Impact of the geopolitical and economic situation on the largest Baltic ports in 2023

Total cargo turnover in Top 10 Baltic ports

The war in Ukraine affected maritime transport in the Baltic Sea region and cargo handling in seaports. The embargoes on energy raw materials from Russia introduced by European countries have resulted in changes in the sources of supply of these commodities, contributing to significant changes in the throughput of energy cargo in many Baltic ports observed both in 2022 and 2023. The volume of cargo turnover in the southern Baltic ports was also partly influenced by the handling of cargo from Ukraine. Moreover, 2023 was a time of significant economic slowdown due to high inflation, falling real incomes, tighter financing conditions and uncertainty related to the Russian invasion of Ukraine and the reversal of the inventory cycle. This had a negative impact on the demand for consumer goods, which in turn resulted in a reduction of unitized cargo throughput (containers and ro-ro units).

In 2023, cargo handling in the ten largest Baltic ports increased by 1.5% (+7.3 million tonnes) compared to the previous year, reaching 489.5 million tonnes (Table 1). The Port of Ust-Luga again took first place. Turnover in this Russian port decreased by 9.3% compared to 2022 (from 124 million tonnes to 112 million tonnes). In other Russian ports on the Baltic Sea, an increase in throughput was observed. After a very large decline in 2022, a significant rebound occurred in the Port of St. Petersburg, where throughput increased by 27.8% and reached 49.6 million tonnes. However, this volume was 20% lower than in 2021. The Port of Primorsk recorded a 10.5% increase.

The sum of turnover for the three Russian ports amounted to almost half of the total throughput of ten largest Baltic ports (46%). This value has remained more or less at the same level since 2021 (in 2021, the share of Russian ports was 47.7%, and in 2022 – 45.6%). In total, Russian Baltic ports recorded an increase in the volume of dry bulk turnover by 16.6% and a decrease in liquid cargo by 8.8%.

The Port of Gdansk, with throughput of over 80 million tonnes (+18.6%), maintained the second position in the Baltic Sea, overtaking the Russian Port of Primorsk by 17.6 million tonnes. Another record result of the port is mainly caused by increased handling of liquid fuels (+47.5%, +12.13 million tonnes) and grains (+60%, +1.16 million tonnes). Moreover, the high level of throughput was maintained in the coal and coke group (+1.1%).

The Port of Gothenburg noted 10% reduction in cargo turnover (36.3 million tonnes compared to 40 million tonnes in 2022) and dropped one place in the ranking. This decline was caused by a 17% reduction in the throughput of energy products. The Swedish port recorded increases in categories such as container handling (which will be mentioned in the next section of the report) and dry bulk cargo. It is one of the most important ports in Sweden, primarily in terms of container handling, because in 2023 approximately 57% of all container cargo passed through it (in 2022 this value was 53%).

The Port of Szczecin-?winouj?cie recorded a 4% decrease in throughput compared to 2022 (35.3 million tonnes to 36.8 million tonnes a year earlier). The reduction was mainly due to reduced turnover of general cargo (-10.4%, -1.84 million tonnes) and coal (-31.9%, -1.37 million tonnes). A positive change was observed in the volume of grain handling (+60%) and other bulk cargo (+20.6%).

In the Port of Klaipeda a decline in throughput for another year in a row was observed. In 2023, the volume of handled goods was reduced by almost 10%, reaching the level of 32.7 million tonnes (in 2022, 36.1 million tonnes were handled in the port). This result was caused by the imposition of sanctions and an embargo on goods from Russia and Belarus. Despite the weakening in this category, the port authorities look positively at the future of the port, hoping that it will become an innovative, effective hub in port services, maritime industry and green investments. In 2023, this Lithuanian port saw an increase in grain, LNG natural gas, wood and frozen products throughput.

2023 was a very good year for the Port of Rostock. For the first time in about 60 years, a volume of over 30 million tonnes was recorded - this is an increase of 6.64% compared to the previous year. This increase was significantly influenced by the throughput of liquid goods (over twice as much as in 2022) and general cargo (21% more).

The Port of Gdynia ended the year 2023 with result of 29.3 million tonnes, which meant an increase of 5% compared to 2022. The main cargoes that contributed to these increased volumes were cereals (+42.7%, +2.02 million tonnes) and liquid fuels (+57.3%, +1.29 million tonnes). The declines were noticed in all other cargo groups, except for the ore category.

Among the top Baltic ports, the largest decrease in throughput volume was recorded in the Port of Riga. The volume decreased by 20% to 18.8 million tonnes (23.5 million tonnes in 2022). The greatest impact on this result had the reduction in dry bulk handling (-29.5%) compared to the previous year, and in particular the turnover of coal and coke (-73.2%). However, it is worth pointing out that in 2022, the Port of Riga handled approximately 5 million tonnes of coal under the agreement between the Port Authority of Riga and the Port Authority of Gdynia. Concerned about the efficiency of coal terminals in Poland and possible problems with the distribution of coal by rail, the government in Poland decided in 2022 to cooperate with other Baltic ports, such as Riga. The decrease in coal turnover in 2023 in Riga is the result of the expiration of this cooperation.

