The Port of this Month is Port of Tallinn. At the 17th ESPO general assembly on 4 November 2014, Ellen Kaasik, the Head of Quality and Environmental Management Department of Port of Tallinn, was elected Chairman of ESPO's Sustainable Development Committee for the period 2014-2016. In April this year, Ellen Kaasik enthusiastically chaired the Sustainable Development Committee for the first time. We therefore take you for a visit to Port of Tallinn.
ESPO: Can you briefly tell us about Port of Tallinn? What are its main characteristics and challenges?
TALLINN: Port of Tallinn is a state-owned limited liability company that operates as an intermodal hub, handling passengers as well as multiple types of cargo. This makes it the biggest port authority in Estonia and an active player in the Baltic Sea Region. Port of Tallinn is a landlord type of port offering infrastructure and sea approaches, private operators offer superstructure.
Port of Tallinn consists of five constituent harbours of which Muuga Harbour (picture left) and Paldiski South Harbour concentrate on cargo flow, while Old City Harbour and Saaremaa Harbour mostly deal with passengers. Paljassaare Harbour is mostly used for ship repair activities. In addition, two industrial parks are owned by Port of Tallinn.
One of our main challenges is keeping up with the intense competition between the ports in the Baltic Sea region. We also have to dealwith the decrease in the volumes of bulk goods, with finding ways of embedding the cargo to our harbours, but also with creating value-adding possibilities.
The current unpredictable geopolitical situation also creates challenges for us as several political decisions can affect business relations.
In the end, the ultimate challenge is to ensure the sustainability of Port of Tallinn in the long run. In addition to activities related directly to our business, we have activity plans for tackling future challenges like preserving the natural environment, ensuring the number of high quality employees, supporting fair market environment and ensuring the development and satisfaction of local communities.
ESPO: The cruise and ferry business is a core activity of your port. What are the main challenges? Do you foresee a bright future for the cruise and ferry business in your port?
TALLINN: Port of Tallinn’s Old City Harbour (picture right) is one of the biggest and busiest passenger harbours in the Baltic region. It is also the biggest passenger harbour for both Tallinn and Estonia. With its location in the very heart of the capital Tallinn, the harbour allows excellent access for passengers to the city centre. It is a superb berthing place for passenger ferries and cruise ships, but also for high speed vessels during summer season.
Old City Harbour is servicing more than 9.5 mln passengers per year, from which ca 500 thousand are cruise passengers.
Additionally, Estonian shipping company AS Tallink Grupp has ordered a "new generation" liquefied natural gas (LNG) car-passenger ferry for Tallinn-Helsinki route. The ship, in addition to complying with upcoming sulfur regulations, is also designed for energy efficiency and increasing recycling utilisation. Old City Harbour has to be ready to service the new LNG vessel by 2017.
Old City Harbour is being expanded and modernized with infrastructure developments like ramps and passenger gangways on certain piers. At the same time, we are leading the “Smart Port” project preparing to take smart traffic solutions into use for ferry passengers that are travelling with cars.
Old City Harbour services have annually around 300 cruise calls with half a million cruise passengers on board. The main challenges are: congestion in ports, provision of sufficient and adequate services and facilities in ports, saturation and carrying capacity of destinations, connections from ports to tourist attractions, security, border control and customs issues..
ESPO: Port of Tallinn is an important cargo port in the Baltic region. How is the business evolving? What are the main challenges?
TALLINN: Due to the modest size of Estonian domestic market, Estonia itself forms only a minor part of the port’s “catchment area”. This puts Port of Tallinn into a competitive market of 300 million consumers and strong competition between all East Baltic Sea ports. Our neighbour the Russian Federation is our major export and consumer market. This market is far less stable than “old Europe” but at the same time includes good opportunities for logistic service providers. Many shippers and logistic service providers prefer to keep their assets in stable EU environment and use Russia’s neighbouring countries like Estonia as a bridgehead or gateway. The same concerns production facilities where raw materials of Russian origin are used.
ESPO: What are the main investment projects in Port of Tallinn for the upcoming years? Could you briefly describe the importance of these investment projects for the port and the city?
TALLINN: The infrastructure capacity related to cargo currently exceeds the real throughput two times. Therefore there is no need to develop the port’s common infrastructure, but rather to concentrate on separate projects. At the moment, the lion’s share of infrastructure projects are situated in the Old City Harbour and are related to passenger services and real estate development, which is indirectly also related to passengers. The investments include new traffic solutions, automation of traffic flows and enlargement of passenger terminals, but also developing real estate around the port infrastructure.
ESPO: In the mid-1990s, Port of Tallinn underwent a restructuring process by developing from a service port into a port of landlord type. What were the main effects of this restructuring process for the port?
