Klaipėda State Seaport Authority
THE ECONOMIC AND SOCIAL IMPORTANCE OF
KLAIPĖDA STATE SEAPORT FOR KLAIPĖDA CITY,
ITS REGION AND LITHUANIA
STUDY
Lithuanian Free Market Institute
Klaipėda University
Economic Consultation and Research
Conclusions
1. Klaipėda Seaport – an object of international importance, a major cargo handling and
passenger transportation hub - ensures favourable preconditions for the fast economic
development of Klaipėda region, increases attractiveness of the region to foreign
investments. It is mainly due to the Klaipėda Seaport that the seaside region is the second in
Lithuania (Vilnius is the first) in terms of the most of economic and social indicators.
2. Economic importance of Klaipėda port is not limited only by the city or the region level; it
plays a significant role in the national economy. More than 800 economic entities are
directly related with the operations of Klaipėda port; economic activities directly related
with Klaipėda port generated 2.7 billion litas revenue in 2004, i.e. approx. 4.5 % of the
country’s GDP. Klaipėda port and companies related with the port operations create over 23
thousand jobs. The port is a basis for welfare of Klaipėda region residents; the average
monthly salary in companies related with Klaipėda port operations was and remains higher
than the average salary in the country.
3. GDP generated by the companies that are directly related with Klaipėda port operations
makes 4.5 % of the total country's GDP, 37 % of Klaipėda region (Klaipėda city included)
and 44 % of GDP generated in Klaipėda city.
The effect of Klaipėda Port on GDP generated in Klaipėda city, Klaipėda region and
Lithuania
Generated GDP, mln.
Lt
Part of GDP directly
generated by Klaipėda
port, %
The effect on the
country's economy
induced by Klaipėda
port, mln. Lt
GDP share induced by
Klaipėda port, %
Income of companies that
are directly related with
Klaipėda port
In
Lithuania
In Klaipėda city
In Klaipėda
region
60.511
6.100
7.262
2.700
4,5%
44,3%
37,2%
100,0%
-
-
-
11.040
18%
181%
152%
100,0%
The effect on the country's economy induced by Klaipėda State Seaport amounted to 11
billiard litas in 2004, i.e. in terms of economic effect induced by Klaipėda State Seaport it
could be stated that Klaipėda port is directly or indirectly related with 18 % of the total GDP
generated in Lithuania.
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The effect of Klaipėda Port on the number of jobs created in Klaipėda city, Klaipėda region
and Lithuania
Indicator
Number of employees
(working-age citizens without
the unemployed)
data as of 01 01 2005, thous.
Share of employees of the
companies directly related with
Klaipėda port, %
Number of jobs induced by
Klaipėda port, thous.
Share of jobs induced by
Klaipėda Seaport, %
In Lithuania
In Klaipėda
city
In Klaipėda
region
number of
jobs created
due to
Klaipėda
Seaport
1.761
106
123
23
1,3%
21,8%
18,6%
100,0%
-
-
-
185
10,5%
174,5%
150,4%
100,0%
Klaipėda port creates 1.3 % of the total number of jobs in Lithuania and 18.6 % of the total
number of jobs in Klaipėda and its region. Calculations the effect induced by the port on the
national economy, show that 185 thousand induced jobs are created due to Klaipėda port,
i.e. 10.5 % of the country’s total labour force is employed.
4. KSSA has started investments into the development of the port infrastructure since 1993 and
until 2004 invested 698 million litas using from 50 % (in 1993) to 96 % (in 2006) of its
total annual investments for the infrastructure development.
5. Average annual investments in the port amount to approximately 74.8 million litas, while
the added value created per year - 11.5 million litas. The slight increase in the added value
created by the port has been observed during recent years. The main reasons for this increase
were the following: the increasing cargo flow (continually up to the year 2004, when it was
decreasing) and the growth of volumes of the expensive cargo (containers, Ro-Ro cargo,
refrigerated cargo, fruit).
6. The development of the infrastructure is performed in two directions: the development of
the general-purpose infrastructure (dredging works, railway development, cruise terminal,
etc.) where 382 million litas were invested by the end of 2004; the special infrastructure
used by particular companies (quays) where 316 million litas were invested by the end of
2004.
