Logistics And Frieght Forwarding

Freight Services in Finland – Adapting to the Post-recession World

The Finland freight services industry is adjusting to a new set of circumstances as the country begins to look beyond the global economic slowdown and plan its future activity. In a speech in 2010, the governor of the Bank of Finland, Erkki Liikanen, said that slowdown in GDP in the Finnish economy had stopped contracting, but that GDP growth will be much slower in the immediate years ahead than it was before the financial crisis. He predicted that Finnish exports would lag behind developments in the export markets and that private consumption would also be sluggish.

This will have a direct impact on the freight company and the shipping company, as they can expect to see lower volumes of freight forwarding in the forthcoming years. In recent years, exports have accounted for over one third of total GDP in Finland. The slowdown in international trade affected Finland very badly in 2009, with the country experiencing one of the deepest contractions in the Euro zone.

Finland excels in high technology exports such as mobile phones and this market has been hit by the recession. Another important export is forestry products and demand for these has been affected by the decline in construction worldwide as well as a decline in demand for paper due to the rise of the digital economy. These trends were experienced directly by the freight services industry in Finland, which saw significant declines in international freight orders related to these sectors.

Metals and engineering (including electronics) and timber (including pulp and paper) are Finland’s main exports. The United States is Finland’s most important trading partner outside Europe and Finland supplies around 2 billion US dollars of international freight exports each year. This makes the United States the third most important market for Finland exports after Germany and the UK.

Finland has thus been badly affected by the decline in demand from the United States and the United Kingdom in particular. In the period 2008-2009, industrial output in Finland declined rapidly and it is expected that the structural realignment of Finnish output combined with an ageing population will inhibit the pace of productivity growth. The decline in manufacturing output will push the current account into deficit in 2011- 2012 and as a result the net foreign debt position of Finland will begin to deteriorate.

It will be a difficult task to get the public finances in Finland back on a sustainable footing and there are likely to be substantial spending cuts and tax increases. In this economic environment, the freight transport sector expects to see cuts in spending in construction and transport projects in Finland and this is likely to impact on the improvement and maintenance of the Finnish transport and logistics infrastructure on which the freight services industry relies. However, despite the negative impact of the world economic slowdown, there are also encouraging areas of growth for freight forwarders and freight companies as Finland adapts to changing circumstances..

One of the most important aspects affecting freight forwarders and freight transport options in Finland is the steady growth in international trade between Finland and Russia.The current global economic slowdown has had only limited negative impact on trade between these two nations. This is mainly due to Finland’s strategic location at the juncture of the Nordic nations and Russia and partly due to a long history of international trade between the two neighbouring countries. The market for freight transport to Russia has been less notably affected by the worldwide crisis due to social and economic changes specific to that country.

Finland is ideally positioned as the leading EU based port which is well placed to handle freight transport from Europe to Russia. Kotka is the main container port which services freight between Finland and Russia and growth has been seen here in recent years,as well as at Hamina, which is the closes Finnish port to the Russian border. So one of the impacts of the global recession has been for shipping companies and freight forwarders in Finland to focus afresh on the opportunities presented for increasing international freight to and from Finland’s large neighbour to the east.

In considering freight transport between Finland and Russia, it is to be noted that freight in these northerly climes will be subjected to some very low temperatures, especially in the long winters, and freight forwarders and shipping companies pay attention to the special needs of any cargo that may be damaged by exposure to low temperatures, recommending specific procedures that help ensure that all international freight arrives at its destination in peak condition. So although Finland is facing a period of adjusting to a new economic order, and an increasingly competitive worldwide market affecting many of its key export markets, it is expected that emerging opportunities will help counter the losses and that the freight transport industry will continue to adapt and flourish in the changed economic circumstances of the post recession world. Stephen Willis is Managing Director of RW Freight Services a UK based freight transport company, established in 1971 and operating worldwide freight forwarding services including specialist freight services to and from Finland

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