA LITHU
2003
Key findings: The ports have shown very good economic results during the past few years.Stevedoring and shipping companies have been privatized almost completely. Further strengthening of the Maritime Administrations is needed.Seafarers are well employed despite diminishing national fleets. Shipping and ports have attracted substantial FDI. Frequent liner shipping services are available in all the countries.
20
19
RT S ICES EDO )
ESTON LA NIA
00
90
PO ERV (STEV RING
IA TVIA LITHUA
2003
132
In 1999-2002, slightly over 50 percent of the cargo in Latvian ports comprised crude oil and oil products: the corresponding figure was over 40 percent for Estonia andover 30 percent for Lithuania.
Table I.1. Cargo traffic in major seaports in Baltic States, and for reference the Ports of St. Petersburg and Kaliningrad in 1995-2002, millions of tons. Source: Estonian, Latvian and Lithuanian MoTC, Port statistics
Year 1995 1996 1997 1998 1999 2000 2001 2002
Port of Tallinn 13.0 14.1 17.1 21.4 26.4 29.3 32.3 37.8Other Estonian ports 1.7 3.2 6.1 6.0 8.0 10.5 9.0 9.0
Estonian ports Total 14.7 17.3 23.2 27.4 34.4 39.8 41.3 46.8Port of Ventspils 29.6 35.7 36.8 36.0 34.1 34.8 37.9 28.7
Port of Riga 7.5 7.5 11.2 13.3 12.0 13.4 14.9 18.1Port of Liepaja 1.4 1.6 2.3 2.3 2.3 3.0 3.3 4.3
Other Latvian ports 0.5 0.3 0.4 0.7 0.7 0.6 0.8 1.1Latvian ports Total 39.0 45.0 50.7 52.3 49.0 51.8 56.9 52.2
Klaipeda State Seaport 12.7 14.8 16.1 15.0 15.0 19.4 17.2 19.7Butinge Oil Terminal - - - - 0.7 3.5 5.1 6.2
Lithuania Total 12.7 14.8 16.1 15.0 15.6 22.9 22.3 25.9
Baltic States’ total 66.4 77.1 90.0 94.7 99.0 114.5 120.5 124.9
St. Petersburg 17.1 16.0 20.6 21.6 28.2 32.4 36.9 42.7Kaliningrad 4.6 5.4 5.9 4.4 4.1 4.3 5.8 9.5
Only the Port of Tallinn has significant international passenger movements, with
0 km. In 2001, 1.3 million passengers and
t,y, whereas
rivate companies carry out cargo handling operations. The landlord type of port isst common arrangement as 75 percent of EU ports also fall into this category.
around 6 million passengers in 2000-2002. There are no other ports in the three Baltic States, which operate more than 200,000 passengers in international traffic per year.
In Estonia, the islands of Saaremaa and Hiiumaa generate domestic ferry traffic,where the travel distance is approximately 40.3 million tons of cargo was carried by the state-owned Saarte Liinid AS.
I.2 Port organization and activities
The prevalent port management practice in the Baltic States is the landlord porhere the owner of land area is either the Government or the Municipalitw
pthe mo
Independent stevedoring companies, shipbuilding and ship repair yards operate withinthe port area on the basis of land lease contract agreements concluded with the Port Authority. The Port companies use the superstructure: handling and ship repair equipment, warehouses and etc.
133
Table I.2. Income statement data from major ports in USD million in 1999-2002. Source: Pre-seminar questionnaire, Port statistics
1999 2000 2001 2002 Port of Tallinn Revenue 52.6 55.1 51.2 66.0
Costs 30.8 29.0 28.3 37.1Depreciation 8.9 7.5 7.5 10.6 Tax 0.3 0.0 0.0 0.0Profit 19.0 28.1 24.4 29.0
Freeport of Riga Revenue 12.9 16.6 24.8 33.2Costs 6.6 9.5 14.8 15.4Depreciation 1.6 2.4 6.0 6.6Tax 0.7 0.5 0.7 0.7Profit 3.4 2.2 0.3 8.5
Klaipeda SSA Revenue 22.7 28.2 24.8 32.5Costs 8.0 11.7 14.3 15.1Depreciation 3.5 5.0 5.7 6.8 Tax 0.0 0.0 0.0 0.0Profit 10.3 11.5 4.8 15.0
The port authorities in major ports have shown very good economic results in 1999-
Saarte Liinid AS (Island's Lines) operates small ports of Roomassaare, Virtsu,
arbor, the Paljassaare Harbor, and the Paldiski South Harbor.
terminal, with the capacity of 250,000 TEU per year, and of a new steel terminal is
2002, and the preliminary data for 2003 is also very good. (Table I.2.) Labor costs account, on average in 1999-2002, 19 per cent of revenues in Riga, 16 per cent in Tallinn and 12 per cent in Klaipeda.
I.2.1 Estonian ports
All included, there are 101 ports in Estonia both publicly and privately owned, 31 of which provide operations related to international merchant marine. There are two public limited companies, which operate public ports: the Port of Tallinn and Island'sLines, and the state is the sole shareholder of these two companies. (See also Box I.1)
Kuivastu, Rohuküla, Heltermaa, and Sviby, which maintain coastal traffic and ferry connections between the mainland and islands of West-Estonia.
The Port of Tallinn consists of four constituent harbors: the Old City Harbor, theMuuga H
In the Port of Tallinn, the Old City Harbor is the main port for passenger traffic with about 6 million passengers per year. It also provides Ro-Ro and Lo-Lo services, and has a container and general cargo terminal. Muuga Harbor handles liquid and dry bulk, general, and reefer cargo, and has facilities for Ro-Ro and container handling. Italso has storage areas for vehicles and timber. Construction of both a new container
134
under way. Paljassaare Harbor has terminals for both liquid and dry bulk and for general cargo, including a reefer complex. The Paldiski South Harbor handles mainlyscrap metal, timber, dry bulk, peat and Ro-Ro cargo. A new quay for peat handling is
structure.The superstructure and equipment are owned and operated by private firms. Other
orts and their facilities are privately owned. In some ports, of which the biggest are and the Miiduranna port, municipal
ave shareholding interests.
c States
being constructed.
The Port of Tallinn operates as a classic landlord port owning only the infra
pParnu, the north western port of Paldiskiauthorities together with private companies h
A container terminal in Muuga was financed jointly by Port cash flow, and by financial instruments from the operators, which include Rotterdam-based EuropeContainers Terminals (ECT) and Estonian logistics groups. The two-berth terminalhas been in operation since 2001.
Box I.1. Developments in small ports in the BaltiCaptain Paavo Arpiainen has been observing the Baltic bulk shipping from the bridge wing for about 10 years.During this time he has conducted several hundred voyages and visited practically all small ports in the region.Shipments are often spot-based and come on a short notice, and they may include ports in the entire Baltic Sea.
According to Captain Arpiainen, the level of port infrastructure and cargo handling equipment in small Baltic ports– not to mention the large ones - has improved significantly since the early 1990s. Especially wood handling portsand terminals are well fitted with appropriate equipment and stevedores’ working arrangements allow flexibleloadings. In some cases it seems that they have even over-invested in cranes and cargo handling equipment, as thecapacity utilizat on rate is often low over the entire year.i
Berthing proced altic States’ ports. Documentaryures and pilotage are mainly managed in a smooth manner in Bformalities before discharging have not developed so well, but a good trend is visible also there. However,difference between Russian and Baltic ports today is remarkable in all these aspects.
In Finnish ports trade arrangements are normally smooth and well working. In wintertime, however, ice or wind conditions cause delays and make bottlenecks in which berthing and discharging capacities do not always fit.
Source: Based on an interview with Captain and M.Sc. (Econ.) Paavo Arpiainen in December 2003
I.2.2 Latvian ports
Latvia has three large ports – Ventspils, Riga, and Liepaja – and seven small ports. Port land may be a property of the state, local government or other legal entities or physical persons. Only the state and local government are entitled to buy port land and it is forbidden for the Port Authority to sell the port land. Port waters are the property of the state and both these and state land is assigned into the possession of the respective port authority. This excludes that state land which serves as railroad infrastructure: these areas are administered as part of the state public railroadinfrastructure.
Quays at the ports of Riga, Liepaja, and Ventspils are the property of the state or localgovernment, but port superstructure and equipment (warehouses, cranes, forklifts etc.) are privately owned. The land belonging to the state or local government may be letor leased to private companies on the basis of contract agreements concluded with the Port Authority. In 2003, the Government has wanted to take a stronger positio then in
135
management of the ports of Riga and Ventspils, which has caused some unrest between the port management and the Government.
Ventspils port deals mainly with oil and chemical cargo. Maximal draught in the river navigation channel is 15.0 m. Riga port handles mainly general cargo and bulk
0.6 m. Liepaja port handles the transshipment of timber, metals, bulk and liquid cargo, Ro/Ro, and fish.
iver navigation channel is 9.5 m. Seven small ports handle all tonnage ships and minor commodities.
Neither the Port Authority, the state nor local Governments subsidize ship or cargot
Program, G t thedevelopment orities repay the loans.
I.2.3 Lithuanian port organization
In Lithuani land tory, the port aters, the drotechni equip t, thequay-walls, the navigation channel and routes, the aids to navigation and otherinfrastructure objects belong to the State. Klaipeda State Seaport Authority isresponsible for the m nt of state ned obje s that are the territoryof the port and the Port Authority is responsible for the reconstru andmoder zation of the structure.
Independent stevedoring companies, as well as shipbuilding anoperate within the port area, on the basis of land lease contact agreements concludedwith the Po thor Port comship repair equipm
rivate
LASCO for LTL 200illion (USD 50 million). The company is in the process of expanding its terminalcilities with a bulk fertilizer, liquid foodstuff and liquid gas terminals.
in port faceasing) bal ent in Port of Klaipeda.
cargoes, but it also turns over oil products and reefer cargoes, and caters for passenger ships. Maximal draught in the river navigation channel is 1
Maximal draught in the rsm
Port Authorities in Latvia are non-profit organizations. The financial resources at the disposal of the Port Authority may be used only for the maintenance and development of the port and its infrastructure and for performing its functions. Port Authorities finance new public investments in Latvian ports.
handling ac ivities in the port. Within the framework of the Public Investmentovernment has provided sovereign guarantees for loans aimed aof the infrastructure. The Port Auth
a, the terri w hy cal men
anageme - ow ct withinction
ni port infra
d ship repair yards,
rt Au ity. Thent, wareh
pd etc. – and all stevedoring companies are
anies use the superstructure - handling and e ouses an
.p
There are eight specialized stevedoring companies in Klaipeda Seaport: KlaipedaStevedoring Company (KLASCO) is the largest in Lithuania, handling more than half of the cargo through the port, which comprises a general cargo port, an international ferry terminal and a container terminal, which opened in 1999. In 1999, a local consortium led by Vialogas acquired a 90 percent stake in Kmfa
In Lithuania, the operation of port infrastructure generates a profit which is invested ilities. Revenues from port activities (mainly from port dues and land ance the financing of new public investml
136
I.2.4 Cost com altic S orts
Ports Organizatio BPO) com ared vessels’ dues and charges in a numberports in 200 cording t the study, complicated to compare the to
calli e por ifferent ries d the diff es insystem in
and whichheapest in the Baltic, but it gives valuable indications of cost differentials.
e total cost of the logistical chain of nents, must be compared.
. Costs for one port call in euros in 2002 in selected Baltic Sea ports for different types of traffic. Source: Port Pricing, Working Group Final
parison of B ea p
Baltic n ( p ofBaltic Sea 2. Ac o it is talcost for vessel ng at th t in d count ue to erenc therevenue structure and form of ownership of the ports, different pricingdifferent countries and differences in tariffs, which are in some cases negotiable andin other cases totally non-negotiable. (Table I.3)
For this reason, the results do not show which port is the most expensiveport is the cFor th objective comparison of transport costs, thedifferent transport corridors, not its separate compo
Table I.3
Report, BPO Communication Committee 2002
Vessel type Tallin Riga Venstpils Klaipeda St.Petersburg Helsinki Stockholm Swinousjie WismarBulker (1) 5 080 8 216 7 785 7 732 10 173 16 871 6 730 6 283 5 006Bulker (2) 30 889 63 583 59 705 60 023 60 222 117 878 40 520 60 265 n.a.Container 1 964 2 216 2 337 1 777 6 669 2 394 2 286 n.a. 1 771General cargo 3 210 3 987 3 745 4 508 6 251 10 604 3 961 3 792 3 950RO-RO 10 122 13 159 14 304 7 912 14 008 5 934 8 659 21 258 3 981Tanker (1) 78 888 87 618 81 893 102 327 n.a. 126 653 n.a. n.a. n.a.Tanker (2) 22 662 21 379 20 446 26 558 29 213 52 647 15 997 28 855 15 165Passenger 4 714 5 350 n.a. n.a. 6 098 6 674 6 624 n.a. n.a.Cruise (1) 14 074 25 556 n.a. n.a. 43 434 41 342 16 680 16 946 22 682Cruise (2) 9 311 n.a. n.a. n.a. 10 842 16 048 8 628 n.a. n.a.
Vessel type Gross tons Net tonsNo. of calls
per yearNo. of pax
per callIce
class Cargo tons FlagBulker (1) 5 381 2 626 1 1B 6 700 non EUBulker (2) 41 643 23 068 1 1B 55 000 non EUContainer 2 658 1 256 52 1A 190 TEU non EUGeneral cargo 2 900 1 533 2 1B 3 000 non EURO-RO 18 205 5 462 52 A EUTanker (1) 72 120 36 268 1 1B 110 000 non EUTanker (2) 17 521 9 371 5 1B 29 000 non EUPassenger 10 002 4 851 363 1319 *) 1BCruise (1) 59 652 29 017 5 1 600Cruise (2) 28 258 9 144 3 350*) in & out per 363 calls: 478,669 incl. 23,933 children and 8,290 drivers
However, the study concluded that in landlord type of ports the share of port dues in total revenue is larger than the share of cargo charge, rental fee and other charges. In that case the port authority uses its own equity to invest into the construction andreconstruction of new quays, terminals etc.
In municipal and state –owned ports the town or the country covers the larger part ofthe investments into the development of the port infrastructure.
137
I.3 Maritime services
All three countries inherited a part of the former Soviet Union’s commercial fleet.
flag, but their rank has fallen toth by 200260.
able I.4. Merchant Fleet owned or registered by the Baltic States as of January 1st,
Having first been organized as state owned enterprises in 1991 they remained as an important part of each country’s national seafaring. The Baltic States are relatively small shipping nations (Table I.4). In 1998, their tonnage ranks between 73 and 77 in the world measured by total tonnage under nationalaround the 100
Tnumber of ships and their gross tonnage (1,000 grt) in 1997-2002.Sources: Pre-seminar questionnaire
Estonia Latvia Lithuania Total
1997 No 78 70 70 2181393
1998 No 83 37 72 1921000 grt 447 580 366
1000 grt 500 333 366 11991999 No 63 78
1000 grt 241 3972000 No 62 70 79 211
1000 grt 233 517 412 11622001 No 64 57 83 204
1000 grt 253 434 361 10482002 No 46 41 87 174
1000 grt 160 362 376 898NOTE: Due to separate data sources, data is not fully comparable
The national fleet in Lithuania has remained relatively stable till 1999. In Latvia, thenational tonnage was radically transformed in 1998/1999, when the bulk of the competitive tonnage was flagged out, as a result of which the remaining fleet is very old. In Estonia, the national fleet was substantially reduced in 1999. In bothcountries, that development has continued till 2002 and 2003.
Table I.5. Merchant fleet by flag of registration of the Baltic States as of December31, 2002, by their gross tonnage (1,000 grt) in 1997-2002. Source: Review of Maritime Transport 2003, UNCTAD
in 1000 grt Total fleet Oiltankers
Bulkcarriers
Generalcargo **)
Containerships
Othertypes
Estonia 357 9 33 117 .. 199Latvia 89 4 .. 3 .. 82Lithuania 435 7 80 196 .. 153CEE & CIS *) 16,028 2,055 2,178 5,588 326 5,880*) Central and Eastern Europe and former USSR **) Including passenger/cargo ships
60 Shipping Statistics Yearbook 1998, ISL, Bremen
138
Data in Table I.4. is not fully comparable, as it may contain data on ship either owned or registered in the Baltic States. For this reason, for example the reduction of Latvian national fleet does not show up. Table I.5. has data by flag of registration.
61I.3.1 The most important shipping companies
stonia
ing operator, with net sales of
Ro-Ro ferry.
hter company ESCO
operations
er in 1999 was USD 191 million.
ere accepted. This fourth privatization round of LASCO was problematic, but iteventually succeeded. The three previous attempts to sell the company contributed to
tvian Shipping Company was. The largest shareholder is
enstpils Nafta with a roughly 1/3 of the shares.
E
Tallink Grupp AS is the major passenger and ferry shipp191.5 million euros and 1,900 staff in FY 2002/2003. Its net profit has been at or over10 % of turnover during the past four years. Its main business is the ferry trafficbetween Tallinn and Helsinki, but it has also lines to Stockholm and Kapellskar in Sweden.62 Its fleet comprises eight ships, of which two are fast catamarans and one is a
The Estonian Shipping Company (ESCO) is the oldest shipping company in Estonia. It was privatized in July 1997 and acquired by American, Norwegian and Estonian investors, and the privatization was completed in 1999.63 In July 2003, ESCO
ivested the business operations but not the vessels of its daugdEurolines OÜ to English shipping company Mann & Son Holdings. In November2003, ESCO managed 11 vessels and employed 330 persons, of which 45 aredministrative staff and the rest is seagoing personnel. ESCO’s containera
Norwegian Tschudi & Eitzen and Samskip of Iceland 64.
Latvia
In 2000, the Latvian Shipping Company (LASCO; Latvijas Kugnieciba) ownedand/or operated a fleet of 49 vessels - tankers, reefers, gas carriers, and dry cargo vessels. The company’s turnov
In 2001, Latvian Government owned the majority stake and terms for privatization w
the collapses of governments. After privatization, the Laregistered as a joint stock company on June 5, 2002V
LASCO reported a net profit of USD 17.2 million for the first nine months of 2003. For fiscal year 2002, LSC Group reported losses of USD 54.4 million. In February 2004, its fleet comprised 30 product and chemical tankers, two LPG gas tankers, 5 reefer vessels, and one Ro-Ro/general cargo vessel. 65
61 Further shipping firms can be found at, for example, http://directory.fairplay.co.uk62 The group’s website is found at: www.tallink.ee63 Tschudi & Eitzen Holding AS, www.tschudi-eitzen.com/esco.html,64 See www.eml.ee ; TECO Lines, see www.teco.ee65 See also: www.latshipcom.lv
139
thestarted under the name TECO Lines in February 2004. This is a joint undertaking of
Lithuania
The Lithuanian shipping company (LISCO) is the largest shipping company in
in Krantas Travel, a
700 persons. 66
1 million litas (USD 18 million).
he dry bulk ately 150 millionns.67 In a rough estimate, about 40 per cent of these volumes are transported within
the Baltic Sea, an cent is t n an m 20 percent involves deep-sea transport.
T n comm Baltic bulk are iron ore, in,f s and lim al ble u ips u 0,000t e largest Ba do d ,000 t caused restrictio ai ack ri rths ndlingcapacity limit the m
T ltic Sea that have the highest cargo turn cludeG Gdynia, laipe n n. O big d ortsa c l pl s ir wo rgyp l elot m ore in 2
A considerable p altic States’ b e is n spot basis o l bulkvessels, generally in the 1,000 to 5,000 dwt range. Especially steel or energy plants a se ships or 0 ra ad a lon sis.T ro-bulk shi ix u mo lsolim
Lithuania. In 2001, 76.4 per cent of its shares were bought by the Danish DFDS Tor Lines for USD 47.6 million. Following that, LISCO acquired 75 % of shares in Baltijas Keltu Terminalas, a cargo handling firms, and 100 %travel agency, and 48.6 % in Krantas Shipping, a water transport firm.
In 2003, it operates as LISCO Baltic Service (LBS), and its principal business is carriage of cargo and passengers by ferries and ships. It has 7 Ro-Ro/pax ferries and 6 multipurpose vessels. It operates ferry lines from Klaipeda to Kiel and Sassnitz (GER), and to Karlshamn (SWE). The main cargoes carried are trailers, containers,and general cargo. In 2003, LISCO and its subsidiaries employ
Klaipeda Transport Fleet, a reefer operator, was established in 1987 by order of the Minister of Fisheries of the former USSR. In 1993, the 20% of state capital was privatized by the employees and in 1995 it registered its name as Klaipeda Transport Fleet Ltd. It owns 16 ships and employs almost a thousand people. In 2000, itsturnover was over 7
I.3.2 Dry bulk shipping in the Baltic States
flows in the entire Baltic Sea amount to approximTto
other 40 per raded withi Europe, d the re aining
he mai odities in the dry market coal, graertilizer estone. These are so suita for large b lk sh p to 10ons. Th shipments in the ltic Sea not excee
rop150 ons, be
raught ns in the Danish str ts and l of app ate be and haaximum size of ships.
he Ba dry bulk seaports over indansk/ St. Petersburg, K da, Riga a d Tallin ther ry bulk p
re often conne ted to an industria ant such a a steel or on ore rks or enelants using coa (e.g. Lulea and Ox sund in Sweden, Raahe and Pori in Finland; all urning over 5 illion tons or m 003).
art of B ulk trad carried o n smal
lso u barges up to 10,00l
tons in intm
-Baltic tr e on g-term ba68his mic market for smal ps is a of numero s com dities . A
estone and coal/coke are sometimes transported in small quantities (See Box I.2.).
6 .lisco.lt6 See www6 seaborne Sea in appr y 350 on tons gl and gene ately 3 is is in the Baltic States’ ports.6 aw wood , woo d saw ranite , crus e,gravel and sand, steel and non-ferrous scraps, grain, malt, fertilizers, feldspar and blasting grit.
7 The total trade in the Baltic 2002 was oximatel milli includiniquid bulk ral cargo. Approxim 0 % of th handled8 Such as r , pulp and sawn logs d chips an dust, g blocks hed ston
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Box I.2. Shipping markets of minor bulk cargoes in the Baltic States
Typical of this micro-bulk trade is the demand for great flexibility between voyages.
The tonnage is mainly employed under single-voyage clauses on spot basis within the Baltic Sea. A typical micro-bulk ship in the Baltic trades makes about 70 – 80 cargo voyages per year sailing about 40,000 miles of which 30 –40 % in ballast condition. A 1,000 dwt ship carries about 60,000 – 80,000 tons or m3 and a 3,000 dwt ship around250,000 – 300,000 tons or m3 in a year. In terms of transport work, they produce around 2 or 6 million ton-mileseach, respectively. The fleet of micro bulkers that regularly operate in the Baltic Sea comprises about 150 ships.
Ship operators work hard to build continuous series of loaded voyages, which means different cargo types and short ballast legs or loadings in the same port immediately after discharging. Here, ships’ own cargo handlingequipment is often a valuable asset. Vessels are often old and of traditional construction, and they have to becapable to load different cargoes with different requirements. Cargo voyages inside the Baltic Sea are short and allow only a limited period for preparation for the next loading, which is typically known very late. All preparations have to be done by the very few – typically four to six - crew members.
In this market factors such as fairway and berth depths, availability of cargo handling equipment and rather short distances mean that economies of scale of ships is not as important as in dry bulk markets in general. This partlyexplains why such a large number of small ports exist in Estonia, and relatively many also in Latvia.
On heavy winters all Baltic coasts are covered with ice and even on normal winters there are ice restrictions in allFinnish ports and also in ports up to the Gulf of Riga. This means that ice navigation skills and ice classed tonnageare also needed. Ice breaker assistance is often in short supply in the Baltic States, which can make scheduling of voyages an imaginary effort.
Most of the tonnage is owned and operated by small or medium-sized German, Dutch, Danish, or Norwegianshipping companies. The crews are mostly from the Baltic States or CIS countries. Russian is increasingly used on board and in navigational communication. Independent of the shipping company or flag of the vessel, the crew,VTS operators, ice breaker officers or pilot organizations are switching fluently into Russian along eastern BalticSea coast from Vyborg to Gdansk. As a consequence, non-Russian speakers may find it difficult to maintain ageneral view of what is going on at sea.
Source: Based on an interview with Captain and M.Sc. (Econ.) Paavo Arpiainen in December 2003
I.3.3 The main liner shipping routes in the Baltic Sea
The ferry services between Tallinn and Helsinki have expanded rapidly during the lastears. There were relatively very few ferry services to and from Latvia and Lithuania
ber of new liner shipping routes or route onfigurations have emerged that better connect Baltic States’ ports to port in
opean continental ports.
come greater since each Baltic State is learly oriented to the European Union in foreign trade, and Baltic transportompanies operate widely in the European Union area. Intermodal transport
Transport an a
directions. Over 60 % of the units are trailers accompanied by a tractor and driver. Unaccompanied trailers and
yin the 1990s. In 2002 and 2003, a numcsouthern Baltic Sea and Eur
The significance of Ro-Ro ferry lines has beccconnections facilitate both accompanied transport units and trailer traffic.
d freight forwarding companies are increasingly forced to providescheduled service because of market demand. Ferry connections provide analternative routing when reliability of transit time is important.
For example, the Tallinn-Helsinki route carries about 150,000 cargo vehicles or units per year. The traffic is generally well balanced in both
141
A large part of the dry bulk trades within the Baltic Sea is carried by ships in the 1,000 to 5,000 dwt range .
other units make up the remainder. Most of the traffic is between Finland and the Baltic States or Hungary. This means that transit cargoes to or from Poland, Germanyor Italy in the south or Russia in the east do not use this route.
In 2004, liner shipping connections are fairly well developed, and routes haverelatively high frequency. Compared with year 2001, for example, the situation has improved substantially (Ojala and Queiroz 2001, 147). Vessels on the routes havesuccessively been renewed, and sub-standard vessels have been phased out from the market (Table I.6).
Table I.6.Source: Shipping lines and port information.
Port Port(s) of call Frequency Operator Nation TypeTallinn Helsinki (FIN) >15/day several EST,FIN Pax/RoRoTallinn Stockholm (SWE) 1/day Tallink EST Pax/RoRo
(SE) 1/day Tallink EST Pax/RoRolines UK Ro-Ro
rhus-Gdansk 1/week Mannlines UK Ro-Ro
DEN) 1/ 14 days Hacklin FIN Container
VentLines LAT Pax/RoRo
Paldiski Kappelskar Paldiski Turku-Kiel-Hamburg 1/week MannPaldiski Kiel-AaMuuga Helsinki-Antw.-Rdam 2/week TECO EST Ro-RoMuuga Felixstowe (GBR) 1/ 14 days TECO EST Ro-RoMuuga Bremerhav-Hamburg 1/week TECO EST Ro-RoMuuga Fredericia (Tall-Riga-Klaip. DEN, GER, BE, NE several/ w Unifeeder DEN ContainerTall-Riga-Klaip. Bremerhav-Hamburg 2/ week Teamlines GER Ro-RoRiga-Klaipeda Sweden 2/week Stena Line SWE Pax/RoRoRiga Stockholm (SWE) 3/week Rigasealine LAT Pax/RoRoRiga Sweden 2/week LASCO LAT Ro-RoRiga Germany 2/week LASCO LAT Ro-RoRiga Hull, Ipswich (GBR) 1/ 14 days Rix Baltic LAT ContainerLiepaja Karlshamn (SWE) 3/week ScandLines DEN Pax/RoRoVentspils Nynashamn (SWE) 5/week ScandLines DEN Pax/RoRoVentspils Travemunde (GER) 2/weekKlaipeda Sassnitz-Rostock GER 2/week LISCO LIT Ro-RoKlaipeda Fredericia (DEN) 1/week LISCO LIT Ro-RoKlaipeda Karlshamn (SWE) 1/week LISCO LIT Ro-RoKlaipeda Sweden, Denmark 2/week DFDS DEN Ro-Ro
I.3.4 The passenger shipping route Tallinn-Helsinki
The Tallinn-Helsinki route epitomizes Estonia’s transformation from a Sovietrepublic to a thriving market economy. The development of the route is also atestimony of competition in transport services.
In the early 1980s, the 60 km long route was served once a day – at most - by one Russian passenger ship. It was essentially the only link between Finland and Estonia
142
Selected liner shipping routes in 2004 connecting the Baltic States.
but it carried no cargo. The passengers, 0.2 to 0.3 million per year in the mid 1980s, were almost exclusively Finnish tourists. With the customs and border checks, the trip could take over 8 hours and the trip itself had to be paid at least 4 weeks in advance to allow for visa arrangements.
After the regained independence the passenger volume jumped to 2 million in 1991 and to 3 million in 1992 despite the still time-consuming visa application procedures. Competition between shipping companies ensued, and by 1997 the volume had surpassed 5 million passengers. Over half a dozen competitors had entered the route.
igure I.2. The number of passengers by shipping lines in Helsinki-Tallinn trade.Source: Silja Line www.portoftallinn.com/bpoconference/presentations/14
By 1999, conventional passenger ferries with a travel time of 3.5 to 4 hours carried their peak of 5 million passengers. Catamarans and hydrofoils, making the voyage in 1.5 hours, carried almost 1 million passengers in 1998. The largest catamarans alsocarry cargo. The ferries are the main freight connection between Estonia and Finland.
Tallinn total Silja Line/SeaWindViking Line TallinkEckerö Line Vana Tallinn etcLinda Line Nordic Jet Line
5 000 000
6 000 000
7 000 000
F
Imn 2 02, the corres0 ponding volumes were 4.2 million by conventional ships and 1.8illion by fast ships. In 2000, also a helicopter service with modern equipment
tures a day, and in the wintertime at least half that number.
Port of Tallinn has had some 6 million passenger movements per year in 2000-2002. Over 95 per cent of passengers through the Port of Tallinn are on the route to Helsinki. Approximately 2/3 of the passengers are Finns, making typically a one-day trip to Tallinn. The number of individuals actually traveling is closer to 3 million per year, as most passengers are counted as both incoming and outgoing passengers.
entered the business with a travel time of 19 minutes and 10 departures per day with a ticket costing four to five times that on fast ships.
The cut-throat competition by ferry lines, hotels and travel agencies keeps fares andunit freights very low, and service quality is good. In summer months, there are over 30 passenger ferry depar
0
1 000 000
12/8
9
12/9
0
12/9
1
12/9
2
12/9
3
12/9
4
12/9
5
12/9
6
12/9
7
12/9
8
12/9
9
12/0
0
12/0
1
12/0
2
Silja Line/SeaWind
Tallinn total
2 000 000
4 000 000
3 000 000Pas
s
Tallink
Viking line
143
The total traffic reached its peak in 2001. Helsinki-Tallinn route had 5.3 millionpassengers in January-November 2003, which is 0.35 million passengers less than in the same period in 200269. The price difference especially in alcohol and tobacco between Estonia and Finland has been driving much of the tourism, even though the
rt sector as
m process have been able to attract significant private capital investment to refurbish infrastructure assets and to modernize cargo-
ering of concessions -
t
g industry
owever, there are strong indications that the situation is eteriorating, in that the number of Baltic States’ vessels being detained is risingharply. The countries need to urgently address this issue with a view to reversing thisend of deteriorating detention rates. In 2003, both Lithuania and Latvia have now een moved from the black list to the grey list of the Paris MOU.
Finnish import quotas have been rather strict70. How the EU membership and the related changes in taxation and import quotas effect this trade remains to be seen.
I.4 Regulatory issues in port and maritime transport
Private sector participation in port operation has reached a significant dimension overthe last decade. This has been driven by broader trends within the transpowell as by a new understanding of the general role of the public sector in the provision of infrastructure services.
The countries that have led this refor
handling equipment. Under private management, ports have significantly improvedperformance with regard to service quality and reduction of handling costs. Whetherthese initial achievements - largely driven by competitive tendcan be sustained in the long term, will depend heavily on the ability of port authorities to stimulate effective intra port competition. Driven by the emergence of multi-modaltransport networks, regional competition will gain relevance and thus the need forregional and multi-modal assessments of competitive structures will require porauthorities to coordinate on a broader scale.
Furthermore, increased globalization of the port, terminal, and shippinmeans that new competition conditions appear which require governments and public port authorities to monitor the market across national boundaries. In such a context, the role of an effective public regulation of the sector will become critical to optimizethe efficiency of the new partnerships developing between the public and private sectors on the one hand, and between ports, terminal operators and shipping lines, on the other.
In the maritime sector, the main regulatory issues include manning of the vessels,safety at sea and in ports, as well as keeping up with the inspection of the technical requirements of vessels. The inspection involves both national and foreign vessels through Port State Control. According to the Paris Memorandum of Understanding (MOU), the percentage of vessels registered in the Baltic States detained followingPort State control was over 6 % in 2002. This compares with an average for EU-flagged vessels of 3.5%. Hdstrb
Finnish Board of Navigation, monthly statistics, January-November 2003. Along with Estonia’s membership in EU, Finland lowered its alcohol tax on March 1, 2004, and
loosens its import quotas on alcohol and tobacco as from May 1, 2004.
69
70
144
The main international maritime standards on safety, manning, loading and cargospection are in place. Since 2001, regulation on security issues in ports and at sea
as been initiated mainly by the Unites States. The measures include, among others, e International Ship and Port Facility Security Code (ISPS) and the Container ecurity Initiative (CSI). The Baltic States ports have started to implement these, as ll ports have to comply to ISPS by July 2004.
he maritime authorities of Russia, Finland and Estonia decided to establish a VTMIS 200471. The system
ns nt surveillance, sincethe VTS centers do not only receive ships' reports but they also monitor their
d in all three
d forthe landside duties requiring nautical expertise is a problem in all three countries.
economic rhave been eadministration is needed; and (d) the size of merchant fleets registered in the Baltic
tates have diminis
s own b e rports may belong to municipalities or. Private companies generally carry out port
h as steve
n o s yEstonia; Ventspils, Riga and Liepaja in Latvia; and
laipeda and Butinge in Lithuania. Only the port of Tallinn has significant
icals, and the traffic of Liepaja
inhthSa
Tin the Gulf of Finland, which is scheduled for start-up in Julyresembles the one used in air traffic. The traffic is under co ta
movements in the passages, and instruct them in danger situations.
The relevant administrative structures in the maritime area are in place, butmanagement systems of Maritime Administration need to be strengthenecountries.
The training of seamen and officers and their availability for national vessels an
Even if the wages paid to seamen are high compared to the national level, they are farbelow salaries in similar international jobs. Especially for officers it is fairly easy totake employment on foreign-flagged vessels.
I.5 Conclusion
Key findings of the seminar in this sub-sector were: (a) ports have shown strong esults during the past few years; (b) stevedoring and shipping companiesalmost completely privatized; (c) further strengthening of the maritim
S hed.
Government the land occupied y larg ports of the Baltic States while smalle
work suc doring and warehousing.
The only ports of the Baltic States ha dling a milli n ton or more of cargo annuallare Tallinn, Kunda and Parnu inKinternational passenger traffic, and there is domestic ferry traffic in Estonia.
The major ports of Tallinn, Riga and Klaipeda handle relatively diverse traffic whilethe traffic of Ventspils is mainly oil and chem
The Finnish Maritime Administration at: www.fma.fi/e/functions/vts/vtmis.php71 ; The acronymVTMIS (Vessel Traffic Management and Information Services) is used for the various telematics and information systems developed to enhance the safety and effectiveness of the maritime traffic. Also the term Offshore VTS has been used in the same context (VTS = Vessel Traffic Service).
145
com rises principally timber, metals andp bulk liquids. The major ports as well as therivately-run cargo handling operations in them have been very profitable.
150,000 tons because of draft restrictions in the Danish straits.
a number of EU-
environmental protection. Other issues that were mentioned included EU Transport shipping as well as
tu
p
Private sector participation in port operations has increased significantly in recentyears, driven by increased opportunities made available as the role of publicauthorities has become more limited.
The total seaborne trade in the Baltic Sea is over 400 million tons. The Baltic States share of this total is about 30 percent. Individual ships in the Baltic Sea do not exceed
The fleet of especially Latvia and to lesser extent, that of Estonia, have declined in recent years, while the size of Lithuanian fleet has remained stable. Despite this,Baltic seafarers are well employed in ships sailing under foreign ownership or flags.
Operations of Ro-Ro ferry lines have increased significantly andbased shipping companies have formed joint ventures in the Baltic States.
In the maritime sector, the main regulatory issues include manning of the vessels,safety at sea and in ports, as well as keeping up with the inspection of the technical requirements of vessels. The inspection involves both national and foreign vesselsthrough Port State Control. There are indications that the situation is deteriorating, and the countries need to urgently address this issue. In 2003, both Lithuania and Latvia have now been moved from the black list to the grey list of the Paris MOU.
The workshop on maritime and port issues in the Parnu seminar prioritized the mostimportant development areas as follows: (1) information flows and systems, (2)maritime safety (especially that of ISPS), (3) infrastructure development and (4)
Policy, transit traffic, cargo security, competition of ports andnsti tional development.i
146
J. Transshipment of Russian oil via Baltic ports72
Russia and a number of CIS countries have large resources of oil located far away from regions of consumption. Oil and gas exports are estimated to account for around 40 per cent of Russia’s total exports and nearly 10 per cent of its GDP.
would double from the year le illion tons of oil products annually.
omestic oil consumption in Russia has fallen drastically from 250 million tonsuring Soviet times to around 130 million tons today. As a result, the difference
on, refinement and crude oil export in
Table J.1. shows Russian oil production, refining and exports and their forecast untilyear 2010. If realized, the volumes of crude oil export2000 vel. Russia also exports around 50 m
Ddbetween domestic and export prices of oil in the beginning of 2003 was more than 20USD/barrel, when world-market price has been around USD 30/barrel.
In 2002, 55 per cent of Russian oil was exported by sea, 40 per cent through pipeline and 5 per cent by railway (Liuhto 2003, 54). In addition, 20 million tons of crude oil from Central Asia was transported through Russia in 2002.
Table J.1. The development of oil productiRussia in million tons in 1997-2002; forecast for 2003-2010. Refining includes domestic consumption. Source: The Russian Energy Ministry.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2010
Production 305.6 303.3 305.0 323.5 348.1 377.0 397.0 419.0 448.0 510.0
Refining 197.2 163.3 174.2 179.0 186.0 182.0 195.0 200.0 206.0 214.0
Crude oil exports 108.4 140.0 130.8 144.5 162.1 195.0 202.0 219.0 242.0 296.0
Construction of new export facilities on Russian territory has intensified due to
M
urrently Russia has three main oil export corridors to the West. The first is the
constraints in the oil export logistics, Russian national security thinking and the aim to lower the payments of transit fees of oil transport.
J.1 ain export routes of Russian oil
CDruzhba-pipeline system to Eastern Europe and Germany, and the second is through the Transneft pipeline system to export terminals in the Black Sea. The third route is sea transport through terminals in Baltic seaports, where oil is transported bypipelines or by rail. In the latter route, the destination is typically Rotterdam, but also other main oil terminals are used, including Fortum’s refineries in Southern Finland.
72 prepared by Matti-Mikael Koskinen and Lauri Ojala, Turku School of Economics and Business Administration
147
The Druzhba-pipeline with a nominal annual capacity of 60 million tons traversesBelarus on its way to the West. The northern line of this pipeline runs through Poland to Germany and the southern line passes through Ukraine, Hungary and Slovakia before ending in the Czech Republic. The capacity of the northern pipeline is in full utilization, but the southern end currently has some capacity left.