7. Investments into development of the special infrastructure by the end of 2004 were used as
following: 56 % of special investments - for KLASCO terminals, 18,3 % of special
investments - for BEGA company terminals; 8,9 % of special investments - for terminals at
the company Klaipėdos Smeltė and from 0,5 to 5,0 % of special investments - for terminals
of other companies.
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8. The development of the port infrastructure allowed to maintain the port's competitiveness,
cargo flow has increased from 15 mln. t (1996) to 21 mln.t (2003) and allowed to maintain
the similar investment efficiency coefficient (~0.17) striving for increase of this coefficient
up to the maximum value of 0.25.
9. The annual revenue of the port influenced by the changes in cargo turnover and quality
amounted to approx. 850 million litas from 1997 to 2004, while the additional revenue in
Lithuania due to additional cargo flows in the port made amounted to 1280 million litas.
10. The port income received from 1996 to 2004 made approx. 4.3 billion litas, that was
distributed as follows: approx. 1.1 billion - to the state budget, 0.6 billion to the region (via
the state budget), approximately 1.5 billion litas went to Klaipėda city via various payments,
purchases, etc. and about 1.2 billion - to foreign companies for machinery, materials and
services.
11. Due to the increase of the cargo flows, approximately 1200 new jobs were created in various
sectors of the national economy from 1997 to 2004; according to the forecasts, by the year
2015 the additional income of the port would make 2,2 billion litas (as compared to the
income of 2004) and ~2200 additional jobs (as compared with 2004) should be created.
12. The additional investments attracted to the port (excluding the investments made by the port
Authority itself) are mostly related with the creation of the port's superstructure and they are
made by port companies. The ratio between the investments of the port companies and
investments into the special infrastructure of the port is ~2.2 – 2.5, while the ratio between
the total investments into the port infrastructure is ~1.2 – 1.5.
13. Having generalised the data presented in the present study and the estimations made by the
experts, it is concluded that the benefit received by Lithuanian and foreign economic entities
due to reduction of transportation costs when importing and exporting goods amounts to 1.2
billion dollars.
14. The investment attraction centre in Klaipėda Region is Klaipėda free economic zone (FEZ).
The turnover of cargo imported and exported by the companies operating in Klaipėda free
economic zone via Klaipėda port makes 26 000 tons, that generates about 420 thousand litas
of additional income for stevedoring companies. It’s forecasted that due to the development
of the zone and entering of new companies to the zone, the cargo flow generated by
Klaipėda free economic zone should increase up to 620.000 tons per year making up to 9.1
million litas of additional annual income for stevedoring companies.
15. By the data as of September 2005, 123 million litas were invested into Klaipėda FEZ, 3450
new jobs were created. All the abovementioned investments are of foreign origin. Having
completed the already undersigned contracts, the amount of private business investments
should increase up to 650 million litas (including investments by Lithuanian capital
companies – 116 million litas) and the number of new jobs created by Klaipėda FEZ should
increase up to 3800 (including 90 jobs created by Lithuanian capital companies).
16. The main prospective directions of Klaipėda port development are related with the
transportation of expensive cargo (containers, Ro-Ro cargo, logistics services); therefore, a
matter of key importance is the development of container and Ro-Ro terminals as well as the
development of logistics centres, because they generate the flows of expensive cargo.
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17. The development of logistics centres is also crucial, because the logistics centres affect the
quality of Klaipėda port operations in terms of the quality of cargo, i.e. improving the
quality of cargo transported via the port and thus creating the added value. Therefore, the
rapid progress in solving the problems of the logistics centres in Klaipėda and Kaunas that
have direct impact on Klaipėda port operations, will directly affect the improvement of
Klaipėda port operations and ability to attract new cargo flows.
18. The density of the Lithuanian transport infrastructure network is sufficient; however, its
technical parameters do not satisfy the growing needs of transport flows and do not
correspond to the development level of the transport infrastructure in the EU. Therefore,
Lithuania as a maritime country crossed through by two main international transport
corridors of European importance, does not take full advantages of its potential for transit
and tourism.
19. Klaipėda port has good interface with the overland transport systems (railways, motorways,
inland waterway transport). By preliminary calculations, currently the Klaipėda port uses
50-60 % of available railway capacities, 15-18 % of available motorway capacities, while
the inland waterway capacities are almost unused.
