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North-European Logistics in the Era of Global Economic Turmoil

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North-European Logistics in the Era of Global Economic Turmoil Olli-Pekka Hilmola & Eugene Korovyakovsky (Editors) NORTH-EUROPEAN LOGISTICS IN THE ERA OF GLOBAL ECONOMIC TURMOIL LAPPEENRANNAN LAPPEENRANTA TEKNILLINEN YLIOPISTO UNIVERSITY OF TECHNOLOGY Lappeenrannan teknillinen yliopisto TEKNISTALOUDELLINEN TIEDEKUNTA TUTKIMUSRAPORTTI 213 Digipaino 2009 TUOTANTOTALOUDEN OSASTO RESEARCH REPORT ISBN: 978-952-214-774-5 (paperback) ISSN: 1459-3173 FACULTY OF TECHNOLOGY MANAGEMENT DEPARTMENT OF INDUSTRIAL MANAGEMENT LAPPEENRANTA UNIVERSITY OF TECHNOLOGY Department of Industrial Management Kouvola Research Unit Research Report 213 Fifth International Railway Logistics Seminar: North-European Logistics in the Era of Global Economic Turmoil Olli-Pekka Hilmola and Eugene Korovyakovsky (Editors) ISBN 978-952-214-774-5 (paperback) ISSN 1459-3173 Foreword As we know well, transport logistics is entirely dependent on the global economic conditions and especially it is driven and fuelled mostly through international trade. Actually transport logistics is the derivative of economic growth, and mainly accelaretes considerably higher base with the growth of the latter factor. During the recent year we have faced one of the most serious modern time declines in global GDP as well as in manufacturing activity; these two main factors, among currency changes and increasing unemployment, have caused dramatic declines in transportation volumes, and volume allocations. Future does not currently look that bright in the transport logistics sector, since under utilization of current fleet (e.g. sea vessel capacity and used long-term infrastructure) accompined with already completed orders (supplied during the forthcoming two to three years) will create harsh business environment with low prices for the entire sector for years to come, if growth will not come back quickly on the real economy. Thus, it is very unlikely that we would go back to good old globalization days during forthcoming years. However, as researchers, looking blindly forward, we see clearly opportunity in here within changing conditions – now nation-wide organizations, governments, municipalities, cities and business sector could start to reconsider used concepts and systems once again, and possibly changing towards environmentally friendly direction. We argue that railways and intermodality, used in appropriate manner, could ease our environmental load considerably, and decrease the dependency on fossil fuels. This book contains more than 20 research manuscripts from the area of transport logistics – what is amazing in all of these works, is the requirement of something new and fresh for the current situation. Either we need more co-operation between actors or countries in a case of crisis, and/or we would need new technological solutions. These latter solutions are typically combination of both hard (investments and machines) and soft (management, specialization and organization), which together would enable needed change in current situation. However, as some of the articles in this volume illustrate that initial investments on transport logistics are not small-scale either – new structures will cost a lot to be constructed, and therefore should be carefully evaluated and planned. It seems to be the case that transport logistics demands more intenelligence and accuracy from about to be completed decisions; these could be gained through e.g. computer simulation systems, but as showed in the book too, operative information systems will modify larger sector actors in the future as well. Finally we would like express our gratitude for the city of Kouvola of arranging this research seminar among larger Innorail meeting – this two day event facilitates the exchange of knowledge and ideas as well as gives us good opportunity to develop and shape the future. During this year our meeting actually consists additional day more, since some of the articles in this volume are by-products of EU project called Stoca, which concerns transportation logistics in the case of emergencies and crises – project, which is ‘just in time’ with regard of current economic situation. Last, but not least, we would like to express our gratitude for Tarja Mustonen, Sanna Tomperi and Jouko Karttunen from assistance in arrangements of this event. In Kouvola, Finland & St. Petersburg, Russia during May 2009, Olli-Pekka Hilmola Eugene Korovyakovsky Prof. (act.), Docent, PhD Head of Department, Dr. 2 3 Table of Contents Tommi Inkinen, Pentti Ruutikainen & Ulla Tapaninen Development and future prospects of Finnish transit to Russia 7 Valery Bakkal, Valery Kurennoy, Alexandr Ledyaev, Eugene Korovyakovsky & Alexandr Chubukov About the level of development intermodal transportations in