Brakes come on for transit traffic of cars through Finland to Russia

Harbours filling up as orders collapse

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Once upon a time, not very long ago, you could hardly move on the road between Hanko or Kotka and Finland's eastern frontier for Russia-bound car transporters. Those days seem to be gone, at least for the time being, as the vigorous growth in the imports of new cars into Russia via Finland has almost ground to a halt over the past few weeks.
      The drying up of the transit traffic of cars is a consequence of the current financial crisis, having resulted in higher loan interest rates and the rapid deceleration of car sales in Russia.
     
According to estimates made by Finnish Customs, a total of 350 truckloads of cars will leave the Port of Kotka for Russia this week. In comparison, in the current year the average number of cars shipped eastwards through Finland in transito traffic has been more than 200 truckloads a day.
      ”This looks rather bad”, acknowledges Tom Wires, the Managing Director of the Hanko-based auto logistics company Assistor.
     
The vast car depots at ports are beginning to be filled to capacity, as the consignments from car manufacturers had been agreed upon before the demand for cars in Russia started to turn sharply downwards.
      Managing Director Kimmo Särmäkari from one of the car carriers, Wallenius Wilhelmsen Logistics Finland, says that new routes are now being sought "desperately”.
      ”Sales are drying up as the financing taps are being turned off”, he notes.
      In an interview with the Financial Times earlier this month, Yann Vincent, the director of the largest Russian car manufacturer Avtovaz, warned that the tightening of loan facilities would pose problems to both sellers and buyers alike.
      The dealers will slam the brakes on, as they are unable to pay for the cars which they have bought in. At the same time, consumer resistance is increasing as nearly half of all car purchases have been based on debt financing.
      Tommi Kivilaakso, the Director of the Eastern Customs District, observes that ”a sudden change of course” has taken place in the transit traffic of cars.
      While the number of consignments has remained higher than in 2007, the growth has dropped to half of last spring’s 25 %, and the future appears to be anyone's guess to all the professionals in the field.
     
Cars make up more than 30% of the Russia-bound transit traffic on Finnish roads.
      The rapid softening of sales is bound to ease the queues created by car-carrying trucks in Southeastern Finland, but the change would also be likely to cause losses to Finnish companies. After all, transit traffic gives employment to thousands of Finns and leaves hundreds of millions of euros in the country.
      ”The signs do not look encouraging”, says Kimmo Naski, the Managing Director of the Port of Kotka.
      In addition, a large number of home electronics and other consumer goods are also exported to the Russian markets, and according to haulage firms and Finnish Customs, the current credit crisis has not affected them as yet.
     
Another phenomenon likely to decrease traffic involves the government’s plans to limit the number of traffic permits issued to the Russians (see earlier article) and to impose road fees for heavy traffic on highways.
      Road haulage companies feel that as a consequence of such plans, the dependability of the route has suffered.
      Kimmo Särmäkari reports that efforts are also being made to transfer the lucrative transit business for cars away from Finland permanently.
      ”One should think that Finns would already have learnt that presenting threats is not the smartest way to deal with Russians”, he adds.
     
The transit business for cars exported to Russia is worth millions for Finland, with revenue coming in from shipping lane fees, harbour services, and transport.
      A recent article also noted that the construction of a new Russian port on the southern shores of the Gulf of Finland could woo away some of the car manufacturers currently shipping vehicles into Russia via Finland.


Previously in HS International Edition:
  Finland considers limiting number of border-crossing permits for Russian trucks in attempt to solve congestion problems (16.10.2008)
  Transport Ministry to examine road use fees for lorries on route to Russian border (7.8.2007)
  Russian company to begin large-scale rail transport of cars (20.2.2007)
  Russia-bound cargo on Finnish roads is growing dramatically (8.2.2006)
  Kotka and Hanko harbours compete for lucrative car transit business (7.11.2005)
  Transit traffic of cars through Finland to Russia has doubled again (21.9.2004)

See also:
  Russian Port of Ust-Luga to increase risk of oil catastrophe in Gulf of Finland (7.10.2008)

Links:
  Assistor

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