The main Russian oil export ports in the Black Sea region are Novorossiysk with an annual transshipment capacity of around 45 million tons and Tuapse with a 10 million
er expand exports through the Black Seac limitations in the Bosporus Strait, where
rge tankers in loaded condition are allowed to traffic only during daylight.
ort of Primorsk is the main export corridor in Russian territory in the Baltic Sea. It ewly constructed Baltic Pipeline System (BPS). In addition, oil is
J.2 Economic importance of transit traffic to the Baltic States
It is, however, difficult to measure correct volumes of transit goods since trade statistics issued by
.6 per cent in year 2000 (Statistical Office of Estonia). Taking into the account the additional services created
rough the transit trade, the general impact of transit is estimated to be 7-8 per cent GDP (Purju et al. 2003, 285).
The transport sector and transit traffic plays an important role in the Lithuanian
altic States.
tons capacity in 2002. Possibilities to furthare restricted also by congestion and traffila
Prelies on the ntransported via ports of St. Petersburg and Kaliningrad. Historically, the largestamounts of Russian and CIS export oil have been transshipped through Baltic States’ports either via local pipelines connected to the Transneft pipeline system or by rail.
Transit fees are an important source of revenue for the three Baltic States andcompanies operating in them. The GDP shares of transit revenues are estimated to bebetween 5 and 10 per cent in the Baltic States (Laurila 2002, 26).
Ministries of transport, statistical offices, port authorities and operators in different countries tend to have incompatible methods in providing data.
In Estonia the share of transit traffic in the GDP was 5
thof the Estonia’s
In Latvia the contribution of oil transit business to GDP has been declining from around 9 per cent in 1993 to the current estimate of 6 per cent (Kaarnite 2003, 308). The total contribution of transport, storage and communication into the Latvian GDP was 14.5 per cent in 2002.
economy, too. In 2000 about 8 per cent of GDP was created in the transport sector, of which a large part is related to the transit traffic (Gatautis et al. 2003, 332).
Competition for transit cargoes between Baltic ports has increased not only due to new Russian export facilities, but also because of Russian companies aspire controlling stakes in companies operating oil export facilities in the Baltic States. Oil transit has - until the shutting down of Ventspils crude oil pipeline in early 2003 - constituted the largest segment of transit cargoes in all three B
148
J.3 Oil export infrastructure in the Baltic Sea Region
J.3.1 Oil pipelines to ports and terminals
The map in Attachment J.1. shows the oil transport infrastructure of the Baltic Statesand North West Russia.
Pipeline is a cost efficient means of transportation for liquid bulk products up to several thousand kilometers, when the volumes are high enough. Baltic Sea ports or oil terminals connected to pipelines include Primorsk in Russia, Ventspils in Latvia,Butinge in Lithuania and Gdansk in Poland.
he Polotsk-Ventspils crude oil pipeline leading to the Latvian port of Ventspils wasto operation in 1968. Its annual capacity is 14 to 16 million tons, depending on
l to it runs an oil product pipeline with a capacity of 4 million tons.
higher transport cost. Recently thevolume of crude oil carried by rail has grown especially in Tallinn and also in
entspils after the closure of the crude oil pipeline to that port. In Estonia, the share of ansit traffic by rail through ports was 83 per cent in 2002.
t ith the ever increasinges, terminal operators have invested heavily in wagon handling equipment. In
The Baltic Pipeline System (BPS), owned by Russian oil pipeline monopolyTransneft, leads to the port of Primorsk. Initially in 2001, it had an annual capacity of 12 million tons of crude oil. In 2003, the pipeline and the terminal had an annualexport capacity of 18 million tons of crude oil. This is likely to reach 42 million tonsin 2004, and it is forecasted to exceed 70 million tons by the end of the decade.
One of the oil terminals in St. Petersburg is also connected via pipeline to the Kirishi refinery. This oil products pipeline has an annual capacity of 2.6 million tons.
Tput inthe source. Paralle
The Lithuanian oil export terminal Butinge is served by a pipeline with a capacity of 13 million tons of crude oil. The Butinge terminal is owned by AB Mazeikiu Nafta, of which a controlling stake of 53.7 per cent belongs to the Russian oil company Yukos.
J.3.2 Rail transportation to ports and terminals
Rail transport has traditionally been used for oil products, since these are moreexpensive than crude oil and can thus carry the
Vtr
Rvolum
ail ransit relies solely on the existing railroad network. W
ports of Tallinn, Riga, Liepaja and Klaipeda rail transportation is the onlyeconomically possible means of oil transit transportation. Despite the oil product pipeline, transshipped oil is mainly carried by rail also to the port of St. Petersburg.
149
J.3.3 Terminal and harbor infrastructure
Russian portsrimorsk oil export terminal, owned by the state pipeline monopoly Transneft, started
operations in December 2001. The port has a berth for two vessels of 100,000-
use of doucertain con ly the terminal has a storage capacity of 500,000 m .
The port of t. Petersb n le ke ing xi r 1meters. Together with length limitations the current maximum size of vessels is around 40,000 tons. Petersburg oil term al, the largest in the port, has storage capacity of 214,000 m3 ppr te fa ies f ilcar dlin
The Port of Kalining as ed the t ve raf thebeginning of the 1990s. The port areas are conn to alti a by kmlong channel. Maximum draught to the port is 8.0 he l st oil terminal operator in is a subsidiary f Russ oil c any LUKoil.
Estonian ports Tallinn is the bi a st i tan it p Es Th uga harbor is
e main cargo harbor in the Port of Tallinn and its cargo volume accounts for approximately 90 per cent of Estonian transit. The port is able to serve vessels with
Pakterminal AS, which has storage facilities for over 250,000 m , of which 213,000 m3 are owned by the firm. It is half-owned by Vopak, a listed
utch firm and Trans Kullo Ltd, an Estonian investment firm. The second largest oilterminal operator in Tallinn is Eurodek Group with a total storage capacity of 215,000
largest operator, concentrates onipment of fuel oils. The storage capacity of the company’s twenty-eight tanks
he services and equipment of the port correspond to modern
P
150,000 dwt and has a maximum draught limit of 15.3 meters. The port requires the ble-hulled tankers, but vessels with double bottom or sides may be used in ditions. Current 3
S urg is avigab for tan rs hav a ma mum d aught of 1
inand a opria cilit or ra han g.
rad w open for interna ional ssel t fic inected the B c Se a 42m. T arge
the port o ian omp
ggest nd mo mpor t trans ort in tonia. e Muth
maximum draft of 15.3 meters and deadweight of 120,000 tons. Several terminalcompanies are offering services for railcar discharging and storing of oil.
The biggest operator is3
D
m3. Estonian Oil Service (E.O.S), the thirdtransshis 175,000 tons. Another company, Oiltanking Tallinn, is focusing on the transit of oil products. This terminal offers storage capacity of 84,000 m3.
Latvian ports Ventspils is Latvia’s most important oil transit terminal, serving vessels up to 120,000 dwt and 15 meters of draught. After the completion of the reconstruction andmodernization works, ttechnical, safety and environmental protection standards. After the completion of thedredging works in the sea entrance channel and the port area, the largest vesselscapable of entering the Baltic Sea can be accepted by the port. The total tank farmcapacity exceeds 1,300,000 m3.
150
The largest terminal operator is JSC Ventspils Nafta. The largest shareholders of the company are JSC Latvijas Naftas Tranzits (42 %) and the Republic of Latvia (39 %).
entspils Nafta, in turn, is the largest owner of LASCO, a shipping company, with
Rigarnover at Riga port involves
ansit freight to and from CIS. The draught limitation of around 11 meters in the pproaching channel restricts the maximum vessel size to around 40,000 dwt. Plans
se, it is now a business port turning over 3
ons. Vessel draft in the port is limited to around 11 meters and the maximum vessel size is thus about 40,000 dwt.
J.4 Oil transshipment volumes in the Baltic Sea Region
The volume of oil and oil products handled in ports has almost doubled from 53.6million tons in 1997 to almost 100 million tons in 2002 (Table J.2). In the port of Tallinn oil and oil products turnover has tripled and most other ports have also increased their cargo volumes. Sharply declining volumes throught the port of Ventspils, due to the closure of the crude oil pipeline, have increased the use of rail transport and the share of oil products is growing through that port.
The port of Primorsk is a crude oil export terminal. Most of the volumes shipped through St. Petersburg consist of oil products. In port of Tallinn large scaletransshipment of crude oil started in 1999 reaching nearly 7 million tons in 2002.
V1/3 of the shares.
Port of is the main general cargo port in Latvia and ranks second in oil products transport after Ventspils. Approximately 80% of cargo tutrafor a new oil product terminal are under consideration.
The Port of Liepaja is the third largest port and growing due to the status as a specialeconomic zone. A former Soviet naval bamillion tons in 2001. Oil products cover more than 80 per cent of the liquid cargoes.
Lithuanian ports Klaipeda State Oilport was constructed in 1959 in order to export Soviet heavy fueloil. The oil terminal is operated by Klaipedos Nafta Ltd. and it has an annual capacity of 7 million t
Butinge oil export / import marine terminal, close to the Lithuanian border and owned by AB Mazeikiu Nafta, was opened in 1999. It is connected to Mazeiku refinery with a crude oil pipeline with an annual capacity of 13 million tons. The loading principleis an offshore loading buoy, which initially had problems with oil spills. Theterminal’s storage capacity is 254,000 m3. The terminal is capable of loading vessels with draught up to 15.3 meters and 120,000 dwt.
151
Table J.2. Oil and oil products cargo turnover 1997-2003 in million tons. Figures for2003 are from the period January-August. Source: Port Authorities and Latvian MoT*.
1997 1998 1999 2000 2001 2002 2003 1-8
Primorsk - - - - no data 12.2 9.5St. Petersburg 5.8 6.4 7.4 7.4 9.0 10.6 No data Tallinn 8.1 11.1 14.5 17.8 21.0 24.3 15.9Ventspils 27.1 26.0 24.3 26.3 28.7 20.1 * 13.2Riga 2.1 2.0 2.2 2.8 3.4 5.2 * 3.5Liepaja 0.3 0.1 0.2 0.4 0.5 0.7 * 0.5Butinge - - 0.7 3.5 5.1 6.2 7.5Klaipeda 3.6 2.2 3.9 5.2 5.1 6.7 4.4Kaliningrad 0.9 0.9 0.9 1.0 1.9 4.7 No dataGdansk 5.7 8.1 7.0 5.8 7.0 5.7 6.6
Total 53.6 56.8 61.1 70.2 81.7 96.4
art of oil transit volumes in ports of Riga, Liepaja and Klaipeda are oil the moment the Butinge marine terminal ha
The major pproducts. At ndles only crude oil. The
CompeStates hsuperst r privatization and commercialization as
icy in order to create
exception is the port of Gdansk, where the turnover consists of both loaded and discharged oil cargoes.
J.4.1 Competition between the Baltic Sea ports
tition between the Baltic seaports for transit freights has intensified. All Baltic ave taken measures to modernize basic port infrastructures, to provide modern
ructure (terminals), to increase sectowell as to improve transport logistics and storage facilities. The major Russian oil companies have successfully played off the Baltic ports against each other andpressed down transit fees. In addition, Russia has increased its own direct sea transports through St. Petersburg and its other Baltic Sea ports, Kaliningrad andPrimorsk oil terminal.
Russian Federation has recently reformed its Railway Tariff Polfavorable conditions for freight carriage to Russian ports. Therefore freight transport to Russian ports has become cheaper compared to similar freight carriages towards Russia’s land border. Cost of transport through land borders (e.g. Latvian ports) is 2 to 4 times higher compared with transport via Russian ports (Latvian MoT).
152
J.4.2 Tanker freight markets and the Baltic Sea ports73
Tanker freights also affect inter-port competition, because different ports can handle ships of various sizes. Because of economies of scale, unit freight decreases also ubstantially when the ship size increases.
Freight levels are subject to fluctuations in world tanker markets, and they are alsoaffected by the volume and distance of each individual shipment. In addition, iceconditions in severe winters – as in winter 2003 - have a dramatic effect on vessel availability, and, as a consequence to freights, in the Gulf of Finland.
Tanker freights from Ventspils, Butinge and even Tallinn tend to follow very closely the overall market rate as indicated by the North Sea – UK and European Continent freight index.
Reported freight rates from the Russian oil terminal of Primorsk follow the North Seafreight rate level most of the year, but as Figure J.1 shows, the ice-season raises freights considerably. In the beginning of 2002, the freight rate level was 100% higher
That volume represents a fifth of the
for vessels capable of navigating in ice of the eastern Gulf of Finland. Freight fixtures reported in summer later that year were again in line with basis freight rates in North Sea. For the first quarter of 2003, the reported five fixtures from Primorsk to UK Continent quote 550 000 tonnes in volume.terminal capacity in that time period and give a clear indication of the freight rate level. Between January-April 2003, ice-situation prevented most of the crude oil fleet from operating in the area and rates rose accordingly.
050
100150200WS250300350400
2.1.
2002
25.1
.200
2
19.2
.200
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2002
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.200
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2003
27.2
.200
3
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.200
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North Sea-UK Continent Primorsk-UK Continent
Figure J.1. Freight rate comparison Primorsk-UK Continent vs. North Sea-UK Continent for a 80 000 ton vessel. Freight quoted as World Scale equivalent (WS), (Koskinen and Ojala 2003).
73 Based on Koskinen and Ojala (2003)
153
As many shipowners withdrew their vessels from the Primorsk trade in winter 2003, only the four well ice-strengthened Aframax-tankers (in the 80-120,000 dwt range) of
utsen OAS were capable of continuing in the market with a few smaller vessels, including Fortum’s two handy-sized tankers. A Fortum executivecommented the situation in the market as follows:
“Now that we have seen a more severe winter the freight rates have high because ofinsufficient supply of ice-strengthened tonnage… Winter 2003 was a bonanza notlikely to be seen again, shipowners were in a dominant position on the market and charterers had to pay the extra costs.”
For the shipper, the cost of transporting one ton of oil from Primorsk to the mainmarket in Central Europe can thus be estimated using an average of USD 5 per ton as the flat rate at World Scale 100. This equals USD 0.6 million for a 120,000 dwt tanker. In the winter 2002, the freight rates of WS 200 caused transport costs of around USD 10 per ton, whereas with the very high WS 400 freight rates in winter 2003 the cost of transport amounted to around USD 20 per ton.
According to shipping industry sources, the freight rates in January-Feruary 2004 e almost at the same level as in the previous winter, despite the relatively mild
flects the persistent lack of appropriate tanker tonnageb
Russian and bottlenecks caused by weather conditions in main export ports of Novorossiysk and Primorsk should allow the BalticStates’ ports to stay in competition, if transport economics were the only argument.
Almost 80 per cent of exports of Russian oil go to Europe. With limited marketgrowth potential in Europe, Russian oil companies give high priority to new marketsin the United States and Far East (Efimova et al. 2003, 169).The current Russian oil transport infrastructure supports neither of these potential new markets. Transporting oil through Baltic Sea ports to Northern America is usually not economical becausethe water depth in the Danish Straits limits the maximum tanker size to 120,000 dwt.
Plans to construct a deep-sea terminal in Murmansk for vessels over 300,000 dwt and a privately-funded crude oil pipeline have been disrupted by the Yukos affair after the rresting of its CEO Mr. Khodorkovsky in October 2003. On the other hand, only
few ports are able to handle vessels of that size in the world, let alone in the US
class of 80,0 t 2002, 21).
he expansion of the Baltic Pipeline System, with the planned terminal in Murmanskillion tons, would add more than 100 million tons to Russian crude
oil export capacity by the end of the decade.
Fortum Shipping and Kn
w rewinter in 2003/2004. This reuita le for winter navigation.s
J.5 Conclusion
Russian oil production and exports are forecast to increase substantially over thecoming years, which is a source of optimism for the Baltic ports handling oil transitcargoes. Insufficient oil export capacity in
a
Atlantic coast. The major part of oil imports to US take place with vessels in the size00-120,000 dwt (Lloyd’s Shipping Economis
Tserving up to 70 m
154
Developments in South Caucasus also affect the future routing of oil from that region, hich now partly uses ports in the Baltic Sea region. Oil pipeline from Azerbaijan
through Georgia to the Turkish port of Ceyhan is expected to be completed in 2007 or
The proposed facilities and Russia’s policy to concentrate cargo to ports within the
rt of Tallinn.
w
2008. Its initial capacity is 11 million tons, but it is planned to reach 45 million tonsper year. When operational, it will carry most of Azerbaijan’s oil – over 10 milliontons per year - directly to the Mediterranean without transiting Russian territory.
Russian territory may lead to declining crude oil transit volumes in the Baltic States’ports.
The oil product export terminal under construction in Vysotsk in the Russian part ofGulf of Finland will have an annual capacity of more than 10 million tons. Whenoperational in 2004 or 2005, it is likely to affect oil products volumes through the Baltic States’ ports, and especially those through the po
155
K. Civil aviation 74
K.1 Aviation infrastructure
Air infrastructure management remains the responsibility of the public sector in all three countries (Figure K.1), but the ways in which civil aviation administrations and airport administrations have been organized differ to some extent among the threeountries.
The provision of air transport services has been partially privatized in Estonia and Latvia, where the airlines have been transformed to joint ventures with establishedinternational carriers and other investors.
igure K.1. The roles of the private and the public sector in airport infrastructure and scheduled services (freight and passengers).
Key findings: The aviation infrastructure and management remains the responsibility of the public sector.The major airline in Lithuania is state-owned. The State owns over 50 % the airline in Latvia and 34 % in Estonia.The airlines have recently turned profitable after years of negative results.Several major airlines operate from major airports.Passenger traffic has steadily increased.Airports have attracted substantial investments. Cargo traffic remains low.
c
F
2000
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ESTONIA LATV A
RT
2000
1990
AIRPORT INFRASTRUC E
ESTONIA ANIA
TUR
LATVIA LITHU
2003
A LITHUANII
2003
PRIVATE SECTORPUBLIC SECTOR
74 Prepared by Tapio Naula and Lauri Ojala, Turku School of Economics and Business Administration
156
K.2 Organization of civil aviation administration
Civil Aviation Administrations (CAA) executes the aviation policy at the national level and the co-operation with other states and international aviation organizations.CAAs are under the authority Ministries of Transport (MEAC, MoTC) in the Baltic
The bodies that manage air traffic are in government ownership in all three countries.In Estonia and Lithuania these services are provided by state own enterprises.
Estonian Air Navigation Services was transformed from a stage agency into a state-owned company in 1998 after reorganization of Estonian airport management. Thetransformation of Estonian civil aviation administration from 1991 to present day is an illustrati
K.3 Air transport markets in the Baltic States
The three Baltic States have around 600,000 air passengers each, of which half use national carriers. The airports could handle 4 to 5 times that amount. The passenger throughput has increased from the mid 1990’s at all the three airports, whereas thecargo volumes have remained low (Table K.1).
Table K.1. Passenger throughput (thousands), cargo volumes handled (tons) and number of aircraft movements at Tallinn, Riga and Vilnius airports. Source: A-Z World Airports, http://www.azworldairports.com/
States.
ve case and it is shown in Attachment K.1.
Passengers '000s 1995 1996 1997 1998 1999 2000 2001 2002Tallinn (TLL) 367 431 502 555 552 560 573 606Riga (RIX) 491 497 531 555 562 574 623 63Vilnius (VNO) 356 371 411 462 481 522 584 63
35
Cargo tons 1995 1996 1997 1998 1999 2000 2001 2002Tallinn (TLL) 2 488 3 997 5 590 5 992 5 326 4690 4543 4292Riga (RIX) 3 918 3 912 4 281 4 907 4 408 4 658 5 209 6 58Vilnius (VNO) 9 25
03 6 724 5 845 5 260 4 962 5 599 4 947 4 069
Aircraftmovements 1995 1996 1997 1998 1999 2000 2001 2002Tallinn (TLL) 13 784 16 695 21 455 24 951 23 591 23358 23633 26226Riga (RIX) 15 695 16 298 16 964 19 483 19 387 18 070 18 910 18 67Vilnius (VNO) 10 510 11 482 13 792 16 711 18 185 17 277 18 362 17 12
64
Table K.2. presents an indication of the Baltic passenger market divided into groupsby the main geographical areas of departures and arrivals. The Estonian passenger volumes seem to be oriented into Scandinavia and Finland whereas transit flights from and to European cities dominate for Latvia and Lithuania.
157
Table K.2. Passenger traffic volumes by market area, indication for 2003. Source: Presentation of Günther Sollinger, airBaltic, Baltic Development Forum Summit Oct 5-7, 2003 in Riga.
PassangersTotal Scandinavia/ Europe/ Europe/ Intercontinent
(x 1000) Finland nonstop TRF
Tallinn (TLL) 601 183 177 191 5030% 29% 32% 8%
Riga (RIX) 611 112 185 258 56
The major airlines often operate to the Baltic States through code-sharingarrangements. Table K.3. shows the airlines present at Tallinn, Riga and Vilnius airports and their online destinations. Some of the major courier services have
3 in Riga).
Tallinn (TLL) Riga (RIX) Vilnius (VNO)
scheduled parcel/courier flights to Tallinn, Riga, and Vilnius.
Table K.3. The number of online destinations and the main airlines operating at major Baltic airports. (Source: Presentation of Günther Sollinger at Baltic Development Forum Summit Oct 5-7, 200
Online destinations 13 16 14 Major airlines Finnair Lufthansa Finnair
Scandinavian Airlines British airways Scandinavian AirlinesCzech Airlines Czech Airlines Czech AirlinesPolish Airlines Finnair LufthansaAustrian Airlines Aeroflot Austrian AirlinesEstonian Air Polish Airlines Polish Airlines
Air Baltic Lithuanian Airlines
21% 31% 39% 8%
18% 30% 42% 9%
Vilnius (VNO) 575 87 188 254 4615% 33% 44% 8%
Total 1,787 383 550 703 152
158
K.4 Organization of Airline services
The Baltic airlines operate regional passenger routes, often in co-operation with their equity partners as feeder carriers to the larger partners’ hubs. None of the Baltic carriers are partners of the major airline alliances Star Alliance or OneWorld.
ance of the national carriers is shown in TableK.4.
Table K.4. Baltic States’ major airlines: passenger volumes and turnover 1996-200275.Source: Airline Business, January 2001 and the airlines.
ir, which is part of the A.P.in the world.
ll the other (five) air carriers in Estonia are privately owned. None of the companiesv mental support on domestic airline connection s
In addition to Estonian Air, airBaltic of Latvia, and Lithuanian Airlines, there are alsosome small regional or domestic carriers that operate in the Baltic States.
An indication of the financial perform
No. of passengers 1996 1997 1998 1999 2000 2001 2002Estonian Air 472 000 216 000 280 000 269 000 285 000 *292,000 *320,000AirBaltic 106 300 151 400 173 652 194 224 216 548 **248,710 **262,212Lithuanian Airlines 229 000 225 800 210 000 200 000 244 000 n.a. n.a.
The Estonian Government holds 34% of the shares of the national airline EstonianAirlines (SAS) with 49Air. The two other shareholders were initially Scandinavian
from% of shares and Baltic Cresco Investment Group Ltd.old its stake to the Maersk A
Estonia with 17 %. InSeptember 2003, SAS sMoeller Group from Denmark, one of the largest transport firms
Arecei e subsidies, except for the governwith ome of the islands.
The Latvian Government owns a 52.6% share in the national airline "Air Baltic Corporation" (trade name airBaltic). Other shareholders are Scandinavian Airlines(SAS) with 47.2 per cent and Transaero Airlines (Russia) with 0.2 per cent.
The Latvian Government (Minister of Transport) appoints four out of seven membersof the supervisory board (including the Chairman). Air Baltic Co. (shortened asairBaltic) operated at profit in 2001-2002 for the first time after several years of losses. It receives no subsidies, nor does the law grant such.
75 Lithuanian Airlines’ turnover in 2003 was USD 75 million.
Turnover mUSD 1996 1997 1998 1999 2000 2001 2002Estonian Air 22 22 30 34 43 *45 *57
a 23 36 38 38 42 44 4847 50 ***52 ***49 ***55 57 n.a.
*Estonian Air, Annual report 2002, http://www.estonian-air.ee/shared/failid/AnnualReport_2002.pdf, read 10.10.2003
AirB lticLithuanian Airlines
**Air Baltic, http://www.airbaltic.com/public/22531.html?year=2001, read 10.10.2003***Lithuanian airlines, Annual reports, http://www.lal.lt/pdf
159
In Lithuania the national airline, Lithuanian Airlines, is owned and operated by the Government. The airline operated at a profit for the first time in 2002. It anticipates a profit of USD 0.75 million in 2003 against revenues of USD 75 million (AirlineBusiness, Dec. 2003). It is, however, not subsidized. Air Lithuania, which operates as a regional carrier, became a subsidiary of Lithuanian Airlines in 1996.
After the unsuccessful privatization bid in summer 2003, Lithuanian Airlines hasannounced a three-year restructuring plan. To help fund restructuring, the carrier isattempting to sell off its 50.8 % holding in catering firm Aerochef-LAL, its 52 %
lines has confirmed its intentions to participate in the Air Lithuania tender (The Baltic Times, Jan 8-14, 2004).
There are no scheduled air cargo aircraft in operation by the Baltic carriers. Freight istypically carried as so-called belly airfreight, i.e. on passenger routes. The majorxpress freight operators (such as DHL, UPS, FedEx and TNT) are all represented in
the three Baltic States. The supply of express freight and courier services is comprehensive.
The Baltic States have also attracted some airline investment in anticipation of their EU membership, and in view of prospects for liberalized air transport markets. Oneexample is Aero Airlines, in which Finnair holds a 49 % stake. Finnair has plans to develop Aero Airlines as a low-cost carrier for regional and domestic Finnish routes.
he geographical proximity between Tallinn and Helsinki has also enabled a frequentelicopter service between the two cities. Since May 2000, the route is operated under
JAR regulations by a Finnish firm Copterline Oy. It operates 14 daily flights in bothdirections. The flight time is 19 minutes. A regular single fare is 128 to 198 euro. This is four to five times the fare on fast ferries crossing the strait in 1.5 hours. Since May
000, the firm has operated over 17,000 scheduled flights.
K.5 Airport services
ly accessible to all airlines.
share in tour operator AIP and regional subsidiary Air Lithuania during early 2004 (Airline Business, Dec. 2003). Scandinavian Air
e
Th
2
In Estonia, the right to operate services is assigned on the basis of bilateral airtransport agreements. Airport slots are reportedly equally and free
Government-owned companies operate Estonian airports. The main airport Tallinn received state subsidies until 1999, but after that, it has operated with income finance. Since 2001, it has shown profits (Table K.5.)
Table K.5. Net sales and profit, and no. of passengers of Tallinn Airport Ltd 1999-2002, and forecast for 2003. Source: Mr. Loik, Tallinn Airport.
1999 2000 2001 2002 2003*Net sales USD million 8.2 9.6 11.1 11.8 13Net profit USD million -0.3 -0.5 0.6 1.6 2.9Passengers Millions 0.55 0.56 0.57 0.61 0.71
160
In Latvia, the assignment of landing rights is organized according to the Bilateral Air Services Agreement (BASA), the "Law on Aviation" and existing Air Policy,introduced by respective Ministerial regulations. As a result foreign airlines havecompletely free access to 3rd -4th air freedom operations.
Riga International Airport is operated as a Government-owned Joint Stock Company,but the local municipality owns Liepaja International Airport. Riga airport is notsubsidized by the Government and operates at a profit whereas Liepaja airport issubsidized by the local government to support an absolutely essential level of operations and certain development.
Basis for assigning landing rights in Lithuania is BASA and the “Regulations for theUse of the Airspace of the Republic of Lithuania”, as adopted in January 1997.
s:
K.7 Aviation infrastructure financing
The main international airport in Estonia, Tallinn Airport, has financed thereconstruction costs from EBRD and EIB loans, from its net assets, from PHARE assistance and from assignments from the state budget. Regional airports mainly use state budget allocations for their construction and improvement activities. The Development Plan of Regional Airports for 2000-2006, on the assumption that the number of passengers will rise, provides for the gradual diminution of state support to the regional airports, while investments from their net assets will rise, together with private investment and assistance from EU funds.
Foreign airlines as well as Lithuanian airlines must obtain a permission to operatecommercial flights to/from the territory of the Republic of Lithuania.
Three Lithuanian international airports (Vilnius, Kaunas, and Palanga) areGovernment-owned companies. The Lithuanian Government owns 67 of shares inSiauliai airport and the remaining 33 of shares are owned by the Siauliaimunicipality. Vilnius, Kaunas and Palanga airports operate at a profit, but Siauliaiairport operates at a loss. Airports are not subsided by the Government.
K.6 Regulatory issues
The key regulatory issues in civil aviation for the three Baltic States can besummarized as follow
• Progressive liberalization with EEA and CEE - competitiveness • slot allocation and its new institutions: coordination committee and airport coordinator;• JAA technical requirements and administrative procedures;• appointment of an independent accident investigator; • improved statistics;• market monitoring instead of approval procedures at the CAA
161
In Latvia, the main source of funding for the construction and improvement of the infrastructure at Riga International Airport is a Passenger Departure Tax introduced by the Cabinet of Ministers’ Decision, devoted solely to developing the infrastructureof the airport. This tax is part of the special state budget. The financial resources of the JSC “Riga International Airport” are a further source of funding. Loans from international financial institutions and commercial banks are used to secure thefunding during project implementation. For Liepaja airport subsidies from the local government are the main source for the maintenance of the facilities.
In Lithuania, construction, and improvement is funded through the airports’ own means and/or through loans of foreign investors.
Baltic States’ major airports in 2003 in
assenger fee 23 17,4 15 16,9 15 14,7 13,4 13 12,6USD/passenger
Riga Vilnius TallinnLanding fee 623 796 576 Airport fee for a Boeing 737-500Passenger fee 1,462 1,118 973 for a turnaround; 60 % load factorTotal 2,085 1,914 1,549 USD
Table K.6. Passenger and landing fees in USD. Source: Mr. Loik, Tallinn Airport, Seminar Presentation,November 25, 2003
Riga Vilnius Tallinn Budapest Stockholm Prague Warsaw CPH HelsinkiP
Passenger fees of selected airports are shown in Table K.6. According to that data, thefees are in line with a number of other airports that have much higher traffic volumes.Passenger fees is Riga airport are the most expensive in this table.
K.8 Conclusion
In Estonia and Latvia, the airlines have been transformed into joint ventures with established international carriers and other investors, whereas Lithuanian air transport privatization has not yet been successful despite several attempts.
The Civil Aviation Administration (CAA) in each of the three countries falls underthe Ministry responsible for transport. Estonia runs its Air Traffic Management(ATM) as a state-owned corporation, Lithuania as a state-owned enterprise, while the
ational CAA is in charge of ATM in Latvia.
eriers. The volume has increased at all
n
Troughly ½ use national and ½ use foreign car
her are 600,000 air passengers per year in each of the Baltic States, of which
key airports, especially in Vilnius. Cargo traffic is modest in each country.
Major foreign airlines in many cases operate to the Baltic States through code-sharing arrangements. The Baltic States have attracted some airline investments inanticipation of their EU membership.
162
The right of foreign airlines to operate air services in the Baltic States is based on bilateral agreements with various governments. This practice will continue with non-EU countries. In intra-EU air traffic, which now stands for over 2/3 of all traffic, EU regulation will be followed. Assignment of slots for service is often granted freely.
The key regulatory issues for Baltic States civil aviation can be summarized as
r improved statistics; (f) greater reliance on market forces vis a vis approval procedures at the CAA, and (g) harmonisation of
identified in civil aviation of the Baltic States are (a) limitedadministrative capacity of regulators; (b) small and fragmented markets: (c) lack of
The main challenges identified in aviation are: (i) progressive liberalization of air
entalapproval procedures.
vement, reconstruction of Vilnius airport including terminal and runway extensions, and at Palanga airport runway
follows: (a) progressive liberalization (increased competitiveness) of air services in relation to EU countries; (b) airport slot allocation; (c) technical requirements and administrative procedures of the Joint Aviation Authority; (d) appointment of anindependent accident investigator; (e) need fo
air navigation systems in view of EU’s Single European Sky initiative.
Airport reconstruction has been financed with EBRD and EIB loans, EU's PHAREprogram, own resources – mainly passenger fees - and with state budgetary assistance.
The main weaknesses
individual strategies for particular markets; (d) large number of air carriers comparedwith the modest market size; (e) prevalence of "two aviation worlds" in terms of technology and regulations; and (f) diminished access at EU airports for all aircarriers of the Baltic States.
transport within the EU; (ii) slot allocation and its new institutions: coordinationcommittee and airport coordinator; (iii) meeting JAA technical requirements andadministrative procedures; (iv) the need for an independent accident and incidentinvestigator; (v) improved statistics; (vi) market monitoring instead of governm
The most important development areas in civil aviation of the Baltic States include:(a) in all three countries, strengthening administrative capacity and complete legal harmonization with EU; (b) in Estonia, airport privatization and restructuringincluding privatization at Tartu and certain other airports; (c) in Latvia, reconstructionof Riga airport including a new terminal, runway extension and category II facilities;(d) in Lithuania, CAA restructuring, fleet impro
rehabilitation and improved landing system.
163
L. General transport support services76
his chapter offers an update on recent developments in markets of transport support se tic State prov ew. fermainly to transport of unitiz all shipments and parcels.
all three countries, freight forwarding, warehousing and other logistics-related services have been privatized entirely (Figure L.1). In general, there seems to be a
services has improvedbstantially during the 1990s. This was also indicated by the BEEPS and logistical
Trvices of the Bal s from the
ed cargo, smiders’ point-of-vi These services re
2000
TRANSPORT SU ORTING SER
ESTONIA LATVIA LITHUANIA
PP VICES
2003
Key findingsInfrastructure or regulatory issues no major concern for logistics providers. The supply of logistics services is wide and generally of good quality. Advanced IT is becoming increasingly important in Baltic logistics services. Well above half of the logistics market is served by international logistics firms,which is still less than in many EU countries.
1990
PRIVATE SECTORPUBLIC SECTOR
Figure L.1. The roles of private and public sectors in Transport Supporting Services (freight forwarding, warehousing and storage, customs brokerage and travel agencies).
In
relatively steady supply of these services, and the quality of thesufriendliness surveys.
L.1 Cost and quality of logistics services matters
Cost and quality of transport and logistics services matter for trade competitiveness.Even if tariff and non-tariff barriers to trade were removed, cross-country evidence suggests that the penalty of high shipping costs will continue to hold down growth rates and income of countries with poor international transport links. Furthermore,
76 prepared by Tapio Naula and Lauri Ojala, Turku School of Economics and Business Administration
164
inefficient internal transport systems sharpen economic inequalities within countries, with hinterland regions being disconnected from international commerce. Two questions that immediately arise in this context are why some countries pay more fortransport services than others, and what governments can do to improve the transport competitiveness of trading firms.
Transport costs can affect economic growth in several ways. First, higher transport costs reduce rents earned from the exports of primary products, lowering an economy’s savings available for investments. They push up import prices of capital
oods, directly reducing real investments.
Second, all things being equal, countries with higher trdattract export-oriented foreign direct investment (FDI). Since trade and FDI are key c transpe np
hird, transport costs affect a country’s selection of trading partners. If export markets
ntial of shifting trade towards the rich and largeEU market epitomizes these switching costs. They have also attracted substantial FDI
Controlling for a large number of socioeconomic, geographic, and institutional
hanks to rapid restructuring, opening up of the economy and trade, and consistent ve boosted their economies,
et they have also succeeded in dramatically improving the quality of logistics ts at a relatively low level.
The demand for transport and other logistics services is always derived from the
g
ansport costs are likely to evote a smaller share of their output to trade. Those countries are also less likely to
hannels of international knowledge diffusion, higher ort costs may lead anconomy to be farther removedroductivity growth.
from the world technology fro tier and slow its rate of
Tlargely consist of poor, slow-growing markets and there are significant costs(including transportation) of switching to richer and faster growing markets, countries may be constrained in their growth potential. Especially after the Russian crisis in 1998, the Baltic States were quick to reorient their trade to the west.
For the Baltic States, the great pote
thanks to their rapid economic growth, low-cost production base, and effective removal of administrative non-tariff trade barriers.
factors, Radelet and Sachs (1998) found that developing countries with lowershipping costs experienced more rapid growth of manufacturing exports relative to GDP in the period from 1965 to 1990. When exploring the relationship between shipping costs and overall economic growth across economies, the study concludes that a doubling of the cost of transportation is associated with slower annual growth of slightly more than one-half of a percentage point.
Tinvestment in transport infrastructure, the Baltic States hayservices and keeping their cos
L.2 Tendencies in European logistics markets
demand generated by trading partners, who are in the business of accommodating theneeds of their customers, which may be commercial end-users or consumers.
165
Since the 1980s, transport markets in all developed countries have been transformedprofoundly through deregulation, privatization, and technological development(notably in information and communications technologies) and through adaptation tocustomers’ changing logistical needs.
This has brought about new types of logistical operators and markets. In many casesthe physical handling and transportation of materials is subordinated to the management of supply chains. Consequently, the transport sector has come to support the wider logistical operations, rather than the other way round. This is manifested in how major European or global logistics companies are organized (Table L.1).
Table L.1. Turnover in billion euros and number of employees of selected European logistics firms in 2002. Source: Company data
Company name Turnover,billion euro
No. of employees Headquarters in
Deutsche Bahn Group*) 21.9 250,000 GermanyDHL Group **) 21.6 150,000 GermanyA.P.Moeller / Maersk 20.5 60,000 DenmarkTNT 4.4 43,000 NetherlandsKuehne & Nagel 6.1 19,000 SwitzerlandGeodis 3.3 23,500 FranceABX 2.9 15,000 BelgiumDFDS 2.4 10,000 DenmarkFrans Maas 1.0 7,000 Netherlands
*) Schenker, the road-based part of DB, had a turnover at 6.2 billion euros and 36,000 staff.**) The road-based logistics operator of DHL operated in 2002 under the name Danzas.
They are building up geographically wide networks of entities capable of matchingspecific transport (and related logistics) demand in time and space with real-time allocation of capacity to do the job profitably. This is a daunting challenge, but the
ading operators have made substantial progress towards achieving this goal. Thisevelopment affects mostly international cargo movements, but they have many
erators in thegistics markets. The impact can be assessed in a number of ways and on manyvels. A large number of studies on macro level impacts have been conducted by the
zations, such as The World Bank,OECD and UNECE.
enlargement.
ledrepercussions for domestic transport markets too.
L.3 Assessing the impact of joining the EU on logistics costs
The cost impact of joining the EU is of particular interest for all the oploleEU, the Accession countries and many organi
Also sectoral studies using macro or industry level data analyze e.g. the welfare effects for the different stakeholders. Industry organizations, such as the IRU in road transport, have also actively reported their views on the economic impact of EU
166
For the purposes of this report, however, an ad hoc inquiry was made in the Parnu seminar. Table L.2. presents the key findings of the Transport Services and Trade Facilitation workshop, which was attended by 12 participants, including the two
he Seminar workshop on Transport Services and Trade
moderators. The Baltic participants were civil servants, so no private sectorrepresentatives were present.
Table L.2: The impact of the EU membership on logistics costs as identified in the ad hoc inquiry at tFacilitation, Parnu, November 25, 2003.