20. However, there is an urgent problem of planning and strategic solutions of the interfaces
between the port and the overland - despite of the unused capacities, there big traffic jams
on some of the railways and the safety problems arise. If the problems of the “bottlenecks”
of the railway connecting Klaipėda port with the hinterland (single-track railroad between
Šiauliai and Klaipėda, no direct connection between Šilute and “Draugystės” railway
station, underdeveloped access roads in the southern part of the port and insufficiently
developed capacities of Prieuostis railway junction) are solved, the infrastructure of cargo
transportation would be optimized, ensuring its safety and convenience; moreover, the
railway capacities would allow transporting up to 30-30 mln.t of cargo annually .
21. The motorways connecting Klaipėda port and the hinterland are well developed and have a
high potential. Having solved the problems of “bottlenecks” on the access roads to the port,
the capacity of the motorways connecting Klaipėda port and the hinterland would allow
transporting from 20 to 25 mln.t of cargo annually.
22. The port makes significant contribution into attraction of incoming tourist flows to
Lithuania (precisely, the marine tourism). However, the existing infrastructure is not
sufficient to provide services of adequate level for the cruise ship passengers or tourists
arriving by yachts. Therefore, the further investments into the development of marine
tourism infrastructure are crucial if Lithuania strives for full use of advantages provided by
the Baltic Sea and Klaipėda port.
23. Cruise ships that call at ports in most cases bring economic benefits to the port town and the
country, but not to the port, because the port duties collected from cruise ships are relatively
low as compared to the investments made into the development of the cruise ship terminals.
24. The main preconditions for increase of the competitiveness of the port and growth of cargo
flows are the following: (1) economic growth of the country, (2) good connection of the
overland transport systems with the port, (3) well developed system of the logistics centres.
25. In case of Klaipėda port, the economic situation in Lithuania directly affects the port
operations, because over 65 % of the handled cargo is of Lithuanian origin. Lithuania itself
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has a very limited amount of resources (timber, peat), therefore, along with improving
economic situation in Lithuania, the turnover of cargo transported via Klaipėda port is
increasing.
26. International comparisons of the ports usually can not be very precise nor very useful. Port
activities and impact depend on peculiarities and target sectors of activities of each
particular port. Methods of calculations also differ, therefore, the obtained results are almost
incomparable. In terms of geographical aspect, the studies of port impact are very popular in
the USA and Australia, but rarely used in Europe, the impact of the majority of the
European ports has not been analysed at all.
27. Thus, Klaipėda port should not be compared to any other port, even to the neighbouring
Latvian ports, because their indicators and figures can dramatically differ, but can show no
actual situation of the port or its influence at all. However, the analysis of the global trends
of ports is important for the following reason: it shows innovations and trends in the
shipping sector, as well as the methods the other ports use in order to stay in the market, to
maintain competitiveness and to improve the socio-economic picture of the region and the
country.
28. Modern contemporary ports, which are able to maintain competitiveness and to attract
customers and make the biggest positive influence on the neighbouring regions, should
offer effective and reliable services for vessels and cargo and, in fact, to become a part of
the production chain. Responding to the market needs, ports in many countries have
developed distribution and logistics centres in the port territory; these centres are used for
storage, preparation and transformation of the cargo. A modern port is no longer a place for
cargo exchange; today it is a functional element of the dynamic logistics network.
29. The importance and the influence of the port on the economy of its region and country is
emphasised in most of the port studies (ports become the main employers, the centres that
induce establishment of related companies, a port is one of the key trade hub thus promoting
the economic growth, ports facilitate operation of tourism industries, which, in turn, create
even more new jobs, generate more revenue to the regional budget and increase the
attractiveness of their region).
Recommendations
If the economic situation does not change dramatically and the same trends are maintained (for
7-10 years), taking into account the trends of the hinterland development and macroeconomic
situation, no crucial changes are expected in the key cargo flows, except for containers and RoRo cargo.
However, if the economic crisis reoccurs in the nearest future in Russia or other Eastern
countries, much more dramatic redistribution of the cargo flow among the ports could be
expected, i. e. expensive cargo would be concentrated in the Baltic ports (Lithuania, Latvia,
Estonia) and the massive cargo would be partly concentrated in the Russian ports.
