Latvia is a well-situated place for organizing transit and logistics between the European Union, CIS and Asian markets.
The operators of the Latvian Ports, railway, road carriers, custom warehouses, broker and logistics centers as well as shipping and forwarding agents and oil and oil product pipelines provide effective and competitive services. The Transit and Logistics sector contributes about a quarter of total service export. Accordingly this sector attracts particular government and business level attention, and significant investments in the transport infrastructure – ports, railway and roads – are firstly made to those transport corridors used for transit purposes.
In 2016 the Latvian ports handled more than 63 million tons of cargo. There is a regular liner connection between the ports in Latvia, Sweden and Germany. Container lines provide possibility to manage container transportations to many other ports in the Baltic Sea and further ports in the EU.
The railway system with 1520 mm gauge provides organization of cargo transportation for CIS and Asian countries with direct gate to Latvian ports in the EU. In 2016 more than 48 million tons of cargo was transported by railway. 87% of the railway traffic is transported as transit through ports, 3% - as transit on land, and only 10% forms the Latvian import and export cargo transportation.
The main road and railway routes, as well as ports and airports are included in the European Union TEN-T network.
The Latvian transit corridors are also included in other international transport networks: UNECE European Agreement on Main International Traffic Arteries (AGR), European Agreement on Main International Railway Lines (AGC), European Agreement on Important International Combined Transport Lines and Related Installations (AGTC), The Euro-Asian Transport Links (EATL) and Organization for Co-operation between Railways (OSJD) networks.
Latvia considers development of effective, safe, multimodal, balanced, environmentally friendly and competitive transport system, stable increase of transit cargo volume, development of distribution and logistics centers and increase of cargo added value as priority.
Transport infrastructure of Latvia
The Latvian transit corridor is formed by three ports - Riga, Ventspils and Liepaja, all of them being connected with TEN-T network roads and railway, as well as two main oil pipelines and an oil product pipeline to Ventspils. The State port development policy and the port activities are coordinated by the Latvian Ports, Transit and Logistics Council.
The major ports mainly ensure handling of transit cargos. Riga and Ventspils ports have a status of Freeport, whereas Liepaja Port is a part of the Liepaja Special Economic Zone (SEZ). Companies working in the Freeport and SEZ can apply not only for 0% rate regarding customs duties, excise tax and VAT, but also for tax allowances up to 80% for company income tax and up to 100% for immovable property tax. Ports are actively implementing different investment projects related to construction and development of industrial and distribution parks, thus attracting investments, promoting added value, developing production, increasing the scope of services and creating new jobs in the ports.
Smaller size ports – Skulte, Mersrags, Salacgriva, Pavilosta, Roja, Jurmala and Engure – are mainly working with shipping wood material and receiving fishing products, and also serving as yacht ports during summer. Small ports currently form a stable position in the Latvian economy and have developed into regional economic activity centers.
The target of the Latvian port development program 2014-2020 is to maintain and preserve highly developed Latvian ports that correspond to international standards, which have today successfully joined the joint transcontinental multimodal transport corridors, offering services with high added value, increasing the handled cargo volumes and ensuring high quality passenger service.
The aim of the Latvian ports is to strengthen its leading position among the Baltic States ports, maintaining the existing cargo volumes and attracting new cargo flows, cargo types and clients.
In the latest years
Latvia is taking an active part in development of the European Union transport policy and in European Union international trade activities.
Lately a lot has been done for development of transit services:
· Latvia has fully implemented the European Union custom regulations for import, export and transit of goods between the European Union and third countries.
· Our main transport infrastructure projects are included in the TEN-T network, attracting the major investments and the most part of the European Union financial support.
· In order to promote development of new logistic centers and attract new cargo flows, a favorable tax regime has been created for those seeking to import goods to the European market, foreseeing a possibility to import goods to Latvia, clear them by customs without paying the VAT and store cleared goods in the distribution center until receiving a request for specific goods from specific store in other Member State.
· Border checkpoints corresponding to European Union requirements have been created in ports and on railway.
· We are actively participating in Northern Dimension Partnership for Transportation and Logistics, defending Latvian interests and projects and looking for solutions to improve the Latvian transit.
· We are actively involving in UNECE expert working groups within the Euro-Asian Transport Links (EATL), resulting in inclusion of transport connection Latvia - Belarus and Latvia – Russia in the EATL maps.
· The container train „Baltika – Transit” is a regular route since 2003, connecting the Baltic State ports with Kazakhstan, Kirgizstan, Tajikistan, Uzbekistan and Turkmenistan.
· We are actively working in order to enable companies from Central Asia to send cargos to Scandinavian market and to ensure cargos for container train Baltika-Transit in both directions.
· In cooperation with the Latvian and Belarussian railway companies, container train “ZUBR” was established in 2009. Later railway companies from Estonia and Ukraine also joined this project. Since February 2012 the container train “ZUBR” route consisted of 6 main stations: Tallinn – Riga – Minsk – Kiev – Odessa - Chernomorsk. In 2012 Moldova joined the train route, connecting it to Kishinev. Facilitated border checkpoint and customs inspection procedures are applied within this train route.
· Together with other countries we are actively working on development of new container train routes in the Eurasian transport corridors.
· In November 2016 the first container train from Chinese city Yiwu arrived at Riga railway station, crossing more than 11000 km in just 12 days.
· The Yiwu commercial platform “Yiwu Timex Industrial Investment Co.” has included Riga in its map as one of the global routes for transporting goods and considers railway as the most perspective way for transporting cargos to Europe.
· We have proved our ability to organize the reverse flow.
· In May 2017 we sent two container train contents from Riga to Kashgar city in China.