Increasing logistics costs: Decreasing logistics costs: Overall cost impact:
EU-regulations in social and Synergies from combing cargo Estonia: slightly positiveenvironmental fields volumesNew bureaucracy burden for SMEs Less customs formalities Latvia: slightly negative
The EU fuel tax minimums,heavy vehicle tax
Shorter lead times “Time-based M
Lithuania: slightlyanagement” positive
The workshop participants did not have access to any quantitative data or analysisduring the session, so the summary reflects their intuitive expectations. The outcomesuggests that the overall impact was expected to be positive. The anticipated cost im act for Latvia was slightly np egative, because of the relative large SME sector,
pt to the new EU regulations. The combined views on Estoniapositive.
tics costs were typically indirect ones orp shorter lead times or operational synergies. In order to benefit rm r needs to seize these opportunities.
y expected to raise logistics costs were more formal or direct
.4 The role of freight forwarders and customs brokers
L.4.1 The market structure
ergers and acquisitions of the logistics providers have profoundly estructured the market in Europe. The major logistics providers in the Baltic States
are also ned o national
The freight forwarding and logistics market Europe oth in and C ’s, hasbeen ve mented. The traditional pic e of th eight f arding rket isincreasi d with ny co anies ating in interlock segm such as
ostal and courier services and third party logistics. The 10 largest companies account
which will have to adaand Lithuania were more
The causes believed to decrease logisop ortunities such asfo these changes the private secto
B contrast, the reasonsones, such as impact on vehicle or fuel tax, social and environmental regulation or increased bureaucracy. In summary, the Government and related administrations need to follow closely the regulatory and operational environment and to participateactively in the preparation of new EU legislation. They also need to communicate the developments nationally and implement the regulations effectively.
L
International mr
mostly ow r controlled by inter operators.
in , b EU EECry frag tur e fr orw mangly blurre ma mp oper ing ents
p
167
for only 10% - 20 % of the total European freight forwarding turnover depending on which definition is used, but in the Baltic States this concentration is higher, with theten largest companies holding almost half of the market (Naula 2002).
Figure L.2. exemplifies the strong growth of Baltic firms in the field of supporting and auxiliary transport services using Estonian data. The total net turnover of theseEstonian firms roughly tripled between 1996 and 2001, exceeding clearly the growth in the entire transport sector. The development indicates the structural change in thelogistics market, where buyers of logistics services look for more comprehensive “one-stop-shopping”, also known as third party logistics solutions.
tical
firms with 20-49 employees seem to prefer investing in real assets in their operations, whereas thegroup of firms with 50-99 employees appears to follow an opposite strategy. Attachment L.1. illustrates the development in major balance sheet components of Estonian supporting and auxiliary transport firms by firm size.
L.4.2 Transport and logistics services available
During the 1990s, the geographical coverage of transport and freight forwarding services improved dramatically. Industry sources as well as indications from foreign firms established in the Baltic States confirm this very clearly. The overall quality
Figure L.2: Net turnover development of Estonian firms in transport supporting services by firm size in 1996-2001 in USD million.77 Source: StatisOffice of Estonia, Statistical Database.
A more detailed examination of the financial data by firm size reveals significantdifferences in the management strategies in this sector in Estonia. The
77 Estonian supporting and auxiliary transport activities, NACE classification I.63: including cargohandling, storage, warehousing and other supporting transport activities and travel agencies.
0
200
400
600
800
1000
1200
1996 1997 1998 1999 2000 2001
mill
ion
USD
not classified
250 and more
100-249
50-99
20-49
10-19
1-9
Number of employees:
168
improvement of these services includes timeliness, accuracy of documentation,customs operations and absence of fraud.
The development and the current status of the geographical coverage of freightforwarding services could be summarized as follows:
Scheduled transport services are widely available to and from the most important trading partners of the Baltic States.Demand for scheduled export traffic lines (routes) is increasing (see Attachment L.2.). Transport via international terminals or logistical hubs is increasing. Baltic trucking companies work frequently as subcontractors producing the haulage between cargo terminals and domestic collection / distribution
Such developments epitomize the underlying character of all transport markets:demand for transport services is always derived demand. Consequently, the service providers have to develop their service offerings along with the changing needs of their customers, that is, the shippers.
A large number of general freight forwarding firms provide transport services by land, ir, and sea. Rail freight forwarders are more specialized in this transport form. A
wide variety of services are available in all three countries, such as:
customs clearances / brokerage customs consulting domestic distributioncustoms bonded warehousing warehousing for customs cleared goods “pick and pack”Electronic Data Interchange (EDI) Cargo surveys
Companies practicing foreign trade increasingly take the opportunity to outsource basic logistic functions instead of producing the services themselves. This development has various reasons, but the search for greater efficiency seems to be themain motivating factor. Transport users have traditionally had departments operatingwith self-owned equipment, but as maintenance costs for aging trucks in their ownaccount transport rise, outsourcing transports becomes a more attractive alternative. This was also shown fro Estonia by Vainu and Vensel (2001).
Table L.3. The share of customs clearances and domestic deliveries made on behalfof customer by a large freight forwarder in percentage of all importshipments. Source: company data.
% of all Customs brokerage Domestic distribution
a
1997 2000 2003 1997 2000 2003Estonia 96 75 70 50 85 85Latvia 20 65 70 40 55 65Lithuania 12 70 n.a. 20 80 n.a.
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Table L.3. shows customs clearances and domestic deliveries made on behalf ofcustomers as a percentage of the total number of import shipments by a large freightforwarder operating in the entire Baltic region. The share of distribution especially in Lithuania and Latvia has increased rapidly, indicating movement into outsourcing of logistic services. This can have a significant impact on general transport economics
hilst consolidation of services creates synergies and greater efficiency.
The Russian economic crisis in 1998 made some companies keep smaller inventories. This has, in part, increased the demand for less-than-truckload (LTL) transports mainly to and from the EU area. Products are more often sold to the customer when transport is ordered. Inventory carrying costs are also increasing due to higher safety requirements in stock keeping facilities. Manufacturing companies in foreign ownership often also adopt logistics practices from the mother companies, preferringoutsourcing in their logistics (Naula 2002).
L.4.3 Viewpoints of International Logistics Providers in the Baltic States
a study of 15 international third party
rgest logistics service providers are also foreign-owned which also explains the highorientation to international services. Figure L.4: summarizes the general swift in
r groupage transportation.
Further, the improvements in geographical service coverage, higher frequencies and service quality were commonly considered to attract the logistics buyers to useservices for shipments under 3,000 kilos. The groupage transportation was also found to substitute air cargo services especially in the capital regions.
Standard services (such as basic scheduled transport) accounted for 80 % of all
w
This section presents the key findings oflogistics providers operating in the Baltic States the Baltic States. The sample group included 5 logistics providers in each Baltic State: Estonia, Latvia and Lithuania.78
International transportation is clearly the most important servive for large logisticsproviders (Figure L.3). Partly, this reflects the openness of the Baltic economies. The la
shipment size in favor fo
sample companies’ sales in 2000. (Figure L.5). The remaining share of tailor madeservices (20 %), both in short and long term customer relationships were foreseen to increase.
78 Naula 2002; the full “AdLog” study can be retrieved from www.tedim.com
170
0
5
10
15
20
25
30
35
40
45
Estonia Latvia Lithuania
mill
ion
euro
s
Support services
Warehousing services
Domestic transportation
International transportation
Figure L.3: Turnover of the four largest road-based logistics firms in each of theBaltic States. Turnover in the main business areas in million euros in 2000. Source: Naula 2002.
he combined turnover of the four main firms was 43 million euros in Estonia, but
ithuania. This coincides with the fact that FDI in transport and export of transport
Tonly about 22 million euros in Latvia and Lithuania. (Table D.1). A rough estimatebased on the breakdown in Table D.2., the four largest road-based freight forwarding firms have a 30 to 40 per cent market share in that business. In Latvia, thecorresponding share is below 20 per cent and in Lithuania probably only 10 per cent. This indicates that market consolidation is the highest in Estonia, and the lowest inLservices were the highest in Estonia, too.
Shipmentsize
Possibilities toadd value
Structural changetransport load demand
Groupage cargo (+)
Full unit loads (-)
Partial unit loads (-)
Air cargo (-)
> 3000 kg
< 3000 kg
average
high
low
average
Shipmentsize
Possibilities toadd value
Structural changetransport load demand
Full unit loads (-) low
> 3000 kg
< 3000 kg
average
high
Partial unit loads (-)
Groupage cargo (+)
Air cargo (-) average
Figure L.4: The structural change in demand for different load types in unitized and groupage international transportation in 2000-2003. Source: Naula and Ojala 2002, 21
171
The majority of the sample companies expressed a wish to move more into long term and tailored customer relationships. Better long-term profitability was mentioned asthe most common reason. A tailored service concept was seen as a way to tie thecustomer to the logistics provider.
Customer
Tailoredservices
Standardservices
Customerrelationshipshort
relationshiplong
9 companies
8 companies
4 companies
Key account management (dedicated contact person and a tailored customer service profile), IT-solutions connecting the customer and the logistics provider and the salesand technical support from agent/partner network were seen as important tools to create a “logistics partnership”. Demand for these services was expected to increase.
.5 Customs services
uring the recent years the number of customs clearances has risen in all three Baltic tates whereas the number of persons employed by the customs boards has remainedonstant (Table L.4) Simultaneously, the quality of customs services – as indicatedy shippers and logistics providers - has clearly improved.
ther areas of improvement in general transport support services which were entioned as areas needing improvement include (e.g. in the response from Latvia) lationships with Russia, border crossing, data exchange system between ports,
order crossing points, and customs warehouses.
U membership will profoundly affect the customs. Extensive preparations have ken place in administrative processes, customs codes, statistics and the organizationf the Customs. However, the abolition of much of documentary and cargo inspection
procedures will make a substantial number of customs staff redundant.
Figure L.5: The detected transition in logistics customer relationships in 2000–2003.79
Source: Naula and Ojala 2002, 22
L
DScb
Omreb
Etao
79) 6 out of the 15 interviewed sample companies expected a change in more than one direction
172
Table L.4: Development of customs number of employees, customs posts, customswarehouses, border crossing points and total number of import and export declarations processed by customs services in the Baltic States.
Source: Estonian, Latvian and Lithuanian Customs services
order crossings started to increase in autumn 2003, as was pointed out by Mr. Karitions, in the Parnu seminar. The national
elevant authorities.
he logistics industry, exporters and importers are concerned how the EU customspractices will flow in intra-EU trade after May 1, 2004. All border formalities before
me significant delays have occurred in
es has also improved. The principal areas
69 92 106 111 140Latvia 151
47
Employedpersons
customs
1995 1996 1997 1998 1999 2000 2001 2002Estonia 1 108 1 177 1 341 1 417 1 381 1 341Latvia 1 946 1 888 1 890 1 753 1 726 1 720Lithuania 3 075 3 223 3 148 3 075 3 107 3 109 3 085 2 967Estonia 75 86 82 83 83 71Latvia 149 164 218 211 199 167Lithuania 68 74 73 73 71 74 70 72Estonia 53
Number ofcustoms postsNumber of
The approaching membership date has allegedly seriously affected the motivation ofcustoms as well as border guard staff in border crossing points. As a result, delays in
Estonia 0,4 0,5 0,6 0,6 0,6 0,7Latvia 0,6 0,7 0,8 0,9 0,8 1,0Lithuania 1,5 1,6 1,9 1,9 1,6 1,8 2,2 2,6
Declarationsprocessedmillion
Lithuania 98 109 104 101 88 87 95 104Estonia 18 22 22 22 22 22Latvia 55 54 53 53 53 52Lithuania 56 56 56 55 55 56 -
warehousesNumber ofborder crossingpoints
bPeltonen, head of Schenker’s Baltic operafreight forwarding associations have also raised the issue with the r
T
that date are carried out by the current system. In reality, a period of perhaps several months of “learning by doing” will follow. This period is likely to be substantially longer than when Austria, Finland and Sweden joined the EU in 1995.
According to EC’s latest assessment in November 2003, customs legislation is largely in line with the acquis in all three countries. The administrative and operational capacity of Estonian customs is only partly in place. In Lithuania, a functioningcustoms administration is in place; however, sothe development of interconnectivity of IT systems and operational capacity. Seriousconcerns remain with the operational and administrative capacity of Latvian customs,especially in the area of computerization and interconnectivity of customs systems.
The volume of customs clearances in the Baltic States has increased considerablywhile the number of people involved in customs clearance or processing has remainedstable. The quality of the custom servicneeding improvements are border crossings where excessive delays occur; dataexchange systems between ports and custom warehouses; and improved customsrelations between Baltic countries and Russia.
173
Customs practices have generally improved in the Baltic countries during recent years. Each of the countries has adopted the Automated System of Customs DataManagement (ASYCUDA). However, it will not be used in intra-EU trade, so itsmain usage in the future will be in trade with non-EU countries. The implementationof EU’s customs systems is required, but progress has been slow especially in Latvia.
L.6 Logistics center developments
ies such as Singapore and theetherlands have been very successful in luring logistics activities to their ground, creasing the economic well being in those regions.
ures, such as goodlocation in a node of major trade and transport flows, excellent infrastructure, favorable legislation, rule of law, supporting industries, capable logistics companies,and effective yet flexible authorities. The success of such logistics centers hasinspired many less-advantaged regions to seek to develop similar features to lurecompanies to position logistics activities on their ground (See Figure L.6.)
Figure L.6. Conceptualization of logistics centers with examples of activities that they can perform. Source: Vafidis and Ojala 2000.
Logistics as an activity can be assessed on the same principles as other operations, namely costs, quality, flexibility, speed, and reliability. As the requirements of
L.6.1 Background and definition
In recent decades both manufacturing and trading companies have radicallyrestructured their logistics flows. Here, centralization of distribution has been an especially powerful trend in many industries. CountrNin
The most successful logistics centers have certain superior feat
TangibleVirtual
Local
National
International
Global
Coherence of the Logistics Centre/Village
Geo
grap
hic
Scop
e of
the
Act
iviti
es
Networked
Bicyclecouriers
Taxis
PR activities,regional or
nationalco-ordination
Network(s)of specialised
serviceproviders
A Networkof Logistics
Centres
“LocalNetwork?”
Project by localadministration
or an individual riskinvestment
Global hub createdby superb location
and businessenvioronment
Evolutionarydevelopment
of thelogistics village
Managementof global
informationflows
174
efficiency constantly increase, many companies using logistics services have re-organized their production and logistics.
In manufacturing, centralization of logistics activities in parallel with postponementnd mass customization promise great potential improvements in cost efficiency and
entralization of value adding activities. Consolidation is particularly important for
ntralization of logistics offers many benefits but it also means large stment in a specific location in facilities, personnel, equipment, and
formation systems may also be risky. For instance, if transport sector workers at a
ry and a customer base in the region, well-known logistics service providers, and references of successful alliances in the region.
ciate a stable and political atmosphere when they decide on where to locate their facilities.
isting port or a major land transport concentration and airport in their region.
arding or road haulage firms or entrepreneurs have seldom capacity to engage in such development projects.
acustomer service levels. Such centralized logistics concepts require dependable logistics services, the provision of which is often outsourced to third party providers. The impact of this in the Baltic States is described in Chapter M.
Wholesale and retail firms depend on consolidation of transport flows and csmall outlets and outlets in scarcely populated areas, where transport frequencies would otherwise be unbearably low.
The 50-50 joint Baltic venture of Swedish ICA and Finnish Kesko announced in
ain a 25 per cent market share in the grocery business in the three countries.g
For companies, cenvestments. Invei
incompany’s European distribution center strike, deliveries to the whole continent maybe halted. Therefore companies will be very careful in assessing the pros and the consof a region before making a decision as to what logistics activities will be based there.
L.6.2 Public versus private sector aspirations in logistics centers
Regions aspiring to lure companies to locate their activities on their territory tend to market good logistics infrastructure, transport and information connections, political stability and favorability, supporting indust
The public sector usually provides the basic infrastructure, city planning and other administrative services. Companies appre
The public sector, be it the Government, county government or the municipality is often eager to promote their own location as a logistics center. One of their key activities is regional or municipal planning. Lucrative land areas suitable for real estate development may be a natural incentive for them to be active in this respect.These efforts are typically connected to an ex
The obvious local partners in developing logistics centers are the port and/or airport authorities and firms providing stevedoring, storage and transport services. Smalllocal transport providers, such as small freight forw
175
December 2003 exemplifies this. By joining forces, the two retails chains attempt to
European logistics industry has been profoundly restructured through mergers and acquisitions during the past decade. As a result, the competition between the big providers offering a wide range of logistics services has grown more intense. The competition is not only local but also international, as key customers need logisticsservices for a wide geographical area rather than one country. To cater for theseneeds, logistics firms have built up extensive international distribution networks
In general, they want to stay flexible in the choice of location, as changes in the firms’ strategy or
L.6.3 Status of logistics center development in the Baltic States
are not alone in developing logistics centers: similar developmentsbound in Finland, Sweden, Denmark, Germany and Poland too80. Logistics center
projects have been initiated at least in Tallinn, Parnu and Paldiski in Estonia; Riga and iepaja in Latvia; and Klaipeda, Kaunas, Vilnius and Panevezys in Lithuania81.
sing the framework in (Figure L.6), the geographic scope of these logistics centerscould be categorized as national or in some cases local. As to their internal coherence,they mostly aspire to create a network of (some of the) existing logistics providers in the region together with public sector participation. Raising funds for the projects has been difficult. Indeed, most of the projects do not even have a solid budget.
There are cases where tangible development – such as real estate development orconstruction of superstructure – takes place locally, such as in Klaipeda and Liepaja. In those cases, the work is conducted through the Free or Special Economic Zone entities rather than through a specific logistics center consortium.
Nationally, much of transport infrastructure development in the Baltic States is targeted at the main transport corridors and nodes. This means that the generalprerequisites for transport and logistics operations are improving in the main ports and transport nodes irrespective of local logistics center developments.
including advanced IT systems that can be linked to customers IT systems.
Big logistics firms are not always eager to promote a specific location in public-private projects, especially if that means cooperating with main competitors.
It is also difficult to attract big industrial or retail/wholesale firms to engagethemselves into logistics center development in a specific location, unless they have a direct interest in the location through, for example, land ownership.
ownership may alter their location preferences on a short notice. In addition, the users of logistics services are the paymasters, and they expect the transport and logistics industry to take care of their own development efforts.
The Baltic Statesa
L
U
80 See, for example, www.netloc.net, For cooperation between some European logistics centers or so-called Freight Villages; see also: www.freight-village.com/
81 Liepaja and Klaipeda projects were briefly described in the report of the Riga Seminar, see Ojala andQueiroz, eds. 2001. The Lithuanian logistics center developments are described briefly in e.g.documentation of the Netloc project at www.netloc.net
176
manufacturing or trading firms. These do not necessarily seek locations withinspecified logistics centers, but seek locational advantages in relation to the market that
The restructuring of the logistics industry in Europe described above is one of thereasons, why many of the logistics center developments in the Baltic Sea Region have not progressed as well as the public sector had hoped. In many cases, in the Baltic States and elsewhere, the cooperation in logistics center developments between the interested parties has not worked well, either.
It is difficult to strike a balance between sometimes conflicting commercial and olitical interests. It may be that the least common denominator for the stakeholders is
some form of joint PR campaigns or other marketing efforts. There have also been efforts to create networks of logistics centers in the Baltic Sea region, but so far, their economic or operational impact has been negligible.
L.7 Conclusion
ollows (a) frastructure limitations and regulatory issues are not major concerns of those firms
providing transport related services in the Baltic States; (b) the supply of transportrelated services in these countries is adequate and generally of good quality; (c) advanced information technology is becoming increasingly important to companiesproviding transport related services in the Baltic countries; and (d) well over half of the transport related services in the Baltic States are provided by international firms.
The principal transport related services provided are freight forwarding, customsbrokerage, customs service, warehousing services, insurance, and banking. In all three
f the Baltic States, these services are almost entirely privatized and the general uality of services is good and improving.
he overall quality of these services in terms of timeliness, accuracy of ocumentation and the absence of fraud, has improved dramatically during the past
id 1990s.
he volume of customs clearances in the Baltic States has increased considerablyhile the number of people involved in customs clearance or processing has remained
stable. The quality of the custom services has also improved. The principal areas eeding improvements are border crossings where excessive delays occur; data
exchange systems between ports and custom warehouses; and improved customslations between Baltic countries and Russia.
Much of customs clearance work will not be needed in intra-EU trade. As a consequence ers and freight forwarding staff willbecome redundant. Logistics firms and freight forwarding associations report that this has affected the work motivation, and caused delays.
they intend to serve (See also Chapter M. and Box M.1.)
p
Key findings of the seminar concerning transport related services are as fin
oq
Tdten years, especially since the m
Tw
n
re
, many customs, customs brok
177
Regional Distribution. Centers are also established by shippers, that is, by
Unreasonable delays at border crossings have been a common and persistent problem ree Baltic States. Special efforts are required to minimize these delays. In late
lays affected the trade with EU countries, which is elivery schedules and dependable service. The
change to EU customs procedures on May 1, 2004 is also likely to cause disturbances.
Customs practices have generally improved in the Baltic countries during recent years. Each of the countries has adopted the Automated System of Customs DataManagement (ASYCUDA). However, it is not used in intra-EU trade, so its main
redible international insurance services as well as banking services are in place in all ree Baltic countries. Some restructuring of these services is expected, especially in atvia and Lithuania, in the near future. Competition in the provision of these servicesincreasing, a trend that has had the effect of reducing costs of insurance services.
in all th2003, persistent borders crossing deincreasingly depending on tight d
usage in the future will be in trade with non-EU countries. According to EC inNovember 2003, customs legislation is largely in place in view of EU enlargement,but the administrative and operational capacity of the customs is not yet compatiblewith EU practices. This applies especially Latvia. Also Estonia has to start collectingcustoms duties, which means a major change in customs operations.
CthLis
178
179
M. Viewpoints of logistics users82
This chapter summarizes the findings of two recent studies in order to highlight how logistics users evaluate the logistics environment in the Baltic States. The first studyconcerns international manufacturing and trading firms that have establishedoperations in the Baltic States (Section M.1). The second one presents the key results of a survey on Baltic wholesaling and retailing firms (Section M.2). The findings of these two studies are synthesized in Section M.3.
M.1 International firms’ logistics operations in the Baltic States
indings of a study (Naula and Ojala 2002) focusing on
nning
Figure M.1: The Framework of analysing strategies of logistics users.Source: Naula and Ojala (2002).
This section discusses the key f15 international firms' distribution solutions to the Baltic States. Firms of this typeand size are known to have the ability and the knowledge to adopt the most efficient logistics arrangements available. Figure M.1. presents the used analytical frameworkLogistics buyers' strategies were studied through the key logistics placomponents: materials flow, information flow, logistics organization and distribution channel - during four stages of their business presence in the Baltic markets.
82 prepared by Tapio Naula and Lauri Ojala, Turku School of Economics and Business Administration
Key findings: Transport infrastructure is no longer a major concern (hinder) for shippers. Regulatory environment remains a hinder for SMEs.Advanced logistics solutions are gaining ground when EU time approaches. Large firms increasingly centralize their logistics activities. There is a need for systematic monitoring of logistics efficiency.
EntranceEstablishmarket Present EU-timeposition
A. Materials flow
B. Information flow
C. Logistics organization
(anticipated)
D. Distribution channel
companycases
Logistics providers
Regulatory environment
Infrastructure
PhilipsProcter&Gamble
HiltiRobert BoschKesko FoodICA BalticGNTYork Int.Hydro Texaco
Samsung
ABBSiemensElectroluxUnileverVolvo Parts
EntranceEstablishmarket Present EU-timeposition
A. Materials flow
B. Information flow
C. Logistics organization
(anticipated)
D. Distribution channel
companycases
Logistics providers
Regulatory environment
Infrastructure
PhilipsProcter&Gamble
HiltiRobert BoschKesko FoodICA BalticGNTYork Int.Hydro Texaco
SamsungSamsung
ABBSiemensElectroluxUnileverVolvo Parts
PhilipsProcter&Gamble
HiltiRobert BoschKesko FoodICA BalticGNTYork Int.Hydro Texaco
ABBSiemensElectroluxUnileverVolvo Parts
M.1.1 Materials flow
International physical distribution
In the early phase of market entrance the studies firms preferred to operate fromoutside the Baltic States when distributing their products to the Baltic States markets.
xporting individual shipments via customs terminals seemed to be a suitable pattern arket entry, but much less used in later business stages (Figure M.2).
arket position, some of the case firms moved slightly more into arehousing on Baltic regional and country level. Relatively few changes were made
between the first two business stages. Presently case firms prefer direct physicalistribution often directly from factories and central European warehouses. Such
patterns have significantly increased in the very recent years.
Figure M.2: Changing physical international firms (max. 3 observations per firm) in the Baltic States. Source: Naula and Ojala 2002
Faster border crossing could have enabled the firms to distribute from one Balticregional stock in the mid 1990’. Customs documentation made this option very complicated (Figure M.3) and expensive to operate and therefore it was little used.
educe the steps in this process from 15 to eight.
Efor m
When establishing mw
d
Number of observations:0 - 6 7 - 12 13 - 18 > 19
Marketentrance
Establishingmarketposition
PresentAnticipatedEU time
~ 1994-1996 ~ 1996-1999 ~ 1999-2000 ~ 2004
Distribution from Factories or centralwarehouses to consignees directly
Distribution from country specificwarehouses in each Baltic State.
Distribution from one regionalwarehouse located in one of the BalticStates serving all three countries.
Distribution by exporting individualshipments to Baltic States viadisp
distribution patterns of 15
atching and receiving terminals.
Number of observations:0 - 6 7 - 12 13 - 18 > 19
Marketentrance
Establishingmarketposition
PresentAnticipatedEU time
~ 1994-1996 ~ 1996-1999 ~ 1999-2000 ~ 2004
Distribution from Factories or centralwarehouses to consignees directly
Distribution from country specificwarehouses in each Baltic State.
Distribution from one regionalwarehouse located in one of the Baltic
atching and receiving terminals.
States serving all three countries.
Distribution by exporting individualshipments to Baltic States viadisp
Customs rules in intra-EU trade r
180
Before EU
COLLECTION
TERMINAL
EXP. CLEARANCE
INT. TRANSPORT
TERMINAL
CLEARANCE IN
STOCK - IN
RELEASE ORDER
STOCK OUT
TERMINAL
EXP. CLEARANCE
INT. TRANSPORT
TERMINAL
IMP. CLEARANCE
DISTRIBUTION
COLLECTION
TERMINAL
INT. TRANSPORT
TERMINAL
STOCK - IN
RELEASE ORDER
STOCK OUT
DISTRIBUTION
After EU
May2004
Figure M.3: Distributing goods via a warehouse in one of the Baltic States serving all three countries. Comparison of the steps of the process before and afterEU membership. Source: Naula and Ojala 2002
Domestic physical distributionThe 15 case firm’s cargo volumes concentrated in the capital regions in Latvia andEstonia. Harju region around Tallinn is the most important cargo destination in Estonia for all the case firms (71 % on average) followed by Tartu and Parnu.
The high concentration may lead to inefficiencies in domestic distribution. The case firms have typically outsourced domestic transportation to logistics service providers. These consolidate several consignments in one transportation unit. Especially in Estonia and Latvia the volumes destined outside the capitals Riga and Tallinn may not be sufficient to offer affordable and frequent distribution services.
M.1.2 Logistics organization
The 15 firms were centralizing their logistics organizations into regional and European units (Figure M.4). The motives were mostly business driven, such as altering business culture, market demand and efforts to reach cost efficiency. The organization was often made as “thin” as.
Riga's dominance is striking: on average 80 % of the case firms' Latvian volumes aredestined here. The next most important regions are Daugavpils and Ventspils. Lithuanian volumes are distributed more evenly between Vilnius, Klaipeda andKaunas. Their volumes average 49 %, 23 % and 18%, respectively.
181
At the market entrance stage, all the business functions (sales, administration,typically present locally. Very often, a local agent was
002
The development of the logistics organization was also closely linked to the distribution channel in general. In some cases a firm needed to have certain functionspresent locally because of a relatively fragmented customer base with large number of customers.
M.2 Baltic Wholesaling and Retailing firms
481 wholesaling firms in Estonia, Latvia and Lithuania were asked to fill out an Internet based questionnaire in Naula, Ojala and Sara 200283. 25 usable responses, or 5 per cent of the total sample, were received.
M.2.1 Marketing channels
The respondent firms were asked to identify their main and secondary marketingchannels in 2002 and in the anticipated EU time (
igure M.5). The arrows represent shiftings in individual firms’ marketing channels.
warehousing, logistics) were used. This is a usable way to enter a small and new market. A shift towards a morecentralized organization followed suit. Nine out of the 15 firms consideredcentralizing all functions other than operational sales outside the Baltic States in the anticipated EU time.
Marketentrance
Establishingmarketposition
PresentAnticipatedEU time
~ 1994-1996 ~ 1996-1999 ~ 1999-2000 ~ 2004All functions centralized except local sales
Marketing function is centralized -other functions are locally present
Marketing, logistics and part ofadministration are centralized
All functions are locally present
Figure M.4: Changing organizational patterns of 15 international firms in the BalticStates (max. 3 observations per firm). Source: Naula and Ojala 2
F
83Naula, Ojala and Sara (2002); available at: www.tukkk.fi/markkinointi/log/baltic_survey
Number of observations:0 - 6 7 - 12 13 - 18 > 19
Marketentrance
Establishingmarketposition
PresentAnticipatedEU time
~ 1994-1996 ~ 1996-1999 ~ 1999-2000 ~ 2004All functions centralized except local sales
Marketing function is centralized -other functions are locally present
Marketing, logistics and part ofadministration are centralized
All functions are locally present
Number of observations:0 - 6 7 - 12 13 - 18 > 19
182
Marketing channels Primary SecondaryNow EU Now EU
Direct sales to consumerend users
8 7 5 4
Direct sales to business or 7 6institutional end users
6 7
Sales to retailers 6 5 5 6
Sales to other wholesalers 4 5 8or agents
6
No answer 0 2 1 2
Figure M.5: Primary and secondary marketing channels of Baltic wholesaling and retailing firms before and after joining the EU in the Logistics Survey On WholesaleOperations.
Comparison between present time and the anticipated EU time does not show drastic
M.2.2 Materials flow
changes in the respondent firms’ first priority marketing channels. In second priority marketing channels more changes can be seen. However these shiftings are rather incoherent and do not seem to be following any specific trends.
The anticipated EU accession may well increase the share of Baltic regionalwarehousing compared to country based warehousing, as indicated by Figure M.6. The results of this survey do not however reflect such general development.
Some of the firms that currently distribute directly from a factory or a distribution centre outside the Baltic States expected to expand distribution to the other Baltic States. This indicates some development in the direction of multinationally integratedlogistics configurations.
87
10
78
10
0
2
4
6
8
10
12
Directly fromFactory/DC
From countrywarehouse
From Baltic regionalwarehouse
Today
EU-time
Figure M.6: Physical distribution channels of Baltic wholesaling and retailing firms.Source: Naula, Ojala and Sara 2002.
183
M.2.3 Evaluation of the logistics environment
The respondent s were asked to evaluate the performance of logistics providers in their country and the hindering effects of local regulatory environment and transportand telecommunications infrastructure in 1993 to 2002 and in 2005.
A significant improvement in logistics providers’ performance in the Baltic States can be seen since the beginning of the 1990’s (Figure M.7). At present most of therespondents perceived logistics providers’ performance as somewhat positive or very positive. In the anticipated EU time, the situation is expected further to improve:none of the respondent firms expect somewhat poor or very poor performance of their logistics providers.
The respondents perceived some improvement in the regulatory environment of theBaltic States during the last ten years, and further improvement was expected with theanticipated EU accession (Attachment M.1.). Curiously, although most of the respondents predicted improvement due to the EU accession, some expected the regulatory environment to become more hindering to materials flow. This may be related with concern over EU regulations, which are not familiar to locally operatingfirms and therefore a potential source increase in logistics costs.
Transport and telecommunications infrastructure was no longer considered as a majorhinder to logistics activities (Attachment M.2). The firms experienced that extensivedevelopment has taken place in the Baltic countries’ infrastructure since 1993. Thehindering effect is further expected to diminish in the European Union time.
0
5
20
25
30
1993 1996 1999 2002 2005
No answer
Very poorly
Somewhat Poorly
Neutral
Somewhat well
Very wel10
15
l
Figure M.7: Wholesaling/retailing firm’s evaluation of logistics providers firms in the Logistics Survey On Wholesale Operations. Source: Naula, Ojala and Sara 2002.
184
48 % of the respondents expected that the share of logistics costs of their turnover remains the same after joining the EU. 33 % of the firms forecast a decrease - and 19 % expected an increase in these costs. Wholesaling firms are likely to achieve costavings in logistics from the implementation of the common European customs zone
M.3.1 Perception of the transport infrastructure and the regulatory environment
e the regulatory environment somewhat
ure of a transport system. The layers are in interaction through marketlations involving demand and supply sides. The lowest level, the transportation frastructure provides capacity to traffic markets. Market operators, such as shipping
lines, form the demand side of the traffic market by using the infrastructure and perating the transport flow with vessels, vehicles and other transportation units. Theaterials flow of individual logistics buyers forms the demand on the transportation arket (Figure M.8).
sbecause many of them are involved with import activities
.3 Shifting Focus from Transport Infrastructure to Efficient Logistics M
The level of transport and telecommunications infrastructure is no longer a hindering factor for logistics buyers. In the early 1990's the key issues in logistics was to find the access to transportation capacity and how to cope with border crossing formalities.Today, the focus is clearly on adopting efficient logistics solutions in accordance with corporate policy - powered by reliable and high-quality logistics services.
he international logistics users still perceivThindering logistics in Latvia and Lithuania but not in Estonia. Small and mediumsized firms also see these issues more as an impediment to their business than theinternationally operating ones; two thirds of the studied SMEs considered the regulatory environment still as hindering.
The results suggest that joining the EU will facilitate logistic operations. EU erafavors firms, which are already familiar with doing business in the EU. However, EU membership will substantially increase regulation and bureaucracy for domestic firmsin the Baltic States that have been accustomed to very low level of regulation.
The logistics hinders in Latvia and Lithuania were related to trade and transportdocumentation. The documentation requirements in Latvia and Lithuania may beworkable if logistics services are produced for own account.
M.3.2 From transport infrastructure to advanced logistics
Freight transport is often presented as a multi-layer model that illustrates thehierarchical natrein
omm
185
Figure M.8: The 15 firms’ main concerns during their stages of market presenceagainst the four layers of freight transport Source: Naula and Ojala 2002; adapted from OECD 1992.
The model is added with a fourth layer - logistics concepts. The materials flow, the information flow, the logistics organization and the distribution channel are integralparts of these concepts. Market conditions prevail also between the upper two layers. An advanced logistics solution typically requires active involvement of a third partylogistics provider together with firms' internal resources.
Infrastructure issues and availability of logistics services were not any longer seen as problematic issues for the logistics users in the Baltic States (Attachment M.1). Thekey issue now is the possibility to integrate logistics operations into their European-wide supply chains. EU membership will make this task much easier.
The removal of customs borders in EU trade will enable firms to centralize physicaldistribution activities and connect their supply chains better. The results indicate that major logistics buyers in the Baltic States are planning major changes in theanticipated EU time. Direct distribution from European logistics centres by using cross docking concepts is a likely model in the near future for large firms. Fewerproducts will be kept available in country specific warehouses. See also Box M.1.
Entrance Establ ishmarketposition
PresentEU-time
(antic ipated)
EE
LTLV
EE
LTLV
LV
S CM
EE LT
Transport market
Traffic market
Advanced logisticsservices market
Infrastructure
Transport flow
Material flow
Logisticsconcepts X
X
X
X
Advancedlogisticsusers
Policymakers
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Not
feas
ible
No
long
era
conc
ern
186
Box M.1. Locating European Distribution Centers after EU EnlargementA recent study by Cap Gemini Ernst&Young, a consultancy, analysed the effects of EU enlargement on the location of European Distributio ers (EDC) i ndustries.n Cent n several i
Based on the location decision cri r distributio used in the study, the countries that teria fo n centresp est locatio n distribution included Belgium, Germany erovide the b ns for investing i centres and thN eaders by countries su s Bulgaria, Czech Republic, Den ,etherlands. These l were followed ch a markFrance, Hungary, Ireland, Luxem and and the United Kingdom. The Baltic States and Finlandbourg, Polc e, and for example Sweden, Austria and ania ranked a g the last-in-linome only after thes Rom mon e.
Northern Europe is an area that usually cannot be a distr .covered by central European ibution centreTraditionally Finland is the country where most distribution centre investments have gone. Part of F tiveness is tha asily used to Rus ninland’s attrac t it can be e for export sia. In terms of attractiveness ilocating regional distribution centres in North lowing .ern Europe the fol ranking applied in the study: 1Denmark; 2. Lithuania; 3. Latvia; 4. Finl d; 5. Eston en.an ia; 6. Swed
Based on this ranking the authors expected that Lit atvia eferred locations rhuania and L will be the pr foNorthern Europe region distribution centres. Latvia was also seen as an excellent starting point for alexport to the Russian market. Finland however is likely to keep an important position since (1) Swedenand Norway are not easy to reach from Estonia, Latvia and Lithuania and (2) Finland has a betterranking than Sweden regarding distribution centre attractiveness. Although Denmark has a goodranking it will hardly be used as Northern Europe regional distribution centre since the other NorthernEuropean countries are hard to reach from Denmark.
Source: European Distribution Centres on the move? Cap Gemini Ernst&Young 2003, Utrecht.EDC investments of following industries were covered: Chemicals; Automotive; Pharmaceuticals &Biotech; High Tech & Electronics Industry; Consumer Products Industry; as well as Research &Development Centres and Distribution Centres covering all industries.
ted trend exhibits the overall positive development in the logisticsnvironment of the Baltic States. Today's situation is challenging for policymakers,ecause many of the actions that further improve the logistics environment seem to be
out of the immediate sphere of political influ ce. Ac e co-operation with non-governmental organ at ndustry level refore l bet ay to ma the n tio end users of advanced icss A concrete co-operation j t c start system ally monitoringf istics efficien peri al c survey would e as a v blesource of information for identifying needs for further improveme
Joining the European Union is likely to ntra-Baltic trade and regionalcooperation in distribution. It is yet unknown to what extent firms will centralize theirl ness acti s to distribution centres outside the Baltic States.
The preseneb
en tive involv ment andiz ions on i is the ikely
he fruitful w intain con ec n to the logistervices. pro ec ould be to aticirms’ log cy. A odic ly onducted serv alua
nt.
increase i
ogistical busi vitie be managed from
187
N. Urban transport 84
N.1 Organization
lects in part the poor profitability of these services for private
d the public sector in urban transport
Both urban transport infrastructure and service provision remains in the public administration domain in all three Baltic States. Urban bus and trolley services are offered by a limited number of private companies, but their share of the overall market is small. This reffirms while at the same time maintaining good service levels, availability, and coverage. On the other hand, good quality yet affordable mobility is very much in the public interest (Figure N.1).
Figure N.1. The roles of the private aninfrastructure and services.
N.2 Urban areas in the Baltic States
Riga is the largest city in the Baltic States with over 0.8 million in the Riga region(Rigas rajons), while the city has 0.75 million inhabitants. Other major cities areVilnius (0.55 million) and Tallinn (0.4 million). Three cities in Lithuania, Tarto in Estonia and Daugavpils in Latvia have over 0.1 million inhabitants (Table N.1). For this reason, the main urban transport operations are in the capital areas85.
