Although recent announcement from Ventspils officials create the impression that the port city has abandoned all efforts to attract new cargoes and instead has decided to focus on industrialization, economic experts say production is not enough to secure the kid of revenue transit can offer. It is necessary to think in both directions, as reported by TVNet.lv.
Baltic Association – Transport and Logistics President Inga Antane notes that Ventpils port is one of the European Union’s ports, which offers opportunities to use advantages of the single market. Ventspils City Council and Ventspils Freeport have to work with businesses present at the freeport and do everything they can to prevent any legal, technical and economic obstacles that prevent stabilization and future development of Ventspils port. According to her, industrialization is welcome as a method for business diversification, but this does not mean it is worth tossing away everything that has been built until now. The same applies to Latvia’s natural treasure – ice-free deepwater port that can handle large volumes of cargoes. «Ventspils has to work hard in all directions that can potentially bring the city and its residents additional income,» Antane says.
Swedbank economic expert Martins Kazaks reminds that Russia plans to start using only its own ports starting from 2018. The country plans to refuse transit services in third countries. This has been a known plan for the past two years. This is why it is only logical for a city whose main source of income is oil and oil product transit from Russia to search for new development directions. He is confident that Vitol, a major oil product trader, will continue carrying cargoes through Ventspils port from Russia just because the company has capacity in Ventspils.
«There is no need to dismantle rails and send them to Liepājas metalurgs for smelting,» Kazaks notes, adding that transit through Ventspils will no longer reach the same volumes as before. «The degree at which transit volumes will decline depends on our ability to find alternative cargoes. It is too soon to bury Latvia’s transit business. As a country, we can do a lot to attract new cargoes,» Kazaks says. He also voices his shock that Aivars Lembergs has suddenly begun defending interests of the capital’s port, not the interests of his city’s port, especially in regards to railway electrification.
«Ventspils’ economic problem historically revolves around having too many large companies and not enough small companies. If one large company experiences problems, the entire city starts coughing. It is not that economic problems in Ventspils are something previously unheard of. Transit will remain. But if current trends remain, transit flow will decline. If people want to earn more, we need something else. Industrialization, manufacture, production of export goods and export services are the main direction to ensure Latvia’s economy can grow,» Kazaks said.
According to him, it is necessary to look both ways – attract new cargoes and think about manufacture and industrialization. At the same time, he reminds that there are many small and interesting companies in Ventspils that add to exports.
SEB Bank’s analyst Dainis Gaspuitis believe there is no reason to completely turn away from attraction of transit cargoes, because even production with added value does not provide as much benefit to the economy as transit cargoes. «It is necessary to consider the development of other industries, but the transit industry should not be forgotten. It is necessary to think about tomorrow while there are resources to spare. We cannot allow resources received from transit to go to waste. The government has to be addressed – look, we’ve found a way to develop production and we need grants. It is necessary to look at transit trends and consider possible improvements. It would be the direction the state should look at,» Gaspuitis notes.
DNB Bank’s economist Peteris Strautins emphasizes that Ventspils’ decision to focus on industrialization is the proper way to develop the city in the time when profits from transit are declining. He does not deny, however, that any production is not enough to generate large enough income for the city and the country to match income brought by transits of Russian oil production.