Finland as a part of logistics of the "Northern Dimension"* 

by Leena Luhtanen, Minister of Transport and Communications of Finland

It is well known that the expansion of the European Union will have a strong and long-lasting effect on the regions bordering Finland.

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Press-photo Leena Luhtanen

After Poland, Estonia, Latvia and Lithuania become members of EU in May of this year, the Baltic Sea region with its 100 millions of people will become an economically important region in the EU. According to estimations, the region is going to develop rapidly, and Finnish companies will be among those enjoying the new opportunities opening up for them in the region. Such great changes will for sure require solving certain problems. Significant differences in taxation, salary levels, as well as other aspects of labour and social life between the old and the new members of the EU are expected to be faced in the beginning of the expansion process.

However, these apprehensions should not be exaggerated. For instance, what should be kept in mind is that agreements on the conditions of the joining EU signed by the new EU member states do include paragraphs stipulating the measures that should be undertaken to soften aftermath of the changes that are going to take place during the transition period. What will be the effects of the EU expansion in the Baltic Sea region on Finland? Will there be any change in the significance of Finland in relation to transport and logistics due to the EU expansion? And if so, how exactly will it change? From my part, I will try to give answers to these questions.

Development of the transport infrastructure of the Baltic Sea region has its special place in the EU working program "Northern Dimension," as well as in the activities carried out to develop the transport communication system of the EU. A special importance is rendered to co-operation in developing navigation at the Baltic Sea. Infrastructure of the land transport of EU countries, for instance, is not sufficient for expected transport flows. The Baltic Sea, on the contrary, offers not greatly overloaded and nature-friendly "infrastructure".

In light of that, Finland has offered its initiative to create a "Baltic Main Waterway". The Baltic Sea countries have gladly accepted the initiative with its goal to increase competitiveness of the transport-logistic chain based on using the Baltic Sea routes

Photo: press-photo The Finish Ministry of Transport and Communications.

between two or more EU countries. All that actually means using effective ice-breaking operations, developing services at seaports and navigation data systems, as well as improving land communications with the sea ports of the region. For instance, subsidies for purchasing new ice-breakers, developing data systems and digital main lines at the Baltic Sea, as well as creating new and safe waterways and transit routes may turn into concrete projects. To a large extent, thanks to Finland, the EU country-members located in the Baltic Sea region have made the decision to prepare for the European Commission a joint proposal on creating the "Baltic Sea Main Waterway". Co-ordinators from the Baltic Sea countries have already begun discussing the content and further development of the project. A joint administrative group that includes representatives of the Baltic Sea countries and the European Commission has been formed to develop projects and create a discussion panel.

There is still much work to do to specify the "Baltic Sea Main Waterway" project. For example, we have to revise all the transport system as a complex and find its actual weak points.

Governments of the Baltic Sea countries on their part can, of course, render political assistance in creating "sea main waterways." However, their practical significance should still be defined by the companies: charterers, transport companies, vessel and navigation companies, forwarding companies and seaports.

Following the expansion of the EU, the position of Finland on the map of Europe will change in terms of transport. The three major transport routes will be optionally used in the future for shipments between Finland and central countries of the EU.

According to estimations, major part of Finland's international trade cargo traffic will still go by the Baltic Sea. This route will become even more attractive for Finland after opening new sea ports on the territory of the new EU members as alternatives to Luebeck and Rostock. After completion, the infrastructure projects in Poland carried out from North to South will lay a better foundation for a more active use of the sea ports, such as Gdansk and Gdynia. The transport routes connecting Finland, Sweden and other Baltic Sea countries will still keep playing their role of important transport communications with the neighbouring regions. Also, the Baltic route may take some part of the trade cargo traffic currently using other major routes.