· We are actively working on development of the North-South corridor, connecting India, Iran, Azerbaijan and Russia. We are planning to organize a container train route from India and Iran in order to show these countries our suitability for offering excellent gateway to the Northern European market through Latvia.
· We are actively cooperating with Duisburg port on creating new routes from China to Scandinavia through Latvia.
· We see great potential for developing new cargo flows within the new China-Belarus Industrial park “Great Stone”. We are actively cooperating with the “Great Stone” administration and developer company of the “Great Stone” Industrial park logistics – “China Merchants Group” in order to mark new logistics routes. We have agreed to develop a trilateral cooperation between Latvia, Belarus and China with a purpose of developing cargo flows through Industrial park “Great Stone”. In 2017 a representation office of Latvian Railway company “Latvijas dzelzceļš” was established in Belarus in order to actively promote the cooperation with Belarus and China in attracting new cargos from China to Latvian transit corridor.
· Different topical transport sector issues are addressed within the Transport working group of the Latvia-Russia Intergovernmental Commission. In order to strengthen the Latvian competitiveness and positions in the transit market, it is crucial to attract investments from cargo owners. There is a growing interest from Russian companies in investing in Latvia. Riga Freeport has launched a new mineral fertilizer terminal „Riga Fertilizer terminal”, which is a co-project of “Uralchem Freight Limited” - a subsidiary company of JSC „Uralhim”, „Baltic Coal Terminal”, which is a subsidiary company of JSC „Ventspils Tirdzniecības osta” and „Indtec Baltic Coal Ltd.” which represents interests of cargo owner and Russian coal supplier OJSC „Šahta Zarečnaja”.
· The USA decision to use the Latvian transport infrastructure for sending non-military cargos to Afghanistan is considered as a high assessment of the Latvian transit sector companies’ professionality. There were regular cargo transportations to Afghanistan since 2009. A great work has also been done in attracting cargos from other NATO Member countries in transit through Riga port and airport.
· In order to promote attraction of new cargos and investments, a Logistics council was established in 2014 at the initiative of the Ministry of Transport of Latvia. Its main task is to cooperate with the private business sector in order to ensure development of integrated proposals and targeted attraction of new clients to the Latvian transport and logistics sector. The Council consists of representatives from the Ministry of Transport, Latvian Railway company, the three largest ports – Riga, Ventspils and Liepaja, the International Riga Airport as well as transit and logistics associations, representing around 650 companies.
· In order to strengthen the competitiveness of the Latvian logistics sector, a lot has been done in solving customs related issues with the support of the government – several additions have been made to the customs legislation regarding temporary storage of goods, appliance of the customs “transit” procedure, simplified declaration, security for excise tax, customs warehouses, merging the customs and tax guarantee, merging warehouses with different statuses, facilitating conditions for fiscal representative activity, action after finding disparity between the imported goods and their documentation.
· In April 2015 we organized a meeting of Transport ministers from ASEM countries and a Business Forum in Riga.
· In order to promote the recognition of Latvia as a professional logistics and transit country, Latvia was entrusted with the task to be the coordinating country for logistics during the China-Central and Eastern Europe 16+1 summit in 2015 in Suzhou. Latvia organized a meeting of 16+1 Transport ministers and a Business conference in May 2016, in Riga.
· A Secretariat for logistics coordination has been established under the leadership of the Ministry of Transport, including an internet platform for 16+1 logistics coordination. In order to fully benefit from the recognition provided by the role of the logistics coordinator, particularly in the context of the Silk Road development, there are specialized transport attachés of the Ministry of Transport working in China in Kazakhstan since April 2016.
In the nearest future
The main priority in Latvian transport sector today is the diversification of cargos. It is also very important to increase the container cargo volumes in our ports. These priorities arise from the global transport business and politics situation. It is crucial to develop container trains towards Asia, Black Sea region and Russia.
We are actively cooperating with both producers in China, Japan and Korea as well as trading chains and global supply chain operators in Europe, in order to convince them of the Latvian logistics advantages and attract new cargo flows and investments.
It is also crucial to take the leading position in development of logistics center in the Baltic States. Along with the transport development trends in the European Union, it is important to create an attractive combined transport system. It is related to both legislation and infrastructure. We have started actively cooperating with Eastern countries in order to attract transit cargos to Latvian ports. There is also an ongoing cooperation with colleagues from China on development of container trains.
Container trains from Latvia and distribution possibilities
More and more cargos are being transported in containers, mostly cargos with high added value, thus giving also the Latvian companies a greater chance to earn.
It is very important for Latvia to retain and strengthen its current position in dry bulk cargo and liquid bulk cargo sectors and pay particular attention to attraction of new cargos from new markets. We are currently actively working with China in order for Eurasian transit corridor to start functioning and for Latvia to become a gateway for import of Chinese cargo to the European Union.
We are also actively cooperating with Russia in order to ensure stable, safe and reliable transportation of container cargos, as well as regular container trains from Latvian ports to Moscow.
In order to solve border crossing issues, Latvia is actively cooperating both with Russia and also with the European Commission.
One of the main priorities is the development of the Latvian logistics and distribution business. Our main goal is to attract more mass-consumption goods with higher added value in order to develop logistics centers, storehouses and distribution business in Latvia. Conceptual approach provides distribution of goods 24h from storehouse to any store in the Baltic States and even Helsinki, Stockholm or Warsaw, but within 48h we can deliver cargos to client anywhere in Scandinavia.
In this field we see great perspective to attract cargos from China, other Asian countries and Turkey. Due to the crisis, several customs and tax reliefs have been implemented in order for the distribution of goods to be smooth and without delays. Of course, this sector is subjected to many external aspects.
Information updated in June 29, 2017.