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Transport and Tourism in the Baltic States

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Transport and Tourism in the Baltic States Briefing Research for the TRAN Committee - Transport and Tourism in the Baltic States This overview of the transport and tourism sectors in the Baltic States was prepared to provide information for the mission of the Transport and Tourism Committee to Estonia, Latvia and Lithuania from 22 to 24 May 2017. 1. TRANSPORT 1.1. Main economical and societal parameters of the transport system Transport sector plays an important role in the economies of the three Baltic States (3BS). In Lithuania, the transport and logistic sectors accounted for 13% of the country’s GDP in 2013, while exports of transport services made up around 60% of Lithuania’s services exports. In 2015, the transport sector proved its resilience by falling only 2% overall in the first three quarters, despite seeing heavy losses in the Russian market due to the Russian trade embargo and recession. Lithuania’s main markets are Russia, Germany, Belarus, Denmark and France1. In Estonia, the transport and storage activities contributed almost EUR 1.5 billion or 8.2% to the country’s GDP. The sector remained the fourth largest economic sector of Estonia, although it shrank by 6.3% on 2014. Estonia’s major trading partners in 2015 included Sweden, Finland, Latvia, Lithuania, as well as Russia in exports and Germany in imports2. In Latvia, transport, transit and storage sector contributed 9.5% to the country’s GDP in 20153. The transit sector was one of the strongest industrial sectors in Latvia.4. Following the growth of 2014, the volumes of services provided in the transportation and storage sector in 2015 remained at the level of the previous year. This was largely due to the drop in cargo turnover at ports and railway. In 2015, the volume of freight transport by rail and in ports was lower than in 2014, respectively by 6.2% and 2.4%. In 2014, the transport and storage services sectors (including postal and courier activities) employed over 220 thousand persons in the 3BS cumulatively, which constituted an average of 4.7% of the countries work force (just below the EU average of 5.1%). Around 63% of them worked for inland transportation (road, rail, pipelines and inland waterway transportation), 1.4% in maritime transport, 1% in air transportation, 26% in warehousing and supporting activities and remaining 8% in postal and courier services5. As far as modal split is concerned, in 2014 cars held a majority share in passenger transportation in all 3BS, which varied from 80% in Latvia to 88% in Lithuania. At the same time, buses and coaches constituted the second largest passenger transportation segment with values above the EU average of 9% in the 3BS (oscillating between 11% in Lithuania, 16% in Estonia and 15% in Latvia). The shares of the railways were low in the 1 European Commission - DG ECFIN (Economic and Financial Matters) - Country Report Lithuania 2016, p.35. 2 Statistics Estonia - Statistical Yearbook of Estonia 2016 - GDP by economic activity, 2011–2015, p.190 and pp.260-261. 3 Latvia’s Ministry of Economics - Report on the Development of Latvia, Jun 2016, p.15-34. 4 Investment and Development Agency of Latvia (LIAA) - Transport and Logistics. 5 Eurostat - EU Work Force Survey by Country, Population aged 15-74 and European Commission - DG MOVE (Transport and Mobility) - EU Transport in Figures - Statistical Pocketbook 2016, pp.19-24. DG IPOL Policy Department for Structural and Cohesion Policies Author: Beata TUSZYÑSKA, Seconded National Expert, with the cooperation of Dylan TYNAN, Trainee European Parliament PE 601.969 EN April 2017 passenger segment in the 3BS. They ranged between 4.1% in Latvia and 1% in Lithuania in 2014, as compared with the EU average of 7%. However, in freight transportation railways had a dominant market share in all 3BS ranging from 55% in Estonia to 74% in Latvia, which is much above the EU average of 18%6. Figure 1: Modal Split of Freight Transport in Estonia, Latvia and Lithuania, 2014 (% of total inland tkm) Source: European Commission7 1.2. Renewable Energy in Transport For all EU Member States, Directive 2009/28/EC (the Renewable Energy Directive) imposes a common target of a minimum 10% share of renewable energy in the transport sector to be achieved by 2020. In 2014, the 3BS scored below the EU average of 6% in this regard. The share of energy from renewable sources in Lithuania’s transport was 4.2%, in Latvia’s transport it reached 3.2%, while in Estonia’s transport sector made up for only 0.2% (the lowest value of all the EU Member States). In addition, the number of new passenger vehicles using alternative fuels in the 3BS was also below the EU average8. Nevertheless, all 3BS are undertaking measures to promote the use of renewable energy. Estonia has a national target to increase the use of renewables to 10% by 2020 and in particular for bio-methane to 5% of all fuels by 2020. The Government’s annual