The Baltic Sea has the most intensive ferry business in the world. Klaipeda port is distinguished by its busy ferries and cargo, but has a relative low traffic flow of passengers.

Will the Sea ferry remain?

The newly built Klaipeda passenger and cargo terminal will become a part of the most competitive in the world Ro Ro (cargo) and Ro Pax (freight and passenger) shipping market. It is planned that the new terminal in Klaipeda will open its doors in May 2013. Currently, it is being discussed that some of its capacities could be opened next year when the construction of pier is finished. The head of Klaipeda Passenger and Cargo Terminal Company Benediktas Petrauskas could not point any shipping line that will use the terminal in 2013.

A few years ago it was claimed that at least one line from the International Ferry Terminal could be removed and transferred to the future terminal of Klaipeda. Now it has three lines, going to the German port of Kiel, Sassnitz and Swedish Karlshamn.

“It is too early to speak about the ferry line transfer. Ferry Terminal activities are associated with the planned construction of gas terminals. Until their environmental assessment has not been done, it is still not clear,” – assured Mr. Petrauskas. The CEO of Klaipeda State Seaport Authority Eugenijus Gentvilus has stated that he will reject the relocation of ferry lines to the new terminal. The reconstruction of Kairiai Street would be worthless. The cost of reconstruction is 32 million LTL.

“Danish shipping company DFDS Seaways is successfully working in the Sea ferry and makes profits for the port. Klaipeda passenger and cargo terminal has to submit their letters of intention for working with other shipping companies,” – said Eugenijus Gentvilas.

The most expensive project

Klaipeda passenger and cargo terminal construction is the most expensive project during the last two decades in the port’s history. The construction of pier and quay, including maintenance, will cost 115 million LTL. So far, it is unclear whether the project will be supported by the EU funds. Lithuanian Railways has already allocated 9,5 million LTL, including 5,3 million LTL of EU investments, for the railway reconstruction of viaduct through Varnenai Street. It was necessary in order to form a better passenger and cargo terminal area.

The Port Authority has already spent several million LTL for the formation of passenger and cargo terminal area. In addition to the port, extra 14 hectares of land were connected. It had home with the people who were relocated. The Authority will also invest into the entrance to the terminal from Minija Street and Baltija Avenue. In the future, millions of LTL will be spent in order to reconstruct the intersection between Baltija Avenue, Taika Avenue and Silute Highway. This is mainly needed for the passenger and cargo terminal as well as for other port’s activities.

Klaipeda Passenger and Cargo Company plans to invest into its superstructure about 70 million LTL. The contractor competition has already started. The winner will be known in December. All in all, the cost of a new passenger and cargo terminal building, including a road, can cost up to 250 million LTL.  Most of the investments will come from the state funds.

When built, according to Mr. Gentvilas, the terminal cannot become a useless reinforced concrete piece, swallowing up operation costs. The terminal has to receive ships, take passengers and cargo. Mr. Gentvilas has stated before that he has a lot of fears for the Klaipeda passenger and cargo terminal construction. However, he does not have a choice because he is only implementing government’s programme.

Search for new lines

From October 20, Klaipeda Passenger and Cargo Terminal Company has set up the post of commercial director. The new director is former DFDS Lisco marketing and sales manager Arvydas Skuodas. Mr. Petraukas assured that the new manager will be responsible for search of new lines and traffic shipping. Mr. Skuodas explained that it is very important for Klaipeda terminal to be properly built and organize internal logistics.

It is typical of the Baltic Sea region that instead of building new passenger and cargo terminals, the old ones are being reconstructed instead. The same happened to the International Ferry Terminal, which was transformed and adapted to constantly changing flows during the last two decades. Sassnitz, Kiel and Karlshamn terminals were similarly upgraded all the time.

One of the recent newly built passenger and cargo terminals is in the Swedish port of Karlskrona. Completely new passenger and cargo terminal is in the Russian port of Ust-Luga. Prior to the building of Klaipeda passenger and cargo terminal, the representatives were not only interested in the similar projects in the Baltic Sea region countries such as Germany, Denmark or Sweden, but also in British terminals. DFDS group was helpful in providing the information about British terminals of which the company has a substantial share.

Optimistic tendencies

Although it is still unknown what kind of lines will be in the new Klaipeda passenger and cargo terminal, the head of the company Mr. Petrauskas assured that the terminal will not stand empty. The terminal will be able to accept three ships at the time. Maximum capacity will be nine ferries per day. It is planned that at the beginning, the terminal will receive 1-3 ferries per day. After 2-3 year, it is expected to receive 3 million tons of cargo per year. The most optimistic forecasts are that the terminal will receive up to 5 million tons of cargo per year.

Although the port of Klaipeda is the poorest port in terms of passenger numbers, the new terminal hopes to raise the passenger traffic by half a million passengers a year in the period of 3-5 years. The terminal will be able to serve about a million passengers per year.

