This research article describes the inland waterway cargo traffic in the Volgo-Baltic and White Sea-Onega basins and in the Lake Saimaa area. The findings and conclusions of the article are based on statistical analysis done in the INFUTURE project both in the AMSUMIS and in the Association of Finnish Waterways. The research show that there is very strong inland waterway traffic on the all three mentioned geographical areas. Total traffic volume in these areas is estimated millions of tons, which does not play a major role in both countries’ logistics performance. The inland waterways, as a transport system, are a vital part of both countries logistics systems and national logistics strategies.
The conclusions show also, that there is approximately 0,5 million tons of cargo moving directly from the Russian inland ports to Finnish ports in the Lake Saimaa area.
There is a very clear increase potential for inland waterway transports in both countries on national level. There is also a very clear business potential to increase business and thus transport volumes between the Russian and Finnish industries located at the inland waterways.
Key words: Inland waterways, cargo transports, new business potentials
THE FUTURE POTENTIAL OF RUSSIAN AND FINNISH INLAND WATERWAYS – OPPORTUNITIES FOR NEW BUSINESS ALTERNATIVES, A CASE STUDY RESEARCH
Russia has the largest inland waterway system globally linking five major sea areas together. The inland waterway network connects following sea areas to one logistics entity: Baltic Sea, White sea, Azov Sea, Black Sea and Caspian Sea. The transport volume on the Russian inland waterway network was in year 2018 approximately 120 million tons. There are more than 130 ports on the inland waterway network, which is totally more than 100000 kilometers (16700 km of which are artificial waterways). The transported volumes mainly include such commodities as dry bulk cargoes and liquid bulk cargoes. Some project cargoes are transported on the network.
The inland waterway system of Finland, for cargo traffic, contains two main issues. The Lake Saimaa area and the Saimaa Canal, which is partly on Russian territory and rented to Finland up to year 2062. The commercial fairways in the Lake Saimaa area is approximately 800 kilometers, and there are five major, public ports and four privately operated industrial ports. The annual cargo volume is approximately 2 million tons. This transported volume includes three different types of transports: transports through the Saimaa Canal (1 million tons), transports inside the lake area (0,6 million tons) and floating (0,4 million tons).
Both the Russian Government and the Finnish Government have developed national transport strategies, which also include inland waterways. It can be noted that the development issues for Russian inland waterways are very strongly described in the Russian strategy. Unfortunately, in the Finnish national logistics strategy, the inland waterway system and its development possibilities are noted only on generic level. Finland’s maritime strategy 2014–2022 says in regard of Russian inland waterways: “Russia’s WTO membership brings new opportunities to take advantage of waterborne transport in traffic movements between Finland and Russia. With the WTO accession, Russia’s inland waterways are opening up to foreign traffic and this will allow the opportunity to switch goods traffic increasingly to vessels travelling directly to the interior”.
This article is also limited to study the Volgo-Balt and White-Sea-Onega Basins’ navigational areas and the Lake Saimaa and Saimaa Canal area.
Passenger and cruising traffic are also well developed in the Russian inland waterway system, however this transport type will be excluded from this research article.
The research questions of this article are: Research question 1: Can the business companies (shipping lines, port operators and the industrial companies) develop new business, which creates bigger transport volumes on the national inland waterways systems?
Research question 2: How can the universities, research organizations, governmental institutes assist in developing the inland waterway transport systems in both countries?
Research question 3: How can the Russian and Finnish inland waterway systems be developed jointly for creating new business opportunities to the local industries?
The geographical scope of this research article is described in the map below. The Volgo-Balt inland waterways area covers traffic, which is partly Russian internal traffic and partly vessel traffic coming to and from Finland and other countries. Volgo-Balt continues to play a key role in 9th international transport corridor as a water gate area from the Helsinki Port direction at the Baltic Sea and St.-Petersburg Port.
Fig.1. Geographical area of INFUTURE project: ports of Saimaa IWWs and Volgo-Balt IWWs
The map above shows how the two national inland waterway networks meet each other’s outside the port of Vyborg. The inland waterway connection between Russia and Finland requires also navigation at the Baltic Sea area. For this reason, this type of inland waterway traffic can be called Lake – River – Sea – Lake traffic as there is a sea area connecting the two national inland waterway systems. Russian Volgo-Balt main waterway of 1100 km in length physically larger then Finish inland waterways, thus providing operations for vessels of up to 5000 tones. Vessels operated from national inland waterways and through Finnish Gulf has to have “river-sea” or “coastal” class. Navigation via big lakes of Ladoga and Onega in some periods is comparable with sea navigation therefore technical requirements to build and operate vessels in big lakes is also differ from inland navigation vessels and include requirements as for the sea going vessels.