84 Urban transport issues were not presented in the Parnu seminar, nor did they have a workshopsession of their own, as was the case in the 1st seminar in Riga in November 2000. This Chapter is compiled by Lauri Ojala based on the Parnu pre-seminar questionnaire and other relevant material.85 Public transport enterprises from Tallinn and Riga belong to the non-Governmental InternationalAssociation of Public Transport; at: http://www.uitp.com/home/index.cfm
PRIVATE SECTORPUBLIC SECTOR
ESTONIA LATVIA LITHUANIA
2000
1990
URBAN TRANSPORT INFRASTRUCTURE
2003
2000
1990
URBAN TRANSPORT SERVICES
2003
Key findings: Urban transport services are mainly provided by the public sector.Private providers are mostly used in Estonia. As elsewhere, public sector subsidies are a key part of finance. EU membership opens urban transport in big cities for tenders.Rapidly growing private car usage undermines urban transport usage.
ESTONIA LATVIA LITHUANIA
188
Table N.1. Key data on main cities and town in Estonia, Latvia and Lithuania in 2002.
Unit Estonia Latvia LithuaniaLand area km2 45 227 64 589 65 300Population 1000 inhabitants 1 361 2 346 3 482Population density persons/km2 32 38 56Urban population % 69 70 67
Tallinn 400 Riga 747 Vilnius 554Tarto 101 Daugavpils 113 Kaunas 379
Major cities Population Narva 69 Liepaja 88 Klaipeda 194 in '000s Kohtla-Jarve 47 Jelgava 66 Siauliai 135
Parnu 45 Jurmala 55 Panevezys 122Viljandi 21 Ventspils 44
Rezekne 38
Car ownership has increased rapidly in Latvian and Lithuanian towns, as shown inTable N.2. Car ownership is Tallinn – as in Estonia as a whole – has decreased, but
States in1998/1999 and 2002/2003. Source: Pre-Seminar Questionnaire.
1.1.1999 1.1.2003 31.12.1998 31.12.2002Riga 206 286 Vilnius 269 376
according to the Ministry (MEAC), this is more because old and redundant vehicleshave been removed from the vehicle registry. Car ownership also reflects differencesin income level. Against that background it is no surprise that most cars per population are in Klaipeda and the least in Daugavpils.
Table N.2. Passenger cars per 1000 inhabitants in major cities in the Baltic
Daugavpils 154 192 Kaunas 280 367Jelgava 179 239 Klaipeda 362 429Jurmala 230 309 Siauliai 281 345Liepaja 161 214 Panevezys 290 362
Rezekne 176 235 TotalLithuania 277 341
Ventspils 226 277Total Latvia 198 266 1999 2002
Tallinn 396 335
N.3 Service operations
PEstonian. In Tallinn,
rivate and municipal companies operate local (urban, suburban and county) traffic in there are two municipal companies in Tallinn (Tallinna
utobussikoondis Ltd. (Tallinn Bus Company Ltd.), and Tallinna Trammi- jaA
189
Trollibussikoondis Ltd. (Tallinn Tram and Trolleybus Company Ltd.), both of which Tallinn City Government owns 100% of the shares), In Parnu the Parnu ATP Ltd. is 50% owned by the Parnu City Government.
Local and inter-city rail passenger services are provided by the private companyEdelaraudtee Ltd. In addition, Elektriraudtee Ltd. – a subsidiary of Estonian Railways Ltd. – provides passenger conveyance by electric train in Tallinn and Harju County. In conclusion, suburban lines and county lines are mainly served by privatecompanies; inter-city lines are operated by private companies only.
Local authorities administer the passenger transport in towns (bus stops, bus shelters, bus ticket offices, etc), and most town bus stations and terminals serving long distance
d
y bus companies, of which three are municipal city electric conveyance companies.
service both within and outside the areas served by the municipal carriers.
e parts are high.
A continuous increase in urban transport costs and the increasing use of private cars has led to a decline in the usage of public transport.
In 1990-2000 public transport in Estonia developed into a free market economy: theLine permit system in bus traffic in Estonia was applied as early as 1991. At first therules for issuing line permits for international bus services were established and the
legal basis was elaborated.
bus lines are municipal. The owner of Tallinn Bus Terminal is the private companyMootorReisi Ltd., which operates international bus lines under Eurolines brand.
In Latvia, more than twenty bus companies, and two tram and one united tram antrolley firms cover domestic passenger conveyance, and domestic passengerconveyance by train is carried out by Latvian Railways. Conveyance in the cities iscarried out by twent
In Lithuania local passenger carriage 46 bus and coach, and 2 trolleybus companies,under the ownership of municipalities carry out service. Private carriers provide their
N.4 Regulatory issues
The Estonian Public Transport Act entered into force on October 1, 2000. It is the basis of public transport management and harmonized with the EU legislation.
Insufficient public funds are an obstacle to increasing public transport effectiveness.75% of buses are more than ten years old, and the second-hand buses purchased from abroad require repair work. The costs for repair personnel and spar
Ministry of Transport and Communications issued the permits. In the same year theMinistry established the new passenger transport rules. Step by step the line permitswere also issued by Local authorities and County Governments for local bus lines, and the relevant
The Estonian MEAC indicates that the necessary urban bus line operator is chosen bypublic competition and all bus companies have equal possibilities to participate in the competition. In Tartu, an international public transport firm, Connex, has already wontenders, where it employs about 200 persons, of which 150 drivers in 2003.
190
In Latvia, access to regular passenger conveyance is determined by law according to the road transport subordinate regulations of Cabinet of Ministers. The right to carry out regular passenger conveyance by the buses – to service a certain route – is given
Estonia, there is a common ticket price for all public transport modes (bus, tram,trolley bus), which is subsidized by the public sector. The town council, according to the proposal of City Government, sets common bus ticket price and also the prices of period tickets (10-day-tickets, monthly tickets and quarterly tickets).
County Governments set the tariffs on suburban and County bus lines, which aresubsidized by the state or the local Governm dinter ail line public transpor are different in different towns and coun ll inte s lines and som c l lines are operated without subsidiesfrom te or t ipalities and ticket prices are set by the operators.
As the aim in Estonia is to keep the urba ffic tick ice at a le accep forthe population, and to develop advantageously urban transport as opposed to individual transport, the price of a ticket does not cover the costs of urban transport for the operators. Therefore urban and c ty urba lic trans re su edfr e bu the year 200 6 million kroons have been planned forpublic bus line transport (town and county lines): that is the level of the year 2000 and constitutes 30% of transport costs. Public urban transport is subsidized up to 38
illion kroons by local authorities (Table N.3.) See also Box N.1.
th heavy passenger flow
according to the results of a contest, in which all the licensed conveyers regardless of ownership have the right to participate. According to the number of conveyers the private companies dominate in city route conveyance, but according to the figures for conveyance the municipal enterprises service more than 70% of the market.
According to the Lithuanian MoTC, the attempt is made to apply equal conditions of business competition both for the municipal and the private carriers.
N.5 Financing
In
ents. MEAC sets tariffs on local an-city r s. The t pricesties. A r-city bu e lo athe sta he munic
n tra et pr vel table
oun n pub port a bsidizom the stat dget. For 1 12
m
Public transport (bus, tram, trolley bus) subsidies in Tallinn are 240 million kroons and this is fully allocated from the city budget. Public urban transport in some cities is also subsidized up to 38 million kroons by local authorities.
For purchasing new buses annually 10 million EEK are allocated on an average from the state budget. These finances are foreseen for the lines wii. e. for purchasing new buses used on urban lines on the basis of lease and license contract. As 75% of buses in use are more than 10 years old, the finances allocatedfrom the state budget are evidently insufficient. Therefore the companies purchase from their own assets buses that have been used in western countries, especially in Scandinavia, which are good for another 5-7 more years.
191
Box N.1. Urban transport in Helsinki: savings through competitive tendering us services were opened up to competitive tendering in Helsinki in 1997 when the relevant EUB
provisions entered into force. The companies chosen to operate the routes in question were those whosetenders were overall the most attractive economically in addition to meeting the other conditions set.Assessment of what is most attractive economically is based on a points system which takes account of the overall price, the quality of the equipment as well as the quality and environmental system used. Contracts are generally awarded for five years.
The number of operators providing bus services declined from seven to five during the firstcompetition round. After the 6th round, HKL Bus (Part of the City of Helsinki’s transport enterprise,HKL) still accounts for 45 % of the market. The three next-biggest are Suomen Turistiauto Oy (acompany owned by the City of Helsinki) and foreign-owned Connex and Concordia have 16.5 to 17.6per cent of the market each.
The first four rounds of competitive tendering brought a reduction of over 17% in operating subsidies.In the next two rounds, the reduction was less. All in all, the first round of competitive tendering for allbus services resulted in the annual total paid in operating subsidies being reduced by around €13.5million or nearly 16%. In 2004 and 2005, the municipal subsidy to HKL will be 47 % of its revenue.
Surveys of passenger satisfaction are conducted regularly and show that competitive tendering hasimproved quality. The most important factor seems to be a considerable improvement in and replacement of vehicles.
The quality and environmental certificates obtained by the service operators as well as the bonuses payable for quality have likewise helped raise the standard. On the other hand, competitive tendering has also had negative effects: changing cooperation partners makes it more difficult to organisefunctions and the consequences of competitive tendering lessen drivers’ job-satisfaction.
The importance of price as a selection criterion has led to the lowest tender being accepted in 35 out of 38 cases. However, price and the quality of transport equipment do not depend on each other. Everyother successful tender included also the best equipment.
By 2002, all internal bus services in the metropolitan region have been opened to competitivetendering. Preparations are in progress to open also tram and metro services in Helsinki to tendering.
In the case of rail-borne transport, competitive tendering is postponed into the future and will depend inpart at least on EU decisions and obligations. In November 2003, a rolling stock company was founded by four municipalities in the capital region owning 65 % and the state-owned rail corporation VR owning the remaining 35 %. This will enable tendering of the services while rolling stock ownershipand maintenance are kept with the firm, which commences operations in 2004.
An important matter to be developed has been that of creating uniform regulations or agreeing on theground rules to be applied in competitive tendering arranged by different bodies. Another importantmatter is to proceed through trials to more encouraging contracts than the present ones. On the whole, the present tendering process works well and there is no reason to change its basic structure.
Source: City of Helsinki; and Public Transport in Helsinki 2002, City of Helsinki, available at:http://www.hel.fi/HKL/english/07_hklinfo/jl_eng.pdf
The ticket prices in Latvia for city conveyance are determined by the corresponding municipality, and in Lithuania, the municipalities also fix ticket prices and tariffs for town transport.
Municipal enterprises in Latvia work at a loss, caused by the fact that these nterprises service a basic route net where certain categories of passengers have fee
relief determined by the state and municipalities. Unfortunately the expenses caused by these reliefs are not defrayed to conveyers to the full amount, and losses result. In most cases the private conveyers work without losses because they service routes
e
192
which have different servicing conditions (there is no fee relief and in many cases igher fee – tariffs).
In Latvia, the conveyance expenses of certain categories of passengers with fee relief(determined by the state from 1994) are partly defrayed to conveyers from the state budget but this compensation does not relate to all nominated categories of passengers. For certain passenger categories, determined by the state, subsidies mustbe provided from the municipalities budget, but some categories do not have subsidies at all. The subsidies for regular passenger conveyance in the countryside wereintroduced in 1996, but in the cities only in 1999. These subsidies are provided from the state special budget – the state motor road fund. The corresponding municipalitiesare responsible for conveyance in the cities, and thus the bulk of subsidies are formedby the subsidies from these municipalities budget.
Table N.3. Allocations for urban transport infrastructure and public transport equipment in 2002 in USD million. Source: Pre-Seminar questionnaire;data gathered from municipalities.
City/town Municipal budget Other funds State budget TOTAL
h
Tallinn Estonia 24.4 24.4Narva Estonia 0.1 0.1Tartu Estonia 2.4 2.4Parnu Estonia 0.8 0.8Riga Latvia 8.2 10.0 2.6 20.8
Jelgava Latvia 0.3 0.3 0.2 0.8Kaunas Lithuania 21.1 0.0 34.6 55.7
Klaipeda Lithuania 8.8 14.7 32.0 55.5Panev žys Lithuania 16.1 - 14.2 30.3
Šiauliai Lithuania 2.9 - 21.9 24.8Vilnius Lithuania 22.6 8.4 140.9 171.9
The im ent of the institutional management of public passenger transport is an important task for the Lithuanian government. It plans to adopt a new law on PublicTransport activities in 2001, which will provide the implementation of a new regulatory model. The model is intended to ensure equal rights and responsibilities
palities’ budget. A significant part of the vehicle stock is obsolete and the finances allocated for renovation are insufficient, whilst privatecarriers who compete with municipal ones often apply more attractive services andtariffs. The right to service a specific route is given according to the result of a (tendering) process, and all licensed conveyors irrespective of ownership are entitled to participate in this process.
provem
for private and municipal carriers through PSO agreements, in which all theconditions of passenger transport will be strictly determined.
Most Lithuanian municipal carriers work at a loss because they receive limitedsubsidies from the munici
193
N.6 Conclusion
In the urban transport sub-sector of the Baltic States, both infrastructure and serviceprovision remain in the public administrative domain. Urban bus and trolley servicesare offered by a limited number of private companies but their share of the overall market is small. The dominance of publicly owned operators reflects in part the poor profitability of these services for private firms when required to maintain good service
Good quality s o e public is clearly in the public interest.
In Estonia, both municipal and private companies operate urban, suburban and county services. There are two municipal companies in Tallinn. In Parnu, the bus company is
wned by th nm 0 percent ow other i lservices are provided in Estonia to local and intercity passengers by a private company and a subsidiary of Estonia Railways.
y bus anies, two tram firms and one united tram and trolleyovide passenger services. Three of the companies are municipally owned.
In Lithuania, there are 46 bus companies and two trolley bus lines, all under municipal ownership. In addition, private bus companies provide services in Lithuania
rban centers.
A number of regulatory issues concerning urban transport face the Baltic States. In Estonia, parliament adopted the Public Transport Act in 2000 providing the legal basis for public transport activity including harmonization with EU requirements.Public transport was made part of the free market economy with local authoritiesissuing permits, under competitive bids, to private firms for bus services.
Latvia, too, has made provision for issuance of permits to private bus lines. Any censed firm is allowed to compete for a permit to operate a bus service.
Nevertheless, about 70 percent of the urban market is served by municipal companies.L Communication attempts to reach a fair
alance between municipal and private companies in the provision of urban transport rvices.
Lack of public funds for urban transport in Estonia is the main obstacle to increased effectiveness of services in that country. Three fourths of the buses there are morethan 10 years old and repair costs of buses have steadily increased as the buses haveaged. Inability to finance new buses is attributed to the decline in passenger trafficlevels and consequently revenue. Subsidies are provided, in all three Baltic States, to companies providing municipal passenger services.
levels. ervice aff rdable to th
50 percent o e gover ent and 5 ned by nvestors. Rai
In Latvia, over twentcompany pr
comp
both within urban areas and beyond u
li
The ithuania Ministry of Transport andbse
In the Baltic countries, the market for urban transport services is eroding at the same time that increased motorization-induced traffic congestion is exerting pressure on the operating costs and service quality of urban transport providers. Prevailing fares and financial assistance in the form of subsidies are insufficient to finance good quality services. No stable source of adequate funding has been found for urban transport.
194
O. Environmental issues in the transport sector 86
Key findings on Environmental issues: Environmental issues’ importance as part of EU Transport Policy will increase.Pricing of transport externalities becomes an issue also for the Baltic States. Based on data aare relatively high in the
t hand, transport sector’s aerial emissions of CO, CO2 and NOx Baltic States considering the volume of operations.
raffic calls for better traffic monitoring and surveillance systems and capabilities to cope with maritime pollution.
The aerial emission of CO, CO2 and NOx in the countries around the Baltic Sea have been decreasing since the mid-1990s. The increasing maritime t
The Baltic States need to improve their environmental monitoring and statistics.A multitude of inter-governmental organizations exist both internationally and in the Baltic Region, participation in which requires a lot of resources. Dialogue with environmental NGO’s on transport issues will intensify.
Environmental issues have also become an integral part of all sectors of the society, and the environmental impact of the transport sector is growing in importance. It has also been one of the key drivers of EU’s Transport Policy87.
Most infrastructure plans need to contain an assessment of their environmental impactefore they can be put to practice. This applies to all major road, railway, port and
can affect sensitive habitats of flora and fauna. They may have adverse separation effects that affect the quality of life and disturb the mobility of inhabitants or the real estate markets.
he other side of environmental concerns is the impact of traffic itself. The mainenviron port are usually divided into the following groups:
Aerial emissions of CO x (m nly NO 2 and small particles NoiseCongestionAc co
These place a burden on the society, and beca he e usua ot bsome
y”, i.e.fees or environmental taxes from users or end-users of transport services, is
correspondingly difficult.
One way to approach the cost of externalities is through the marginal cost principle. The marginal external costs of transport use correspond to the costs caused by an additional transport user that are not borne by the user himself but by others. These
bairport planning. Such projects
Tmental impacts of trans
2, NO ai 2), SO
cident sts
use t ir tru cost is lly n orneby the user, they are called transport externalities. Determining the true costs ofnegative) externalities is difficult, at this time, and “making polluters pa(
charging
86 Prepared by Lauri Ojala, Turku School of Economics and Business Administration87 See e.g. the EU White Paper on transport policy at: ttp://europa.eu.int/comm/energy_transport/library/lb_texte_complet_en.pdfh
195
costs consist not only of costs in the monetary sense, but also of, for example, timesses, pollution, noise and so on. Costing externalities is, however, beyond this
report, but the topic is discussed extensively elsewhere.
ommission (1999) at: http://europa.eu.int/comm/transport/infr-charging/library/crash-cost.pdf
lo
Table O.1. Transport fatalities, casualties and accidents in the EU by mode.Source: Calculating Transport Accident Costs, EU C
Mode Fatalities Casualties Total socio-economic costs, Billion euros **)
Fatality risk per 106
passenger km inUK ***)
Road (1995) 45,000 3,450,000 162.0 (car) 0.004 (bus) 0.0004
Rail (average 88-92) 1,300 4,700 2.7 0.001Aviation 86 *) 183*) 0.5 0.0003Inland waterway and Maritime *)
180 234 1.8 0.006
*) In 1995 within EU; Transport Accident Costs and the Value of Safety, ETSC, 1997**) Within EU; source: Transport Accident and Incident Investigation in the EU (2001); EuropeanTransport Safety Council (ETSC) at: http://www.etsc.be/accinv.pdf***) in 1996; UK Department of Transport
Data on noise, congestion and separation effects in the Baltic States are not readily available. Accident costs are not discussed in this Chapter, but data on road trafficccidents and road safety are provided in the road transport Chapter. Accidents and
but the human and economic impactable O.1).
O.1 Aerial emission in the Baltic States
This section shows data on emissions of transport in the Baltic States. The most recentata available is from the 1990s, but it gives an order of magnitude of the problem,
Dep s 40 to 60 per cent ofO2
emissions. (See Attachment O.1. and O.2.)
ruary 2004, however, the Kyoto Protocol itself is not yet ratified, as e.g. the United States is not likely to ratify it and Russia has recently sent mixedsignals whether or not it will ratify the Protocol.
Especially in the western countries there have been striking improvements in the emissions of air pollutants from new vehicles over the last decade and two further rounds of significant cuts have been agreed in the EU in respect of CO, NOx,
arelated cost occur also in other transport modes,of road transport accidents is by far the largest (T
dand gives a reference point with some other countries in the Baltic Sea Region.
ending on the country, the transport sector typically produceall NOx emissions, 20 to 40 per cent of CO2 emissions, and 10 per cent of S
Most ECMT Member countries have still to identify, in quantitative terms, measuresfor the transport sector that will make a sufficient contribution to meeting theeconomy wide targets set under the 1997 UN Kyoto Protocol on reducing emissionsof CO2. In Feb
196
hydrocarbons, particulate matter and benzene. Important work in this direction is also
owever, at least for the medium term, air quality with respect to NOx, ozone and
carbon, NOx and particulate emissions from both new and existing ehicles remains a challenge.
In Estonia, stricter requirements were established for imported vehicles and the into compliance
with the relevant EU requirements; higher taxes have been imposed on used vehiclesand on vehicles with more powerful engines. Different measures have been implemented to promote the use of public transportation. The system of technical inspection of vehicles has improved as well.
In recent years the Estonian automobile fleet has grown mostly on account of increasing numbers of used cars: ca 80% of them are more than 8 years old and buses are even older, 12-15 years old. At the same time, Russian-built vehicle stock has largely been replaced by used and new western cars.
Table O.2 Emissions into the ambient air from Estonian sources of pollution, thousand tons per year. Source: Transport and Communications 2001, Annual report by the Estonian MoTC 2002
Emissions of pollutants
undertaken by the UN/ECE Inland Transport Committee.
Hparticulate concentrations remains a problem in many locations at a local andsometimes regional scale. The influence of prevailing weather patterns andtopography, as well as traffic conditions, make the nature of air quality concerns specific to location.
In most transition economies, including the Baltic States, developing strategies toreduce CO, hydrov
quality of liquid fuel in 1996. Exhaust gas rates have to be brought
PM SO2 Nox CO CarbohydratesYearP P T P T P T P T
1990 268.5 238.8 13.1 22.6 45.1 59.9 374.2 14.7 70.41995 113.1 110.3 8.3 14.8 27.2 27.2 215.1 6.5 41.01998 69.8 100.9 9.2 14.9 31.1 26.4 254.3 5.7 48.02000 59.5 91.5 4.4 15.3 29.0 19.4 100.2 7.6 14.0
Data source: Information and Technical Centre of the Ministry of the EnvironmentP – stationary sources of pollution ; T – transport; PM – Particulate material (small particles)
he level of pollution inthe city centres in Tallinn and some other major cities. The worst times are the rush hours during summer months. In Tallinn, transport related pollution constitutes more than 90% of the total environmental pollution, caused by the skyrocketing number ofautomobiles.
Although transport related pollution in Estonia remains below the permitted European levels, the NOx and CO emissions exceed the limit values of t
197
O.2 NATURA 2000
NATURA 2000 is a network of protected areas in the European Union covering fragcon rv
Intensif e as well as infrastructural development, fragmentation of nat lin th200 nthro h
wo main EU directives related to nature protection - the so-called Birds Directivend Habitats Directive - form the legal basis for NATURA 2000. These legal EU
Baltic 21 Agenda for sustainable transport
altic 21 is a joint, long-term effort by the 11 countries of the Council of the Baltic ountries differ widely as far as economic, social and
According to Baltic 21, the ideal regional indicators for sustainable transportation support the monitoring of progress and indicate whether the region is on the ”right way” or not, since they are derived from agreed on goals or desired trends. The ideal indicator set:
ile and valuable natural habitats and species of particular importance for these ation of biological diversity within the territory of EU.
ication of agriculturura areas and pollution pose threats to natural habitats, that may lead to a decrease
e local population sizes of many species. The main objective of the NATURA 0 etwork is to ensure the survival of species that are threatened or rareug out Europe.
Tadocuments ensure the protection of certain natural habitats, flora and fauna, as well as the creation of the above-mentioned European network of protected territories. All EU member states share these legal obligations to protect territories included into the NATURA 2000 network.
The construction of new transport infrastructure is among the activities that mayconflict with the objectives of NATURA 2000. However, no projects in the BalticStates were mentioned among the major transport projects in the accession countries that were highlighted in a recent NGO report conflicting with these objectives. 88
O.3
BSea States (CBSS). These cenvironmental preconditions are concerned, but they agree on the long-term goals they wish to attain for the region as a whole89. The goal of Baltic 21 with regard to sustainable tranportation in the Baltic Sea Region consists of two components:
To minimize the negative environmental effects, the consumption of non-renewableresources and use of land for transportation purposes, to protect human health and the environment, in particular the sensitive ecosystems of the region.To retain the ability of transport to serve the economic and social development of the Baltic Sea Region.
88 The NGOs were Transport and Environment, WWF, BirdLife International, Friends of the EarthEurope and CEE Bankwatch Network, and the report is found at:http://www.panparks.org/Newsroom?&file=cikkek&sid=54
89 See: http://www.ee/baltic21/publicat/R1.htm
198
covers all three dimensions of sustainability: environment, economy and social aspects, is based on available data and is comparable in time and among countries or regions and,can easily be understood not only by experts.
The ”right way” can be characterised by effective and efficient measures (processoriented indicators or ”response” indicators) or by their results (outcome oriented indicators). While the outcome is directly linked to agreed on goals, the choice of adequate measures and policy instruments is under intensive discussion and depends on the particular political, cultural and economical situation of each country. However, the measures considered to be important in the Baltic Sea Region have not
O.4 Maritime environment and Helsinki Commission (HELCOM)
The Convention on the Protection of the Marine Environment of the Baltic Sea Area,1992 (entered into force on 17 January 2000), operates under the name Helsinki Commission (HELCOM)90. See Box O.1.
In October 2002 HELCOM compiled a detailed inventory on the current state ofmaritime transportation, and the outlook for the future91. It expects that the amount of
roughly 500 to 1,000 million tonnes, including a tripling in general
e high-ing the
limited space for maneuvering, high ship densities, and a high risk of grounding due
An overall assessment of the statistical risks of ship accidents in the Baltic Sea is to beaccident
scenarios cov rances to major oil terminals.
willintensify efforts to ensure the safety of navigation and emergency capacity in the Baltic Sea Area, by making maritime safety an absolute priority for all Baltic SeaGovernments, especially taking into account seasonal weather conditions.
The declaration also confirmed the commitment to fully implement the obligations setout in the HELCOM Copenhagen Declaration (i.e. the Declaration on the Safety of
yet been defined.
goods being transported each year in the Baltic Sea will eventually double frommillion tonnes
cargo and container traffic as well as oil transportation.
Based on data on ship accidents in the Baltic Sea, HELCOM has identified threrisk areas: the Gulf of Finland, the South-western part of the Baltic includDanish Straits, and the entrances to harbors. These areas are all characterised by
to varying water depths.92
elaborated on the basis of accident inventories, in combination with detailedering the main oil transport routes and ent
According to the 25 June 2003 HELCOM Ministerial declaration93, the members
Navigation and Emergency Capacity in the Baltic Sea Area).
90 ww.helcom.fi/helcom/convention.html See: http://w91See:http://www.helcom.fi/proceedings/bsep92.pdf
//www.helcom.fi/proceedings/bsep87.pdf92 See e.g. http:93 See: http://www.helcom.fi/helcom24/MinDec.pdf
199
Box O.1. HELCOM data on airborne pollution in the Baltic SeaThe annual atmospheric nitrogen deposition of emissions from transport and other sources into theBaltic Sea is estimated at 230,000 tonnes per year, accounting for around 25% of the totalnitrogen input.
Emissions from shipping on the Baltic Sea are a major source of nitrogen.
Approximately 560 tonnes of lead enters the Baltic Sea each year through atmosphericdeposition - about a third of the total input. About a fifth of the total inputs of mercury and cadmium are airborne.
The deposition rates for pollutants are generally highest in the southwestern waters of theBaltic Sea, and decrease northwards.
Airborne pollution reaches the Baltic from many countries outside the region, particularly the
United Kingdom, France, the Netherlands and the Czech Republic.
HELCOM Countries except Russia have had intentions to designate the Baltic Sea asa Particularly Sensitive Sea Area (PSSA), taking into account the sensitivity of theBaltic marine environment. Russia has been invited to join the efforts in enhancing
The availability of the meeting
Currently, thBaltic Sea re
O.5 Conclusion
Environmental issues have become an integral part of policymaking in all sectors ofthe society. In the transport sector, environmental issues have relevance in a numberof fields. Environmental assessments have become standard practice in all infrastructure planning through legislation. This type of regulation is gettingincreasingly stringent in the EU, which will also be adopted in the Baltic States.
Tighter emission controls of vehicles have already been imposed on private and lass of
trucks in 200
The Baltic S n tothe volume of traffic, and efforts need to be intensified to meet ever increasingrequirements through renewal of fleets. Also the monitoring of transport sector’sexternalities need to be intensified.
co-operation within the framework of IMO.
adequate emergency capacity was also addressed, andadopted HELCOM Recommendation 24/9 "Ensuring adequate emergency capacity".
e emergency capacity is not fully adequate in any of the countries in the gion, and it is clearly inadequate in the Baltic States.
commercial vehicles, and these regulations – such as the adoption of EURO 4 c5 - will also grow more rigorous in the near future.
tates have had relatively high aerial emission of transport in relatio
200
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205
Attachment C.1. List of Participants
Name Title Organisation
INTERNATIONAL ORGANISATIONS:
1. World Bank2. World Bank
3. Sr. Health Specialist World Bank 4. Lead Highway Engineer World Bank 5. Lauri Ojala Professor of Logistics TSEBA
6. apio Naula Researcher TSEBA7. Vice President EIB
8. Senior Loan Officer EIB9. Schenker East Oy Ab
10.11.12. S13.14. P EBRD15. Ma TEDIM Secretariat
ES
1. Minister MoEAC 2. Secretary General MoEAC 3. Deputy Secretary General MoEAC
4. a Secretary General MoEAC 5. Priit Enok Counsellor to the Minister MoEAC 6.
ent 7. Heldur Vaher Councel MoEAC
Development and Logistics Dep. 8. Tonis Laks Head of Structural Funds MoEAC
Division9. Head of Transportation and MoEAC
Traffic Division10. M
epartm11. a a xecutiv
lopment and Logistics Dept12. Tiit Kau xecutiv AC
13. Andres Uusma ead ofControl Department
14. Chairman of Management Board Tallinn Airport Ltd. 15. irport Ltd.16. am Estonian Air Navigation Services
Management Board17. Tiit Soorm Head of Development Department Estonian CAA18. Raivo Vare CEO; Ex-Minister of Transport Pakterminal Ltd
and Communications of Estonia19. Enno Lend Vice-Rector Tallinn College of Engineering20. Valev Reinhold Assistant Professor Tallinn College of Engineering21. Oleg Epner Director General Railway Administration22. Erkki Laving Head of Development Department Railway Administration
Roger W. Grawe Country DirectorSr. Transport SpecialistLuisa Velardi
Dominic S. Haazenesar QueirozC
TSauli NiinistoAnn-Louise Aktiv VimontKari Peltonen Regional Director
hoJack S rt Secretary General ECMTLauri Johnson Vice President NIB Yngve oderlund Deputy Regional Manager NIBErkki Karmila Executiv NIBe Vice President
nUrmas aavel Head of Missiotti Ylosjoki Sr. Adviser
TONI :A
Meelis AtonenMarika PriskeAndres Tint Signe R tso Deputy
Anti Moppel Head of Transport Development MoEACand Logistics Departm
lor of Transport
Priit Vene
Margit arkus Head of Aviation and Maritime MoEAC D entAveli K rj E e Officer of Transport MoEAC
Deverla E e Officer of EU and MoE
International Cooperation DeptH Budget and Financial MoEAC
Rein LoikEinari Bambus Director of Development Tallinn AJaan T m CEO; Chairman of
206
23. Reimo Pettai Head of Intern. Ministry of Foreign Affairs
24. Urmas Kase Head of Development Division Parnu County Government25. t and Tallinn Technical University
26. A rector G me Administration27. Riho Sormus Director General nistration28. Sk Road Administration29. r of Program Department Road Administration30. Mart Pu Road Administration31. s Road Administration32. Viivi Perri Loan Program Department Road Administration33. Loan Program Department Road Administration
LIT
1. tas Balcyt s oTC2. il
3. imante
4. 5. Albertas ent Directorate 6. Puodz ukas
7.
8. n Maritime
LATVIA:
1. MoTC 2. g 3. ep. MoTC 4. lations MoTC
5.
6. t
7. ru vilciens” 8. Peteris Romans Deputy Director o MoTC
Planning Department; 9. I ta Rozensteine Deputy Head of Unit of State MoTC
Programs and Statistics10. aiba Pope Senior Officer of Maritime Dep. MoTC11. Maris Pekalis Head of Unit of Road Transport MoTC12. Juris Iesalnieks Director Railway Administration13. Ansis Zeltins Director Maritime Administration14. Guntars Sprogis Head of Development Project Unit Airport “Riga” 15. I ors Kabaskins Vice-Rector for Research and Transport and
Development Affairs Telecommunication Institute16. Edgars Strods Deputy Director of Transport Riga City Council
Department17. Anna Butuzova Senior Officer of the Transit MoTC
Policy Department18. rma Kocane Head of Public Relation Unit MoTC
Cooperation Division
Juri Laving Head of Chair of TransporLogistics; Professor
rvo Veskimets Deputy Di eneral MaritiRoad Admi
Peeter epast Deputy Director GeneralUlle Ka jane Head
ust Head of Loan Program DepartmentTooma Ernits Traffic Safety Department
Arge Sau
HUANIA:
Zigman i Minister MLiudm a Lomakina Secretary of the Ministry MoTC
Briedyte Director of Int. Relations and MoTCREuropean Integration Dep.
Vidmantas Kairys Director of Civil Aviation MoTCAruna Transport InvestmDirector
Director GeneralVirgaudas i Road Administrationigitas DS obilinskas Director General Klaipeda State
Seaport AuthorityEvaldas Zacharevicius Director Lithuania
Safety Administration
Roberts Zile Ministerigo Le zdins State Secretary MoTC V
Arnis Muiznieks Director of Aviation Dustris Caunitis Director of Foreign ReA
Departmentndrians Lublins Director of Passenger MoTCA
Transportation DepartmentGints Peka Expert of the Association Passenger Transpor
AssociationLinda Balti a Chairwoman of the Board SC “Pasazie
f Strategic
n
B
g
Sa
207
Attachment C.2. Program of the 2nd Seminar on Restructuring othe Trans
fport Sector in the Three Baltic States
Scandic Hotel RannaHotell , Ranna puiestee 5, EstoniaNovember 24 and 25, 2003
d EU Members
0
pening plenary session chaired by Mr Cesar Queiroz, The World Bank 0 ns
:1
1:3ia
11:5
12:1 Mr M. Atonen, Minister of MEAC, Estonia
:3
3:1
Afte d by Mr Riho Sõrmus, Estonian Road Administration5:00 Experience in Transport Sector Restructuring
Mr C.Queiroz, The World Bank15:20 Transport Policy Challenges
the 21st century Mr J.Short, ECMT, Secretary General
5:50 Coffee break
6:10 Financial tions Mr S. Niinist President3
16:517:1
for EU Membership Mr V. Legzdins, Latvia, State Secretary y of the Ministry
20:00 Dinner hosted by Mr M. Atonen, Minister of EAC, Estonia
The Estonian Ministry of Economic Affairs and CommunicationsThe World Bank
Parnu,
Seminar language: English
Theme for Day 1: Transport Sector an hip
10: 0 RegistrationCoffee
O11: 0 Welcoming Statement Mr M. Atonen, Minister of Economic Affairs and Communicatio
(MEAC), Estonia11 0 An Overview of Economic Development and Transport in the Baltic States
Mr R.Grawe, The World Bank0 An Overview of Latvian Transport Sector1
Mr R. Zile, Minister of Transport, Latv0 An Overview of Lithuanian Transport Sector
Mr Z. Balcytis, Minister of Transport, Lithuania0 An Overview of Estonian Transport Sector
12 0 DiscussionCoffee
0 Press Conference113:30 Lunch hosted by The World Bank
rnoon plenary session chaire1
in
1
Experience of International Institu o, EIB, Vice 116: 0 Mr U. Paavel, EBRD, Head of Mission
0 Mr E. Karmila, NIB, Executive Vice President0 Preparing the Transport Sector
Mrs L. Lomakina, Lithuania, SecretarMr A. Tint, Estonia, Deputy Secretary General
18:00 DiscussionsCoffee
18:30 Concluding remarks Mr M. Atonen, Minister of MEAC, Estonia
208
he or the Future
:00 L. Ojala, Turku School of Economics
9:4010:0 ce of a major logistics
provider Mr K. Peltonen, Schenker group, Finland
Main themes e.g. : Traffic Safety, Road Finance, Infrastructure needs
ail, moderated by Ms L. Velardi, The World Bank
and Maritime Transport, moderated by Mr L. Ojala, TSEBAMain themes e.g.: Matching demand and supply of port and maritime services,
Main themes e.g.: Airport infrastructure needs, regulating the air services industry
Tran , moderated by Mr K. Peltonen, Schenker groupMain themes e.g.: The impact of EU membership on
stry,
2:3 C
3 0 Preparing the slides of workshop results by groups
as, Lithuanian R Administration
of Workshop results by groups: Roads, Rail, Ports, Aviation, Trade Facilitation
ure Mr R.Vare, C ief Executive Officer,Pakterminal Ltd., Estonia
T me for Day 2: Transport Policy Directions f
Plenary session chaired by Mr Anti Moppel, MEAC, EstoniaPre-seminar questionnaire highlights Mr9
9:20 Transport Education and Research Mr I. Kabaškins, Transport andTelecommunication Institute, Latvia
Development of Airports Mr R.Loik, Tallinn Airport Ltd., Estonia0 Experien
10:20 Instructions for the Modal Sessions, Mr. L. Ojala, TSEBA
10:30 Coffee break10:45 Modal Workshop Sessions: Lessons Learned and Policy Directions
Roads and Road Transportmoderated by Mr C. Queiroz, The World Bank
RMain themes e.g. : Lesson learned from restructuring, rail sector finance, Rail Baltica
Ports
Maritime safety and security Aviation, moderated by Mr J. Tamm, Est. Air Navigation Services
sport Services and Trade Facilitation
competition, costs, service level and structure of logistics induCustoms issues
0 Buffet lunch hosted by The Estonian MEA1
:31
Plenary session chaired by Mr Virgaudas Puodžiuk oad
14:00 Presentation
15:30 Concluding remarks and seminar clos h
209
AttSeminar
. Who owns and maintains the road network in your country by the end of year 2002?
Cent
rnment _____km _____km
Private Sector
1. Is economic an f repair
. d reconstruction was subject to economic an also used for n nstruction?
f the road maintenance nd construction industry has been privatized (including bothon/maintenance and design/engineering institu )?
. is of competitive bidding was used in 2002, including maintenance,
6. To what extent was road design and supervision of works contracted by end-2002 (on a dollar-equivalentbasis, and as a percent of the annual budget)?
of
se indicate, for types of road work done und authority of y administration, the amount which e by force account and by contractor in 2002:
Force Account94 Contractor
pital Improvement _____km _____km
nance _____km _____km
9. For work which is done by contractor, please describe the method y which your adm istration selects a national competitive bidding, international compe bidding). Is the capacity of the localustry adequate to ensure comp tition?
hat was the amount of expenditures in road maintenance and co truction in 2002?
1. What is the structure of the road user charges that apply? For the year 2002, what was the total amount of
12.
3.
a ing, remixing, cold emulsion, road andbridge management systems, use of HDM4 to set priorities for road maintenance/rehabilitation)?
ad roughness survey carried out each year for the main road network? If so, for how manykilometers? Please describe the methodology used to calibrate your roughness measuring devices. What are
nd
achment C.3. Questionnaire for the Baltic States Transport
Management of Road Infrastructure
1Ownership Maintenance
ral Government _____km _____km
Local Gove
_____km _____km
alysis used to determine which road sections should be repaired, and what level oshould be done? What kind of economic analysis is used (HDM or other)?
What percentage of last year’s (2002) road maintenance, rehabilitation, an2economic analysis? Is alysis ew co
o3. How muchconstructi
ations
4. How many staff were employed by your road administration by the end of year 2002?
How much contracting on the bas5rehabilitation, reconstruction, and new construction (on a dollar-equivalent basis, and as a percent of theannual budget)?