“The potential of passengers exists. This is confirmed by our studies. If at least one-third of the fellow countrymen visited Lithuania at least twice a year, using ferries, the passenger traffic would reach 300 thousand. Ferries are used by Spanish, German, Dutch, people, the number of English people is also rising,” – assured Mr. Skuodas.

The spokesman for DFDS Lisco Jonas Nazarovas believes that there is no need to build another Las Vegas in Klaipeda because there is no need for it. Klaipeda is too far away from other ports. If ferry shipping keeps developing in the same pace as before, it is possible to expect no more than 700 thousand passengers per year after the period of ten years.

We should not expect for some kind of miracle, flooding our ferries with foreigners. In the line of Klaipeda-Karlshamn, only 8-10 per cent of passengers are Swedish. The line of Tallinn-Stockholm sees only 15 per cent of Swedish passengers. Swedes tend to use Swedish-Polish ferry lines. Swedes travelling for cheaper vodka make up about 30 per cent of all passengers. Poland has these lines going to Sweden: Gdyn-Karlskrona, Szczecin-Ystad, and Gdansk-Nynashamn.

Every option will be considered

The key question remains unanswered: what kind of new ferries are going to visit the new Klaipeda passenger and cargo terminal? Will there be any new ferry line operators? For some time, it has been argued that the port of Klaipeda does not have any competition between shipping lines because the only company working in the port is DFDS Seaways. Therefore, the prices are one of the largest in the region.

According to Mr. Skuodas, there are 50 ferry shipping operators in the Baltic Sea region. In addition to DFDS Seaways, well-known operators are Stena Line, Tallink, Finnlines, Viking Line, Scandline, Unity Line, TT Line, Transfenicca, Nordo Link, TransRussia Express, Color Line, Polferries, and Linda Line. It is still unknown which of these companies will enter the newly built terminal. In 2010, the new plan of terminal will be presented to the operators. According to Mr. Petrauskas, the operators are aware of the fact that the terminal is being built and they are supplied with all the necessary information. However, the message that the building of terminal will last for longer cannot be good news for Klaipeda.

There are certain rules in the ferry business. Optimal ferry routes are the ones that do not take longer than 24 hours to complete. Almost all routes to the Baltic ports fit into such a schedule. Optimal routes would go to Swedish and German ports.

“I do not know whether shipping lines to Poland could exist. We evaluate each option. We will try to create a positive environment for operators to come and work in the port of Klaipeda and create new lines. The creation of profitable lines is not an easy affair. It may take a year and a half or even two years,” - said Mr. Skuodas.

Doubtful profits

Mr. Nazarovas believes that the most attractive destinations from the port of Klaipeda will be that of Copenhagen and Stockholm. The question is how profitable the destinations can prove. The voyage to Stockholm would take about 15 hours and to Copenhagen about 17 hours. The price of one trip to Stockholm is 70 thousand euro. The amount takes up the ferry lease which is about 45 thousand euro per day and the costs of 40 tons of fuel per trip and the maintenance of crew for another 7 thousand. The most optimal solution is to use a ferry with two thousand seats, having one thousand square meters for transport. If such a ferry is loaded to 80 per cent of its capacity, its revenue would be 12 thousand euro. In order to cover all the costs, there needs to be a thousand passengers, which could spend, including their tickets and services, 100 euro. Mr. Nazarovas believes that this is unrealistic. In his opinion, within the next years, there will be no new lines going to Stockholm or Copenhagen.

What remains? The closest port to Klaipeda is that of Gdansk, which is distanced about 115 nautical miles. The trip there could take about 7 hours. For a short period of time, there was a connection with this port from Klaipeda. However, it was relatively unused. Why use ferries when it is cheaper to reach it with auto transport? For similar reasons, the lines from Klaipeda to Ventspils, Riga, and Tallinn ports are not going to pay-off. The same applies for the Russian ports of Ust-Luga and Baltijsk.

For many years, Polish cherish the idea of connection between Klaipeda and Svinoustje ports. This port is located near the Polish border with Germany and can possibly attract a share of freight transport. However, that might be the same goods that travel from Sassnitz to Klaipeda. In Germany, without Kiel and Sassnitz (the ports connected with Klaipeda), the bigger ports are in Rostock and Lubeck (Travemunde). Travemunde is already connected by Scandline with Ventspils and Liepaja. The coast of Sweden is covered with larger or smaller ferry terminals. In addition to Karlshamn, Klaipeda could enjoy the lines with Trelleborg, Ystad, Karlskrona, and Kalmar terminals. These terminals are near the before-mentioned Karlshamn, therefore, the question arises whether it pays-off to send the ferries in more or less the same destinations.

Facts

The Baltic Sea ports which have the sea ferry terminals: