14. starptautiskÄ konference 2012 - Latvijas JÅ«ras akadÄmija

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Proceedings of 14th International conference „Maritime Transport and Infrastructure - <strong>2012</strong>”ANALYSIS OF STRUCTURE OF CARGO TURNOVERAT LATVIA’S PORTSJānis Bērziņš*, Ilmārs Lešinskis**, Artūrs Prauliņš**** Latvian Maritime Academy, 5B Flotes Street, LV-1016, Latvia, E-mail: janis.berzins@latja.lv** Latvian Maritime Academy, 5B Flotes Street, LV-1016, Latvia, E-mail: ilmars.lesinskis@latja.lv*** Latvian Maritime Academy, 5B Flotes Street, LV-1016, Latvia, E-mail: arturs.praulins@latja.lvAbstractPorts play a crucially important role in the development of national economy as they generate stabletax flows and duties, providing direct positive effects on GDP, Balance of Payments and Balance ofTrade. Sometimes their impact on regional economy may be significant also. The analysis of thestructure of cargo volumes (annual throughput) transshipped by the port and changes in commoditymix can provide an invaluable insight in the trend of port development. The comparative analysis ofthe structure of cargo volumes at Latvia’s ports has been done in the paper and the degree of itsdissimilarity was statistically evaluated.KEY WORDS: cargo, Latvia, ports, structureIntroductionTransport is of fundamental importance to human society, providing mobility and facilitatingindustry and trade. The essential economic and social benefits, which are so difficult to balanceagainst the high social and environmental costs, make transport a crucial sector for sustainabledevelopment, as recognized in the EU sustainable development strategy [1].Actually, transport is one of the most important and dynamic sectors of economy in the BalticStates. Increasing volumes of export explicitly demonstrate the role of the transport sector in theeconomic growth of those countries. It is acknowledged that high quality of transport servicesprovides the national economy with various benefits, inter alia improved logistics (reduced level ofinventories, more reliable supply of goods, higher delivery quality etc.) and better mobility that leadsto the higher profitability of business [2]. However, in spite of the optimal location of transportinfrastructure in Latvia, its low quality still influences the competitiveness of the provided transportservices [3, 4]. In addition, not only the total volume of throughput determines the effectiveness ofport activities and impact on national or regional economy but also the change in the commoditymix as different types of cargo require different handling methods, use of labour, material andservice input.The paper aims to do a quantitative analyze of and to draw conclusions about dissimilarity andchanges in the structure of cargo turnover at Latvia’s posts. To achieve the aim of the paper severalresearch methods were used, namely, deduction, induction, synthesis and analysis, statistical andmonographic methods. The research object is the changes in the structure of cargo turnover at Latvia’sports; the research period is from 2000 to 2010. All the calculations are made by the authors of thepaper and based on statistical data obtained from Central Statistical Bureau of Latvia as well as reportsof Tallinn and Klaipeda ports.Impact of ports on regional economy95% of world trade is transported by ship. Demand for transport can be viewed as derivingfrom the changing nature of international trade relations. With the growth in world trade, internationalshipping is expanding [5]. It is pointed out [6] that since international trade is carried predominantlyby sea transport major container ports play a crucial role in regional economies. In the past thepresence of a port meant not only traffic and transport activities, but also economic activities, ranging16
Proceedings of 14th International conference „Maritime Transport and Infrastructure - <strong>2012</strong>”from industries that use mainly raw materials imported by sea and whose land transportation costswould have been too high, to those producing goods to be exported by sea and/or those whose optimallocation was where the break of bulk took place. Nowadays it is not longer the case as many of theseindustries, no technologically restricted to port areas any more, and suffering from the relative scarcityand/or high prices of space and other inputs, have moved to regions where these inputs are available atbetter conditions [7].Therefore the general guidelines for conducting analysis of port's economic impact providedby G. R. Yochum and V. B. Agarwal [8, 9] are worth mentioning. The guidelines are based ondifferent linkages between the port and the region's economy and depicture clearly theinterdependence degree between above mentioned economic subjects.1) Port required industry - employment in companies providing services for the movement ofwaterborne commerce. There are transportation services (e.g. freight forwarding, transport of cargo byrail and road) and port services (e.g. terminal operations, stevedoring, vessel supply, pilotage, towage,ship repair, diving services, insurance, legal services).2) Port attracted industry - employment in companies attracted to the region because of thepresence of the port and its facilities. If the port facilities were closed down, the companies wouldleave region. Usually these companies export commodities or import products or raw materials forassembly and distribution (e.g. steelworks, chemicals, refineries).3) Port induced industry - employment in companies that have expanded their markets byexporting through the port due to reduced transportation costs. Such industries are typically located ata substantial distance from port facilities (because theoretically they could be located in the regionregardless of the availability of port facilities) and cannot be identified on the basis of a meregeographical criterion.Some researchers have tried to discover the factors the impact of port on local economydepends on. After performance of empirical studies based on the port of Tampa (USA), J. S. DeSalvoand D. Fuller [10, 11] concluded that the impact of ports depends on the cargo volumes transshippedby the port and on the price elasticity of the demand for imports and exports channeled through thatport. Although M. Benacchio et. al. [7] did not reveal an apparent relation between the estimatedimpact and the total volume of ports throughput, vital importance to distinguish between changes incargo volumes, and changes in the commodity mix was stressed in their study. Different commoditiesrequire different handling methods and thus different use of labour, material and service inputs fortheir loading and unloading. It means that a rise in the share of containerized traffic would decreaseaggregate direct labour inputs (stevedoring services), increase indirect effects due to logistic activitiesperformed on high value goods, increase capital investments and expenditures on items such as fueloil, in turn indirectly altering the structure of local economy. It is acknowledged [7] also that theemployment structure (workers, professionals, engineers etc.) is an important indicator of the qualityof the impact in terms of its added value. At the same time the growth in tons does not definitely leadto a comparable growth in terms of employment because the introduction of containerization andstandardization of cargo could induce the transformation of ports from main service centres to simpletransit points.According to R. O. Goss [12] there are at least four clear reasons for which port expansion orimprovement is likely to be an inefficient tool of economic development strategy: Port benefits are likely to "leak" to users in inland locations; Assisting and investing public money in a port will probably mean assisting foreign exporters,some of whom will be able to compete more effectively with home producers; Any public assistance to a port is likely to lead to higher local taxes (local share ofinfrastructure financing), running the risk to make the area less attractive to residents andpossible businesses too; Since the aggregate demand for labour within any given economy is determined bymacroeconomics factors, ports are competing among themselves for a share of a reasonablyfixed level of business (e.g. the expansion of a port belonging to a range could also be at theexpense of lost trade in other regional or national ports belonging to the same range).17
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