7. If routine maintenance is contracted, what kind of contracts are used (e.g., lump sum or unit cost)? Areperformance-based contracts used for road maintenance? Please give length (km) of roads under each typecontract (by the end of 2002).
8. Pleaon
er the our wasd
Ca
Mainte
b incontractor (e.g.,construction ind
titivee
10. W ns
1road user charges that was collected? Please indicate the breakdown. What percentage is from fuel taxes?How much of the road user charges is transferred to the national road administration, and how much for local road organizations?Is there a formal Road Fund that is more than an accounting mechanism? If yes, does it have a Board withrepresentation of the road users? Is the Road Fund effective in providing sufficient funds for roads?
1
Wh t new technologies have been introduced since 2000 (e.g., recycl14.
Is a regular ro15.
the typical IRI (in m/km) values obtained on (i) new or recently rehabilitated/reconstructed pavements, a
94 Force account” is otherwise known as “direct labor,” “depar“ tmental forces,” or “direct work.”
210
(ii) pavements about to be rehabilitated? Do you use other performance measures to gauge the quality of your
6. Have there been improvements in quality control (if so, what are they)? Are independent consultants hired toks? If so, to what extent?
, are unitcosts lower or higher? Do road treatments last longer? Please give basic unit costs of works carried out in
nce of paved roads S$----/km.
18. briefly describe how your administration incorporates resea innov ion into the planning, e, and operation of
19. activities are organized within the road sector; as se rate R&D entities (which?) or other agencies, or within the private ctor?
20. structuring allowed your admin ration to pro etter quality roads?
21. prove your abilit to provide be lity roa s?
22. gn standards currently adop d in your cou y with thos used in EU countries suchk, Finland or Sweden.
.
been considered to improve road safety? Which have been implemented? How have
. Which have been implemented? How
. : Speeding? Seat Belt Usage?
ease provide the following Road Safety data:
roads, pavements, etc.? If so, please describe.
1supervise road and bridge wor
17. What changes in the cost and quality of road maintenance have occurred since 1991? For example
2002, e.g., asphalt concrete US$----/m3, surface treatment US$----/m2, routine maintenaU
Please rch and atdesign, construction, maintenanc roads.
Please specify how research paunder road administration, se
In what ways has re ist vide b
What additional reforms would im y tter qua d
Please comas Denmar
pare the desi te ntr e
23 Please provide a brief description of the road safety situation in your country.
What initiatives have24.they impacted safety levels?
25 Speeding: What initiatives have been considered to decrease speeding?have they impacted levels of speeding?
26. Seatbelt Usage: What is the percentage of seatbelt use? What campaigns exist to increase seatbelt use?
27 Reporting: Which of the following factors are recorded in accident reportsRole of alcohol? What other factors are recorded?
28. Pl
1999 2000 2001 2002Num ents involving personal
uryber of road transport accid
injNumber of injuredNumber of killedTota countryl number of vehicles in the
of which – passenger carsEstimated vehicle-km run
Road
1. e number and distribution of the size by number of vehicles of road tra s i your countryecent data available) in a) road freight transport, b) bus tran taxi s vices?
2. in a) road freight transport compa , b) bus tr port comp es, and c)nt data available, plea indicate the s of companies (by number of vehicles).
3. an road transport industr cking, bus ) has been p ?
4. r training is require establishing a) domestic oad haulage company, andaulage company?
5. icense or training is required for establishi a) a domes pa and b) anbus company?
. Are passenger rates set freely by the companies, or the Governm nt in inter-ci traffic?
pecial reciprocal arrangementswith some countries?
Transport Services
What is th(most r
nsport firm nsport, c) er
How many people are employed nies ans anitaxi service? Using most rece se ize
How much of the inter-urb y (tru es rivatized
What type of operating license o d for rb) internationally operating road h
What type of operating lally operating
ng tic bus com nyinternation
by e ty6
. What is the structure of transit fees for foreign trucks and buses? Are there s7
211
What is the structure of license registration and heavy veh8. icle charges, and have these changed since 2000?
categories?
? How effective are weight controls? What kind of w ed?
11. How are road transport related social aspects (driving and rest hours) being checked (e.g. through roadside ch undertakings)? Are the minimum EU levels of these checks ensured?
1.___
2.ands of latis).
ear 20 01
9. What are the maximum axle weights and maximum total weights for different vehicle
10. Are there special charges for vehicles with heavy loadseigh stations are us
ecks and checks at premises of
Railways
Please provide the following traffic statistics over the past four years (1999-2002):a) Freight ton-km = ___________ Freight train-km = ___________b) Passenger pax-km = _________ Passenger train-km = ______________
Please provide statistics for revenues, in local currency for a) passengers and b) freight. (Estonia andLithuania: in millions of kroons or litas; in Latvia: in thous
Local Currency at end-y 1999 00 20 2002Passenger revenueFreight revenue
3. Please provide statistics over he past 4 years (1999-2002), for total labor es) in local currency (anddollar equivalent) for the railway company/companies. Please indicate how many people are employed by the
4. company /
5. ivately owned? Please describe the ownership structure and the
6. ency (Estoniahousands of latis).
1999 2000 2001 2002
t cost (wag
railway company/companies.
Please provide a short description of the main facilities and equipment possessed by the railwaycompanies.
To what extent are the railways publicly or prlegal form of railway companies.
If public, please provide the income statements of railways for years 1999-2002 in local currand Lithuania: in millions of kroons or litas; in Latvia: in t
RevenueCosts
Of which labor costs Result before depreciationDepreciationResult after depreciationFinancial revenueFinancial costsNet income after financial costs Extraordinary costsNet income before tax Tax etc.,Profit
magnitude andovide subsidies. Do other local authorities provide a subsidy for
8. If public, are tracks and rolling stock repairs and overhauls done by force account or by contract to outside contractors?
. Are the railway companies able to set their own rates, or must they get approval from the Government?
. Does the Government provide a subsidy for railway operators? If so, please give order of7describe the motivation for the decision to pr
ors?railway operat
a) Are parts of the service regulated under Public Service Obligations (PSOs)? If so, please provide themethod applied.b) Are these parts of service concessioned by competitive tender?
9
10. Are the rail operating system and the infrastructure owned and operated jointly, or are they operated asseparate companies? If so, please give the track access charges?
212
11. tional rail infrastructure? If so, please indicate the fee structure. Pleasegive the track access charges.
Air I
. Is the national airline owned and operated by the Government? What is its ownership structure?
2. of the national airline(s) for the years 1999-2002.1999 2000 2001 2002
Can foreign railways operate on the na
nfrastructure and Services
1
Please provide the income statement
RevenueCosts
Of which labor costsResult before depreciation DepreciationResult after depreciationFinancial revenueFinancial costsNet income after financial costsExtraordinary costsNet income before taxTax, etc.Profit
3. Is the national airline subsidized? If yes, give order of magnitude and describe the motivation for the decisionto provide subsidies.
5.
6.a loss? Is it subsidized by the Government?
. f main
Name of the port: 1999 2000 2001 2002
4. What is the basis for assigning landing rights and which authority issues these?
Do foreign airlines have free access to landing rights in major airports?
Are the airports operated by a Government-owned company, or under a concession to a private company? Ifpublic, does it operate at a profit or
7. What is the source of funding for construction and improvement of airports?
Ports
Please provide traffic statistics and activity reports over 1999-2002, as well as a short description o1facilities and equipment.
2. Are the port facilities publicly or privately owned? Are they operated by Governmental entities or privatecompanies? Please make the distinction between infrastructure, superstructure (e.g., warehouses) andequipment in each case.
3. Please provide the income statement of port authorities for the past four years (1999-2002) (Tallinn,Ventspils, Riga, Liepaja, Klaipeda, Butinge)
RevenueCosts
Of which labor costsResult before depreciationDepreciationResult after depreciationFinancial revenueFinancial costsNet income after financial costsExtraordinary costsNet income before taxTax, etc.Profit
4. Is any of the ports subsidized by the Government? If yes, to what extent?
213
5. Are new public investments financed by revenues from port activities or by Government budget? Please giverecent examples of new investments and their financing.
6. escription.
Name of the port: Export Import
Are yard and trucking operations public or private? Please provide a brief d
7. What is the average dwell time in hours, in the port?
General CargoContainersRoll on- Roll off vessels
8. What are the main causes of undue delays under the following heads - Customs, late arrival/presentation ofmanifests/bills of lading, banking requirements under payment terms, unavailability of connecting transport,
ith 5 years ago? Pleasee general labor laws, dock-
with 5 years ago? As far as regional competition is in terms of port charges, quality, performance, and reliability?
s, certificates of
inspected?
Maritime Trans
2. Please name ons that your country has adhered to (ratified) by the end of year
are the main maritime policy issues currently being discussed? Please summarize recent progress in this
4. How is inspection of maritime safety issues (both seaside and portside) functioning? Please summarize main
5. tatistics of the merchant fleet of ships over 100 GT (by number, gross tonnage, and type) for1999-2002.
6. vide statistics of seafarers (by number and job description) for 1999-2002.
bRoa
split ownership, could youestimate percentages for each for the capital and a small sample of cities?
y the local and/or national institutions in 2001 and 2002.
. Is there a system for charging for on-street parking in any major city? How many pay-parking spaces arethere in the capital and any other large city? How many parking spaces are controlled through time limits?
exchange controls, pre-shipment inspection, tardy take-up by consignees, etc.?
9. How many staff are directly employed for port activities? How does this compare wmake the distinction between clerical jobs, port-workers and seamen hired under thworkers and seamen benefiting a special status.
Port authority Stevedoring firmsNum In 1998 In 2002 In 1998 In 2002 ber ofAd inistrative staff mPor workers under labor lawstStevedorers
10. What are the main performance indicators available as regards ship waiting time, handling performance,dwelling time of cargo? How does this compare
Seamen
concerned, what is the situation
11. How many signatures are required by Customs in clearing goods through the port? To what extent can theprocess be considered modern and efficient?
12. What is the approximate proportion of declarations for which supporting documents - invoiceorigin, way-bills, bills of lading etc. - are inspected? What is the approximate proportion ofconsignments/containers which are physically
port
1. How is the maritime administration organized?
the main maritime conventi2002.
3. Whatarea.
issues and recent progress.
Please provide s
Please pro
Ur an Transport Infrastructure and Servicesds and traffic
1. In the largest cities, are major urban roads in municipal or state ownership? If
2. What are the financial arrangements for funding the maintenance, rehabilitation, upgrading and expansion ofurban roads for both state-owned and city-owned road network? Is it done through national road fundallocations? Local road fund? Municipal budget? Please cite amounts spent b
3
214
What technology is being used for pay parking? What is a typical hourly charge for short and long termparking? Who manages the program?
4. Are there commercial off-street parking garages? What are their hourly rates? Are they privately owned andoperated, municipally owned and privately operated, or municipally owned and privately operated?
5. Please cite car ownership per 1,000 population for major cities and nationally. What are the growth rates incar ownership over the last 5 years?
6. What are the traffic growth rates over the last 5 years in the main cities?
ublic transport services
. What is modal split between the car and public transport services (percent of daily travel by public transport
8. What is the ma rivate-owned public transport operators? Please indicate if the carried (both should be included if ava
. Please provide a table showing summary operating statistics for municipal transport companies in the capitalvehicle-km of service by type, staff, passengers
carried).
10. In term f fre eds of public transport services, have there been changes for the betteror worse in the in the period 2001-2002?
11. Please provide atement for municipal transport companies in the capital city for 2001-2002. T tab rating costs broken into wages, energy, parts, miscellaneous,
es, broken into fare revenues, other businessy, and subsidies and compensation from the state.
2. Please indicate the current public transport fare per trip for the capital city and one other main city. Cite theite discounted fares for school children, students, pensioners, etc.
14.
ervices, do public-owned companies bid and win contracts?
?
.
. Is there a national association of urban passenger transport operators? Do they publish statistics for membercompanies?
ity-based Transport Institutions
. Is there a separate public transport authority in the capital city, established to regulate public transportservices? Separate urban roads authority or directorate? Combined? If none of the above, is all transporthandled through municipal departments?
. At the state level, who is responsible for regulating urban transport? If a ministry, is there a separatedepartment? With which functions?
P
7and by car)? Is this changing or stable?
rket breakdown between public-owned and panswer is in terms of vehicles in service, or in terms of passengers ilable).
9city for 2001-2002 (total and in-use fleet by vehicle type,
s o quencies and travel spemajor cities,capital and
a summary financial sthe le should show: (1) ope
depreciation and financial costs; and (2) operating revenurevenues, subsidies and compensation from the municipalitPlease explain sources of subsidy.
1price of a monthly ticket, if available. C
13. Who sets general and discount fares in public transport services: the operators, the municipality, or the state?If state and/or municipality, is there a formula for compensating the operators for revenue losses.
How often are fares adjusted? Is there a specific adjustment formula?
15. Are city transport operators legally separate companies or are they municipal departments? In either case,how are they regulated? Through the budgetary process, service agreement or a negotiated contract? If thereis tendering of s
16. How are private operators regulated? Simple licensing, open tenders? Do they pay any fees? Do they receiveany subsidies? Must they serve passengers claiming discount fares
17. Who sets fares for private operators?
If there is contracting for services, who monitors the performance?18
19
C
20
21
215
General Transport Support Services (freight forwarding, customs brokerage, banking, insurance, customs)
1. Is there free and timely m lays at customsposts? If delays, how long needed to cross the border by road? By rail?
2. Is there a credible international insurance system available for international shippers?
3. Are banking facilities adequate to facilitate payment transactions, both domestically and abroad?
4. What are the main areas of general transport support that need improvement?
5. What were the main changes during 1999-2002 in the legal and regulatory framework relating to provision of logistics services?
6. What are the key obstacles to effective transport and logistics services?
Agent, Forwarder, Customs Broker, Multimodal Transport Operator Association
1. In communication with your customers, to what extent do you use a) the Internet, b) EDI, and c) e-mail, satellitecommunications?
2. Are facilities for such uses satisfactory?
3. Do you use any of the FIATA standard transport documents? If so, which and to what extent?
4. What proportion of your inward consignments are subject to physical inspection by Customs? Are these alsosubject to inspection by other control agencies?
Exporters/Importers Association
1. In communication with your customers, what are your main means of communication - post, telephone, expressdelivery, fax, EDI, Internet, satellite, other?
2. Do you have difficulties in using any of these communication methods? If so, in what respects?
3. Do you have regular, significant difficulties in:Customs clearanceExchange control?If so what sort?
4. What proportion of your import consignments are submitted by Customs to: Documentary inspection?Physical inspection?
What is your view of the efficiency of any physical inspections ?
Customs
1. What is the average time from submission of the import entry to release of goods from your custody, in maritimetrade for a) conventional general merchandise, b) containerised cargo, and c) roll-on/roll-off vehicles at i) exportand ii) import?
2. What are the corresponding times for road-based consignments at main land frontier posts at a) export, and b)imports?
3. What are the corresponding times for airfreight consignments of a) documents, b) non dutiable and de minimis,and c) dutiable, goods?
4. Are the times in the previous three questions static, increasing, or decreasing?
5. Do you consider any of these release times unsatisfactory and if so which? What do you see as the main causes?
6. Do you separate procedures and documentation to give "release" of goods from physical controls from those for"clearance" of the transaction following the satisfaction of fiscal requirements?
Are your paper forms aligned on the UN standard documentary system?
ovement across borders to neighboring countries, or are there de
7.
216
8. Are you using or planning to use computers in any operations? If so which? Do/will these includeexchanges? If so, with whom? Do you use UN/EDIFACT messages?
direct data
9. Do you use/plan to use ASYCUDA or any other proprietary Customs system? If so which? Are you satisfied witha) the product, b) post-implementation support, and c) technological top-up?
10. How many disputes are lodged with/recorded by Customs annually? What is the largest single focus of difference- valuation, classification, temporary importation compliance, other?
11. Do you have an active Customs/Trade Consultative Committee?
Chamber of Commerce
1. What is your membership? Is this statutory or on a voluntary basis?
2. Do you offer advice to exporters and importers on:
National and foreign Customs requirements?Foreign standards, dangerous goods regulations, etc.?Payment systems, including documentary credits?Containerised, multimodal transport?
3. Do you have specialist committees for questions related to:
Customs?Commercial banking?Transport?Communications?Electronic commerce?
4. Do you run courses on any of these subjects? If so, which?
5. Do you have regional Chambers of Commerce, and if yes, in which cities/regions?
Department/Ministry of Trade/Industry
1. Do you have any existing institutional focus for dealing with such trade facilitation tasks as the simplification andstandardisation of documents and formalities, the shift from paper to electronic commerce, and the revision of thenational regulatory framework affecting goods in international movement? If so, of what sort and with whatobjectives?
2. Are you aware of, and/or active in, current WTO enquiries into the nature and needs of international tradefacilitation?
3. Is the Department able to offer rapid, efficient Customs clearance of goods as an inducement to overseascompanies considering direct inward investment in manufacturing?
4. How far does the Department consult small and medium sized companies on the extent to which their overseas trading performance and prospects are affected by Customs and other import/export formalities?
217
218
Attachment D.1. Map of the Baltic States Map by World Bank Map Unit, Map No. 31223
Attachment D.2. Estonia at a glance. Source: The World Bank
Estonia at a glance 8.20.03
Europe & Upper-POVERTY and SOCIAL Central middle-
Estonia Asia income2002Population, mid-year (millions) 1.4 476 331GNI per capita (Atlas method, US$) 4 140 2 160 5 040GNI (Atlas method, US$ billions) 5.6 1 030 1 668
Average annual growth, 1996-02
Population (%) -0.7 0.1 1.2Labor force (%) -0.3 0.4 1.8
Most recent estimate (latest year available, 1996-02)
Poverty (% of population below national poverty line) .. .. ..Urban population (% of total population) 69 63 75Life expectancy at birth (years) 71 69 73Infant mortality (per 1,000 live births) 8 25 19Child malnutrition (% of children under 5) .. .. ..Access to an improved water source (% of population) .. 91 90Illiteracy (% of population age 15+) 0 3 7Gross primary enrollment (% of school-age population) 103 102 105 Male 105 103 106 Female 101 101 105
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1982 1992 2001 2002
GDP (US$ billions) .. 4.2 5.5 6.4
Gross domestic investment/GDP .. 26.9 27.7 27.3Exports of goods and services/GDP .. 60.3 90.6 88.6Gross domestic savings/GDP .. 32.7 24.0 23.3Gross national savings/GDP .. 40.4 21.6 21.1
Current account balance/GDP .. 0.9 -6.1 ..Interest payments/GDP .. 0.0 1.7 2.3Total debt/GDP .. 1.4 51.6 73.9Total debt service/exports .. 0.6 7.4 14.0Present value of debt/GDP .. .. 53.2 ..Present value of debt/exports .. .. 56.7 ..
1982-92 1992-02 2001 2002 2002-06(average annual growth)GDP -0.7 3.7 5.0 5.8 5.0GDP per capita -1.1 4.9 5.5 6.2 5.7Exports of goods and services .. 10.7 -0.2 8.0 7.2
STRUCTURE of the ECONOMY1982 1992 2001 2002
(% of GDP)Agriculture .. 13.1 5.9 5.9Industry .. 34.7 29.2 29.5 Manufacturing .. 22.8 18.8 19.1Services .. 52.2 64.9 64.6
Private consumption .. 51.3 55.8 59.0General government consumption .. 15.9 20.3 17.8Imports of goods and services .. 54.4 94.4 92.7
1982-92 1992-02 2001 2002(average annual growth)Agriculture -7.0 -1.4 -6.7 2.5Industry -8.4 3.4 5.8 5.0 Manufacturing .. 4.0 8.2 5.0Services -3.0 4.4 5.5 2.1
Private consumption -3.0 4.2 9.2 6.0General government consumption -3.6 4.9 2.1 9.8Gross domestic investment -11.9 5.9 6.1 7.4Imports of goods and services .. 11.2 2.1 9.3
Note: 2002 data are preliminary estimates.
This table was produced from the Development Economics central database.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.
-20
-10
0
10
20
30
97 98 99 00 01 02
GDI GDP
Growth of investment and GDP (%)
Estonia
Upper-middle-income group
Development diamond*
Life expectancy
Access to improved water source
GNIpercapita
Grossprimary
enrollment
-10
0
10
20
30
40
97 98 99 00 01 02
Exports Imports
Growth of exports and imports (%)
Estonia
Upper-middle-income group
Economic ratios*
Trade
Domesticsavings
Investment
Indebtedness
219
Estonia
PRICES and GOVERNMENT FINANCE1982 1992 2001 2002
Domestic prices(% change)Consumer prices .. .. 5.8 4.2Implicit GDP deflator -3.3 873.6 5.4 4.3
Government finance(% of GDP, includes current grants)Current revenue .. 32.4 35.2 36.8Current budget balance .. 2.2 2.7 3.6Overall surplus/deficit .. -0.2 0.4 -0.3
TRADE1982 1992 2001 2002
(US$ millions)Total exports (fob) .. 457 3 309 3 878
Food .. 91 265 278 Minerals .. 37 71 77 Manufactures .. 328 2 973 3 523
Total imports (cif) .. 387 4 295 4 817 Food .. 35 404 446 Fuel and energy .. 111 379 450Capital goods .. 129 1 110 1 215
Export price index (1995=100) .. .. 174 181Import price index (1995=100) .. .. 94 96Terms of trade (1995=100) .. .. 185 189
BALANCE of PAYMENTS1982 1992 2001 2002
(US$ millions)Exports of goods and services .. 659 5 007 5 568Imports of goods and services .. 707 5 216 5 821Resource balance .. -48 -209 -254
Net income .. -13 -283 -275Net current transfers .. 97 151 183
Current account balance .. 36 -339 ..
Financing items (net) .. 46 267 ..Changes in net reserves .. -82 72 -394
Memo:Reserves including gold (US$ millions) .. 196 906 1 217Conversion rate (DEC, local/US$) .. 3.1 17.5 16.6
EXTERNAL DEBT and RESOURCE FLOWS1982 1992 2001 2002
(US$ millions)Total debt outstanding and disbursed .. 58 2 852 4 739
IBRD .. 1 65 39 IDA .. 0 0 0
Total debt service .. 4 383 796 IBRD .. 0 13 44 IDA .. 0 0 0
Composition of net resource flows Official grants .. 71 45 .. Official creditors .. 11 -12 -63 Private creditors .. 22 54 1 330 Foreign direct investment .. 82 539 .. Portfolio equity .. 0 32 ..
World Bank program Commitments .. 30 0 0 Disbursements .. 1 6 5 Principal repayments .. 0 9 40 Net flows .. 1 -3 -35 Interest payments .. 0 4 4 Net transfers .. 1 -7 -39
Note: This table was produced from the Development Economics central database. 8.20.03
-15
-10
-5
0
96 97 98 99 00 01 02
Current account balance to GDP (%)
0
2 000
4 000
6 000
96 97 98 99 00 01 02
Exports Imports
Export and import levels (US$ mill.)
0
5
10
15
20
25
97 98 99 00 01 02
GDP deflator CPI
Inflation (%)
G: 1 590
A: 39 D: 28
F: 3 078
E: 4
Composition of 2002 debt (US$ mill.)
A - IBRDB - IDAC - IMF
D - Other multilateralE - BilateralF - PrivateG - Short-term
220
Attachment D.3. Latvia at a glance. Source: The World Bank
Latvia at a glance 8.20.03
Europe & Upper-POVERTY and SOCIAL Central middle-
Latvia Asia income2002Population, mid-year (millions) 2.3 476 331GNI per capita (Atlas method, US$) 3 480 2 160 5 040GNI (Atlas method, US$ billions) 8.1 1 030 1 668
Average annual growth, 1996-02
Population (%) -1.1 0.1 1.2Labor force (%) -0.9 0.4 1.8
Most recent estimate (latest year available, 1996-02)
Poverty (% of population below national poverty line) .. .. ..Urban population (% of total population) 60 63 75Life expectancy at birth (years) 70 69 73Infant mortality (per 1,000 live births) 12 25 19Child malnutrition (% of children under 5) .. .. ..Access to an improved water source (% of population) .. 91 90Illiteracy (% of population age 15+) 0 3 7Gross primary enrollment (% of school-age population) 100 102 105
Male 101 103 106Female 100 101 105
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1982 1992 2001 2002
GDP (US$ billions) .. 6.4 7.7 8.4
Gross domestic investment/GDP 30.7 41.2 27.3 27.6Exports of goods and services/GDP .. 79.9 44.8 45.7Gross domestic savings/GDP 34.5 48.1 18.8 19.5Gross national savings/GDP .. .. 19.6 19.5
Current account balance/GDP .. 3.3 -7.0 -6.8Interest payments/GDP .. 0.0 1.5 1.4Total debt/GDP .. 1.0 74.5 ..Total debt service/exports .. 0.0 13.2 ..Present value of debt/GDP .. .. 72.4 ..Present value of debt/exports .. .. 141.9 ..
1982-92 1992-02 2001 2002 2002-06(average annual growth)GDP -0.1 3.4 7.9 6.1 6.0GDP per capita -0.4 4.7 8.5 7.2 6.8Exports of goods and services .. 4.5 6.5 6.1 7.9
STRUCTURE of the ECONOMY1982 1992 2001 2002
(% of GDP)Agriculture 15.7 17.6 4.5 4.5Industry 47.0 34.9 26.1 26.4
Manufacturing 42.2 28.2 14.8 14.8Services 37.3 47.5 69.4 69.1
Private consumption 57.7 39.4 59.4 58.5General government consumption 7.8 12.5 21.8 22.0Imports of goods and services .. 73.1 53.4 53.8
1982-92 1992-02 2001 2002(average annual growth)Agriculture -0.8 -2.0 3.5 3.5Industry -0.2 1.4 7.0 7.0
Manufacturing 1.3 1.2 6.0 6.0Services 0.8 5.7 14.0 3.9
Private consumption -2.5 3.6 0.8 5.9General government consumption 4.0 5.0 45.8 6.5Gross domestic investment -3.6 4.0 9.4 5.8Imports of goods and services .. 4.6 6.1 6.0
Note: 2002 data are preliminary estimates.
This table was produced from the Development Economics central database.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.
-20
0
20
40
60
97 98 99 00 01 02
GDI GDP
Growth of investment and GDP (%)
Latvia
Upper-middle-income group
Development diamond*
Life expectancy
Access to improved water source
GNIpercapita
Grossprimary
enrollment
-10
0
10
20
30
40
97 98 99 00 01 02
Exports Imports
Growth of exports and imports (%)
Latvia
Upper-middle-income group
Economic ratios*
Trade
Domesticsavings
Investment
Indebtedness
221
Latvia
PRICES and GOVERNMENT FINANCE1982 1992 2001 2002
Domestic prices(% change)Consumer prices .. .. 2.9 2.4Implicit GDP deflator 2.3 975.9 2.5 1.8
Government finance(% of GDP, includes current grants)Current revenue .. 28.1 38.7 39.1Current budget balance .. 1.4 1.9 2.6Overall surplus/deficit .. -0.8 -1.7 -1.4
TRADE1982 1992 2001 2002
(US$ millions)Total exports (fob) .. .. 2 162 2 368 n.a. .. .. .. .. n.a. .. .. .. .. Manufactures .. .. 1 810 1 954
Total imports (cif) .. .. 3 323 3 630 Food .. .. 317 359 Fuel and energy .. .. 143 152 Capital goods .. .. 575 624
Export price index (1995=100) .. .. 104 108Import price index (1995=100) .. .. 110 113Terms of trade (1995=100) .. .. 94 96
BALANCE of PAYMENTS1982 1992 2001 2002
(US$ millions)Exports of goods and services .. 1 159 3 537 3 893Imports of goods and services .. 1 061 4 211 4 585Resource balance .. 99 -674 -691
Net income .. 2 124 105Net current transfers .. .. 17 19
Current account balance .. 207 -533 -568
Financing items (net) .. -72 553 656Changes in net reserves .. -135 -20 -88
Memo:Reserves including gold (US$ millions) .. .. .. ..Conversion rate (DEC, local/US$) .. 0.2 0.6 0.6
EXTERNAL DEBT and RESOURCE FLOWS1982 1992 2001 2002
(US$ millions)Total debt outstanding and disbursed .. 65 5 710 .. IBRD .. 0 243 .. IDA .. 0 0 ..
Total debt service .. 0 516 .. IBRD .. 0 24 .. IDA .. 0 0 ..
Composition of net resource flows Official grants .. 53 80 .. Official creditors .. 18 17 .. Private creditors .. 14 697 .. Foreign direct investment .. 29 177 .. Portfolio equity .. 0 6 ..
World Bank program Commitments .. 45 0 .. Disbursements .. 0 22 .. Principal repayments .. 0 11 .. Net flows .. 0 11 .. Interest payments .. 0 13 .. Net transfers .. 0 -2 ..
Note: This table was produced from the Development Economics central database. 8.20.03
-15
-10
-5
0
96 97 98 99 00 01 02
Current account balance to GDP (%)
0
1 000
2 000
3 000
4 000
96 97 98 99 00 01 02
Exports Imports
Export and import levels (US$ mill.)
0
5
10
15
20
97 98 99 00 01 02
GDP deflator CPI
Inflation (%)
G: 3 035
A: 243
D: 295C: 24
F: 2 070
E: 43
Composition of 2001 debt (US$ mill.)
A - IBRDB - IDAC - IMF
D - Other multilateralE - BilateralF - PrivateG - Short-term
222
Attachment D.4. Lithuania at a glance. Source: The World Bank
Lithuania at a glance 8.2
Euro
0.03
pe & Upper-POVERTY and SOCIAL Central middle-
Lithuania Asia income2002Population, mid-year (millions) 3.5 476 331GNI per capita (Atlas method, US$) 3 660 2 160 5 040GNI (Atlas method, US$ billions) 12.7 1 030 1 668
Average annual growth, 1996-02
Population (%) -0.6 0.1 1.2Labor force (%) -0.4 0.4 1.8
Most recent estimate (latest year available, 1996-02)
Poverty (% of population below national poverty line) .. .. ..Urban population (% of total population) 69 63 75Life expectancy at birth (years) 73 69 73Infant mortality (per 1,000 live births) 9 25 19Child malnutrition (% of children under 5) .. .. ..Access to an improved water source (% of population) 67 91 90Illiteracy (% of population age 15+) 0 3 7Gross primary enrollment (% of school-age population) 101 102 105
Male 102 103 106Female 101 101 105
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1982 1992 2001 2002
GDP (US$ billions) .. 11.4 11.9 13.8
Gross domestic investment/GDP .. 15.7 21.8 22.5Exports of goods and services/GDP .. 23.4 50.9 45.0Gross domestic savings/GDP .. 19.2 16.3 16.5Gross national savings/GDP .. .. 16.9 17.0
Current account balance/GDP .. .. -4.8 ..Interest payments/GDP .. 0.0 1.8 1.7Total debt/GDP .. 0.5 44.2 44.9Total debt service/exports .. 0.3 30.6 31.8Present value of debt/GDP .. .. 43.7 ..Present value of debt/exports .. .. 81.9 ..
1982-92 1992-02 2001 2002 2002-06(average annual growth)GDP .. 2.5 6.5 6.7 5.4GDP per capita .. 3.2 7.3 6.9 5.5Exports of goods and services .. 6.0 20.8 3.5 7.3
STRUCTURE of the ECONOMY1982 1992 2001 2002
(% of GDP)Agriculture .. 14.3 7.1 7.2Industry .. 42.9 34.9 34.7
Manufacturing .. 34.4 23.2 23.1Services .. 42.8 58.0 58.0
Private consumption .. 67.8 67.7 67.2General government consumption .. 13.1 16.0 16.3Imports of goods and services .. 19.9 56.4 51.0
1982-92 1992-02 2001 2002(average annual growth)Agriculture .. -0.6 -6.9 3.0Industry .. 3.4 16.4 4.0
Manufacturing .. 5.0 18.0 4.0Services .. 3.4 2.6 5.9
Private consumption .. 6.2 3.0 21.6General government consumption .. 1.0 0.4 10.1
oss domestic investment .. 6.4 19.5 9.3GrImports of goods and services .. 7.5 17.7 8.7
Note: 2002 data are preliminary estimates.
This table was produced from the Development Economics central database.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.
-20
-10
0
10
20
30
40
97 98 99 00 01 02
GDI GDP
Growth of investment and GDP (%)
Lithuania
Upper-middle-income group
Development diamond*
Life expectancy
Access to improved water source
GNIpercapita
Grossprimary
enrollment
-20
-10
0
10
20
30
97 98 99 00 01 02
Exports Imports
Growth of exports and imports (%)
Lithuania
Upper-middle-income group
Economic ratios*
Trade
Domesticsavings
Investment
Indebtedness
223
Lith
NCE1982 1992 2001 2002
uania
PRICES and GOVERNMENT FINA
Domestic prices(% change)Consumer prices .. .. 1.3 -1.6Implicit GDP deflator .. 942.3 -0.2 0.0
Government finance(% of GDP, includes current grants)Current revenue .. 30.5 29.8 29.2Current budget balance .. -42.9 -0.2 0.3Overall surplus/deficit .. -45.7 -2.0 -1.5
TRADE1982 1992 2001 2002
(US$ millions)Total exports (fob) .. 1 142 4 889 5 212 Mineral products .. .. 1 082 992 Agriculture and food .. .. 567 658 Manufactures .. .. 1 947 1 989
Total imports (cif) .. .. 6 353 6 521 Food .. .. 397 414 Fuel and energy .. .. 509 1 709 Capital goods .. .. 897 1 027
Export price index (1995=100) .. .. 107 110Import price index (1995=100) .. .. 95 95Terms of trade (1995=100) .. .. 113 117
BALANCE of PAYMENTS1982 1992 2001 2002
(US$ millions)Exports of goods and services .. 1 272 6 046 6 409Imports of goods and services .. 1 232 6 697 7 261Resource balance .. 40 -651 -852
Net income .. 16 -180 -280Net current transfers .. .. 258 249
Current account balance .. .. -574 ..
Financing items (net) .. .. 899 ..Changes in net reserves .. -125 -325 -272
Memo:Reserves including gold (US$ millions) .. 106 1 669 ..Conversion rate (DEC, local/US$) .. 0.3 4.0 3.7
EXTERNAL DEBT and RESOURCE FLOWS1982 1992 2001 2002
(US$ millions)Total debt outstanding and disbursed .. 56 5 253 6 199
IBRD .. 0 273 279IDA .. 0 0 0
Total debt service .. 4 1 937 2 091IBRD .. 0 29 40IDA .. 0 0 0
Composition of net resource flowsOfficial grants .. 68 94 ..Official creditors .. 10 10 -18Private creditors .. -3 91 42Foreign direct investment .. 0 446 ..Portfolio equity .. 0 -16 ..
World Bank programCommitments .. 60 0 0Disbursements .. 0 40 16Principal repayments .. 0 13 26Net flows .. 0 27 -10Interest payments .. 0 15 14Net transfers .. 0 12 -24
Note: This table was produced from the Development Economics central database. 8.20.03
-15
-10
-5
0
96 97 98 99 00 01 02
Current account balance to GDP (%)
0
2 500
5 000
7 500
96 97 98 99 00 01 02
Exports Imports
Export and import levels (US$ mill.)
-5
0
5
10
15
20
25
97 98 99 00 01 02
GDP deflator CPI
Inflation (%)
G: 2 123
A: 279
D: 169C: 121
F: 3 271
E: 236
Composition of 2002 debt (US$ mill.)
A - IBRDB - IDAC - IMF
D - Other multilateralE - BilateralF - PrivateG - Short-term
224
Attachment D.5. Transport sector balance of payments in the Baltic States, million USD. Sources: Bank of Estonia, Bank of Latvia, Bank of Lithuania and The WorldBank (GDP data: World Development Indicators)
Estonia Latvia Lithuania1999 2000 2001 2002 1999 2000 2001 2002 1999 2000 2001 2002
Sea transport balance 191.8 184.2 204.0 232.4 306.3 403.8 376.9 334.9 91.1 134.1 138.9 137.1credit 357.7 372.9 388.8 439.4 323.3 465.3 439.4 411.0 139.1 180.3 180.2 208.4debet -165.9 -188.7 -184.8 -207.0 -16.9 -61.5 -62.5 -76.1 -48.0 -46.2 -41.3 -71.3
Passenger balance 83.8 71.6 64.8 76.0 0.5 -0.2 -0.7 -4.2 3.0 2.8 4.6 5.7credit 114.6 109.5 112.9 131.1 0.6 0.6 0.4 0.7 3.0 2.8 4.6 5.7debet -30.8 -37.9 -48.1 -55.1 -0.1 -0.9 -1.2 -4.9 0.0 0.0 0.0 0.0
Freight balance 16.6 6.2 23.0 53.2 83.3 117.9 163.4 168.6 38.8 34.3 35.4 4.7credit 109.1 118.9 120.1 150.4 97.6 143.5 178.8 188.5 68.0 65.7 65.9 65.3debet -92.5 -112.7 -97.1 -97.2 -14.3 -25.6 -15.4 -19.9 -29.2 -31.5 -30.4 -60.7
Other balance 91.4 106.4 116.2 103.2 222.5 286.2 214.2 170.6 49.4 97.0 98.8 126.7credit 134.0 144.5 155.8 157.9 225.1 321.2 260.1 221.8 68.2 111.7 109.7 137.3debet -42.6 -38.1 -39.6 -54.7 -2.6 -35.1 -45.9 -51.3 -18.8 -14.8 -10.9 -10.6
Air transport balance 26.7 26.0 25.1 30.1 -11.3 -4.3 -7.1 -3.7 16.0 17.8 16.8 25.7credit 52.1 49.4 49.9 62.1 55.0 61.5 54.5 59.1 46.9 43.7 46.1 53.5debet -25.4 -23.4 -24.8 -32.0 -66.3 -65.8 -61.5 -62.7 -30.9 -25.8 -29.3 -27.7
Passenger balance 26.7 26.5 26.7 29.8 -20.3 4.8 -3.3 -0.9 24.4 22.5 24.8 31.0credit 34.6 35.2 35.8 45.9 32.8 36.3 26.9 30.4 29.7 26.9 28.0 34.4debet -7.9 -8.7 -9.1 -16.1 -53.1 -31.6 -30.3 -31.3 -5.4 -4.4 -3.2 -3.4
Freight balance 0.4 -0.4 -0.6 -0.7 -4.1 -7.2 -6.6 -8.3 -5.4 -2.0 -1.6 -3.1credit 3.4 3.0 3.6 2.9 2.2 2.8 4.1 4.7 2.0 3.6 3.7 3.6debet -3.0 -3.4 -4.2 -3.6 -6.3 -10.0 -10.7 -12.9 -7.4 -5.6 -5.3 -6.6
Other balance -0.4 -0.1 -1.0 1.0 13.2 -1.9 2.9 5.5 -3.0 -2.7 -6.4 -2.2credit 14.1 11.2 10.5 13.3 20.0 22.4 23.4 24.0 15.1 13.2 14.4 15.5debet -14.5 -11.3 -11.5 -12.3 -6.9 -24.3 -20.6 -18.5 -18.1 -15.9 -20.8 -17.7
Other transport balance 102.7 93.9 75.5 50.2 226.7 160.0 191.9 208.0 78.9 118.7 139.5 194.3credit 289.3 301.3 354.5 574.0 334.3 268.7 275.8 301.8 213.3 267.8 305.6 393.0debet -186.6 -207.4 -279.0 -523.8 -107.7 -108.7 -83.8 -93.7 -134.5 -149.1 -166.1 -198.6
Passenger balance 2.2 1.3 1.0 1.9 1.1 2.9 5.8 7.1 5.1 5.0 3.9 6.7credit 3.6 3.6 5.1 4.6 1.3 4.4 6.4 8.3 8.6 8.8 9.0 11.0debet -1.4 -2.3 -4.1 -2.7 -0.2 -1.5 -0.6 -1.2 -3.5 -3.9 -5.1 -4.
