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Latvia Shipping Report Q3 2011
Business Monitor International, June 2011, Pages: 87
Business Monitor International's Latvia Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Latvia's shipping industry.
Global shipping continues to suffer from the glut of vessels ordered during the boom years coming online. With demand still struggling to recover to previous levels, the three shipping sectors - container and dry and liquid bulk - are all struggling to maintain healthy rates in the face of overcapacity in the global fleet.
Indexes are falling and ships are increasingly being forced to operate below break-even rates. Huge geopolitical events, such as the Arab Spring and the Japanese earthquake, have further complicated the market dynamics in the shipping sector.
BMI forecasts growth at Latvian ports in 2011 as the country continues to recover from the economic downturn, and through the mid term, though at a slow pace. The port of Riga will continue to dominate both tonnage and container throughput. The country has ambitious plans to increase the tonnage going through its ports over the long term.
Headline Industry Data
- 2011 port of Riga tonnage throughput forecast +0.76% following a growth of 2.53% in 2010. Growth to average 1.7% to 2015.
- 2011 port of Riga container throughput forecast +1.52% following an increase of 39.1% in 2010. Growth to average 1.8% to 2015.
- 2011 total trade real growth forecast +9.4%, and to average 4.7% to 2015.
Key Industry Trends
Controversy Over Where To Build Baltic LNG Terminal: There were disagreements during the quarter as to where to build the proposed Baltic LNG terminal. Neither Latvia nor Lithuania has the funding to develop their own, so the two Baltic states are to operate one together. There is no unified opinion, however, as to where this should be.
Breaking The Ice: In February, the Riga Free Port Authority requested the government of Latvia to play a greater role in breaking the ice that blocks the Gulf of Riga. Spokesperson Anita Leiskalne stated: 'The Riga Free Port Authority is requesting the Latvian government, especially the transport ministry, to take a greater share of responsibility in helping to solve the current situation.' Ice caused havoc at the port in the winter, with 34 vessels trapped in the ice in February.
Latvian Ports Target 66% Cargo Growth By 2025: Latvian ports are likely to register a 6-7% year-onyear (y-o-y) increase in cargo throughput to nearly 65mn tons in 2011, stated Uldis Reimanis, deputy state secretary at the Ministry of Transport, while speaking at the Baltic Forum in Riga in May.
Meanwhile, the country's ports are targeting to achieve a cargo throughput of 100mn tons by 2025, up by 66% from 2010. He said that the target can be achieved through the import of transit goods from Asia, as well as building new port facilities.
Risks To Outlook Potential downside risk to BMI's throughput forecasts arise from the opening of a new terminal at the Russian port of Ust-Luga. The terminal with a projected annual capacity of 30mn tonnes of crude oil and petroleum products began operations in January 2011, and has been devised as an export platform for Russian crude oil and petroleum products through the Baltic Sea, allowing Russia to decrease its reliance on Baltic states' ports for its liquid-bulk shipment needs.
Further risk comes during the winter months, when the Gulf of Riga is prone to freezing. Should the port not invest in ice-breaking equipment, carriers may look to other Baltic ports for fear of becoming trapped in the ice.
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