Authors concentrate on analyzing the cargo flows between the Russian and Finnish inland waterway systems. The transport statistical figures are derived from the official national statistical sources. There may be some differences in the statistical procedures between the countries and thus we must concentrate on the macro level statistical figures.
Import of goods from Finland to Russia can be described by following figures: machines, its equipment and transport means – 34.6%, chemistry – 24.4%, paper and cardbox -12.2%, food and agricultural – 3.3%. Meanwhile structure of Russian export to Finland is modest. There are three main categories of cargoes: oil and its products – 73.3%, chemistry – 11%, forestry – 5.7%.
On Russian side the operational areas of the Volgo-Baltic and White Sea-Onega inland waterways (illustrated in the map, fig.1) include two main big lakes (Ladoga and Onega), which are connected to each other by the River Svir. The River Neva connects Lake Ladoga to the Baltic Sea.
The statistical analysis shows how the transport volumes have developed during last ten years. In year 2018, there was approximately 16 million tons transported in the Volgo-Balt Basin (fig.2). White Sea-Onega Basin showed for the same period 6 million tons of cargoes transported. Total amount transported in these connected inland waterway areas was about 22 million tons, which is 10 times more of the level as vessel transports in the Lake Saimaa area. Formula for estimation of total cargo transported in the basin like Volgo-Balt can be seeing as follows below:
𝑉 = 𝑡 + 𝑖 + 𝑜, where V – total cargoes transported, t; t – cargoes in transit, t; i – cargoes incoming to waterway basin, t; o – cargoes outcoming from waterway basin, t. The statistical analysis in summarized in the table below. In spite that the total volumes of transported cargoes in Russian Volgo-Balt and White Sea-Onega basins include transited cargoes as well, potential for the grows in the transportation between inland ports of both neighboring countries and regions is very high.
Fig. 2. Dynamics of cargo flows by Volgo-Baltic and White Sea-Onega Basin Administrations, thousand tons
The transported commodity groups for analyzed Russian Volgo-Balt basin is summarized in the chart below (fig.3). Building materials have 54% share of the total transported volume. Second and third biggest commodity groups are oil and metal products (10% each), fourth and fifth commodity groups are wood and flux agents (9% each).
Fig.3. Structure of cargos transported in Volgo-Balt inland waterways (e.g. 2016)
Distribution of cargoes transported in White Sea-Onega inland waterway area is not so diversified and limited by building materials (88%), wood (10%) and other goods (2%).
Here can be noted, that the profile of the commodity groups in Russian Volgo-Balt and White Sea-Onega basins is different compared with Lake Saimaa area. Oil products are not transported in the Lake Saimaa area. The statistical analysis show that there are three main port areas in the Russian lakes and rivers of Volgo-Balt, where products are transported directly to Finnish ports – those are Beliy Ruchey (68 thousand tons of wood cargo), Belousovo (44 thous.t) and Shala (44 thous.t), Mondoma (37 thous.t) and Vytegra (31 thous.t). These are respectively 22%, 14%, 12% and 10% of wood cargoes volumes transported to Finland in 2016. Main Finland inland ports for cargoes originated from Russia are Imatra, Lappeenranta and Kaukas.
The statistical summary shows that the total export volume of raw wood products from Russian Volgo-Baltic and White Sea Onega areas to Finland amounts more than 0,5 million tons annually. Picking the figures of 2016 this export volume on 75% (310 thous.t) consisted of wood exported to Finland and transported by 235 sailings: wood balances – 270 thous.t (202 sails), wood round – 34,5 thous.t (24 sailings), wood chips – 4,3 thous.t (9 sailings).
It must be noted that there are also direct vessels sailing from Russian inland waterway ports to Finnish seaports.
Analysis on Russian side has shown those vessel types, which are in use in the traffic between Russian and Finnish inland waterways: 10523 type, 1743 type, 2-95A, 326.1 and R168 types. Vessel analysis also revealed the picture that some of the vessel types are relatively old and should be replaced by more modern tonnage during coming 5 years.
There are three different types of cargo traffic at the Lake Saimaa area and in the Saimaa Canal. The biggest volumes go through the Canal either up- or downwards. The transported volumes are mainly dry bulk cargoes. 1,3 million tons (62% of total volume) were handled in industrial ports and 0,8 million tons (38%) were handled in the public ports. The intra Saimaa traffic was 0,6 million tons (fig. 4). Traffic is basically in balance, meaning that vessels, which sail upwards with cargo return downwards also with cargo. Russian vessel, which carry raw wood from Russian ports, normally return empty to Russian river and lakeside ports.
The imported cargo volume to Lake Saimaa area was in year 2018 670 000 tons (68% of total volume). Approximately 50% of the import was raw wood from Russian (370 000 tons) and the rest was different types of dry bulk cargoes.
The exported cargo volume was in year 2018 370 000 tons (32% of total volume). Forest industry product have a 30% share of the exported volume. Rest of the exported volume was different types of dry bulk products.