Container Turnover in Top 10 Baltic Container Ports

In 2023, container turnover in 10 largest container ports in the Baltic dropped slightly by -0,85% (-71,414 TEU) and reach a level of 8.38 million TEU (Table 1). Most of the biggest container seaports have noticed a decrease, others (except from Port of St. Petersburg) noted a small increase. The results were mainly affected by the economic slowdown in Europe – low economic growth due to higher interest rates and faltering global trade. Moreover, the ongoing geopolitical unrest were also one of the important factors that impacted on the general cargo trades among most Baltic ports.

Port of St. Petersburg is the only one with the container volumes up by two-digit number (+13,25%). However, the Russian port still do not manage to reach the pre-war level of yearly throughput. After the Russia’s aggression on Ukraine, most of the largest containers operators suspended their services to St. Petersburg. The volume of Russia's trade with Western countries is replaced primarily by trade with China. This change means an uneven distribution of import and export loads, which results in a constant accumulation of empty containers in Russia. The MSC retains a considerable presence in the Russian trades with feeder operations in all 3 Russian gateways while the other key European carriers have withdrawn completely from the market. A number of new operators have started offering their services, among others FESCO, Torgmoll, Safetrans, Reel Shipping. One of the most important steps in 2023 was the opening of a regular service along the Northern Sea Route with a container ship Newnew Polar Bear operated by Hainan Yangpu Newnew Shipping.

The largest container port on the Baltic Sea Region, Port of Gdansk, handled 2 050 037 TEU, 1.07% less than in 2022, and almost 68 thou. TEU less than in the record year 2021. This result was possible to achieve mainly due to growth in the fourth quarter of 2023 when container handling icreased by approximately 20% compared to the last quarter of 2022. In 2023 Baltic Hub faced some operational problems causing high congestion both on land and water. Due to the high level of yard density at the Port of Gdansk, Maersk decided on import cargo booked on L02 and L03 services to be discharged at the Port of Gdynia.

The year 2023 at the Port of Gdynia ended with a 4,44% decline caused by a reduction in turnover by as much as 40.5 thou. TEU. The result could have been impacted by the CMA CGM decision to withdraw calls from the Gdynia Container Terminal and Baltic Container Terminal and redirect them to the Port of Gdańsk as from May last year. However, shortly after, Port of Gdynia was added to the reintroduced service SWAN. The MSC operator's direct connection with the Far East is the first of its type in this port. The regular service also links the seaports: Gdańsk and Klaipeda. The first call to Port of Gdynia took place in July. The port of Gdynia was also added to the IBESCO service by the Ocean Network Express (ONE), by including calls at the Gdynia Container Terminal.

The Port of Klaip?da improved its last year's record - the throughput threshold of 1 million TEU was once again exceeded. However, the result was higher by only 0.27% (+3 thou. TEU) than in 2022. Container turnover in term of tonnes, was of 12% lower (-1.3 million tonnes less). The geopolitical situation, sanctions, decreasing export volume of local entrepreneurs, as well as gradually decreasing consumption were the main reasons for the decreasing tonnage in the container segment.

Although 2023 was associated with declines for most Baltic ports, the Port of Gothenburg achieved a record throughput in the container segment. Handling almost 914,000 TEU means 16,000 TEU more than the port's previous record from 2012. Last year's growth was mainly due to exports strengthening. The imports in turn, characterized by high increases during the pandemic, saw a downward trend. In the last quarter of the year, a break in the trend was noticeable. The first three quarters meant a 20% reduction in import turnover, and in the last quarter of 2023, it was already about 10%.

The total number of containers in the Port of Aarhus decreased by 11% (-83 thousand TEU). This is the second largest decline among the main container ports in the Baltic Sea Region. The drops occurred both in imports and exports. The port's performance became an object of interest for the local community, which began to question the need for the planned port expansion. An additional threat to future container volumes is Maersk and Hapag Lloyd's decision to cut off the direct connection from the Baltic to Asia from 2025. The liner industry’s new vessel-sharing alliance, the Gemini Cooperation, will buck the recent trend of direct port calls in favor of a "hub and spoke" model of operations.

The third Swedish container port in the ranking also felt the effects of the weakening market. The Port of Helsingborg recorded a double-digit decline, the largest in the entire ranking. This meant a loss of 33 thou. TEU last year. This is another year with a reduced volume in the containerized cargo category. It is worth noting that the port, having recorded increased annual volumes so far, decided to move the service to new areas. The new container port at the Port of Helsingborg is scheduled to operate before 2030.

At the Port of HaminaKotka, 2023 began with strikes by the Finnish Transport Workers' Union AKT. The protests affected the ten largest ports and contributed to a significant drop in traffic, which, together with the overall worse economic situation in the country and the economic slowdown in key trading partner countries, was reflected in the final year result. The Finnish leader in container handling recorded almost 2% drop.