Russia and in the world 19 Jouni Juntunen, Mari Juntunen & Vesa Autere Factors affecting the profits of LSPs 37 Eleonora Shabarova Outsourcing of local passenger transportations 49 Bulcsu Szekely The process of liberalizing the rail freight transport markets in Hungary: market entry conditions and competition dynamics 59 Pekka Koskinen Finnish paper industry’s joint SCM concept, implementation evaluation 73 Jyri Vilko & Jukka Hallikas Supply chain risks and management 89 Miika Mäkitalo The rise of competition in Finland’s rail transport 101 Miika Mäkitalo Timetable-based rail network investment strategy 111 Milla Laisi Swedish and Polish railway freight operators’ market entry 119 Juha Saranen Evaluating regional transportation systems under emergency situations 133 Lauri Lättilä Modeling seaports with agent-based modeling and system dynamics 145 Ramūnas Palšaitis & Vytautas Verbickas Establishment of intermodal transport terminal near Poland-Lithuanian border 163 4 Oleg B. Malikov & Yulya Korovyakovskaya Loading-unloading areas of warehouses in the logistic chains 171 Tõnis Hunt, Nelli Norit & Raivo Portsmuth Analyzing risks involved in handling oil and chemicals in Estonian ports 183 Jacek Szołtysek & Agnieszka Jonkis Sustainability and multimodal transportation in modern cities – looking for effective relocations in urban areas 195 Andrej Simushkov & Eugene Korovyakovsky Basement for modeling of the common information area of a transport and logistical complex 207 Anton Ivanov, Anastasiya Kalyuzhnaya, Kiril Shulika, Maria Dmitrieva Development of a transport infrastructure of northwestern federal district 219 Jouko Karttunen Real options in the logistics investments 225 Petrov & M.A. Zhuravskaya Research Note: Strategy and scenario of development for Urals container transport system 241 Ivan Shutov Research Note: Developing of the railway passenger options between Russia and Finland 247 Mikhail Pimonenko Research note: Crisis - challenges for logistics business and management 251 O.N. Kuranova & N.K. Rumyantsev Research Note: SAP options for the transportation companies and logistic service providers as used at OAO "RZhD" 255 Marija Zherebak & Petr Rybin Research Note: IT outsourcing in supply chain management (Russian railways case-study) 261 5 6 7 Development and future prospects of Finnish transit to Russia Tommi Inkinen1, Pentti Ruutikainen2 & Ulla Tapaninen2 1Department of Geography, University of Helsinki, Finland 2Centre for Maritime Studies, University of Turku, Finland Abstract The eastbound transit to Russia has importance to Finnish national economy and economy of the Kymenlaakso region. The ports of Kotka and Hamina handle approximately 60% of Finland’s eastbound transit volumes in tonnes (2008). The volume of transit has increased steadily since 1998, but the current global economic slowdown has impacts also on the new estimates of the near future (2010–2012). The impact of transit traffic on national economy was approximately 380 million Euros in 2007. Estimates of the impacts on employment vary between 3 000 to 5 000 work years in 2007. The transit traffic sector is highly competitive. This is due to a large number of small transport companies and dominant national monopolies, particularly in rail transports. In addition, transit routes “compete” with each other. The Finnish route is considered a reliable and safe alternative compared to routes in Central-Eastern Europe and the Baltic countries. The value-added services are also well developed resulting into a competitive cost-benefit ratio of the Finnish route. Our research results indicate that the eastbound transit is more significant compared to westbound transit due high-value of the transported cargo. Westbound transit includes more bulk products. Furthermore, reliability is a necessity for the transit of high- value goods such as cars, electronics and machinery. In 2008, approximately 850,000 cars were exported to Russia via Finland. This equals an amount of 97 cars (or 1.5 cars per minute) each hour around the clock for the whole year. The Finnish route transits nearly 15% (over 30 billion Euros) of the Russian import value. Russia’s new ports that are under construction will have an important structural effect. In this paper we present the latest statistical figures and future trends in Finnish-Russian transit. Our data includes the latest figures of the year 2008. Keywords: Transit, physical logistics, transport, Russia, Finland 1. Introduction The transit from Finland to Russia has significant importance to the regional economy of South-East Finland. Ports of Hamina and Kotka handle approximately 60% of Finnish eastbound transit volumes. Until the year 2008, strong growth in the Russian economy supported expansion of volumes in terms of value and TEU (transit equivalent unit of 20 feet container). The benefits of transit
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