plan foresees building an Estonia-wide charging network by 2018. Furthermore, several local authorities are in the process of replacing ordinary buses by the methane-fuelled ones. Interestingly, between 2012 and 2014, Estonia built up a country-wide network of fast-charger stations under the Electro-Mobility programme. However, the number of new electric cars bought has drastically gone down, since the grant budget supporting the introduction of electric cars was depleted in 2014 after putting slightly more than 1000 cars into circulation. Simultaneously, the Lithuanian Government is negotiating with other Member States on sharing their excess renewables production (up to 2020) in the ‘cooperation mechanisms’ for renewable energy. The Commission strongly encourages this initiative and hopes that it will result in the relevant cooperation agreements being signed9. In Latvia, the use of renewable energy and fuels in public transport became part of green public procurement rules in 2015. However, more actions need to be undertaken to reach the binding target of 10% by 2020. In the 2014-2020 programming period, the European Regional Development Fund (ERDF) is expected to contribute EUR 7 million to the development of the electric charging stations network in Latvia and the Cohesion Fund (CF) may provide up to EUR 108.5 million to the environmentally friendly public transport system (trams infrastructure and rolling stock)10. Lithuania is less than halfway towards achieving the 10% target by 202011. The country is considering negotiations with other Member States on sharing their excess renewables production (up to 2020), under cooperation mechanisms for renewable energy12. 6 European Commission - DG MOVE (Mobility and Transport) - EU Transport in Figures - Statistical Pocketbook 2016, p. 37 and 49. 7 European Commission - DG MOVE (Mobility and Transport) - EU Transport in Figures - Statistical Pocketbook 2016, p.37. 8 European Commission - DG MOVE (Mobility and Transport) - Transport Scoreboard 2016 - Energy Union and Innovation. 9 European Commission - DG ECFIN (Economic and Financial Matters) - Country Report Estonia 2016, pp.24-54. 10 European Commission - DG ECFIN (Economic and Financial Matters) - Country Report Latvia 2016, pp.37-38. 11 International Energy Agency - Energy Policies and Measures in Lithuania, 2015. 12 European Commission - DG ECFIN (Economic and Financial Matters) - Country Report Lithuania 2016, p.40. - 2 - 1.3. The Trans-European Transport Network (TEN-T) The multimodal North Sea-Baltic Corridor is the Map 1: TEN-T Corridors - focus on the North Sea - Baltic only Core Network Corridor (CNC) of the TEN-T that Corridor in Lithuania, Latvia and Estonia crosses all 3BS and therefore, provides the only land transport connection of these countries to the rest of the EU (please see Map 1). It connects the ports of the eastern shore of the Baltic Sea with the ports of the North Sea. When completed, the corridor will connect Finland with Estonia by ferry, provide modern road and rail transport links between the 3BS on the one hand and Poland, Germany, the Netherlands and Belgium on the other. The most important project and the major missing link of this corridor is "Rail Baltica" (also referred to as “Rail Baltic”), a European standard gauge railway between Tallinn, Riga, Kaunas and north-eastern Poland13. Regarding the TEN-T Core Network, by 2014 Latvia had completed 88% of its TEN-T Core Road Network, but its rail network still needed a lot of development. At the same time, Estonia was amongst the Member States with overall low completion rates of its TEN-T Core Network (below 35%). In Lithuania, only the Core Inland Waterways Network was 100% completed, whereas only 7% of the Core Road Network and 14% of the Core Conventional Rail Network was finished in 201414. North Sea-Baltic Corridor Baltic-Adriatic Corridor Scandinavian-Mediterranean Corridor Source: European Commission 1.4. Transport Infrastructure Quality In general, transport systems in the 3BS still largely reflect the infrastructures of the past, when the countries were part of the Soviet Union. Density, quality and the east-west orientation of the main transport arteries to date represent former traffic and goods flows. Indeed, north-south oriented transport connections are very scarce and, if they exist, are often of poor quality. This impedes the development of freight and passenger flows not only between the 3BS themselves, but also with the rest of the EU. The present TEN-T policy aims at overcoming these problems placing priorities on the development of north-south oriented transport15. The transport infrastructure shows different characteristics in the 3BS depending on the mode of transportation. In general, EU ratings for Estonia’s transport infrastructure quality have improved across all modes of transport, with its port infrastructure ranking clearly above the EU average. Ratings for the Estonian air transport infrastructure are getting closer to the EU average.
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