Second most important container port in Finland, Port of Helsinki, was also affected by the port workers strikes at the beginning of the year. The decrease in container turnover in TEU was -8.1%. However, the drops in tonnes were more severe, meaning a loss of 388,000 TEU (-10.2% y/y). A sign of the weakening Finnish economy is the significantly reduced export container volumes (-13.4% y/y).

Container throughput in the Port of Riga increased by 1.02%, reaching the level of 465 391 TEU. For the first time in the history of this Latvian port containerized cargo turnover amounted to over 5 million tonnes, which corresponded to an increase of 10%. Also for the first time in the history of the Port of Riga, container cargo became the largest cargo group, accounting for 27% of the turnover structure. Currently, the investment project in Kundzi?sala at the Baltic Container Terminal (BCT), the largest container terminal in Riga, is underway. The project provides for the extension of the BCT berth by 57.3 meters, with the construction of its additional section. At the end of the project, the process of loading and unloading cargo at the terminal will be accelerated, increasing the terminal's operational efficiency and commercial competitiveness.

Ro-ro and ferry market in 2023

In general, it was rather not the best year for ro-ro segment in Baltic ports. Such conclusion can be drawn from the available throughput’s statistics from the several main Baltic ro-ro ports (including the largest ro-ro cargo ports on the Baltic, such as Trelleborg or Helsinki). Similarly, as in the case of container segment, unfavorable macroeconomic conditions in Europe in 2023 negatively influenced also the throughput in ro-ro cargo segment in Baltic ports.

Table 3 presents data of ro-ro cargo throughput in selected Baltic ports. Out of eleven ports that have been analyzed, only the Port of Gdynia (+2%) recorded growth in this cargo group. This increase was caused by growth in the volume of cargo on the Gdynia-Karlskrona ferry route operated by Stena Line, while transport on the Gdynia-Hanko ro-ro route operated by Finnlines decreased. The remaining Polish ports – Port of Gdańsk and Port of Szczecin-?winouj?cie recorded a decrease in freight units by 25.7% and 10.9% respectively.

The biggest Baltic ro-ro port – Port of Trelleborg – has recorded a decrease in throughput of 3.4% y/y. Despite this, it was noticeable that more people passed through the port (5% more), as well as more passenger cars (9.7% more) than in 2022. This change might be caused by resuming in 2023 the King’s Route (Trelleborg-Sassnitz) by high-speed catamaran Skane Jet operating by FRS Baltic. This Swedish port is working on becoming the most sustainable ro-ro port. In 2023 it started the construction of two wind turbines and continued with wastewater treatment plan.

Other Swedish ports – Port of Gothenburg and Port of Ystad also noticed decline in volume of ro-ro cargo (-3.7% and -13,2% respectively). The first mentioned port is the biggest vehicle port in Sweden. It offers direct services by sea to North America, Europe, Australia and Asia. Every year, around 267 000 vehicles are handled in the port and shipped directly to North America, Australia and Asia.

In the Port of Helsinki, the throughput of ro-ro cargo decreased by 8% y/y to the level of 644 thousand freight units. This result kept this Finnish port on the second place among Top Baltic Ports. In the previous year this port started using onshore power connections which is part of their sustainability program and has positive impact for environment.

The Port of Tallinn experienced a 7% decrease in ro-ro freight units. A new double ramp for serving ro-ro ships was introduced at the terminal last year. It has been used by the Eckero Line causing an increase in its volume.

The Port of Rostock ended the year 2023 with almost 11% decrease in the throughput of ro-ro cargo compared to 2022. In 2023 ro-ro cargo constituted 53% of the total cargo turnover in this German port.

The Port of Klaipeda decreased its volume in ro-ro cargo throughput by 1.62% (to 316 thou. from 321 thou. in 2022).

In the Port of Hanko in 2023 the throughput of ro-ro cargo decreased by 12% reaching volume of 170 thousand freight units (193 thou. in 2022)

Outlook for 2024

The year 2023 was marked by inflation, the continued war in Ukraine and disruptions in the transport and energy markets. 2024 will be another year with an undoubted impact of geopolitical factors on the Baltic countries’ economies, and thus on the transport market.

Russia's continuation of the war in Ukraine in 2024 will involve maintaining the sanctions imposed by the EU on Russia, but also introducing new ones - at the end of 2024, there will be an embargo on Russian LPG gas. This, in turn, will affect ports turnover of energy raw materials and liquid fuels in the region.

The economic situation in the Baltic region will influence the unitized cargoes turnover in ports. According to the forecasts, in 2024 the economic situation in the Baltic countries is expected to improve. Forecasts for all Baltic countries show a positive change in GDP in 2024. In the Baltic countries the GDP growth is expected to be from 0.6% (forecasts for Sweden) to 2.8% (forecasts for Poland). This raises hopes for recovery in the Baltic container, ferry and ro-ro markets.

Authors:

• Ewelina Synak-Mi?osz, Project Manager, Actia Forum

?? mail: [email protected]

?? phone: (+48) 516 800 559

• Monika Rozmarynowska-Mrozek, Head of Consulting, Actia Forum

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?? phone: (+48) 798 645 201

• Joanna Szymikowska, Market Analyst, Actia Forum

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