Economists Debate Business Model for Rail Baltic
Rail Baltic is still coming round the bend despite a minor setback last week, but some economists are confiding doubt as to whether the project will ever be profitable.
Project planners behind the multimillion euro initiative to reconnect the Baltic rail system to the rest of Europe are banking on catering to Finnish timber companies and paper mills, which theoretically should prefer railways to trucks or ships.
Transit expert Raivo Vare, a former transport minister, says he isn't sure whether the railway will meet the freight volume targets it will be built to attract.
"I'm one of the skeptics who has serious problems understanding whether it will be possible to bring 15 million tons over to Rail Baltic in a situation where it competes with road and marine cargoes," he told ETV. "The realistic option is that it can't be anything other than Finnish freight, but Finland is already making use of all channels. Plus we have no idea how restructuring on world markets will take place and what the freights of the future will be. There will be changes in Finish export industries as well," said Vare.
The next few months should be crucial in determining whether reconnecting the Baltic capitals to the rest of Europe by rail will get the hoped-for funding from the EU's next budgetary period.
Project personnel are more bullish.
Rail Baltic Estonia project manager Miiko Peris counters that advance marketing will be a major factor, and companies will "price in" the railway in their plans. "If those in control of the goods hear that the project will go ahead, they will take it into consideration in their logistics chains, and there's bound to be enough cargo in the rail category as well."
Rail Baltic's project manager coordinating things on the European Commission side, James Pond, said infrastructure projects take time to come to fruition. "Such major infrastructure projects of this type need a while to mature. Take the Channel Tunnel, a massive construction from some years ago which is only now moving into profitability. The question is when," he said on ETV, adding he was confident that the project would be profitable.
Rail Baltic last week hit a snag as the Estonian government scrapped a procurement for route mapping due to unsuitable bidders. The new call to tender will be announced in the coming months.
"The exact route will be decided in the next few years. It will be revealed bit by bit as environmental impact assessment is time-consuming and the interests of local residents must be considered," said Peris.
