Estonia losing transit price war with Latvia, Finland
The transit of goods through Estonia is in a downward spiral, whereas Estonia's close neighbors enjoy an opposite trend. The Chairman of the Board of the Estonian Logistics and Transit Association, Andrus Valgerist, told ERR that this is primarily caused by Estonia's low competitiveness level and high taxes.
Last year, 20 percent less goods traveled through Estonia than in 2013. Many put this down to the political situation and Russia sanctions but according to Valgerist, the reasons should rather be sought in Estonia losing the price competition with Latvia and Finland.
"There has been a lot of talk about political factors, but a thorough analysis, commissioned from PricewaterhouseCoopers, shows that the region's transit rates are actually going up. Transit through Latvia has spiked, Finland shows improvement too, but the situation is still deteriorating in Estonia," Valgerist said.
Whereas over the past few years, Estonia has subjected the logistics sector to additional charges and taxes, thereby reducing its ability to compete with neighboring countries, Latvia and Finland have taken steps to improve the competitiveness of their transit industries and have long-term strategies in place. "Politics only comes to play if the prices are competitive," Valgerist said.
He added that the Cabinet hoped to raise around 20 million euros a year when subjecting the logistics industry to extra charges. Yet, the drop in volumes means that the state now has to spend 20 million euros on the upkeep of the rail infrastructure this year alone, and the sum is likely to grow in the future.
"The charges had a negative effect on cargo volumes. A 10 percent decrease lowered the state's income by 80 million euros. Last year saw a 20 percent drop, so we can talk of roughly 150 million euros," Valgerist said.