TALLINN: The goal of restructuring the port from service type into a landlord type was to offer a service that is more efficient and with better quality and to create competition between different service providers. Today we have met the goal – the terminal operators in Port of Tallinn are offering a high-quality service by using modern technology and also constantly finding ways to improve and develop the service. Port of Tallinn’s role is to create a suitable environment with modern infrastructure to the port and near the port areas in order to enhance companies’ possibilities to offer their service, develop their production and add value. Port of Tallinn creates advantages for doing business in port areas; for example by offering long-term contracts and location within the free-zone area that enables more flexible and simplified customs procedures, easy transfer of ownership and no import VAT.
ESPO: ESPO is a partner of PORTOPIA, an FP7 project that aims to measure port performance. What is Tallinn’s approach for measuring the port’s performance?
TALLINN: We aim to be a port that is sustainable and that pays attention to efficiency. For ensuring this, we try to do the right things (be effective) in the right way (be efficient). Therefore, information is needed about how we are doing and what needs to be changed. We monitor and analyse financial and non-financial data about market trends, logistic chain, our port and its customers to assess our position and presence in various market segments. Business potentials in various segments are evaluated in infrastructure investment decision process. We want to use our port area and assets in viable and valuable business segments. We continuously monitor port asset usage and returns, going from port numbers down to services provided across different business segments (by cargo types, passengers, real estate) in different locations. Service and segment profits and asset volumes (asset returns) are compared with assets utilisation, service pricing indicators, market and customer data. Simultaneously, returns are followed by investment projects implemented. The aim is to pinpoint services and segments that are providing the most and the least to the port performance. They both have to be considered and understood to ensure the port is viable over long period of time for our customers and surrounding environment. Most of financial and non-financial data about cargo, passengers, vessels and port operators are available online through business intelligence application, while return and investment analysis together with major performance indicator analysis is carried out once a year. Several monthly and ad-hoc performance analyses are done in between. As for environmental performance, we try to minimise the port community’s impact on environment by taking measures to detect and react to potential problems. In 2015, a fully automatic air quality surveillance system will be launched in our main cargo harbour to immediately alert the port and respective cargo operators about potential air quality issues (smells) for the neighbouring living area, so the responsible operator must react. We aim to minimise the number of air quality complaints near the cargo harbour.
ESPO: Currently, Port of Tallinn is chairing the sustainable development committee at ESPO. What environmental policies have been developed by the port?
TALLINN: Since 2003, Port of Tallinn Management System has been certified as being in compliance with the requirements of ISO 9001 and ISO 14001. Environmental management system according to ISO 14001 standards, ESPO Environmental Code of Practice (1994), EcoPorts (2002) and the ESPO Green Guide (2012), ESPO Green Award (2014) etc. All contributed to the development and implementation of the port’s environmental policy. Our current environmental priorities are air quality, noise management, ship-generated waste management and relationship with local communities.
In our activities we adhere to the following environmental management principles:
- To operate in environmentally friendly ways pursuant to the environmental pollution prevention principle;
- To assess all environmental impacts when planning development activities;
- To take into consideration the public opinion and the suggestions made by our clients and customers in making any decision;
- To comply with Estonian, European Union, ESPO and international environmental legislation and guidelines;
- To work in close co-operation with Estonian and international organisations, scientific establishments and research institutions and consultation companies in pursuit of our environmental policies and goals.
In accordance with its environmental policies, goals and responsibilities, Port of Tallinn has defined the actions associated with significant environmental aspects.
ESPO: Since 1 January, the sulphur directive has come into force. Do you already have an idea on its impact for your port?
TALLINN: We can predict the impact on our business activities: prices of sea transport will increase, competition between non SECA area ports will get more intense and it is possible that several businesses will choose other means of transporting their cargo than via the sea.
Due to the drop of oil prices on the world market, the increase of maritime fright in the Baltic is rather moderate, much less than expected a year ago.
According to EU Directive and Estonian legislation, ships calling at Port of Tallinn’s harbours shall have the obligation to pay waste fee (no- special-fee) and this does not directly depend on quantity of ship-generated waste delivered. Comparing to other ports, in our port ship-generated waste includes not only waste, which are generated during the operation of a ship and fall under the scope MARPOL 73/78 annexes I, IV, V, but also annex VI, which includes scrubber’s waste. Since 1 January 2015, when stricter sulphur content limits in marine fuel have become a fact, a substantial part of ships have already installed or will install scrubbers and particular attention should be paid to emerging issues and challenges related to scrubber’s waste. Wastes generated by these systems are harmful to the marine environment and therefore should be delivered to port reception facilities. MARPOL Annex VI wastes (incl. scrubber waste) are not yet covered by the Directive 2000/59/EC, while the Estonian Government has included these wastes into the scope of Port Act. Therefore Port of Tallinn is obliged to receive MARPOL Annex VI waste on account of waste fee.
Taking into account that the exhaust gas cleaning system wastes are wastes generated during the normal operation of the ships, Port of Tallinn believes that in order to avoid waste tourism and to eliminate the environment as a competitive factor between ports, there is a need for a harmonized implementation requirements related to scrubber residues and port reception facilities in all Member States.