Freight balance 8.6 5.4 4.1 -12.9 119.4 106.0 172.2 192.2 88.5 128.2 151.1 201.4credit 175.1 190.6 266.7 494.7 166.4 180.3 230.6 259.5 198.2 252.6 288.5 368.2debet -166.5 -185.2 -262.6 -507.6 -47.1 -74.2 -58.3 -67.3 -109.7 -124.4 -137.4 -166.9
Other balance 91.9 87.2 70.4 61.2 106.2 51.0 13.9 8.8 -14.7 -14.5 -15.5 -13.7credit 110.6 107.1 82.7 74.7 166.6 84.1 38.8 34.0 6.6 6.4 8.1 13.7debe
3
t -18.7 -19.9 -12.3 -13.5 -60.4 -33.0 -25.0 -25.2 -21.3 -20.9 -23.6 -27.5Transport balance 321.2 304.1 304.6 312.7 521.7 559.5 561.7 539.3 186.0 270.6 295.2 357.2
(All) credit 699.1 723.6 793.2 1075.5 712.7 795.5 769.6 771.9 399.3 491.7 531.9 654.8debet -377.9 -419.5 -488.6 -762.8 -190.9 -236.1 -207.9 -232.6 -213.3 -221.1 -236.7 -297.6
Services balance 563.9 562.2 580.4 488.5 336.0 442.7 495.9 544.5 305.4 380.2 456.5 543.5(All) credit 1488.9 1497.7 1649.1 1985.6 1024.5 1212.7 1189.0 1252.3 1091.7 1058.9 1156.8 1478.8
debet -925.0 -935.5 -1068.7 -1497.1 -688.5 -769.9 -693.1 -707.8 -786.3 -678.7 -700.3 -935.3Transport balance 57.0 54.1 52.5 64.0 155.3 126.4 113.3 99.0 60.9 71.2 64.7 65.7
% share of credit 47.0 48.3 48.1 54.2 69.6 65.6 64.7 61.6 36.6 46.4 46.0 44.3 services debet 40.9 44.8 45.7 51.0 27.7 30.7 30.0 32.9 27.1 32.6 33.8 31.8Transport balance 6.2 5.9 5.5 4.9 7.8 7.8 7.3 6.4 1.7 2.4 2.5 2.6
% share of GDP credit 13.5 14.1 14.4 16.8 10.7 11.1 10.0 9.2 3.7 4.4 4.5 4.7debet -7.3 -8.2 -8.8 -11.9 -2.9 -3.3 -2.7 -2.8 -2.0 -2.0 -2.0 -2.
Goods balance -821.7 -767.3 -788.4 -1102.6 -1027.1 -1058.1 -1350.7 -1444.2 -1404.5 -1103.8 -1108.0 -1336.8(All) credit 2515.4 3308.7 3359.3 3516.2 1889.1 2058.3 2215.8 2575.7 3146.7 4050.4 4888.9 6030.7
debe
2
t -3337.1 -4076.0 -4147.7 -4618.8 -2916.1 -3116.5 -3566.5 -4020.0 -4551.3 -5154.2 -5996.9 -7367.6
225
Attachment D. 6. International transport agreements andconventions ratified by the Baltic States, Finlandand Poland. Source: Unece 2003.
Estonia
Latvi
a
Lithu
ania
Finlan
d
Poland
Infra- Construction Traffic Arteries, 1950 X Xstructure E Road Network (AGR), 1975 X X X Xnetworks E Rail Network (AGC), 1985 X X
E Comb. Tr. Network (AGTC), 1991 S XProtocol Inl. Nav. to AGTC, 1997E Inl. Water Network (AGN), 1996 X S
Road Road Traffic, 1949 X Xtraffic Road Traffic, 1968 X X X X X
Road Signs & Signals, 1949 X XRoad Signs & Signals, 1968 X X X X XSuppl. 1968 Convention Road Traffic, 1971 X X X XSuppl.1968 Conv. Road Signs & Signals, 1971 X X X X XWeights and Dimensions, 1950Suppl. 1949 Conv. and Protocol, 1950 XRoad Markings, 1957Protocol Road Markings, 1973 X XDriving Permits (APC), 1975
Vehicles Vehicles Regulations, 1958 X X X X XTechn. Inspect. Vehicles, 1997 X XGlobal Vehicles Regulations , 1998
Road Work of Crews Int. Road Transport (AETR), 1970 X X X X Xtransport Taxation Priv. Road Vehic. , 1956 X X
Taxation Road Passenger Vehic. , 1956 X X XTaxation Road Goods. Vehic. , 1956 X X XContract Road Goods Transport (CMR) ,1956 X X X X XProtocol to CMR, 1978 X X X XContract Pass. & Lugg. Rd. Transp. (CVR) , 1973 XProtocol to CVR, 1978 XEcon. Regulat. Road Transp. , 1954
Inland Collision Inl. Nav. , 1960 Xnavigation Registr. Inl. Nav. Vessels, 1965
Measurement Inl. Nav. Vessels, 1966Liability Vessel Owners (CLN), 1973Protocol to CLN, 1978Contract Inl. Nav. Pass. & Lugg. (CVN) , 1976Protocol to CVN, 1978
Border Touring Facilities, 1954 X Xcrossing Temp. Import. Priv. Road Vehicles, 1954 X X Xfacilitation TIR Convention, 1959 X X
TIR Convention, 1975 X X X X XTemp. Import.Aircraft & Boats, 1956 XTemp. Import. Commerc. Vehicles, 1956 X X XCross. Front. Pass. Bagg. Rail, 1952Cross. Front. Goods Rail, 1952Spare Parts Europ Wagons, 1958Customs Container Convention, 1956 X XCustoms Container Convention, 1972 X X XCustoms Treatment Pallets, 1960 X XHarmoniz. Frontier Controls Goods, 1982 X X X XCustoms Pool Containers, 1994 X
Dangerous Dang. Goods by Road (ADR) , 1957 X X X X Xgoods and Protocol to ADR, 1993 X X X X Xspecial Liabil. Dang. Goods (CRTD) , 1989cargoes Dang. Goods by Inland Waterways (ADN), 2000
Perishable Foodstuffs ATP), 1970 X X X X XTotal number of agreements/conventions 13 17 19 32 32
X = Ratification, accession, definite signatureS = Signature
226
Attachment D.7. Domestic freight and passenger statistics for Lithuania. Source: Statistics Lithuania at: http://www.std.lt/web/main.php
Freight transport Lithuania
1996 1997 1998 19991995 2000 2001 2002Total.thous.tonnes 188 770 143 770 117 113 115 136 101 326 109 077 115 128 116 563
Railways 26 004 29 138 30 498 30 912 28 347 30 712 29 174 36 650
Roads 138 329 88 638 58 773 54 631 45 651 45 013 45 075 45 047
Oil pipelines 18 110 20 724 22 584 24 087 22 249 27 981 35 627 29 539
Sea 5 841 4 693 4 541 4 165 4 280 4 515 4 706 4 809
Inland waterways 484 576 714 1 338 797 852 543 515
Air 3 2 3 3 3 3 3 3Total, million tonne-kilometres1) 14 409 14 612 16 437 16 857 18 223 20 149 20 798 25 371
Railways 7 220 8 103 8 622 8 265 7 849 8 919 7 741 9 767
Roads 5 160 4 191 5 146 5 611 7 740 7 769 8 274 10 709
Oil pipelines 2 006 2 308 2 656 2 964 2 627 3 457 4 780 4 892
Inland waterways 18 7 9 14 3 1 1 1
Sea 4 3 4 3 3 4 3 3
Passengers carried by public transport Lithuania
1995 1996 1997 1998 1999 2000 2001 2002Total. thous. 694 683 609 414 551 379 516 243 471 930 383 243 355 874 358 325
Railways 15 236 14 190 12 557 12 195 11 527 8 852 7 718 7 217
Roads 678 163 593 475 537 080 502 139 458 328 372 684 346 401 347 783
buses 405 686 361 648 346 834 316 158 273 492 213 350 182 099 182 118
trolleybuses 272 477 231 827 190 245 185 981 184 835 159 334 164 301 165 665
Sea 39 41 36 44 51 64 69 58
Inland waterways 1 003 1 470 1 435 1 564 1 728 1 300 1 324 2 890
Air 242 239 271 302 296 343 363 376
Total mill. passenger-kilometres 5 699 4 933 4 444 4 205 3 831 3 272 3 180 3 107
Railways 1 130 953 842 800 745 611 533 498
Roads 4 169 3 601 3 191 2 964 2 665 2 154 2 119 2 046
buses 3 334 2 879 2 603 2 390 2 096 1 666 1 617 1 540
trolleybuses 835 722 588 574 569 488 502 505
Sea 28 25 26 28 32 44 43 36
Inland waterways 2 2 4 3 2 2 1 3
Air 370 352 381 410 387 461 484 524
227
Attachment D.8. EU’s priority transport projects by Van MieGroup and transport corridors in the Baltic Se
rta
Region as presented in Fall 2003. Source: Finnish inistry of Transport and Communications 2003M
228
Attachment D.9. TEN, TINA and Helsinki transport networks
Source: Kallstrom, L. and Ingo, S. (2000) Sea Transports in the Baltic Sea; Trends and consequences for urban structure and regional development in the Baltic Sea region; On behalf of the Interreg II C projects Matros and Urban Systems & Urban Networking in the Baltic Sea Region, June 2000
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Ports and main networks for road and rail transport according to TEN, TINA and Helsinki networks
229
Attachment D.10. Anticipated TEN-T Road and rail networkdensities in 2010. Source: TEN-T Invest 2003
Road network
Rail network
230
Attachment D.11. The main population centres in theBaltic Sea RegionKallstrom, L. and Ingo, S. (20Source: 00) Sea Transports in the BalticSea; Trends and consequences for urban structure and regional development in the Baltic Sea region; On behalf of the Interreg II C projects Matros and Urban Systems & Urban Networking in the Baltic Sea Region, June 2000
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Attachment D.12. Overview of organisations' transport researchcapacity in the Baltic States in 2000, SourceNTF-RECAP study, available at:
:
http://www.ntf-recap.org/download.php
English name
1 A
ir Tr
ansp
ort
2 Se
a tra
nspo
rt
3 R
oad
trans
port
4 R
ailt
rans
port
5 In
term
odal
tran
spor
t
6 Pu
blic
trans
port
7 Lo
gist
ics
8 Tr
ansp
ort p
olic
y
9 Tr
ansp
ort t
elem
atic
s / IT
10 E
cono
mic
issu
es
11 E
nviro
nmen
tal i
ssue
s
12 S
ocia
l iss
ues
13 M
etho
ds a
nd m
odel
s
Nat
iona
l res
earc
h pr
ogr.
EU /
inte
rnat
. res
. pr
ogr.
Org
anis
. of c
onfe
r. /s
emin
ars
Publ
ic. i
n re
fere
ed jo
urna
ls
Has
web
site
Poas
tgra
duat
e st
uden
ts
Num
. of p
rinci
pal e
xper
ts
Num
of d
octo
rs /
prof
esso
rs
EstoniaEstonian Institute for FutureStudies
X X X X X X X X X 6 2
IB STRATUM X X X X X X X X X X X X X X 4 1
Road Laboratory Ltd X X X X X X X 3 2
Tallinn College of Engineering X X X X X X X X 12
Tallinn Technical University,Chair of Automotive Engineering
X X X 5 3
Tallinn Technical University,Institute of Transportation
X X X X X X X X X X X X X X X X 5 2
Technical Center of EstonianRoads
X X X X X X X 12
University of Tartu, Faculty of Biology and Geography, Instituteof Geography
X X X X X X X X X X X X 25 15
LatviaAir Navigation, group of institute X X X X X 12 7
Environment Consultancy Bureau X X X X X X X X X X
Latvian Maritime Academy X X X X X X X X 12 7
Latvia University of Agriculture,Motor Vehicle Institute
X X X X X X X X X 11? 8
Rezekne Institutution of HigherEducation
X X X X X X X X 16
Riga Technical University,Division of Modelling andSimulation
X X X X X X X X X X 7? 4
Riga Technical University,Professors Group “BusinessLogistics and Transport
onomics”Ec
X X X X X X X X X 2 2
TrTe
ansport andlecommunication Institute
X X X X X X X X X X X X X X X 84 64
Lithuaniaaunas University of Technology XK X X X X X X X X X X X X 29 28
KlIn
aipeda University, Maritimestitute
X X X X X X X 3 7
Klaipeda University, ShippingepartmentD
X X X X X X X X X X 3 3
TrIns
ansport and Rroad Researchtitute (TKTI)
X X X X X X X X X X X X X X X X X X 18 8
Vilnius Gediminas TechnicalUniversity, Transport ResearchInstitute
X X X X X X X X X X X X X X X X X X 88 81
232
233
Attachment E.1. Main trading partners of Estonia, Latvia and Lithuania in 2000 and 2002. Source: StatisticsLithuania, 2001 - 2003.
ESTONIA'S Rank Rank %-Share %-Share ESTONIA'S Rank Rank %-Share %-ShareEXPORT TO: 2000 2002 2000 2002 IMPORT FRO 2000 2002 2000 2002Finland 1. 1. 32.3 24.8 Finland 1. 1. 27.5 17.1Sweden 2. 2. 20.5 15.3 Germany 3. 2. 9.5 11.2Germany 3. 3. 8.6 9.9 Sweden 2. 3. 9.8 9.5Latvia 4. 4. 7.0 7.4 Russia 4. 4. 8.5 7.4United Kingdom 5. 5. 4.4 4.8 China 6. 5. 3.5 5.2Denmark 6. 6. 3.5 4.4 Italy 7. 6. 2.9 4.6Lithuania 7. 7. 2.8 3.5 Japan 5. 7. 6.1 3.8Netherlands 8. 8. 2.5 3.4 Lithuania 15. 8. 1.6 3.3Norway 10. 9. 2.4 3.4 United States 11. 9. 2.2 3.2Russia 9. 10. 2.4 3.4 Poland 14. 10. 1.8 2.8Top 10 share - - 86.4 80.3 Top 10 share - - 73.4 68.1
Total 3166.4 3443.9 m USD Total 4235.8 4300.2
VIA'SPORT TO: 2000 2002 2000 2002 IMPORT FR
m USD
LATEX
Rank Rank %-Share %-Share LATVIA'S Rank Rank %-Share %-ShareO 2000 2002 2000 2002
many 2. 1. 17.2 15.5 Germany 1. 1. 15.7 17.2d Kingdom 1. 2. 17.4 14.6 Lithuania 4. 2. 7.6 9.8
den 3. 3. 10.8 10.5 Russia 2. 3. 11.6 8.8uania 4. 4. 7.6 8.4 Finland 3. 4. 8.6 8.0
ia 6. 5. 5.3 6.0 Sweden 5. 5. 6.8 6.4sia 7. 6. 4.2 5.9 Estonia 6. 6. 6.2 6.2mark 5. 7. 5.8 5.7 Poland 7. 7. 4.7 5.0ted States 9. 8. 3.3 4.2 Italy 8. 8. 3.7 4.2erlands 8. 9. 4.0 3.8 Denmark 9. 9. 3.6 3.4
and 11. 10. 1.9 2.3 Netherlands 10. 10. 3.4 3.4 10 share - - 77.5 76.9 Top 10 share - - 71.9 72.4
Total 1869.3 2284.4 m USD Total 3190.8 4053.7
NIA'S Rank Rank %-Share %-Share LITHUANIA'
GerUniteSweLithEstonRusDenUniNethFinlTopm USD
LITHUA S Rank Rank %-Share %-SharePORT TO: 2000 2002 2000 2002 IMPORT FREX O 2000 2002 2000 2002ted Kingdom 3. 1. 8.3 14.1 Russia 1. 1. 27.2 21.9ia 4. 2. 6.1 11.3 Germany 2. 2. 15.0 17.2
many 2. 3. 15.0 10.5 Italy 6. 3. 3.6 4.9ia 1. 4. 15.0 9.7 Poland 3. 4. 4.9 4.8
ark 6. 5. 5.2 5.3 France 5. 5. 4.2 3.9en 8. 6. 4.7 4.4 Sweden 7. 6. 3.5 3.4
ce 9. 7. 4.5 4.2 United Kin
UniRussGerLatvDenmSwedFran gdom 4. 7. 4.7 3.4
nia 11. 8. 2.2 3.9 Denmark 8. 8. 3.2 3.0Poland 5. 9. 5.6 3.6 United States 10 9. 2.5 2.8United States 12. 10. 5.0 3.4 China 14. 10. 1.6 2.4Top 10 share - - 71.6 70.4 Top 10 share - - 70.4 67.7m USD Total 3548 5158 m USD Total 5219 7415
Esto
Attachment E.2. Number of exporters and importers by the value of exports and imports 2000 and 2002. Source: Statistics Lithuania (2001, 74-75 and 2003, 71)
2000 2000Value of Number of Number ofexports/imports, Estonian % % % Estonian % % %(thousand USD) exporters of number of value of value importers of number of value of valueTotal 6 089 100,0 100,0 100,0 10 851 100,0 100,0 100,01 - 999 5 579 91,6 15,6 13,3 10 071 92,8 20,8 17,61000 - 4 999 384 6,3 23,6 19,6 599 5,5 26,0 22,35000 - 9 999 67 1,1 13,1 9,6 112 1,1 16,0 13,010000 - 49 999 56 0,9 29,9 28,3 67 0,6 25,6 25,3Over 50 000 3 0,1 17,8 29,2 2 0,0 11,6 21,8
2000 2000Value of Number of Number ofexports/imports, Latvian % % % Latvian % % %(thousand USD) exporters of number of value of value importers of number of value of valueTotal 5 164 100,0 100,0 100,0 14 067 100,0 100,0 100,01 - 999 4 790 92,8 17,1 12,0 13 338 94,8 26,8 14,51000 - 4 999 286 5,5 27,7 19,5 592 4,2 30,7 16,45000 - 9 999 53 1,0 16,1 13,0 86 0,6 14,7 9,210000 - 49 999 32 0,6 27,6 26,7 48 0,4 21,3 22,8Over 50 000 3 0,1 11,5 28,8 3 0,0 6,5 37,1
2000 2000Value of Number of Number ofexports/imports, Lithuanian % % % Lithuanian % % %(thousand USD) exporters of number of value of value importers of number of value of valueTotal 8 392 100,0 100,0 100,0 13 134 100,0 100,0 100,01 - 999 7 811 93,1 13,6 16,0 12 096 92,2 18,1 21,81000 - 4 999 441 5,3 19,3 18,9 832 6,3 23,8 24,05000 - 9 999 79 0,9 10,8 11,5 122 0,9 11,4 11,210000 - 49 999 49 0,6 18,5 26,4 71 0,5 18,3 21,3Over 50 000 12 0,1 37,8 27,2 13 0,1 28,4 21,7
2002 2002
2002 2002
2002 2002
234
235
Att
achm
ent E
.3.
Fore
ign
Dir
ect I
nves
tmen
ts in
war
d an
d ou
twar
d th
e B
altic
Sta
tes i
n 19
96 –
200
2, m
USD
. So
urce
: Cen
tral
Ban
ks o
f Est
onia
, Lat
via
and
Lith
uani
a
Prim
ary
pro
duct
ion a
nd p
ublic
adm
inis
tratio
n*)
12.1
11.6
19.2
21.4
78.2
145.5
2To
tal
648.
986
8.8
1107
.012
10.4
2083
.823
31.5
27Li
thua
nia
Tra
nsp
ort
and
sto
rag
e a
nd
co
mm
unic
atio
n7
8.3
12
2.7
33
9.1
420
.143
7.8
499
.7F
inanci
al i
nte
rmedia
tion
38.2
66
.81
59.9
281
.737
8.6
530
.2M
inin
g a
nd q
uarr
ying, M
anufa
cturing,
Ele
ctrici
ty,
gas,
wate
r, C
onst
ruct
ion
30
8.4
40
5.9
55
1.5
690
.577
3.4
798
.41
Tra
de
, H
ote
lsa
nd r
est
aura
nts
,R
eal e
state
, re
ntin
g2
56.4
39
7.9
52
3.2
611
.470
6.0
790
.71
Prim
ary
pro
duct
ion a
nd p
ublic
adm
inis
tratio
n*)
19.1
47.2
51.6
59.4
52.3
46.5
79.
Tota
l70
0.3
1040
.616
25.3
2063
.023
48.1
2665
.539
81.
Out
war
d Fo
reig
n D
irec
t Inv
estm
ents
, m U
SD
1996
1997
1998
1999
2000
2001
200
Est
onia
Tra
nsp
ort
and s
tora
ge a
nd c
om
munic
atio
nn/a
n/a
38.0
28.8
45.8
70.3
144
Fin
an
cial i
nte
rme
dia
tion
n/a
n/a
11
3.3
17
5.5
81
.618
4.5
261
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ing a
nd q
uarr
ying, M
anufa
cturing,
Ele
ctrici
ty,
gas,
wate
r, C
onst
ruct
ion
n/a
n/a
15.9
35.3
42.9
81.3
88.2
Tra
de
, H
ote
lsa
nd r
est
aura
nts
,R
eal e
state
, re
ntin
gn/a
n/a
28
.639.5
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.710
2.2
176
.7P
rim
ary
pro
duct
ion a
nd p
ublic
adm
inis
tratio
n*)
n/a
n/a
1.5
1.4
1.7
1.7
3.0
Tota
ln/a
n/a
197.
328
0.5
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744
0.0
673.
8La
tvia
Tra
ns p
ort
and
sto
rag
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mm
unic
atio
nn/a
n/a
n/a
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n/a
n/
Fi n
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n/a
n/a
n/a
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n/a
n/a
n/
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ing a
nd q
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ying, M
anufa
cturing,
Ele
ctrici
ty,
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r, C
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n/a
n/a
n/a
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n/a
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de
, H
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n/a
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ln/a
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241.
047
.067
.Li
thua
nia
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n0.0
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0.4
0.4
0.2
0.4
0.
Fi n
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al i
nte
rmedia
tion
0.1
0.1
1.2
7.8
3.6
0.0
0.
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ing a
nd q
uarr
ying, M
anufa
cturing,
Ele
ctrici
ty,
gas,
wate
r, C
onst
ruct
ion
0.0
3.0
5.6
17
.51
5.2
17
.62
Tra
de
, H
ote
lsa
nd r
est
aura
nts
,R
eal e
state
, re
ntin
g0.0
22.2
9.5
7.0
11.8
20.5
25.
Prim
ary
pro
duct
ion a
nd p
ublic
adm
inis
tratio
n*)
0.0
2.8
0.8
1.0
0.8
1.0
0.
Tota
l0.
125
.517
.533
.631
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.55
*)A
gricu
lture
, huntin
g,
fore
stry
, F
ishin
g,
Public
adm
inis
tratio
n a
nd d
efe
nce
, E
duca
tion,
Heal th
and s
oci
alw
ork
and O
ther
com
munity
Inw
ard
Fore
ign
Dir
ect I
nves
tmen
ts, m
US
D
1996
1997
1998
1999
2000
2001
2002
Est
onia
Tra
nsp
ort
and
sto
rag
e a
nd
co
mm
unic
atio
nn/a
n/a
13
7.0
687
.356
9.7
711
.090
5.9
Fin
anci
al i
nte
rmedia
tion
n/a
n/a
39
9.4
574
.964
3.0
796
.91
18
4.7
Min
ing a
nd q
uarr
ying, M
anufa
cturing,
Ele
ctrici
ty,
gas,
wate
r, C
onst
ruct
ion
n/a
n/a
64
6.5
638
.667
3.3
869
.61
03
2.1
Tra
de
, H
ote
lsa
nd r
est
aura
nts
,R
eal e
state
, re
ntin
gn/a
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58
8.0
513
.867
1.8
707
.81
02
7.7
Prim
ary
pro
duct
ion a
nd p
ublic
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inis
tratio
n*)
n/a
n/a
35.9
52.7
75.2
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Tota
ln/
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a18
06.7
2467
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3150
.342
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iaT
ransp
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mm
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n3
06.5
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11
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12
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.147
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1.6 7 3 2 .4 .5 a a a a a 0 7 0
8.9 5 0
5.1
Attachment E.4. Data of Business Environment and Enterprise he
PS Interactivedatasheet
Performance Survey (BEEPS 2002). Sources: TWorld Bank (2003), The BEE
Country
Minor obstacle
Moderate
obstacle
Major o
bstacle
Observa
tions
Number of
observa
tions
Financing Estonia 24.2 % 22.0 % 31.8 % 22.0 % 132Latvia 20.8 % 11.9 % 40.3 % 27.0 % 159Lithuania 17.0 % 13.2 % 34.0 % 35.8 % 106Poland 28.1 % 24.0 % 30.6 % 17.4 % 242Russia 11.1 % 10.1 % 28.8 % 50.0 % 542
Infrastructure Estonia 59.1 % 23.5 % 13.6 % 3.8 % 132Latvia 34.6 % 34.0 % 24.7 % 6.8 % 162Lithuania 47.3 % 28.2 % 20.9 % 3.6 % 110Poland 53.9 % 29.2 % 13.6 % 3.3 % 243Russia 39.6 % 27.8 % 18.7 % 13.9 % 546
Taxes Estonia 9.8 % 30.3 % 34.8 % 25.0 % 132Latvia 4.9 % 9.8 % 47.0 % 38.4 % 164Lithuania 6.3 % 11.6 % 26.8 % 55.4 % 112Poland 7.7 % 17.9 % 35.8 % 38.6 % 246Russia 2.6 % 6.9 % 26.8 % 63.8 % 549
Policy instability Estonia 21.7 % 24.8 % 28.7 % 24.8 % 129Latvia 12.3 % 24.1 % 36.4 % 27.2 % 162Lithuania 25.5 % 24.5 % 27.4 % 22.6 % 106Poland 13.6 % 31.3 % 30.9 % 24.3 % 243Russia 3.3 % 11.9 % 21.8 % 63.0 % 546
Inflation Estonia 20.6 % 35.9 % 27.5 % 16.0 % 131Latvia 19.9 % 34.8 % 35.4 % 9.9 % 161Lithuania 24.5 % 19.1 % 29.1 % 27.3 % 110Poland 9.0 % 38.1 % 40.2 % 12.7 % 244Russia 3.5 % 8.4 % 21.5 % 66.7 % 550
Exchange rate Estonia 51.6 % 22.1 % 19.7 % 6.6 % 122Latvia 23.8 % 38.8 % 30.6 % 6.9 % 160Lithuania 55.1 % 15.9 % 18.7 % 10.3 % 107Poland 28.5 % 30.7 % 28.5 % 12.3 % 228Russia 12.5 % 14.8 % 20.7 % 52.0 % 527
Functioning Estonia 52.6 % 31.9 % 8.6 % 6.9 % 116of judiciary Latvia 27.7 % 34.8 % 29.1 % 8.5 % 141
Lithuania 27.5 % 36.3 % 26.4 % 9.9 % 91Poland 32.3 % 28.5 % 23.8 % 15.3 % 235Russia 33.6 % 36.6 % 15.0 % 14.8 % 500
Corruption Estonia 41.1 % 37.1 % 17.7 % 4.0 % 124Latvia 30.3 % 29.6 % 25.4 % 14.8 % 142Lithuania 22.4 % 24.5 % 26.5 % 26.5 % 98Poland 33.5 % 27.1 % 20.8 % 18.6 % 221Russia 22.4 % 27.1 % 22.9 % 27.6 % 490
Street crime Estonia 32.6 % 31.8 % 21.7 % 14.0 % 129Latvia 27.2 % 31.1 % 28.5 % 13.2 % 151Lithuania 21.2 % 25.0 % 11.5 % 42.3 % 104Poland 30.7 % 28.9 % 16.2 % 24.1 % 228Russia 21.3 % 28.5 % 21.1 % 29.1 % 536
Organized Estonia 64.6 % 16.5 % 11.8 % 7.1 % 127 crime Latvia 46.9 % 29.3 % 15.6 % 8.2 % 147
Lithuania 25.8 % 25.8 % 14.4 % 34.0 % 97Poland 50.2 % 21.2 % 10.1 % 18.4 % 217Russia 23.7 % 26.5 % 18.4 % 31.4 % 510
Anti-competitive Estonia 43.3 % 35.8 % 13.3 % 7.5 % 120behavior Latvia 21.1 % 19.7 % 36.2 % 23.0 % 152
Lithuania 25.3 % 25.3 % 14.7 % 34.7 % 95Poland 30.3 % 33.8 % 23.1 % 12.8 % 234Russia 18.2 % 26.7 % 29.9 % 25.3 % 499
236
Attachment E.5. Data of the Logistics Friendliness Survey 2003. ources: The World Bank 2003, Data and Statistics (GNI data)
Transparency International 2003 (CPI data) Turku School of Economics and Business Administration(survey data)
SR
ank
Cou
ntry
GN
I per
cap
ita 2
002,
PPP
(Inte
rnat
iona
l dol
lars
)
CPI
scor
e 20
03
Log
istic
s fr
iend
lines
sSu
rvey
200
3 sc
ore
Ran
k
Cou
ntry
GN
I per
cap
ita 2
002,
PPP
(Inte
rnat
iona
l dol
lars
)
CPI
scor
e 20
03
Log
istic
s fr
iend
lines
sSu
rvey
200
3 sc
ore
1 Belgium 27350 7.60 6.83 35 South Africa 9870 4.40 4.882 Hong Kong 26810 8.00 6.67 36 Philippines 4280 2.50 4.863 Switzerland 31250 8.80 6.67 37 Turkey 6120 3.10 4.674 Austria 28240 8.00 6.63 38 Indonesia 2990 1.90 4.635 New Zealand 20020 9.50 6.50 39 Thailand 6680 3.30 4.506 Norway 35840 8.80 6.38 40 Argentina 9930 2.50 4.467 Denmark 29450 9.50 6.33 41 Bulgaria 6840 3.90 4.438 Italy 25320 5.30 6.29 42 Malaysia 8280 5.20 4.439 Sweden 25080 9.30 6.20 43 Peru 4800 3.70 4.43
10 Spain 20460 6.90 6.17 44 Slovenia 17690 5.90 4.3811 Australia 26960 8.80 6.14 45 Israel 19260 7.00 4.0012 Netherlands 27470 8.90 6.14 46 Kazakhstan 5480 2.40 4.0013 UK 25870 8.70 6.14 47 Ukraine 4650 2.30 4.0014 Germany 26220 7.70 6.00 48 Venezuela 5080 2.40 4.0015 Japan 26070 7.00 6.00 49 China 4390 3.40 3.8816 Poland 10130 3.60 6.00 50 Brazil 7250 3.90 3.8317 Portugal 17350 6.60 6.00 51 Uzbekistan 1590 2.40 3.7518 France 26180 6.90 5.86 52 Azerbaijan 2920 1.80 3.6019 Ireland 28040 7.50 5.86 53 Chile 9180 7.40 3.5720 Greece 18240 4.30 5.63 54 Egypt 3710 3.30 3.5721 South Korea 16480 4.30 5.60 55 India 2570 2.80 3.5722 Canada 28070 8.70 5.57 56 Mexico 8540 3.60 3.5723 Vietnam 2240 2.40 5.57 57 Colombia 5870 3.70 3.5024 Estonia 11120 5.50 5.54 58 Jordan 4070 4.60 3.5025 USA 35060 7.50 5.54 59 Russia 7820 2.70 3.5026 Slovak Republic 12190 3.70 5.43 60 Belarus 5330 4.20 3.2927 Singapore 23090 9.40 5.38 61 Costa Rica 8260 4.30 3.2528 Hungary 12810 4.80 5.33 62 Moldova 1560 2.40 3.0029 Finland 25440 9.70 5.21 63 Armenia 3060 3.00 2.8830 Czech Republic 14500 3.90 5.17 64 Morocco 3690 3.30 2.7131 Romania 6290 2.80 5.14 65 Nigeria 780 1.40 2.7132 Lithuania 9880 4.70 5.05 66 Zambia 770 2.50 2.6033 Latvia 8940 3.80 4.90 67 Ghana 2000 3.30 2.5034 Croatia 9760 3.70 4.88 68 Kenya 990 1.90 2.50
237
TEN-T Investment in Accession countries.Source: TEN-T Invest 2003.
Attachment F.1.
238
239239
Attachment F.2. The main Estonian transport projects with EU orWorld Bank loans or financial assistance in theshort term. Source: Estonian MEAC
Mode Target Finance Timeframe EstimatedprojectCost
Maritime and ports Million €Reconstruction of local ports,(TEN-T network)
Virtsu, Kuivastu,Rohuküla, Helterma
CF 2004- 12.1
Construction of breakwaters Muuga Port CF 2004-2009 61.7Extension of Port territory Muuga Port CF 2006-2007 72.4Completion of VTMIS Gulf of Finland CF 2003-2007 2.9Reconstruction Small ports ERDF 2004-2006 7.4
Maritime and ports total 156.5Railway projectsRailway border station Koidula CF 2004-2006 48.6Railway bypass TA first phase *) Tallinn CF 2004-2005 48.6TA for reconstruction *) Electrical railway
(Tallinn)CF 2004-2005 44.7
Reconstruction of traffic node *) Tapa CF 16.0Decontamination Railway surroundings CFEstablishment, training andequipment
Railway rescue force CF
Railway infrastructure platforms, railway stations ERDF 2004-2006 2.3Railway projects total 111.6
Road projectsVia Baltica road Ikla-Parnu - Tallinn-Narva ISPA/CF 2003-2008 137.3Road Tallinn-Tartu ISPA/CF 2006 9.6Road reconstruction Jõhvi - Tartu - Valga ISPA/CF 2005 22.8Fixed link pre-feasibility study Saaremaa ISPA/CF 2004 0.6Road reconstruction Tallinn-Tartu-Võru-
LuhamaaWB 14.8
Reconstruction Regional roads ERDF 2004-2006 15.0Road projects total 62.8
Airport projectsReconstruction of airside area Tallinn Airport CF 2005-2006 14.6Reconstruction of passengerterminal
Tallinn Airport CF 2005-2006 14.6
Reconstruction of local airports,(TEN-T network)
Tartu, Parnu, Kardla,Kuressaare
CF 2005-2006 24.5
Reconstruction Airports ERDF 2004-2006 2.0Airport projects total 55.7
*) Construction Cost of the project All total 386.6CF=Cohesion Fund for new Member states; ERDF= European Regional Development Fund; ISPA = Instrument for Structural Policies for Pre-Accession; WB = The World Bank.
240
Attachment F.3. Lithuanian Railway reform
(a) Institutional structure as per December 31, 2003, and (b) asanticipated in 2006. Source: Lithuanian MoTC
(a) In December 31, 2003:
(b) Anticipated in 2006
Ministry of Transport and Communications
Freight transport unit
Passenger transportunit
Infrastructuremaintenance and management unit
Infrastructure property unit
Administration
State RailwayInspectorate
JJSSCC LLiitthhuuaanniiaann RRaaiillwwaayyss
Administration
Freight TransportServices
Passenger transportServices
Railway InfrastructureMaintenance
Ministry of Transport andCommunications
Railway StateInspectorate
JJSSCC LLiitthhuuaanniiaann RRaaiillwwaayyss ((LLGG))
State enterpriseRailway infrastructure
Other private entities in
railway sector
Affiliate companies
241
Attachment F.4. Cohesion Fund and ISPA projects in Latvia.Source: Latvian MoT
242
Attachment G.1. Number of persons killed in road accidents pmillion private ca
errs. Source: Eurostat (2001, 4)
243
Attachment G.2. Transport data on the Baltic States 1980-99.Source: ECMT
Goods transport by Rail1980=100
0
20
40
60
80
100
120
140
160
1980
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Estonia Lithuania Latvia CEECs
Goods transport by Road1980=100
0
20
40
60
80
100
120
140
160
1980
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Estonia Lithuania Latvia CEECs
Passenger transport by Rail1980=100
1991
1992
1993
1994
1995
1996
1997
1998
1999
0
20
40
60
80
100
120
140
1980
1987
1988
1989
1990
Lithuania Latvia CEECs
Public transport by Road (1980=100
0
20
40
60
80
100
120
140
1980
1987
1988
1989
1990
1991
1992
1993
buses only )
1994
1995
1996
1997
1998
1999
Estonia Lithuania Latvia CEECs
Road Fatalities1980=100
0
20
40
60
80
100
120
140
160
180
1980
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Estonia Lithuania Latvia CEECs
Estonia
244
Attachment G.3. Road fatalities in 1999 in selected countries.Source: ECMT.
Total number of deaths per millionroad motor vehicles
Total number of deaths per millionpopulation
1999 (estimated data) * 1999 (estimated data) *
Source: Trends in the transport sector, ECMT * Vehicle and population data refer to 1998
0 100 200 300
NL
S
UK
SLO
SK
RO
PL
MKD
LV
LT
HR
H
EST
CZ
BIH
BG
ALB
0 500 1000 1500 2000
NL
S
UK
SLO
SK
RO
PL
MKD
LV
LT
HR
H
EST
CZ
BIH
BG
ALB
.
245
Attachment G.4: Time series of fuel prices in Europe. Source: Metschies (2003, 47)
246
Attachment G.5. Via Baltica traffic flows in 1999
247
Attachment G.6. Cargo and passenger transport by road in the Baltic States in 1996-2002. Source: Ministries of Transport data compiled by Latvian MoT.