The majority of the ports of the Eastern Baltic focus their services plans on servicing of the East
– West transit flows. However, due to the instable situation of Russia and Belarus it is difficult
to ensure consistent flows of this cargo.
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It is very important to plan the port development adequately considering the trends in the market
of port services. For instance, having ensured timely construction and development of the
adequate number and capacities of container terminals, Klaipėda port, by experts’ opinion,
would attract 3-4 times more containers; however, having failed to take serious measures in
order to increase the competitiveness of the port, the container turnover via Klaipėda port could
not just stabilize but even start decreasing over the years.
As decrease in one or another kind of cargo flows in the ports is usually not accidental, it is very
important to follow the market trends and to plan actions in advance. The same applies for the
forecasts of potential growth of cargo flows.
It is necessary to consider that transport as well as a port is a service, and it is extremely
important that this service would be provided timely and exactly at that time when it is required.
Cargo owner needs to transport the cargo when it is available, and cargo can not wait until a
terminal or a quay is built. Thus, in order to maintain sufficient level of competitiveness, a port
should have reserve capacities and to analyse the market situation very carefully, so it could
make timely preparations and offer its services to the cargo owners at the adequate moment.
In most cases, development of ports is based not on the principles of market or logistics, but on
the geographical location – where is the most convenient place for construction or expansion of
a port - however, this is not the best choice, as it is not always based on actual potential of
cargo flows.
In order to attract new cargo and investments to the port, city and region, it is necessary to
maintain the port’s collaboration with the railway system - not just in terms of tariffs, but also
ensuring the quality of cargo transportation and cargo handling services. When the railway
system focuses on the cargo transportation and this activities make the main share of a port
income, it is extremely important to coordinate the activities among the companies striving for
common goals,.
The current technical condition of the railways and their infrastructure in the port and the
hinterland does not satisfy the economic needs. However, under current conditions, this problem
is not being solved, or is solved only by cosmetic measures, mostly using the financing from the
state budget or the EU funds. To improve the situation of Klaipėda and Skuodas railroads, it is
necessary to make structural reform of the decision taking process. Firstly, clarifying the issue
of the property rights - the public railway should be separated from the private access one; and
the public railway should be operated by the infrastructure operator, while the private access
railroads that are used by a single economic entity should belong to that economic entity, i. e. to
the particular company operating in the port and using the railway.
Recently, the need for the qualified labour force has especially increased in the market. In view
of that, the qualification-education centres should be developed and expanded paying the
especial attention to Klaipėda University as the major culture centre of the Western Lithuania.
Recommendations considering the strengths, weaknesses, opportunities and threats of
Klaipėda port region in terms of tourism
The regional structures should pay more attention to the development of infrastructure of the
cities and towns in the region (Klaipėda, Kretinga, Gargždai, etc.) and to make full use of
available industrial territories.
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Lithuania has a possibility to join the common market of recreation and tourism of the European
Union. However, to achieve this goal, it is necessary to increase the quality of infrastructure of
recreation and tourism, spa treatment, car tourism, bicycle tourism, sea tourism and tourism in
the inland waters, to ensure more active development of these sectors in order to find an
adequate balance between the supply and the demand and prices.
Moreover, the administration of recreation and tourism in the municipalities of the region has to
be strengthened; coordination between the authorities and their collaboration should be
increased; also the tourism information and marketing should be further developed.
To make full use of the big available potential of sea tourism, recreational and coastal fishing.
To balance the development of international transport motorways and the development of
certain transport sectors, also to coordinate the development of the tourism in the Eastern Baltic
region.
Analyzing the creation of new jobs, the growth in a job price (salaries and facility maintenance
costs are increasing) should be taken into account, because the port revenue is redistributed in
part through the jobs and such redistribution directly affects the social and economic
environment.