Fig. 4. Break down of transport statistics in Saimaa inland waterways based on annual volumes
There are 8 major ports in the Lake Saimaa area. Five of the ports are public ports (Lappeenranta, Savonlinna, Kuopio, Varkaus and Joensuu). Siilinjärvi, Joutseno, Imatra and Kitee ports are owned by local industries. The ports of Varkaus and Lappeenranta have both privately owned and public ports (see fig.5).
Six of the ports handle also cargo between the Lake Saimaa area ports. These ports area marked with yellow text in the map below and those ports, which handle cargo through the Saimaa Canal are marked with blue dots.
As it was mentioned above, Russia is the biggest trading partner for Lake Saimaa industries. There is both import and export volumes from Russia. Raw wood import from Russian lake and river ports is the biggest commodity group. There are approximately 200 vessels annually carrying Russian raw wood to Finnish forest industries in the lake area.
The statistical analysis shows, that UPM Kymmene in Lappeenranta has purchased 160 000 tons of raw wood from Russian inland ports (Vytegra) including port of St. Petersburg. This means approximately 80 vessel loads during year 2018. There has also been a cargo flow of coal from Vysotsk to Lappeenranta public port (7000 tons).
The industrial port of Imatra (StoraEnso) has also imported 140 000 tons of raw wood from St. Petersburg port. This equals to approximately 70 vessel loads. There are very few volumes from the Lake Saimaa area to Russian destinations. There were 2-3 sailings from port of Kuopio to Tver. These volumes consisted of raw stone in dry bulk format to Paroc’s insulation material factory in Tver and voyages were performed by Russian vessels.
Fig. 5. Location of main Saimaa inland ports and its statistics
Floating is the third inland waterway transport mode within the Lake Saimaa. There are approximately 20 smaller ports/places, where the intra Saimaa traffic vessels are loaded and where the raw wood bundles are prepared for floating.
The floating volumes and main loading places are described in the map below (fig.6).
Fig. 6. Floating volumes and main loading places (Finland)
It should be noted that in main inland waterways of Russia floating transportation of round wood is restricted, but in some areas, where it does not harm to environment and carry limited risks to other parties, this mode or way of transportation is allowed. Volgo-Balt does not deal with this transportation.
The statistical analysis done in the INFUTURE project both in Russia and in Finland show that there is a vital inland waterway business between these two countries. However, the commodity groups transported are very limited in both directions, but for example the raw wood supply to Finnish forest industries plays a very strategic role to the industries.
Both the Russian and Finnish governments have realized that inland waterway transports are very cost effective and very environmentally friendly. Inland waterway transports meet the climate change challenges in a very good way due to the fact that with one vessel transport we can substitute several truck loads.
The Russian inland waterway network is part of the Russian logistics system. Same conclusion can be drawn from Finnish side.
This research article gives answers to the three research questions:
Research question 1: Can the business companies (shipping lines, port operators and the industrial companies) develop new business, which creates bigger transport volumes on the national inland waterways systems?
Answer to research question 1: Statistical analysis shows that there are relatively few commodity groups, products, which are transported by inland vessels. Developing new and modern vessel types would attract new commodity groups to inland waterways.
Research question 2: How can the universities, research organizations, governmental institutions assist in developing the inland waterway transport systems in both countries?
Answer to research question 2: The universities, research organizations and governmental institutions can do different types of analysis. The conclusions of the analyzing work can later be handed over to the business and they will then do new business concept development.
Research question 3: How can the Russian and Finnish inland waterway systems be developed jointly for creating new business opportunities to the local industries?
Answer to research question 3: Basic analyzing work has been completed in this research article and the results should be communicated to the business and industries. Bringing together the Russian and Finnish industries, which are located on lake and river sides, would enable new dialogues between the business and industries. One example can be mentioned here. Russian raw wood exporters would like to sell more of their products to Finnish and Baltic Sea area markets and the Finnish forest industries would like to purchase more raw wood from Russian inland waterway areas. This example means also, that the inland waterway transports have to be competitive compared with other transport modes.
This research was conducted in the frames of INFUTURE project financed from the South-East Finland - Russia CBC Programme 2014-2020 with a budget of 1,2 MEUR. Funded by the European Union, the Russian Federation and the Republic of Finland.
Anatoly Burkov, PhD (Marine Eng. Econ.) Associated Professor of Management of Waterway Transport Department Project Manager, "INFUTURE" Project, CBC Program, Admiral Makarov SUMIS
Tatiana Pantina, Dr. of Sc. (Econ) Vice-rector for research and innovations, Head of Economics of waterway transport department, Admiral Makarov SUMIS
Pekka Koskinen, PhD (Econ., Log.) Vice chairman, Finnish Waterways Association
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Photo: Oy Saimaa Terminals Ab