Year
Frei
ght
trans
porte
d(th
ousa
nd to
ns)
inla
nd
inte
rnat
iona
l
Frei
ght t
urno
ver
(Mill
ion
tonk
m)
Pass
enge
rstra
nspo
rted
(mill
.pas
.)
inla
nd
inte
rnat
iona
l
Pass
enge
rtu
rnov
er (m
illio
n pa
ssen
ger k
m)
Estonia1996 9 367 8 070 1 297 1 693 187 187 0 2 0211997 9 561 7 980 1 581 2 138 192 192 0 2 2301998 11 281 8 610 2 671 3 564 173 173 1 2 2121999 11 258 8 650 2 608 3 708 171 170 1 2 2672000 13 827 11 158 2 669 3 690 188 187 1 2 3712001 14 161 10 693 3 468 4 693 172 171 1 2 4642002 17 845 14 748 3 097 4 409 171 170 1 2 3312003
Latvia1996 4 059 4 059 793 988 149 148 1 1 6121997 4 706 3 577 1 130 1 370 151 151 1 1 7201998 33 764 32 060 1 705 4 108 164 164 1 1 9041999 33 305 31 650 1 655 4 035 167 167 1 2 3682000 32 914 30 928 1 986 4 790 166 165 1 2 3482001 32 336 30 031 2 305 5 341 169 169 1 2 3052002 36 906 34 297 2 609 6 160 174 173 1 2 3612003
Lithuania1996 9 339 9 339 2 127 2 133 362 361 1 2 8791997 12 357 9 297 3 060 2 971 347 345 2 2 8761998 11 606 8 494 3 112 3 298 316 315 1 2 3871999 45 651 41 449 4 202 7 740 273 272 1 2 0972000 45 013 40 748 4 266 7 769 213 213 1 1 6662001 46 470 41 805 4 665 8 566 182 181 1 1 6172002 45 047 39 347 5 700 10 700 182 181 1 1 1342003
248
Attachment H.1. Statistics over rail transport in the Baltic Stat1996-2003. Source: Transport ministry data compiled by the Latvian MoT.
es
sandns 50 6 37 39 936 13
land 09 1 7 5 97export 64 5 8 63 29
port 69 8 2 6 53ns 2 0 0
transi or 05 2 18 550 28 0 28Freight transpo on
4 7 2 0Passen(thousands) 16 4 7 276 5 48 85
land 29 9 6 6 5 7 133 363 78in na 87 5 1 11 07
Passenger nspo(million passeng 9 1 7
Latvia 96 7 20 02Freight transportedtons) 64 9 3 36 4 89 00
la 65 2 1 0 15po 10 5 1 2 62
import 3 667 4 633 4 643 3 577 3 998 3 373 3 492inland transit 4 767 4 683 2 763 2 146 2 799 14 442 4 029
transit through ports 22 755 26 395 25 465 23 884 25 925 16 847 29 603reight transport work (millionnkm) 12 412 13 970 12 966 12 208 13 291 14 179 15 020assengers transportedthousands) 35 140 32 994 30 088 24 862 18 188 20 119 21 960
inland 33 973 31 856 29 185 24 122 17 502 19 593 21 531international 1 167 1 139 903 741 686 526 429
assenger transport workillion passengerkm) 1 182 1 148 1 057 984 715 706 744
ithuania 1996 1997 1998 1999 2000 2001 2002reight transported (thousandns) 29 138 30 498 30 912 28 802 30 712 29 174 36 650
inland 4 092 4 720 5 977 4 976 4 664 6 340 6 481export 5 290 5 495 6 210 5 068 4 100 4 273 4 476import 4 734 4 581 4 977 4 308 3 961 3 410 4 898
inland transit 5 346 5 761 5 263 5 282 6 421 8 120 13 073transit through ports 9 676 9 941 8 486 9 168 11 566 7 031 7 722
reight transport work (millionnkm) 8 103 8 622 8 265 7 848 8 919 7 741 9 767assengers transportedthousands) 13 196 11 185 10 629 10 577 8 852 7 718 7 234
inland 11 166 9 239 8 970 9 094 7 412 6 314 5 756international 2 030 1 945 1 658 1 483 1 441 1 404 1 462
Passenger transport work(million passengerkm) 889 766 715 693 611 533 498
Estonia 1996 1997 1998 1999 2000 2001 2002Freight transported (thou
24 8toin
)9 6
29 03 31 940 388 654 38398 5
42 69 18 8 308 0 40 3 9
1 0 1 36 1 258 0 20 3 6im
land tra2 8
t4 42 3 824
000
774 20
95 2 50in
t through pits 11 3 14 06 0 662 30 71 35 5
rt work (millitonkm)
gers transpo3 89 4 810 5 786 7 295 801 8 18 9 33
rted6 7 5 60 6 717 6 763 0 5 1
in 6 2 5 13 453 89 5 5 0ternatio l 4 46 264 174 43 7 1
tra rt workkm)er 30 262 237 238 263 83 17
19 199 1998 1999 2000 01 20 (thousand
35 2 41 01 37 857 3 208 10 37 5 40 1inex
nd 2 5rt 1 5
2 522 78
2 4322 555
1 9381 663
752 2936 1
11 2 322 6
FtoP(
P(m
LFto
FtoP(
249
Attachment H.2. Lithuanian railway and road infrastructure priorities 2004-2006. Source: Lomakina, Lithuanian MoTC.
VILNIUS
Klaipėda
TelšiaiŠiauliai
Tauragė
Panevėžys
Kaunas
Marijampolė
Alytus
Utena
Turmantas
Didžiasalis
ŠvenčionėliaiPabradė
Kena
Stasylos
Senovė
Kybartai
Kazlų Rūda
Lentvaris
Kaišiadorys
GaižiūnaiPagėgiai
Radviliškis
Obeliai
Joniškis
Kretinga
Skuodas
Kužiai
Mažeikiai
Bugeniai
Russia
Latvia
Poland Belarus
Baltic Sea
Šeštokai
MMain priorities of Lithuanian railway infrastructure ain priorities of Lithuanian railway infrastructure modernisationmodernisation in 2004 – 2006
Modernization of the interface between Klaipėda Seaport and railway transport
Modernisation of telecommunication equipment.
Track reconstruction for train speed up to 160 km/hour. Construction of two-level railway intersections.
Modernisation of signalling and power supply equipment. Modernisation of train radio system.Introduction of hot axle box detection devise system.
Construction of European gauge railway line: State border with Poland - Šeštokai - Kaunas.
Rehabilitation of Kaunas railway tunnel.
IXB
IXB
IXB
I
I
I
IA
IXD
19
ViaBaltica
To RigaTo Riga
To Warsaw
To Kaliningrad
I A
IXBIXD
Main priorities of Lithuanian road network developmentMain priorities of Lithuanian road network developmentin 2004-2006
Further modernisation of road Vilnius-Kaunas-Klaipėda of transport corridor IX –strengthening of pavement, construction of separate grade intersections.
Strengthening of pavement of individual Via Baltica road sections, construction of separate grade intersections; reconstruction of Garliava-Marijampolė road section into motorway.
Branch IXD – reconstruction of road Marijampolė-Kybartai section including widening of pavement up to the width of 9 meters.
Connection of Vilnius with Via Baltica -taking into consideration alterations of economic relations between Lithuania and Poland.
Implementation of investment projects for the construction of Southern and Western by-passes in the City of Vilnius.
Development of TEN-T network roads (A15 Vilnius-Belarus border, A2 Vilius-Panevėžys, A11 Šiauliai-Palanga), stage I
Attachment I.1. Cargo traffic in major Baltic States’ porthousand tons 1996-2002. Source: Ministries of Transport data compiled by Latvian MoT.
ts in
1996 1997 1998 1999 2000 2001 2002loaded 5 337 8 315 10 550 9 258 11 650 13 265 15 885
unloaded 2 120 2 898 2 765 2 755 1 702 1 619 2 223Riga total 7 457 11 213 13 315 12 013 13 352 14 884 18 108
loaded 35 102 36 216 35 629 33 394 34 330 37 541 28 151unloaded 642 564 417 743 425 396 553
Ventspils total 35 745 36 781 36 046 34 137 34 755 37 937 28 704loaded 1 255 1 810 1 806 1 970 2 560 2 762 3 710
unloaded 354 486 490 354 405 498 609Liepaja total 1 609 2 296 2 297 2 324 2 965 3 261 4 318
loaded 11 573 12 490 12 227 12 537 15 488 13 079 15 180unloaded 3 264 3 640 2 789 2 708 3 755 4 219 4 563
Klaipeda total 14 836 16 131 15 016 15 245 19 243 17 298 19 743loaded 9 969 12 895 17 007 15 499 25 182 28 472 33 593
unloaded 4 090 4 179 4 292 4 136 4 050 3 592 3 933Tallinn total 14 059 17 074 21 299 26 445 29 232 40 094 37 526
251
252
Att
achm
ent J
.1.
Oil
tran
spor
t inf
rast
ruct
ure
of th
e B
altic
Sta
tes a
nd N
orth
Wes
t Rus
sia.
Oil
pipe
lines
are
m
arke
dw
ith a
bro
ader
or
at so
me
poin
ts w
itha
doub
le-li
ne, w
here
as th
e na
rrow
sing
le li
nes
sym
boliz
e ra
ilway
s. So
urce
: For
tum
Cor
pora
tion.
Attachment K.1. Development of Estonian civil aviation organizations in 1991 – 2003. Source: EstonianNavigation Services http://ww
Airw.eans.ee/eng/
253
Attachment L.1: Structure of the Balance Sheet of Estoniansupporting and auxiliary transport activities by firm size. Source: Statistical O
firms in
ffice of Estonia.http://gatekeeper.stat.ee:8000/px-web.2001/dialog/statfileri.asp
rehousing and othergo handling, storage, waNACE classification I.63: including carsupporting transport activities and travel agencies.
1 - 9 employees (626 firms at end of 2002)
-300000
-200000
-100000
0
100000
200000
300000
1996*** 1997 1998 1999 2000 2001****
1000
USD
10 - 19 employees (95 firms at end of 2002)
-300000
-200000
-100000
0
100000
200000
300000
1996*** 1997 1998 1999 2000 2001****
1000
USD
20 - 49 employees (62 firms at end of 2002)
-300000
-200000
-100000
0
100000
200000
300000
1996*** 1997 1998 1999 2000 2001****
1000
USD
50 - 99 employees (15 firms at end of 2002)
-300000
-200000
-100000
0
100000
200000
300000
1996*** 1997 1998 1999 2000 2001****
1000
USD
100 - 249 employees (21 firms at end of 2002)
-300000
-200000
-100000
0
100000
200000
300000
1996*** 1997 1998 1999 2000 2001****
1000
USD
Current assets total
Inventories total
Fixed assets total
Current liabilities total
Long-term liabilities
Equity total
Other restricted reserves
254
Attachment L.2: Weekly schedule for shipments to and fromEuropean destinations of a large internationlogistics provider in Estonia.
0 kg) in this service is routed
al
argo (less than 2,50 via central terminals, or hubs, theay of departure from terminal is marked with “X”. Baltic export shipments are
ustry’sample
tures are subcontracted to Baltic carriers.
GR Thessalonica X X X XHU Budapest X X XIE Dublin X XIT Torino XIT Milan X XIT Verona XIT Bologna XIT Florence XLT Vilnius X X X XLU Mechelen ( BE ) X X XLV Riga X X X X X X X X X XNL Ede X XNO Oslo X X XPL Warsaw X X XPT Porto X XPT Lisbon X XSE Stockholm X X X X X X XSE Boras X X X X X XSI Ljubljana X X X XSK Liberec ( CZ ) X X X XTR Istanbul X X X XTotal departures / day 12 5 40 2 19 4 5 9 10 24Total departures Export: 78 Import: 52
Cdtypically shipped as full trailer loads or full container loads, but the export inddemand for less that truckload export traffic lines is, however, rising. In the excase, nine out of ten of all depar
EXPORT departure IMPORT departureCountry Terminal city Mon Tue Wed Thu Fri Mon Tue Wed Thu FriAT Vienna X X XAT Salzburg X X XBE Mechelen X X XBG Sofia X X X XCH Basel X X XCZ Liberec X XDE Hamburg X XDE Stuttgart XDE Cologne XDK Copenhagen X X XDK Arhus X XES Barcelona X XES Irun X XES Madrid X XES Valencia X XFI Helsinki X X X X X X X X X XFR Lille XFR Lyon XFR Paris X XFR Strasbourg XFR Bordeaux XFR Lyon XGB London X XGB Immingham XGB Hinckley XGB Manchester XGR Athens X X X X
255
Attachment M.1. Evaluation of logistics environment by 15 international firms in manufacturing and trade.Source: Naula and Ojala 2002
a) transport and telecommunications infrastructureb) regulatory environment andc) logistics service providers in the Baltic States.
Does the regulatory environment of the Baltic Stateshinder efficient materials flow of your company's goods
?
1.00
2.00
3.00
4.00
5.00
EntranceEstablishing
market position PresentAnticipated EU
time
1 = No hinder … 5 = Strong hinderEstonia Latvia Lithuania
Does the transport and telecommunicationsinfrastructure of the Baltic States hinder efficient
materials flow of your company's goods ?
1.00
2.00
3.00
4.00
5.00
EntranceEstablishing
market position PresentAnticipated EU
time
1= Very well... 5=Very poorly
Estonia Latvia Lithuania
How well do logistics providers fulfil your company'srequirements for efficient materials flow ?
1.00
2.00
3.00
4.00
5.00
EntranceEstablishing
market position PresentAnticipated EU
time
1= Very well... 5=Very poorly
Estonia Latvia Lithuania
256
Attachment M.2. Wholesaling/retailing firms’ evaluation of regulatory environment and transport and telecommunications infrastructure in the Logistics
olesale Operations. Source: Naula,
Does the regulatory environment of Estonia hinder your company'smaterials flow? (N=27)
Survey On WhOjala and Sara 2002.
0
5
10
15
20
25
30
1993 1996 1999 2002 2005
No answ er
Very strong hinder
Strong hinder
Average hinder
Some hinder
No hinder
Does the transport and telecommunications infrastructure of Estonia hinder (negative effect) your company's materials flow? (N=27)
0
5
10
15
20
25
30
1993 1996 1999 2002 2005
No answ er
Very strong hinder
Strong hinder
Average hinder
Some hinder
No hinder
257
Attachment O.1. Transport Emissions in the Baltic Sea Regionstates. Source: Baltic 21.
Transport sector emissions 1990-1998, and transport sector % of total in 1996 or 1997
Transport CO2 Emissions, Million tons Transport a1990 1991 1992 1993 1994 1995 1996 1997 1998 % of total*)
Denmark 13 13 13Estonia 3 2 2
13 14 14 14 22 %2 2 2 3 13 %
14 14 14 15 15 23 %ermany 174 178 182 180 183 182 183 20 %
1 1 1 1 20 %2 2 2 24 %4 4 4 28 %
12 12 12 12 13 36 %29 n.a.
24 22 19 17 n.a.weden 21 20 21 21 22 22 22 22 23 42 %
Transport
Finland 15 14 14 14GIceland 1 1 1Latvia 6 3 3 3 2LithuaniaNorway 11 11 12Poland 26NW Russia 29 28S
Transport NO2 Emissions, 1,000 tons a1990 1991 1992 199
Denmark 156 161 159 1473 1994 1995 1996 1997 1998 % of total o
146 135 131 52 %n.a.
175 172 172 169 65 %1196 1146 63 %
2 8 28 %18 41 %39 33 58 %
0 160 165 166 57 75 %oland 402 393 396 420 420 414 417 452 41 %
1572 1453 1407 1347 1379 58 %78 %
Transport
151EstoniaFinlandGermany 1920 1883 1939 1282
1 2Iceland 17 18 19 20 2Latvia 67 39 34 29 30 22
38LithuaniaNorway 170 164 163 168 16PNW Russia 1899 1598 1581Sweden 321 319 316 310 323 293 231 217
Transport SO2 Emissions, 1,000 tons a1990 1991 1992 1993 1994 1995 1996 1997
Denmark 21 22 19 14 13 12 9 81998 % of total*)
5 %stonia n.a.
2 1 2 1 %64 65 43 3 %
3 3 0 12 %7 3 5 1 4 2 %
9 9 1 10 %5 4 5 2 13 %
Poland 140 90 91 50 50 42 46 47 2 %NW Russia 52 98 2 %Sweden 37 27 25 25 24 24 9 2 11 %
1991 1992 1993 1994 1995 1996 1997 1998Denmark 3,3 3,3 3,3 3,3 3,4 3,5 3,5 3,4
stonia 6,2 5,9 5,912 11 10 10 9 969 67 60 59 59
huania 1,6 2,9 1,8 1,7 1,8 2,2Norway 4,6 4,9 5,4 4,8 4,8 4,7 4,3 4,1
olandNW RussiaSweden 4,7 4,4 4,1 3,9 3,7 3,5 3,3 3,1Source: BALTIC 21 website at: http://www.ee/baltic21/ read November 26, 2003
EFinland 4Germany 111 81 75
eland 2 3 3 3IcLatvia 5 7 7LithuaniaNorway 11 10 8 7 5
Transport Particle Emissions (1,000 tons)
EFinland 13 13Germany 68 67IcelandLatviaLit
P
258
259
Attachment O.2. Transport’s share of emissions in 1998 and distribution by transport source in Estonia 1992-1998
Source: UN Environmental progamme: http://grida.no/enrin/htmls/estonia/env2001/content/soe/air_2-2.htm
Transport emissions thousand tons per year
260
Attachment P.1. Slide presentations given at the seminar
The presentations appear in the order of presentation. Some of the speeches given at the seminar did not use slides and they are not included here.
An overview of the Latvian transport sector 1. Mr R. Zile, Minister of Transport, Latvia
An overview of the Lithuanian transport sector 2. Mr Z. Balcytis, Minister of Transport, Lithuania
Experience of Transport Sector Restructuring3. Mr C. Queiroz, World Bank
Experiences of the international financial institutions 4. Mr S. Niinisto, Vice President, European Investment Bank (EIB) 5. Mr U. Paavel, Head of Mission, EBRD 6. Mr E. Karmila, Excecutive Vice President, NIB
Preparing the Transport Sector for EU membership 7. Mr V. Legzdins, State Secreraty, Latvia 8. Mrs L. Lomakina, Secretary of the Ministry, Lithuania 9. Mr A. Tint, Deputy Secretary General, Estonia
Pre-seminar questionnaire highlights 10. Mr L. Ojala, Turku School of Economics and Business Administration, Finland
Transport Education and Research 11. Mr I. Kabaškins, Transport and Telecommunications Institute, Latvia
Development of Airports 12. Mr R. Loik, Tallinn Airport Ltd, Estonia
Experience of a large logistics provider 13. Mr Kari Peltonen, Oy Schenker East Ab, Finland
14. Workshop guidelines and the results of the five workshop sessions (Mr. L. Ojala)
15, Roads and road transport workshop (Mr C. Queiroz)
16. Ports and maritime workshop (Mr L. Ojala)
17. Aviation workshop (Mr J. Tamm)
18. Transport services and trade facilitation workshop (Mr T. Naula)
Overview of Latvian Transport Sector
2000 – 2003
Roberts Z leMinister of Transport
2nd Seminar on Transport SectorRestructuring in the Baltic States
November 24 – 25, 2003, Pärnu, Estonia Lithuania
Byelorussia
Russia
Estonia
Ventspils
Liep jaR zekne
Daugavpils
R GA
A-1
A-2A-3
A-4A-5
A-6
A-6
A-7A-9
A-10
A-11
A-12
A-14
A-13
A-13
A-15
A-8
Valka
Valmiera
C sis
Al ksne
GulbeneBalvi
Ludza
Madona
J kabpils
Prei i
Kr slava
Ogre
Bauska
DobeleSaldus
Tukums
Talsi
Kuld ga
Aizkraukle
rg i Lub na
Limbaži
Ainaži
<Ka
ii n
grad
a
Kaua
>
< Varšav
a
Vitebska >
Maskava >
St.P
terbu
rga>
St.Pterburga (Pleskava) >
St.Pterburga (Tartu) >
Talli
na>
<Kl
aip
da
2920(25%)
3320(27%)
7720(22%)
5540(31%)
2180(20%)
430(31%)
610(30%)
2370(34%)
3990(34%)
2390(34%)
5930(24%)
4160(28%)
2800(30%) 3830
(34%)
3030(33%)
830(34%) 3020
(25%)
1900(29%)
9570(22%) 6390
(27%)6980(27%)
5020(29%)
8770(24%)
2200(55%)
2420(36%)
810(54%)
2120(46%)
2780(27%)
2330(22%)
980(40%)
2070(32%)
1420(44%)
1610(28%)
1580(57%)
2040(38%)2520
(42%)
5170(24%)
2470(25%)
3000(25%)
1990(30%)
2120(26%)
1040(47%)
1050(31%)
1590(25%)990(49%)
830(30%)
6140(22%)
14200(17%)
9900(16%)
4630(23%)
3500(26%)
4250(21%)13820
(16%)
2650(28%)
3300(29%)
3310(24%)
5220(21%)
4080(26%)
4770(29%)
8640(14%)
6610(26%)
15520(18%)
7860(15%) 5080
(19%)5450(21%)
2880(24%)
2300(25%)
360(25%)
1160(22%)3110
(26%)
2410(22%)
1540(22%)
5860(21%) 2340
(22%)
1080(25%)
2700(34%)
2190(36%)
2740(24%)
6620(20%)
8050(17%)
12970(16%)
4620(20%)
LAD Strat ijas da a
Jelgava
LATVIATRAFFIC DATA - AADT year 2002STATE ROADSMAIN
3260(14%)
Average daily traffic (vehicle/day)Heavy vehicle (percentage)
Riga Gulf
Baltic sea
Share of the transit cargo in the total cargo turnover in Ports
transit cargoes
82 %
import/export cargoes
18 %
Transit ~ 42,8 mill t.
Terrestrial freight transportation
Division of terrestrial transportation of cargo
Railway53%
Motor vehicle 47% Railway
Motor vehicle
Freight Transported by Road
28985
19801
2502629499
25169
33764 33401 3291136906 36906 37361
0,0
5000,0
10000,0
15000,0
20000,0
25000,0
30000,0
35000,0
40000,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
tons
Registered Road TransportVehicles
0
100
200
300
400
500
600
700
800
thou
sand
s
passenger cars lorries and road tractors buses motor-cycles
motor-cycles 15,792 18,444 19,267 19,409 20,057 20,732 21,37 22,16
buses 16,465 17,275 18,558 11,505 11,556 11,501 11,29 11,16
lorries and road tractors 68,668 72,909 76,771 84,942 90,22 97,081 99,71 102,73
passenger cars 331,837 379,895 431,816 482,67 525,572 556,771 586,21 619,08
01.01.96. 01.01.97. 01.01.98. 01.01.99. 01.01.00. 01.01.01. 01.01.02. 01.01.03.
Road Traffic Accidents
0
1000
2000
3000
4000
5000
6000
7000
traffic accidents 3389 3814 4056 3709 3925 4540 4442 4482 4766 5083 5083
persons injured 3721 4380 4903 4326 4674 5414 5244 5449 5852 6300 6352
persons killed 670 717 611 540 525 627 604 588 517 518 400
1993 1994 1995 1996 1997 1998 1999 2000 2001 20022003
forecast
Passengers Carried by Road
186,0 188,1 183,9
148,7 151,4164,2 167,4 165,9 169,4 173,5 174,0
0,020,040,060,080,0
100,0120,0140,0160,0180,0200,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
mill
pas
seng
ers
Freight Transported by Rail
30,627,8 28,8
35,241,0
37,833,2
36,440,1 40,1
48,6
0,00
10,00
20,00
30,00
40,00
50,00
60,00
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
mill
tons
Passengers Carried by Rail
59,655,7
42,334,1 33,0 30,1
24,918,2
22,0 22,0 21,6
0,00
10,00
20,00
30,00
40,00
50,00
60,00
70,00
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
mill
pas
seng
ers
Construction of a second railway track on the route Riga – Krustpils Oil Transported by Pipeline
15349 1523218028 19599 20888
1801820960
26603
1931416408
0,0
5000,0
10000,0
15000,0
20000,0
25000,0
30000,0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
tons
to Ventspils to Mazeikiai TOTAL
Oil Products Transported byPipelines
644
2890 2710 2962 32063589 3546
4008 41144645
0
1000
2000
3000
4000
5000
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
tons
Passenger Turnover (arrived+departed) in Airport “Riga”
310,6392,0
490,6 497,1 531,2 554,6 562,4 574,4633,3 633,3
709,2
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
pas
seng
ers
Passengers Carried by Air by Latvian airlines
(regular+chartered flights)
163,2191,5
234,2 230,9270,2 261,9
239,5271,0
298,7325,9 330,0
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
pas
seng
ers
Freight Turnover(loaded+unloaded) in
Ventspils Port
22226
27941 29623
35745 36781 3604634137 34755
37937
28704 29271
0,0
5000,0
10000,0
15000,0
20000,0
25000,0
30000,0
35000,0
40000,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
tons
Freight Turnover(loaded+unloaded) in
Riga Port
4669,25844,2
7453,57457,0
11213,113315,1
12007,613351,7
14883,9
18108,3
21656,4
0,0
5000,0
10000,0
15000,0
20000,0
25000,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
tons
Freight Turnover(loaded+unloaded) in
Liepaja Port
4261100
1440 16092296 2297 2324
2964 3261
43184974
0,0
1000,0
2000,0
3000,0
4000,0
5000,0
6000,0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
forec
ast
thou
tons
AN OVERWIEV OF LITHUANIAN TRANSPORT
SECTOR
2nd Seminar on Transport Sector Restructuring in the Baltic States
Parnu, Estonia, November 24 and 25, 2003
Zigmantas BAL YTISMinister of Transport and Communications
Priorities of transport policy in Lithuania:
•• the modernisation of the transport infrastructure;
•• the improvement of compatibility of elements of various transport systems;
•• the creation of logistics centres;• the formation of a safe, environmentally
friendly and accessible transport system;• the completion of structural reforms;• the development of short sea shipping.
TINA network Infrastructural development:• implementation of Via Baltica and Rail Baltica projectsRail Baltica projects; • renovation of railway tracks;• modernisation of signalling and telecommunications
systems in railways ;• Reconstruction & construction of quays, Klaip da port;• development of the railway network in the port;• deepening of seaport waters;• adaptation of Vilnius, Kaunas and Palanga airports
terminals to the Schengen requirements;• modernisation of instrumental landing systems at
Vilnius and Palanga airports.
Operational development:
• implementation of combined transport projects;
• reduction of time spent at the borders;
• simplifications of procedures;•• creation of logistic centres.
LITHUANIA
BYELORUSSIA
UKRAINE
RUSSIA
POLAND
Radvilishkis
Klaip da
Kena Gudogaj
Molodechno
Minsk (Kaliadichy)Vilnius (Paneriai)
Osipovichy Zhlobino
Kalinkovochy
SlovechnoBerezhest
Korosten
Kiev-LiskiShepetovka
Kazatin
Zhmerinka
Kotovsk
Iljichevsk
Route of the combined train“Viking”
Administrative development:
• to strenghten the administrativecapacities;
• to finish harmonisation of legislation;• to enforce the legislation;• to complete structural reforms.
Railway reform:
• liberalisation of railway transport;• creation of competitive railway sector;• ensurance of equal legal and economical
conditions for all operators.
Freight transportunit
Passenger transportunit
Infrastructuremaintenance andmanagement unit
Railway reform: state for 31/12/2003Railway reform: state for 31/12/2003
Infrastructureproperty unit
Ministry of Transportand Communications
State RailwayInspectorate
JSCJSC LithuanianLithuanian RailwaysRailways
Administration Administration
Freight TransportServices
Passenger transport Services
Railway InfrastructureMaintenance
Ministry of Transport andCommunications
Railway State Inspectorate
Railways reform: state for the year 2006Railways reform: state for the year 2006
JSCJSC LithuanianLithuanian RailwaysRailways (LG)(LG)
State enterpriseRailway infrastructure
Other privateentities in
railway sector
Affiliate companies
Administrative development:
• impelmentation of sectoraldevelopment strategies;
• ensurance of fair competition indifferent transport sectors;
• preparation to operate in theliberalised European market.
Thank you for your attention !
2nd Baltic States Seminar on Restructuring of the Transport Sector
Cesar QueirozTransport Program Team Leader
World BankParnu, 24-25 November 2003
Experience in Transport Sector Restructuring
Economies GNI per capita
Low-income $745 or less
Middle-Income $746 to $9,205
High-income $9,206 or more
Source: World Development Indicators-WDI 2003
Classification of Economies
EU$39,840$10,900
CIS$1,750 $180
Baltics$3,870 $3,230
Economic Development in EU, Baltic States and CIS(GNI per capita range)
39840
30600
23780
1430010900
4830 4230 3870 3350 3230 1750 180 800
10000
20000
30000
40000
Luxembourg
Denmark
Fin landSpain
Portuga l
HungaryPoland
Estonia
L ithuania
LatviaRuss ia
Tajik istan
DR Congo
GNI per capita ($/pop)
Source: WDI 2003
Economic Development and Transport Infrastructure
100
1000
10000
100000
100 1 000 10 000 100 000
Paved Road Density (km/mil pop)
GNI ($/pop)
Source: Queiroz and Gautam
logGNI = 1.39 logPRDR squared: 0.7698 countries
Paved Road Density and Other Measures of Infrastructure
logPRD = 0.75 + 0.76logELE + 0.22logRWY
PRD=paved road density (km/mil pop)ELE=electricity generating capacity
(1,000kW/mil pop)RWY=railroad tracks (km/mil pop)R square = 0.86
Source: Queiroz and Visser
Stakeholders in the Transport Sector
ShippersShippers PassengersPassengers
Carriers
Trade, tax & transport authorities
Infrastructure providers
Other service providers & operators
Environment
Fiscaland
trans-port
policy
In the Cold War it was: “Whose side are you on?”
In Globalization it is: “To what extent are you connected to everyone?”
Thomas Friedman, 2000: “The Lexus and the Olive Tree,” p. 10
Most Frequently Asked Questions
Global integration (links between countries) has accelerated
in the past 20 years• Lower transport costs• Lower trade barriers• Faster communication of
ideas• Greater mobility of people• Growing capital flows
Trade and Development• Exchange of goods and services
across borders is an indicator of a country’s integration with the global economy
• Trade spurs economic growth by encouraging specialization in line with a country’s comparative advantage
0
40
80
120
160
200
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Estonia Latvia Lithuania
Trade in goods (% of GDP)
Source: WDI
138
91
73
Transport in the Baltics
• Relatively good main road links
• Efficient landlord ports
• Well educated transportprofessionals
• Convenient geography
• Poor condition of secondary and rural roads
• Some outdated customs procedures
• Small markets• Deficient railways• Poor safety records
Strengths Weaknesses
PRIVATE SECTORPUBLIC SECTOR OWNERSHIP
ROAD TRANSPORT
ESTONIA LATVIA LITHUANIA
Freight services mostly privatized by 2003
RAIL TRANSPORT
STEVEDORING
FREIGHTFORWARDING
Railway Employee Productivity
1358
1056 1054917
715 681 611415 330 319
0200400600800
1000120014001600
Estonia
Finland
Russia
Latvia
France
German
y
Lithuan
ia
Poland
Turkey
Hungary
Traffic Units per Employee
Source: WDR 2003
Transport Development Opportunities
• Maximize benefits from transit location• Eliminate backlogs in transport
infrastructure maintenance (secondary and rural roads, rail)
• Improve competitiveness of transport operators in preparation for the Single European Market
• Get ready to use EU funding for Member Countries
Transport Development Challenges
• Environmental protection (e.g., confined disposal facility)
• Improvement in railway operations (e.g., separation of rail infrastructure and operations)
• Increased efficiency in border crossings (e.g., Customs modernization)
• New investments in infrastructure
Further analytical work• Analysis of railway performance with regard to
competitiveness (EU accession, impacts on other transport modes) and fiscal burden to the government (subsidies, PSO)
• Review and analysis of the secondary and rural road network with regard to economic growth
• Legal basis for public-private partnership in the transport sector
• Improved governance
9,7 9,3
7,5 7,46,9
5,5 5,34,7
3,8 3,62,7 2,4
1,4 1,3
0
2
4
6
8
10
FinSwe
USAChile Fra Est Ita Lit Lat
PolRus
KazNig Ban
2003 Corruption Perceptions Index
Source: www.transparency.org
Economic Development, Infrastructure and Corruption
Economy PRD km/mil pop
CPI
Low-income 170 2.1
Middle-income 1,660 4.1
High-income 10,110 7.7
Source: Queiroz and Visser
% of GDP/year 1998 1999 2000Czech Rep. 3.0 3.2 3.2Bulgaria 2.1 1.7 3.0Romania 2.4 2.7 2.7Slovenia 2.8 2.8 2.6Estonia 2.3 2.8 2.5Latvia 3.0 3.0 2.4Hungary 2.2 2.2 2.3 Slovakia 1.1 0.6 1.9 Lithuania 2.0 2.2 1.8Poland 1.5 1.3 1.4
Transport is underfundedTotal Transport Expenditures
Source: World Bank
Some Policy Implications• Transport infrastructure is essential
for economic development;• sufficient resources should be made
available to maintain and expand a country’s transport infrastructure;
• private sector participation can help; and
• corruption has to be addressed.
Seminars on Restructuring of the Transport Sector in
the Baltic States
• 1st seminar: Riga, November 2000
• Great interest by Estonia, Latvia and Lithuania to hold the 2ndseminar: Parnu, November 2003
Key Pillars of the 2nd
Seminar:Ms. Kaidi Laks
Ms. Inta RozensteineMs. Rimante Briedyte
Thank You!
2nd Seminar on Transport SectorRestructuring in the Baltic States
Pärnu, 24 November 2003
Transport Sector and EU Membership
Mr Sauli Niinistö, Vice President of the European Investment Bank
EIB Tasks
“The task of the European Investment Bank, the European Union's financing institution, is to contribute towards the integration, balanced development and economic and social cohesion of the Member Countries.”
EIB and the Enlargement –Institutional Framework
• The EIB is owned by the Member States of the European Union. 10 new countries, including Estonia, Latvia and Lithuania, will become shareholders of the EIB in 2004.
• Close institutional links between the Baltic States and the EIB will reinforce co-operation between the countries and the Bank.
EIB Lending in the Accession Countries
2.4 2.4 2.9 2.73.6 3.1
01234
1998 1999 2000 2001 2002 Nov-03
Year
EUR
billi
on
E I B and Transport Lending
Other lending 68%
Transport28%
Urbaninfrastructure
4%Other lending
Transport
Urbaninfrastructure
EIB track record in the Accession Countries
• Based on 120 approved loans since 1990, the EIB’s signed loans for transport sector operations amount to EUR 8.6 billion.
• Almost 90% of the volume is based on rail and road projects.
3/5/2004 61
EIB and the Initiative for Growth
Two main components:1) Under “Innovation 2010 Initiative” EUR 50
billion for RDI up to 20102) Possibility to commit EUR 50 billion under
a TENs Investment Facility (TIF) in support of TENs priority projects
EIB – Way forward in the transport sector – key points
• EIB activity in the Baltic States is to be seen in the European Union context.
• Transport sector (particularly the T-TENs) is to remain as a key sector for the EIB.
• Rail and road investments alone in the Accession Countries are estimated to amount to some EUR 75-80 billion during 2003-2012.
EIB – Way forward in the transport sector – key points
(continued)• In the transport sector investments, the
Commission contributions are likely to be of major importance -> the EIB will provide complementary funding to these projects.
• The EIB intends to work in close co-operation with the authorities and the Commission to help to prioritise projects.
• Development of PPPs is actively followed by the Bank and eligible (“bankable”) projects will be supported.
Transport operationsin the Baltic States
• In the Baltic States, further development of TEN Corridors is a key priority to the Bank
• Additionally, other sound transport sector projects could be continuously financed by the EIB (maritime, aviation, urban infrastructure, other road/rail operations).
TRANSPORT SECTOR- BALTIC STATES
Mr. Urmas PaavelEBRD
Transport Portfolio – Baltic States
• €158 million committed to projects with total value of €448 million
• 10 projects in total
Rail
40%
Road
28%
Ports/Shipping
15%
Air 16%
Transport Portfolio –Baltic States by Country
Number of projects
EBRDCommitment
Total Project Value(Euro million)
Estonia 3 37.1 63.5Latvia 4 38.7 146.8Lithuania 3 82.4 238.3Total 10 158.2 448.6
Transport Portfolio –Baltic States (by Sub-sector)
No of projects
EBRDCommitment
Total Project Value(Euro million)
Rail 2 63.9 188.7Road 3 44.6 170.6Air 3 26.1 28.6Ports/Shipping 2 23.6 60.7Total 10 158.2 448.6
Railway Sector Objectives
• Improve the market competitiveness
• Improve asset management to increase economic returns
• Overcome transport bottlenecks;
• Improve international trade links
Road Infrastructure Objectives
• Maintenance of existing network
• Creation of new infrastructure (roads and motorways)
• Improvement in asset management and maintenance efficiency
• Sector cost recovery
Port Operations Objectives
• Modernise basic infrastructure
• Provide modern superstructure(terminals)
• Increase sector privatisation and commercialisation
Air Transport Objectives
• Modernise assets to meet safety, security and commercial requirements
• Facilitate the privatisation of airlines
• Improve sector commercialisation
Transport Sector Restructuring/Transition
Achievements - Baltic States
Estonia/Latvia Railways• Support of restructuring broadly in line with EU
Directives (Latvia)• Support for sector privatisation with technical
assistance (Estonia)• Promotion of East-West trade
Transport Sector Restructuring/Transition
Achievements - Baltic StatesTallinn and Riga Airports• Improved access to region facilitating market-
oriented economy• Commercial approach to airport operations
Ventspils Port Terminals• Public-private approach to port investments• Promotion of East-West trade
Transport Sector Restructuring/Transition
Achievements - Baltic States
Latvia/Lithuania Road Projects• Open tendering for civil works• Road sector budgeting• Sector cost recovery (road user charges)
Transport Sector – Baltic States EU Membership
Potential role of EBRD in the Transport sector
• Selective provision of matching funds for Cohesion and Structural Fund projects
assistance with project preparation and management
• Non-sovereign lending to viable public entities (e.g. rail freight companies)
• Development of Public Private Partnerships (“PPP”) projects (e.g. for development of road infrastructure).
22ndnd Seminar on Transport Sector Seminar on Transport Sector Restructuring in the Baltic StatesRestructuring in the Baltic States
Experience of International Financial Institutions
Mr Erkki Karmila, Nordic Investment Bank
Executive Vice President
NORDIC INVESTMENT BANKNORDIC INVESTMENT BANKOwned by the five Nordic countriesFinances projects in– the Nordic region– in the neighbouring areas– other industrialized countries– emerging markets in Asia, Latin America, Africa, the Middle East
and in Central and Eastern Europe
Financing based on sound banking principlesFunding on the international capital marketsHighest possible credit rating AAA/AaaHead office in Helsinki and offices in Copenhagen,Stockholm, Oslo, Reykjavík and Singapore
NIB’S TOTAL COMMITMENTS TO THE BALTIC SEA TRANSITION COUNTRIES BY
SECTOR– as of November 2003 (mEUR)
Baltic Poland Russia Total%
countries
Energy sector 189,04 158,24 0,00 347,27 34 %
Telecommunications 14,36 37,65 17,00 69,00 7 %
Transport infrastructure 156,06 0,00 0,00 156,06 15 %
Water and sewage 20,45 20,00 78,02 118,47 11 %
Total infrastructure 379,90 215,88 95,02 690,80 67 %
Municipal financing 60,00 0,00 0,00 60,00 6 %
Manufacturing 12,54 0,00 25,50 38,04 4 %
Other 166,98 20,00 55,44 242,43 24 %
TOTAL 619,43 235,88 175,96 1 031,27100 %
NIB financing of Baltic Transport Sector
Via Baltica Road Loan in Lithuania, 1996 mUSD 6.7 million
Lithuanian Gravel Road Programme in 2001 mEUR 67.4 million
- Regional development
Estonian Rural Road Development Programme in 2001
mEUR 45.0
- Regional Development
- Extension of Via Baltica from Tallinn to Narva
Tallinn harbour development in 2003 mEUR 40.0
Klaipeda harbour development in 2003 mEUR 4.3
Total approx. EUR 160million
VIA BALTICA
NORWAY
St. Petersburg
RUSSIAESTONIA
Tallinn
LITHUANIA
GERMANY
Helsinki
FINLAND
LATVIARiga
Kaunas
WarsawBerlinPOLAND
DENMARK
SWEDEN
BELARUS
1000 km landtransport route
Connecting Estonia,Latvia, Lithuania
andPoland with Finland and EU
Corridor 1 of EU’sTrans EuropeanNetworks (TENs)
Integration of BalticSea economies and markets
Via Baltica DevelopmentFirst Investment Programme 1996 – 2000 (EUR 214
million)
- 110 km new roads- 333 km road improvements- 28 bridges rehabilitation- New border facilities at all borders- E-67 marking- Road safety improvement- Private sector involvements (road service)> Via Baltica well known route with substantial traffic increase (30 –
150 %)
Second Via Baltica Investment Programme 2001-2006(EUR 553 million)
- Implementation period until closure of EU/ISPA programme- EU membership in 2004 > border crossing will be easier
> increased traffic >increased investment pressure
Via Baltica development process
Via Baltica route: Warsaw-Riga-Tallinn-Helsinki/St.Petersburg• Via Baltica Feasibility study prepared in 1993
- Investment Estimate USD 145-270 millions- Study financed by Nordic Project Fund/NIB, EBRD and Finnish government- Participation from countries concerned, EU, all relevant IFI´s (WB, EIB,
EBRD, NIB)
• First Via Baltica Investment Programme for the years 1996-2000- EUR 180 million proposal – implementation EUR 214 millions- Prepared by the High Level Working Party on Via Baltica, established in
1996- Established upon the initiative of Nordic Investment Bank
• Second Investment Program for Via Baltica 2001-2006- EUR 553 millions + EUR 102 million for access roads to Via Baltica- Implementation ntil closure of EU/ISPA programme in 2006- Prepared by Via Baltica Monitoring Committé- Participation from countries concermned and European Commission
MOTORWAY: HELSINKI-LAHTI
LAHTI
HELSINKI
69,2 km
LAHTI MOTORWAY
OWNERS
Construction Major maintenance Daily maintenance
Road companyNelostie Limited
LENDERS
FINNRAConsession contract
Skanska,Laing Inv., PCA Corporate Finance
Construction and O & M contracts Sampo Bank, NIB
Skanska Skanska Skanska
Lahti Motorway Concession Structure in Finland
PPP financing of Lahti- Motorway - Keyfigures
• Concession with a maturity of 15 years
• Shadow toll – cashflow from state related to traffic volumes
• Total investment costs EUR 96 millions
• FinancingLong term loans (15 years maturity)NIB-loan EUR 42 mio.Sampo-bank EUR 42 mio.