Conclusions and recommendations for the further development of the overland transport
and logistics systems in the context of Klaipėda port
In case of Klaipėda port, the economic situation in the hinterland and especially in Lithuania
directly affects the port operations, because over 65 % of the handled cargo is of Lithuanian
origin. Lithuania itself has a very limited amount of resources (timber, peat), therefore, along
with improving economic situation in Lithuania, the turnover of cargo transported via Klaipėda
port is increasing. The economic situation in the hinterland indirectly affects the port
operations; this was realised during the Russian crisis of 1998-1999, but significant changes in
economic situation in the hinterland, especially crises, make big impact on the Lithuanian
economy (effects of the Russian crisis of 1998-1999 on the Lithuanian economy) and thereby
have direct impact on Klaipėda port operations.
Klaipėda port has good connections with the overland transport systems (railways, motorways,
inland waterway transport). By preliminary calculations, currently the Klaipėda port uses 5060% of available railway capacities (assessing the southern access via Pagėgiai, Šilutė), 15-18%
of available motorway capacities (in terms of cargo vehicles), while the inland waterway
capacities are almost unused or is used only episodically, for instance the Nemunas waterway
from Kaunas to Klaipėda.
At the same time there are serious weaknesses in the overland transport system connecting the
port with the hinterland. Weaknesses of the railway system are the following: a sector of singletrack railroad between Šiauliai and Klaipėda, no direct connection between Šilute and
“Draugystės” railway station, thus trains have to go via Rimkai railway station, underdeveloped
access roads in the southern part of the port (currently railway development works are being
performed in this area), insufficiently developed capacities of Prieuostis railway junction.
Having solved the abovementioned „bottlenecks“ on the railway connecting Klaipėda port with
the hinterland, the railway capacities would allow transporting up to 30-30 mln.t of cargo
annually.
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Motor roads outside Klaipėda city connecting the port with the hinterland are well-developed
and have sufficient potential, but at the same time there are „bottlenecks“ on the access roads to
the port, especially via Klaipėda city and on Klaipėda bypass road. In order to solve the
problems of „bottlenecks“ on the above mentioned motor roads, connecting the port with the
hinterland, it‘s necessary to complete the works on development of Northern access road from
Melnragė via Kosmonautų street up to Liepų Street (currently under construction), to construct
the Southern access road from the Southern part of the port to Klaipėda bypass road (Šilutė –
Palanga) , from Rimkai crossroad (southern road) to the Northern access (crossroad of Liepų
street and bypass road), it‘s necessary to construct a two-way road (category 1), to construct
two-level junctions on the roads from the central part of the port:
-
Baltijos avenue – Minijos street;
-
Baltijos avenue – Taikos avenue;
-
Baltijos avenue – Šilutės street (road);
-
crossroad of the highway Klaipėda – Vilnius and Klaipėda bypass road.
Having developed the specified sectors of motor roads, capacities of motorways, connecting
Klaipėda port with the hinterland, will allow transporting up to 20 – 25 millions tons of cargo
by motor vehicles annually.
The development of inland water should be implemented under a separate programme but its
relation with the port can have prospective potential when Kaunas free economic zone and
Kaunas logistics centre starts actually functioning.
Logistics centres have key importance to Klaipėda port, especially in terms of increase of
container and Ro-Ro cargo transportation capacities. Logistics centres that make direct impact
on operations of Klaipėda port:
-
Klaipėda logistics centre (prospects of this LC are unclear);
-
Small logistics and distribution centres located in the port terminals and in their vicinity,
such as „Klaipėdos terminalo grupė“, possible combination „Klaipėdos Smeltė“ –
„Progresas“, etc..
Logistics centres make impact on Klaipėda port performance in terms of cargo quality, i.e. the
quality of cargo transported via the port is improving, thereby also creating added value.
Faster solution of the problems related with the major logistics centres directly influencing
operations of Klaipėda port – i.e. Klaipėda and Kaunas logistics centres – will make direct
impact on improvement of operations of Klaipėda port, attraction of new cargo flows.
Currently existing small, so called logistics centres that more likely function as distribution
centres, do not generate cargo flows themselves. Whereas large logistics centres do generate
flows of expensive cargo themselves and these cargo flows or at least their major share is
directed to the port. On the basis of the prepared design of Klaipėda logistics centre, a new flow
is planned, which, if directed to the port, would amount to 1,7 – 2,0 mln.t. Unfortunately, due
to untimely decisions regarding establishment of Klaipėda logistics centre, it was impossible to
take advantage of this possibility.
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