Estonia Freight Transport Report 2008 - a new market research report on http://www.companiesandmarkets.com
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Estonia expected to be able to weather Russian attempts to divert some of its transit cargos, including oil products, from the small Baltic state after a diplomatic confrontation, Foreign Minister Urmas Paet said in August. The country’s main port and the railway operator said an impact from trade measures had been seen in falling cargos, with the railway firm planning to cut jobs because of this.
However, an official said the impact on the state budget of less transit trade was limited. Paet agreed, saying that it would not harm Estonia that much, although he objected to what he described as the politicisation of Russian trade policy.
Estonian-Russian relations hit a low point after the Baltic state moved a World War Two Red Army memorial from the centre of its capital, Tallinn in April 2006. Russia called it an act of desecration and an effective glorification of Nazism.
Estonia said the monument had become a focus for Russian nationalists, which in turn provoked Estonian nationalists. But in the wake of the confrontation, industry and trade sources said Russia had ordered exporters to halve shipments of refined oil, metals and coal via Estonia.
The Port of Tallinn, the largest in the country, said it handled 23% less cargo in July 2007 compared with the same month of 2006 and 13% less in June. Paet told Reuters that the fall in Russian transit trade was a political move as the Russians were not just reorienting transit flows to Russian ports, but were also are sending goods to ports in other neighbouring countries. Despite uncertainty, in our new Estonia Freight Transport Report, BMI concludes that rail and port traffic will take a hit this year, and then begin a recovery. We are forecasting that total freight carried, measured in million tonnes-km, will increase by an annual average of 0.9% in 2007-2011.
Various factors underpin this forecast. The Estonian economy is set to achieve one of the fastest economic growth rates in the EU, at an annual average of 6.7% for the next five-year period. The freight transit business – hauling mainly Russian cargos to and from the port of Tallinn – will contract, but trade with Europe will help offset this.
There are encouraging signs that Estonia’s Baltic ports can hold their own in competition against Russian outlets. Within the road sector, after a large surge in road haulage carried in 2003 we expect the annual average increase to stabilise at around 4.5% in the five years to 2011, ahead of rail, which will be hardest hit by the fall in Russian transit business and which will contract by an annual average of 1.0% over the next five years.
Port traffic will rise by an annual average of 0.4%. Airfreight will continue to be a dynamic sector, although it is expanding from a small base: we expect the annual average growth in airfreight carried to be 8.6%. As mentioned, average annual freight carried across all modes, measured in million-tonne km (mntkm) will grow by 0.9% during the forecast period.
The operating environment is supportive. BMI’s composite score for Estonia’s freight transport business environment is 40 (out of a theoretical total of 70). This places it just above the average for its peers in the European region. Areas of strength include long-term political and economic risk, and the regulatory environment. Comparatively speaking, there is room for improvement in the competitive environment and the rate of freight growth.
According to our latest forecasts, the total value of transport and communications GDP will rise to US$4.44bn in nominal terms by 2011, representing 15.3% of Estonia’s GDP. The transport and communications sector employed 55,400 people, or 9.5% of the labour force, in 2006. We see that figure staying virtually flat at 55,000 by 2011.
Author : Mike King
Web : www.companiesandmarkets.com
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