EUR 84 millions
Equity EUR 12 millionsTotal financing EUR 96 millions
Comments on Lahti Motorway• First real PPP project with a limited recourse basis in
Finland
• Construction completed 12 months ahead of schedule
• Company has met all performance oblications under the concession agreements
• Traffic volumes are in the line of projections
• Risk within an acceptable level
• Example of PPP projects carried out with ”off budget” funds
ARLANDA EXPRESS
UPPSALA
ARLANDA
ROSERSBERG
VÄSTERÅS
ODENSALA
ÄLVSJÖ
MAINRAILWAY
ARLANDA EXPRESS
ULRIKSDAL
STOCKHOLMSTOCKHOLM
E3E4
E18
Winning consortium
Alstom
NCC
Siab
Vattenfall
Mowlem
A-BananProjekt AB
Arlanda LinkConsortium
(ALC)
Appoints the winner of the contract
Incorporates
Establishes
Orders the project = Finance, Rail-way & Rolling Stock, Operation & Maintenance
Orders the Railwayand Rolling Stock
Future owner
Client Companyand Operator
Contractor
Mowlem AlstomBanbrytarna(NCC)
A-Train AB
General Project StructureCosts and Financing: Arlanda Express
CostsMSEK 4 404
FinancingMSEK 4 404 (+200)
Turnkey Contract MSEK 3 838
A-T running costs MSEK 112MSEK 726 Lease 6 trains (of 7)
MSEK 1 228 Bank Debt(MSEK 500 NIB)
MSEK 1 000 Government Debt
MSEK 400 Equity
MSEK 850 Government Grant
A-T construction period MSEK 436Change Orders MSEK 20
MSEK 200 Sponsor Debt
MSEK 200 Sponsor Standby Debt (0)
ROAD TOLL SYSTEM IN OSLO
OSLO CITY
Toll collection
FORNEBU
Full scale road toll system around Oslo city • Objective -To improve traffic system in the greater Oslo area
• Project company, A/S Fjelllinjen, Oslo- Joint venture between Oslo and Akershus municipalities
- Established as a vehicle to improve Oslo transportation system
• Project implementation period 1990 – 2005/2007
• PPP-financing structure selected to accelerate the implementation of road infrastructure in Oslo
• Financing- NIB – financing EUR 70 million- Other loan financing EUR 180 million- Total investment costs EUR 1.5 billion
The Norwegian Road program 1998
Decision in the Parliament to test the PPP conceptIn 1998 the Parliament asked the Government to propose road projects to test the PPP concept.
National Transport ProgramFebruary 2001: The Parliament approves three road projects. Aims to test efficiency and effectiveness in achieving politicalobjectives through the PPP model.
First project E39 Klett – BårdshaugJune 2001: The Parliament approves the financing of new E39 Øysand – Thamshamn, and asks the Road administration to procure E39 Klett – Bårdshaug as a PPP- project.
E39 Klett – Bårdshaug: Scope of Work
Engineering, Procurement and Construction: Øysand-Thamshamn 21.9 km. Up to 3 year construction period.
Operation and Maintenance: Klett - Bårdshaug26.9 km. Concession period 25 years.
Financing of construction and operating period.
NIB loan NOK 300 mio (EUR 40 mio). Other loan financing cost NOK 1.4 billion.
Contractual Structure E39 Klett – Bårdshaug
Skanska BOT ABLaing Inv. Ltd.
Selmer Skanska AS) Selmer Skanska AS
Orkdalsleden(SPC) Lenders
Road administration
Fixed Price Turn Key Contract Operation and MaintenanceContract
AP, MMP, TP, SP and ERC
Loan
Repayment
PPP Contract
Equity
Return
E39 Klett - BårdshaugNIB Participation
• New Nordic PPP Infastructure project
• Low risk project
• Long term funding necessary
• NIB participation complementary to bank financing
• Innovative financial structure in the Norwegian/Nordic market
• NIB´s participation will strenghten the total financial structure
Other New Norvegian PPP Transport Projects developed by State Road Administration• Development of road network around Tönsberg and surrounding municipalities
- Toll collection system around Tönsberg municipality- Project Company owned by relevant municipalities- Up to 20 years loan maturities secured by sponsors- Loan financing
NIB EUR 40 millionOther EUR 80 million
- Total project cost estimate EUR 330 million
• E 39 Phase 2 Lyngdal-Flekkefjord- Turn key and Operation & Maintenance- Total cost estimate EUR 185 mio.- Project Structure similar to Phase I E39 Klett-Bårdshaug
• E 18 Vestfold- Project Structure as E 39 Phase I and II- Total cost estimate EUR 185 million
Conclusions• NIB has an extensive experience from PPP-financing of transport
projects
• Advantages of PPP-financing- One Phase implementation
Reduced costs compared to traditional year to year implementation- Off-budget financing
Enables up-front full financing irrespective of budgetary restraints
- A PPP-structure encourages sound project preparation from all parties concerned
• Restraints- Heavy documentation compared to simple supply contracts and direct budget
financing
- Financing costs slightly higher than under direct budget financingHowever – no major up-front financing required
- Indirect undertakings from public sector necessary
> A well planned project may be implemented at reasonable costs
Preparing the transport sectorfor EU membership
Vigo Legzdi š
State Secretary
Latvian Ministry of Transport and Communications
2nd Seminar on Transport Sector Restructuring in the Baltic States
Parnu, Estonia, November 24, 2003
TINA (future TEN)
network –priority for
investments
Investments made in Transport Infrastructure
1996 – 2002, million EUR• State Roads 71• Railway 254• Airport "Riga" 40• Ports (without private) 159
Resources of EU funds for transport infrastructure (million EUR / Year)
4,83024,1
80
0
20
40
60
80
100
120
Before accession After accession
Mill
ion
EU
R
ISPA/ Cohesion fundPHARE/ ERDF
19
ERDF financing in 2004 -2006
• Reconstruction of the first class stateroad network;
• Improvements of transport system inurban areas (including Riga);
• Upgrading of public hydro-technical structures in ports (outside TEN);
• Modernisation of railway rolling stockfor passenger transportation
Thank You for Your Attention!
3 Gogo a street, R ga, Latvia
PREPARING THE TRANSPORT SECTOR FOR EU MEMBERSHIP
2nd Seminar on Transport Sector Restructuring in the Baltic States
Parnu, Estonia, November 24 and 25, 2003
Liudmila LomakinaSecretary of the Ministry of Transport and
Communications of Lithuania
Main objectives of Lithuanian preparation for membership in EU
• harmonisation of EU legislation; • implementation and enforcement of regulations;• alignment with EU technical and quality standards;• preparation for management of EU funds;•preparation for participation in the EU work.
Harmonisation of legislation(railways)
• Restructuring of railways;• Implementation of the Infrastructure
package:Law on Railway Sector Reform;Amendmends to the Railway TransportCode;Infrastructure Charging Rules;Capcity Allocation Rules.
Harmonisation of legislation
Road transport:Technical legislation.
Air transport:Market liberalisation;Flight safety;Environmental issues.
Maritime transport:Safety requirements (Erica packages).
Implementation and enforcement of legislation
• recruitment of additional staff;•training of personnel;•purchase of new equipment;•use of new information technologies.
Alignment with technical and quality standards
• standards for infrastructure;•quality standards for operational activity;•ensurance of safety, accessibility and environment;•security ensurance;•application of modern information technologies.
Andres TintDeputy Secretary General
2nd Seminar on Transport Sector Restructuring in the Baltic States,November 24, Parnu, Estonia
Preparing the Estonian Transport Sector for EU Membership
Preparing the Estonian Transport Sector for EU Membership
Main themes:
Legal framework / Regulatory Bodies
Transport in figures
Infrastructure development
Legislation in force
Complete package of transport laws and secondary legislation have been passed in Estonia:
Road Transport Act
Public Transport Act
Road Traffic Act
Railway Act (adopted 19.11.03)
Maritime Safety Act
Port Act
Aviation Act
Transport Sector Competition Policy
The Estonian transport policy is characterised by extensive privatisation of the operator services and the infrastructure, regulation of competition between the modes of transport through prices and taxes and infrastructure policies favouring international connections
The major state-owned transport companies are Port of Tallinn Ltd; Tallinn Airport Ltd; Air Navigation Centre Ltd.; Electrical Railway Ltd.; Estonian Pilot Ltd.; Saarte Liinid Ltd; Regional Airports – Kuressaare, Kärdla, Pärnu, Tartu.
Cargo carried by Estonian carriers
0
10
20
30
40
50
60
70
80
Mill
ion tons
Autotransport 11,4 12,1 9,5 9,4 11,3 12,2 12,2 13,2 14,1 17,8
Raudteetransport 41,8 40 41,2 44,7 48,6 53 58,3 63,9 64,7 71,1
Meretransport 6,8 5,7 3,1 4,4 4,4 5,2 4,5 2 1,5 1,6
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
International passanger transport carried by Estonian carriers
5,1
3,5 3,3 3,2 3,13,5
3,94,5 4,77
4,42 4,42
931866
790 776
915
1 043
1 2431297,8 1294,7
1192,41 087
2
3
4
5
6
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Mln passangers
400
500
600
700
800
900
1 000
1 100
1 200
1 300
1 400
Mln passanger-km
p
Transport Sector Performance – Some facts
Almost 95% of Estonian transit trade and bigger part of import and export passes through Estonian portsIn 2002, a total of 47.0 million tons of cargo were loaded and unloaded in Estonian ports. In Estonian Railway network was carried 71,1 million tons of cargo (incl. 35.5 million tons of transit cargo)Transit, import and export of freight to and from Estonia was mainly transported (~90%) in multi-modal chain, among this 2/3 in chain ship-train or train-ship, almost 1/5 in chain ship-car or car-ship.Volume of inter-modal transport (including cargo transported in trailers/semi-trailers on ships) made up to 9.2% of the total transport volume
Ports projects CF
Reconstruction of local ports, belonging to TEN-T network (Virtsu, Kuivastu, Rohuküla, Helterma) (~12.1 M€)
Construction of breakwaters in Muuga Port 2004-2009 (~61.7 M€)
Extension of Muuga Port territory 2006-2007 (~72.4 M€)
Completion of VTMIS 2003-2007 (~2.9 M€)
Railway projects CF
Construction of Koidula railway border station 2004-2006 (~45 M€)Tallinn railway bypass TA first phase 2004-2005, 8construction cost ~48.6 M€)Reconstruction of electrical railway, TA and study 2004-2005, (construction cost ~44.7 M€)Decontamination of railway surroundingsEstablishment of centralised railway rescue force, including training and equipment Reconstruction of Tapa traffic node. (Construction cost ~16 M€ )
Road projects ISPA/CF 2003-2008
Via Baltica: Ikla-Pärnu -Tallinn-Narva road 2003-2008 (~137.3 M€)Tallinn-Tartu road 2006 (~9.6 M€)Reconstruction of Jõhvi -Tartu - Valga road 2005 (~22.8 M€)Saaremaa fixed link pre-feasibility study 2004 (~0.59 M€)Tallinn-Tartu-Võru-Luhamaa road reconstruction (WB loan~14.8 M€)
Airports projects CF
Reconstruction of Tallinn Airport airside area 2005-2006 (14.6 M€)
Reconstruction of Tallinn Airport passenger terminal 2005-2006 (14.6 M€)
Reconstruction of local airports, belonging to TEN-T network (Tartu, Pärnu, Kärdla, Kuressaare) 2005-
2006 (24.5 M€)
ERDF investments 2004-2006
Reconstruction of regional road infrastructure (~15 M€ )
Reconstruction of small ports infrastructure (~7.4 M€)
Reconstruction of airports infrastructure (~2 M€)
Railways- railway junctions and other infrastructure (platforms, railway stations etc. ~2.3 M€)
TOTAL: 26.7 M€
1
PRE-SEMINAR QUESTIONNAIREHIGHLIGHTS
2nd SEMINAR ON TRANSPORT SECTOR RESTRUCTURING IN THE BALTIC STATES
Pärnu, Estonia, November 24-25, 2003
Lauri OjalaTurku School of Economics and Business Administration
2
Roads and road transport
• Traffic safety has improved but fatalities and accidents still at a very high level.
• The private sector has taken a large share of road maintenance and construction.
• Rapid fleet renewal of both private and commercial vehicle stock.
• Competition on international road transport intense, less so domestically.
3
Railways• Infrastructure and operations remain in the public
sector in Latvia and Lithuania.
• Estonia has mostly privatized its railways.
• The railways have improved their management and turned profitable.
• Cargo increase almost entirely from transit traffic.
• Transit of Russian oil (products) to ports in Estonia and Latvia, transit over land significant in Lithuania.
• Performed passenger kilometers at their lowest level.
4
Civil aviation
• Aviation infrastructure in the public sector.
• Joint Aviation Authority membership anticipated.
• Major airlines state-owned in Latvia and Lithuania;
Estonian Air privatized; Government has a 34 %.
• Airlines have turned profitable after years of losses.
• Several major airlines operate from TLL, RIX, VNO.
• Passenger traffic has steadily increased.
• Cargo traffic volume remains low.
5
Maritime transport and ports • Major ports have shown strong economic results.
• Cargo handling in ports (very) profitable.
• Stevedoring and shipping companies have been privatized almost completely, often with foreign owners or part-owners.
• Merchant fleets registered in the Baltic States have diminished.
• Latvian and Lithuanian vessels no longer in the Black List.
• Further strengthening of the Maritime Administrations are needed.
6
General transport support services• Transport infrastructure or regulatory issues no
major concern for shippers.
• The supply of logistics services is wide and generally of good quality.
• Centralized logistics solutions - some outside the region - gaining ground in anticipation of EU time.
• Over half of logistics services is provided by international firms, but still less so than in the EU.
7
1991 1996 2002 EU
EE
LTLV
EE
LTLV
LV
SCM
EE LT
Transport market
Traffic market
Advanced logisticsservices market
Infrastructure
Transport flow
Material flow
Logisticsconcepts
Advancedlogisticsusers
Policymakers
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Not
feas
ible
No
maj
orco
ncer
n
Shift of shipper attention
Source: Ad LOg study, Naula & Ojala 2002
8PRIVATE SECTORPUBLIC SECTOR OWNERSHIP
ROADTRANSPORT
ESTONIA LATVIA LITHUANIA
Freight services mostly privatized by 2003; estimated size of domestic operators;
turnover in USD million
RAILTRANSPORT
STEVEDORING
FREIGHTFORWARDING
250 300
120
250
30
170
250
40
450
170
200
60
9
Passenger services also publicly owned; estimated domestic market is small;
turnover in USD Million
60 50 55ALL SCHEDULED AIR TRANSPORT
PRIVATE SECTORPUBLIC SECTOR OWNERSHIP
RAILTRANSPORT *)
10 50 20
ESTONIA LATVIA LITHUANIA
INTERURBANSCHEDULED BUS
TRANSPORT30 40 50
*) Less subsidies
10
Average annual investments in TEN-T: Million euros per year
Source: TEN-Invest report 2003
1996-2001 2002-2005 2006-2010Roads Estonia 10 49 26
Latvia 4 25 30Lithuania 21 36 9
Railways Estonia 7 6 2Latvia n.a. n.a. n.a.Lithuania 15 82 68
Ports Estonia 17 32 12Latvia 11 0 0Lithuania 7 27 42
Airports Estonia 5 1 1Latvia 4 2 0Lithuania 2 9 9
11
Net exporters of transport services:Freight, Passenger and Other
Net capital flow (+) in 2002 in USD Million:
1999 2002
Estonia 330 346
Latvia 520 540
Lithuania 185 357
Source: Bank of Estonia, Latvia and Lithuania: Balance of Payments statistics12
Significant progress made, while• Major infrastructure needs exist in TEN-T roads.
• Lithuania plans to invest heavily in railways.
• Port investment is increasing in Estonia and Lithuania.
• Capacity building in transport administrationneeded.
• The private sector provides most transport services.
• Foreign entry in road, air and maritime & logistics services have restructured the market profoundly.
• The efficiency and quality of logistics services and that of the customs have improved substantially.
13 14
15 16
17 18
Airport development
Mr. Loik, Tallinn Airport Ltd.
2nd Seminar on Transport Sector Restructuring in the Baltic States
November 24 – 25, 2003, Pärnu, Estonia
20
Tallinn Airport Ltd
• Tallinn Airport is a self-financing company
• Estonian Government owns 100% of the shares
• Tallinn Airport Ltd is only responsible for operating and developing of Tallinn Airport
• Quality management system certified according to ISO 9001 requirements since 2002
• Environmental system according to ISO 14001 planned to be certified by 2004
21
Location
• Location:– 4 km from the city centre– 4 km from passenger port– 1 km from the main bus station– 5 km from railway station
• Ideal for both business and leisure traffic
22
Airport facilities
• Runway: 3070 m long, 45 m wide
• Runway cover:asphalt concrete
• Taxiways: length2560 m, 23 m wide
• Apron: 137 000 m2
23
Passenger terminal
• Modern passenger terminal reopened in December 1999
• Annual capacity 1,4 million passengers
24
Scheduled international flights network (winter 2003/2004)
25
Passenger movements 1996-2003
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
1996 1997 1998 1999 2000 2001 2002 2003*
* - estimation 200326
Passenger traffic – Balticairports
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
1998 1999 2000 2001 2002 2003 (10months)
Tallinn
Riga
Vilnius
27
Market share - airlines by paxtraffic (October 2003)
0 % 10 % 20 % 30 % 40 % 50 % 60 %
Estonian Air
Aero Airlines
Finnair
SAS
CSA Czech
LOT Polish
Iberworld/Futura
Lotus Air
Air Baltic
Austrian
Lithuanian
2003
28
Market share - destinations by pax traffic (October 2003)
BerlinOslo
RigaKiev
WarsawParis
PragueVilnius
MoscowHamburg
FrankfurtLondon
StockholmCopenhagen
Helsinki
0,00 % 5,00 % 10,00 % 15,00 % 20,00 % 25,00 % 30,00 %
29
TLL market
• 18 scheduled destinations (incl domestic)– latest new routes
• Tallinn-Paris (April 2003)• Tallinn - Prague (April 2003)• Tallinn - Oslo (August 2003)• Tallinn - Berlin (August 2003)• Tallinn – Amsterdam (October 2003)
• 10 scheduled airlines– lates new airlines
• CSA Czech Airlines (April 2003)
– 91% of passengers travel on scheduled flights
30
Investments 1993-96
• Total value - 15 million EUR• Targets - continuing airport operations, safety and
security• Includes projects:
– airfield (runway and taxiway system) rehabilitation– upgrading of fire-rescue equipment– upgrading of meteo system– upgrading of heating systems
• Financing: loan from EBRD, state funds, aid funds, Tallinn Airport funds
31
Investments 1997-99
• Total value - 29,1 million EUR
• Targets - comfort for clients, the upgrade of service quality
• Includes projects:
– Rehabilitation of the Passenger Terminal
– apron rehabilitation
– the construction of new cargo centre
– the construction of new fire-rescue centre
• Financing – loans from EIB and EBRD, state funds, PHAREfunds, Tallinn Airport funds
32
Investments 2000-2002
• Total value – 1,6 million EUR• Includes projects:
– Apron overlay– Upgrading of electrical systems– Noise monitoring
• Financing: Loans from EIB/EBRD, Tallinn Airport funds
33
Investments 2003-2008
• Total value - 40 million EUR• Targets – expansion of current facilities, additional capacity• Includes projects:
– Taxiway extension– De-icing platform– The construction of the new maintenance centre– Passenger Terminal expansion– Apron expansion– The construction of Cargo Terminal 2– Cat II– Renovation of Tallinn Airport old terminal– Landside development
• Financing: ISPA aid fund, Tallinn Airport funds
34
Investments (million EUR)
0
5
10
15
20
25
30
35
40
mill
ion
EU
R
1993-1996 1997-1999 2000-2002 2003-2008
35
Airport long-run cost curve
1 2 3 4 5 6 7 8 9 10
Passengers (millions) or work-load units handled per annum
Uni
t co
st p
er p
asse
nger
or w
ork
–lo
ad
unit
Source: The Airport Business by Rigas Doganis36
Airport business model
• Small airports have high fixed costs
• To manage high costs in a small airport– Subsidy from the owner (government)
– Higher user charges
37
Tallinn Airport business model
• Until 1999 Tallinn Airport was partly subsidised by the owner (government)
• From 2000 self-financing company– Increased user charges from 2000:
• additional sercurity costs and insurance costs andwell as changes in US dollar rate
38
Sales/profit/passenger volume
-2
0
2
4
6
8
10
12
14
1999 2000 2001 2002 2003*
Mill
ion
EU
R
520 000
550 000
580 000
610 000
640 000
670 000
700 000
730 000
Pas
seng
ers
Net sales
Net profit
Passengers
* - 2003 estimation
39
Airport fees for B737-500 per turnaround(60% load factor) –Baltic airports
0
500
1000
1500
2000
2500
Riga Tallinn Vilnius
Landing fee
Passenger fee
Total
Source: AIP Comments: Riga landing fee also includes navigation fees. 19.11.2003 currency rates were used 40
Passenger fees
0
5
10
15
20
25
Riga Vilnius Budapest Tallinn Stockholm Prague Warsaw CPH Helsinki
Source: AIP Comments:. 19.11.2003 currency rates were usedBudapest, Stockholm, Helsinki - Security charge has been added to the passenger charge
EUR
41
Tallinn Airport user charges(international flights)
• Landing fee:– 11 EUR per ton/MTOW
• Passenger fee:– 15 EUR per departing passenger
• Parking fee:– Up to 6 hours free of charge for freighters
– Up to 3 hours free of charge for other aircraft
– 1,5 EUR per ton/MTOW per 24 hours
Thank you!
Experience of a major logistics provider
Kari Peltonen, Director, Oy Schenker East Ab
2nd Seminar on Transport Sector Restructuring in the Baltic StatesParnu, Estonia, November 25, 2003
Communications/17.11.2003
The Schenker view: Baltic Common Economic Zone
Common IT-basis
Overnight connections
Delivery within the Balticsin 24 hours
Warsova520 km
Saint Petersburg 360 km
Tallinn
Jöhvi
Tartu
RigaLiepaja
Klaipeda
KaunasVilnius
Moscow 1000 km
Minsk 200 km
Kiev 750 km
Helsinki80 km
325 km
325 km
ESTONIAN EXAMPLE: European road transport
•Direct traffic lines to/from Europe
Now 29 scheduled lines, more coming
Daily service to Baltics, Helsinki and Stockholm
Similar services from Latvia and Lithuania
ESTONIAN EXAMPLE: Terminal in Tallinn
Goods are delivered throughout Estonia in 24 hours
3,000 square meters, 43 gates, gas heated premises
Also capable of handling air freight containers
Temprerature controlled space for air freight
ESTONIAN EXAMPLE: Delivery network
Terminals in Tallinn, Tartu, Jõhvi and Pärnu
Distribution routesLine haul
EXAMPLE: Delivery process from Finland
• Standard service:
to final customer within 24 hoursfrom pick-up in Finland including export and import clearance
• How performed:
• Main haul to Baltic terminals from Central stock in Helsinki
• Terminal handling and delivery in the Baltic States
•Border crossings: a critical issue
Helsinki
TallinnRiga
Vilnius
Key Performance Indicators (KPIs)
• In all agreements with major customers
• Target e.g. 95% - 99% from the agreed level
• Customer typically demand 2 – 4 KPIs in the contract
• agreed lead time 96 % within 48 h door-to-door
• customs clearance 99 % of clearances correct
• invoice 98 % of invoices correct
• pick and pack 99 % of orderlines correct
• damage occurance 99 % of without transport damages
Examples of standard KPIs with major customers:
Corporate StructureOptimisation of Service Quality
0%Service quality = compliance to KPI’s
100%
Ser
vice
Pro
duct
ion
Cos
t
Optimal Qualitylevel dependingon client and KPI level 95-99%
50%
Tallinn
Riga
Vilnius
EXAMPLE: Tallinn Export HUB
• collection of products from severalsuppliers
• based on a strong national network
• main haul to Helsinki terminal for delivery in Finland
• tight IT cooperation with customers
HUB to Germany under development
Similar solutions with other countries can be set up quickly if needed
Helsinki
Potential for Warehousing for the Baltics
• Replacing warehouses now in Finland, Sweden and Denmark for Baltic import
• Favourable labour and real estatecosts in Baltic States and Poland
• Additional advantages: export to Russia and Belarus
• Potential locations: Poland, Riga, Tallinn, Lithuania
• In the long term, distribution to the Nordic countries possible
Riga
Vilnius
Tallinn
Far East
Warsaw
From
Euro
pean
d
Nor
th-A
mer
ica
New route;increasing use
Previously used route;now decreasing
From Europe, NA, FE
Border crossing between the Baltic States now
• delays of trucks up to 10 hours now, and getting worse
• deteriorating work motivation in border stations due to EU enlargement
• Customs instructions for tighter inspection
• to use the clear channel for clear unitswith Carnet Tir or Baltic Transit Document (T1B)
• direct more clearances to inland terminals
Solutions suggested by logistics industry
Current problem
Likely causes of the problem
1
2nd Baltic States Seminar on Restructuring of the Transport Sector
Guidelines for the workshops
Lauri OjalaPärnu, 25 November, 2003
2
Workshop objectives are to• ...offer an opportunity for discussing
and comparing progress made by transport subsectors,
• ...offer presentations of the main subsector achievements and measures required in the plenary session, and
• ...facilitate the preparation of the summary documentation of the seminar.
3
Example of subsectoral topics:
• INSTITUTIONAL
• FINANCIAL
• ENVIRONMENTAL
• SAFETY
• SOCIAL
• TECHNICAL and OTHER ISSUES
4
• Road Mr. Cesar Queiroz
• Rail Ms. Luisa Velardi
• Maritime & port Mr. Lauri Ojala
• Civil aviation Mr. Jaan Tamm
• Logistics Mr. Kari Peltonen
Groups and Moderators
5
The roles
• Moderators ensure that discussion is kept on the relevant issues
• Co-facilitators keep a record of the discussions and the conclusions drawn in the workgroups
6
The groups should identify...:• ...the most important development areas in the next
5-10 years
• ...the most pressing problems relating to these development areas/issues
• ...the best ways to address these
Presenting the results for all
• Key findings on 3-4 slides. • 10 minutes per group.• Presentation given by a group representative.
7
Moderated by Cesar Queiroz
Traffic safety presentation by Dominicq Haazen
Workshop conclusions presented by Peeter Skepast
2nd Baltic States Seminar on Restructuring of the Transport Sector
Roads and road transport Workshop
Main Themes: Traffic safety and Road finance
8
Standardized Death Ratio Transport Accidents
10
15
20
25
30
1999 2000 2001Year
Rat
e pe
r 10
0,00
0 P
opul
atio
n
Estonia
Latvia
Lithuania
9
Deaths versus population
10
15
20
25
30
1999 2000 2001 2002Year
Rat
e pe
r 10
0,00
0 P
opu l
atio
n
Estonia
Latvia
Lithuania
10
Road Transport Accidents versus Population
90
110
130
150
170
190
210
230
1999 2000 2001 2002Year
Rat
e pe
r 10
0,00
0 P
opul
atio
n
Estonia
Latvia
Lithuania
11
Deaths versus Number of Accidents
9
10
11
12
13
14
15
16
17
1999 2000 2001 2002Year
Rat
e pe
r 10
0 A
ccid
ents
Estonia
Latvia
Lithuania
12
Deaths versus Kilometers Travelled
2
3
4
5
6
7
8
9
1999 2000 2001 2002Year
Rat
e pe
r 10
0 m
illio
n ki
lom
eter
s
Estonia
Latvia
Lithuania
13
Deaths versus Number of Vehicles
30
40
50
60
70
80
90
100
1999 2000 2001 2002Year
Rat
e pe
r 10
0,00
0 V
ehic
les
Estonia
Latvia
Lithuania
14
Deaths versus Length of Roads
30
40
50
60
70
80
90
100
110
1999 2000 2001 2002Year
Rat
e pe
r 10
,000
km
of R
oads
Estonia
Latvia
Lithuania
15
Kilometers per Vehicle
6 000
8 000
10 000
12 000
14 000
1999 2000 2001 2002Year
Avg
. Kilo
met
ers
per
Veh
icle
per
Yea
r
Estonia
Latvia
Lithuania
16
Haddon's Matrix:
Basic Road Safety Elements
People Vehicle Environment
Pre-crash
Prevent Crash
Education/training
ImpairmentAttitudes/behavior
RoadworthinessSystem (lights, brakes, tires,
etc.)
Road designSigns, lighting,
markingsMaintenance,round-about
Crash Prevent/ Reduce Injury
Use of restraints
Impairment
RestraintsCrashworthiness
Maintenance
Protection (Barrier)
Pedestrians crossing
Post-crash
Sustain Life
First aid skillAccess to
medics
Ease of accessFire risk
Rescue Facilities
Congestion
17
Workshop conclusions on Traffic safety
• Problems– Death and accident rates very high
• Development areas– Human factor (attitudes, behaviours)
– Environment (marking, lighting, designs, etc.)
• Solutions– High level commitment (including the financial
commitment) to ensure the cooperation of different institutions and thus improve the road safety
18
Workshop conclusions on Road finance
• Problems– Lack of maintenance financing
• Development areas– Assessment of the maintenance needs (knowledge
based and predicting systems – HDM IV)
• Solutions– Better feedback to decision makers – “maintenance
needs has to be satisfied first”, high economic rate of return
19
Moderated by Lauri Ojala
Pärnu, 25 November, 2003
2nd Baltic States Seminar on Restructuring of the Transport Sector
Maritime workshop results
20
Organization of the workshop
• The 12 participants comprised– Transport ministry or maritime administration
officials from all three; – Port management in Lithuania and Latvia;– Estonian Ministry of Foreign affairs official.
• First, the main issues facing maritimetransport and ports were identified in a groupdiscussion; 10 issues were identified in all;
• Second, each participant rated the three mostimportant issues giving 3, 2, and 1 points in a descending order.
• The combined results are shown below
21
The most important development areas in the next years
• Information flows and systems (8)
• Safety (7)
• Infrastructure development (5)
• Environmental protection (5)
• Transit traffic (4)
• EU Transport Policy (4)
• Cargo security issues (4)
• Competitions issues: ports and shipping (3)
• Institutional development (2)
• Icebreaking capacity (0) 22
The way forward with information flow and
systems: B2B, B2G, G2G
• Cargo, vessel and other documentation
• Technical issues not the main problem
• Interplay between actors need to improve
• Pressure from International rules – cargo security (ISPS Code)
– International solution required
• White, gray and black list is a concern
23
The way forward with safety
• Maintaining the skills of seafarers– International conventions
– training facilities and programs
• More capacity to Port State Control
• Insufficient capacity to oil damages– Prestige lessons to be learned
– Salvage issues
• Coordination of Search and Rescue
• White, gray and black list is a concern24
Infrastructure and environment issues:
• Continued infrastructure needs to link maritime and land-based transport
• Safety-directed investment
• Vessel management systems, radar systems, telecommunication systems
• Traffic separation schemes and open sea pilotage
• Increased cooperation with maritime authorities and ports in the Baltic Sea
25
Baltic States Seminar on Restructuring of the Transport Sector
Aviation Modal WorkshopPärnu, Estonia, 24-25 November 2003
Moderator - Jaan Tamm
Estonian Air Navigation Services
26
Modal Workshop main themes
• … identify and specify aviation infrastructure (ANS and Airport) needs
• … elaborate on regulating the aviation infrastructure services
27
Modal Workshop objectives
• ...offer an opportunity for discussing and comparing progress made by transport sub-sectors in the three Baltic States
• ...offer an opportunity to present the main sub-sector achievements and measures required in the plenary session
• ...facilitate the preparation of the summary documentation of the seminar
28
• Working on low margins
• Tough competition
• Emerging ‘open skies’
• Blooming low cost airlines
• New technologies
• Global alliances
• Electronic commerce
• Commercialisation and Privatisation
Civil Aviation in general...
29
Following the liberalisation in Airline Industry similar changes appear to take place in Airport and Air Navigation Services business
… and aviation infrastructurein particular
30
1. Globalisation and trans-nationalisation of markets and operations
2. Commercialisation of governmental service providers and diversification of financial measures
3. Liberalisation of economic regulation, potential evasion of safety regulation, and overall concerns with safety and security
4. Recognition of and response to environmental concerns
5. Emergence of new technologies, and approaching of physical limits to infrastructure capacity at the same time
Background and drivers in Air Transportation
31
T 1: Identifying and specifying aviation infrastructure needs• ANS needs will depend mostly on the
progress within Single European Sky
– Networking regionally
• Airports
– Security & safety
– EU membership & joining the Schengen room
– Environment concerns
– Civil-military joint use of resources
– Growing traffic demand32
ATM Capacity Shortfall
•• Capacity has grown Capacity has grown steadily since 1990steadily since 1990
•• Has lagged the traffic Has lagged the traffic growth by around three growth by around three yearsyears
•• Consequent delays Consequent delays have cost users have cost users between €between € 1,3 … €1,3 … € 1,91,9billion a yearbillion a year
Source: CRCO Source: CRCO andand PRUPRU
33
European ATM cost-effectiveness
34
T 2: Regulating the aviation infrastructure services• Consolidation and harmonisation of
regulation
• Improving the regulatory and supervisory capabilities
35
Consolidation of regulation
36
The most pressing problems relating to these development areas/issues
• Global – safety, security
• European regional – harmonisation (Single European Sky, slot policy for Airports)
• Sub-regional – beneficial cooperation, dev. capacity gradually to anticipate the demand
• National – proper regulation and supervision, multimodal transport development, balancing the expectations of main stakeholders
37
The most pressing problems relating to these development areas/issues
• Aggravating safety and security issues
• ANS - fragmented airspace
• Many different technical systems, resulting low interoperability
• Excessive personnel
• Insufficient commercial flexibility or not always enough diversified financial measures
• Higher customers’ expectations
• Inefficient civil-military cooperation
• Low regulatory and supervisory capabilities 38
The most important development areas in the next 5-10 years• Further liberalisation of infrastructure
service provision
• Regional consolidation and harmonisation of regulation
• Consolidation of ATM
• Development of low cost service providers
39
The expected benefits
• harmonised regulation provided on lower cost
• high European safety and security standards are maintained and even improved
• better use of congested infrastructure
• fewer delays, lower indirect costs
• reduced pollution and related costs
• airlines and their customers will benefit from shorter, cheaper flights
40
Baltic aviation infrastructure
Thank you for your attention!Tänan tähelepanu eest!
Paldies!Dekui!
41
Terminology
• Corporatisation– Refers to the legal status : indicates that the
ANS Provider has been established as a private law entity, regardless of its owner
• Privatisation– Refers to ownership: indicates that the
share capital has been sold to private investors, in whole or in part
• Commercialisation– Refers to the management processes and
practices: indicates the introduction of commercial business and management tools from the private sector 42
The expected benefits (SES)• SES will ensure that high European safety
standards are maintained and even improved
• It will deliver savings and efficiency improvements by encouraging cross-border co-operation between service providers
• Targeted EU funding and more transparent charging will allow resources to be applied to solving particular congestion problems, with Europe-wide benefits
• SES will help to control charges for ANS (currently over 5 % of airlines’ total costs) with estimated annual savings of up to € 1 billion
43
Entrance Establishmarketposition
PresentEU-time
(anticipated)
E E
LTLV
EE
LTLV
LV
SC M
EE LT
Transport market
Traffic market
Advanced logisticsservices market
Infrastructure
Transport flow
Material flow
Logisticsconcepts X
X
X
X
Who are we here for ?
Policy makers
Transport operators
Logistics usersN
otfe
asib
le
No
long
era
conc
ern
Transport Services and Trade FacilitationWorkshop, Parnu seminar
44
Changing economic and political map
• Attractiveness of Via Baltica
Ferry lines - more connections, frequencies
Polish road tax will limit
• Unitized transit cargo to/from Russia: the potential
• Russian double taxation for Estonia will be removed
• Synergies in domestic distribution, cost efficiency, service level
• 3rd country traffic volumes: FI, SE will loose - Baltics and Poland will win
• Baltic distribution market: Riga as the hub, PL competitor
• overnight transportation as limiting criteria
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• International companies will quickly enter the Baltic marketsmanufacturing and trade
• Need for new business connections
• Network building crucial, otherwise merged with internationals
• New payers on the market, number will be reduced
• Open competition is a possiblity for Baltic busineses
• Logistics centres for multimodal use: • EU enlargement creates possibilities for combined transports
• Distribution structure: • European, regional, national
Impact of EU enlargement
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CostsDecreasing because:Synergies from combining volumesLess customs formalitiesLead times will improve“Time based management” in logistics planning
Increasing because:EU regulations will increase costs: social, envronm.Bureaucracy burden for SMEsEU fuel tax minimums, heavy vehicle tax
ResultingEE: Slightly positiveLV: Slightly negative (large SME sector)
LT: Slightly positive
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Research and education
• Significant potential in cost saving, hidden though • Consumers will benefit in lower prices of products• Logistics efficiency comes in small pieces• Logistics associations in major role
Users, logistics providers, policy makers
Awareness
Education• New technologies, transport telematics• Need for technically oriented professionals (EU) • How to utilize resources and possibilities in the EU?• Educational and research co-operation between universities and other actors
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To-do -list
• Meet the requirements of the EU
• Promote international integration of logistics centres
“Baltic Sea Logistics Centres” by TEDIM
• Inter-ministerial co-operation to be enhanced
non-gov organizations as tools
• E-Logistics: cross usage of data: officials, firms, Tranport
• Co-operation in information support in logistics
• Promote logistics awareness and education