During recent years, political and economic development of Russia has been relatively stable. Russia has made a significant step on the way of joining the European and the world political and economic systems. The volume of the Russian-Finnish trade has grown up significantly within the last five years. Also, the investment flow from Finland to Russia has increased. Our countries are vastly co-operating in trade, business, manufacturing, as well as in transportation. Active and stable work of each of the parties involved in developing the economic relations is a good ground for keeping the strong position of Finnish companies in the Russian market. I can openly declare that in the sector of transport and communications Finland and Russia are having excellent relations in terms of co-operation with the central authorities located in Moscow and with administration institutions in St.Petersburg and other regions of the North-West Russia. The main goal of the "Northern Dimension" that will have to be achieved in the near future in the sector of transportation will be Russia's integration into the transportation network and logistics systems of the Northern countries, Baltic countries, Germany, and Poland. The fourth major transport route connects Finland and Russia. The route's significance will increase more and more due to the plan to concentrate mostly on developing the transport communication between Helsinki and the Russia-Finland state border that should take place in the 2010s within the framework of the Northern triangle. At the same time, this route is a part of the Pan-European transport passage going from Helsinki to Moscow. Finland is still missing the highway sector E18 from Helsinki to Vaalimaa and the railroad from Helsinki to Vajnikkala that should be there according to the Northern triangle. Construction of the express railroad communication between Helsinki and St.Petersburg has its goal to shorten the travel time from today's five hours to three and a half hours. To reach the goals of the "Northern Dimension", it is important for the parties to undertake the responsibility to carry out the projects and provide a national financial support. Shipments made through the Siberian Railroad route are already functioning well to provide transport service to the EU countries, China, Japan and South Korea.

Another important transport route, the North-South passage currently under development, will go through St.Petersburg and Moscow to the Caspian Sea, Iran and the Persian Gulf. Realising this transport route will open up a new and fast communication

Photo: press-photo Tanker Nordscot in the Baltic Sea

with the South Asia and the Persian Gulf region. We just have to believe in gradual stabilisation of the region's political situation to lay a good foundation for a more effective use of this route in the future. The Northern Sea Way or the North-East transport line is a large project of the future being so much anticipated in Finland as well. The most important point in this project is to make the Western part of the route available for international shipments. Finland has also been co-operating with Russia in projects that include crossing of the countries' state border. Among such projects, we can mention the TEDIM program with its subprojects. An electronic customs procedure system developed by the customs services of Finland and Russia has recently started operating at Torfyanovka checkpoint. This is a great step on the way to progress in logistics that will help develop individual logistics systems of companies.

Our goal is to make sure the transport main routes are well-loaded and developing in the long run. As a part of the economic co-operation between the EU and Russia, the Ministry will develop a research and development program for logistics and transportation telematics. Digital communication networks in Finland are considered to be advanced on the worldwide scale. Finland has gained a vast experience in information technologies that can be used when creating advanced networks of logistics services that will use logistics services provided by companies to supplement one another. To reach these goals, the companies need to develop an advanced compatible software that will help people in issues related to managing operations based on the experience accumulated in the systems and in compliance with the pre-set rules of the game.

The forwarders have been constantly telling us about little traffic of the shipped cargo. The traffic is increasing slowly. Therefore, it is the right time to ask: "How can we together find out what measures should be taken, for instance, in relation to the infrastructure?" Just a rapid use of the data and increased traffic are not sufficient to change the situation because multi-link chains of shipments face their unique obstacles. For example, Finland cannot fully solve the problem of the Northern winter's influence on shipments even if we undertake the most rational measures. And this is one of Finland's unique features compared to Central Europe.

Finland would like to continue serving as one of the acceptable logistics passages. Carrying this out has been constantly requiring perfection and development of infrastructure in the country as well as setting territories for creating logistics centres. We can together turn comprehensive transport-logistics activities into a new competitive part of the industry that will help strengthen Finland's manufacturing structure and the national economy.

In addition, we should render assistance to the infrastructure projects that are being carried out in other Baltic Sea countries, especially in Poland, Estonia, Latvia and Lithuania. This is because their infrastructure projects will serve Finland in its transport operations and will open up opportunities for delivering goods to the main markets of our international sales.

*abridged

The article was based on publications in the magazine Vneshneekonomicheskiye Svyazi (Foreign Economic Relations), No. 1, 2004.