Strengthening Finland’s logistics position
With the advance of economic globalisation, international competition is spreading
everywhere. The development of logistics services has contributed to the rapid growth of international trade. Good logistics is a necessary condition for business success.
Efficient logistics and good transport links will continue to assume greater importance for Finnish competitiveness in the future. A strong logistics market acts to boost competitiveness, economic growth, employment and welfare. Logistics costs in trade and industry amount to around 20 billion euros a year, accounting for some 10 per cent of turnover in this sector. Logistics is also a major source of employment in Finland, with some 100,000 people employed in the logistics service sector. Constant efforts are needed to lower logistics costs and to increase logistics efficiency. In the new competitive situation that is unfolding with globalisation, economic growth in Russia and stiffening competition in the Baltic Sea region, it is imperative that a long-term and systematic effort is undertaken to strengthen Finland’s logistics position. This will also require flexible customs and other official procedures at different stages of the transport chain. A key challenge for Finland’s infrastructure and logistics policy is to make sure there is access to reliable and moderately priced international routes to and from Finland’s major export and import markets. Another major challenge is to maintain Finland’s logistics position as Russia’s neighbour, at the same time as the position of Estonia, Latvia, Lithuania and Poland continues to strengthen. The development programme is based on an assessment of Finland’s logistics competitiveness and its development. It also takes account of the recommendations made by the Prime Minister’s Office in its “Finland in the Global Economy” project as well as the measures that will be introduced in response to those recommendations.
The EU is committed to promoting closer EU-Russian integration and to achieving strategic partnership. It is in Finland’s best interests actively to promote that partnership.
In spite of transparency objectives and ideas of partnership, there remain clear conflicts of interest within the logistics field. The interests of the customer and service provider do not always coincide, because what is a cost for one party is an income for the other. This is a constant factor that never changes. There are both constant and variable factors in Finland’s logistics position. One constant factor is the country’s geographic location, i.e. its distance from its main markets. In logistics, distance is a definite disadvantage, reducing speed and adding to costs. Long transport journeys involving multiple legs are time-consuming – and time is often the most critical scarcity factor in logistics. On the other hand, distance may serve to protect some areas of domestic production.
One way to reduce the impact of distance is to accelerate speed at all stages of the order-delivery chain – the potential for improved performance is the greatest at various terminal stages. Another time-related factor is punctuality, which ties in directly with the factor of predictability. Predictability impacts stockpiling levels and capacity needs and thereby has a direct bearing on the costs of logistics. An increase in speed requires major investments and/or an increased costs, whereas increased punctuality usually requires minor investments combined with an effort to develop and improve operations strategies and management.
On the route from Helsinki via Vaalimaa to St. Petersburg, for example, even major investments in transport infrastructure will not have a significant effect on overall transport time, much of which is spent elsewhere than on the roads or rails. For this reason, the development of customs procedures and related information transfer at dispatch, border crossings, and arrivals is a key condition to improving logistics efficiency. The key to developing Finland’s export and import logistics, and at once transit transport, lies in the improvement of border crossing practices.
1. Highest level education in the field shall be developed in line with the recommendations issued by the joint working group appointed on 19 Dec 2004 by the Ministry of Transport and Communications (MTC) and the Ministry of Education (MoE) to discuss higher education in the transport sector. Where necessary this will be followed up by a review of the special needs in the logistics industry. The MTC and the MoE will jointly draft a development programme on basic and applied research in logistics, taking account of the recommendations by the working group just mentioned. The Academy of Finland and the National Technology Agency Tekes will also be involved in this effort. Special attention will be paid to the development needs of education at the PhD level.
2. A working group will be appointed for the purpose of developing professional education in the transport and logistics sector. Professional education shall be developed to make sure there is access to skilled and competent labour.
3. Professional training for HGV drivers shall be provided in keeping with the new EU directive, with regular vocational education accepted as one entry avenue. Access to HGV driver training shall be secured throughout the country.
4. Low cost training shall be provided for new would-be entrepreneurs to keep fresh blood flowing into the transport sector. It is also necessary to look into the feasibility of organising courses in connection with other vocational training funded from the public purse.
5. An assessment shall be carried out of the need for operator independent training for locomotive drivers and other rail safety personnel.
6. Steps shall be taken to develop up-to-date information transfer and processing systems that serve the needs of freight transport and logistics parties. Where possible the corresponding services shall also be provided across the Russian border.
7. Steps shall be taken to develop and introduce IT solutions required by international transport.
• An active contribution shall be made to the creation of a joint logistics information network for the Baltic Sea region.
• Support shall be provided for the introduction of new compatible information systems in Russia’s Baltic ports.
• The new PortNet service shall be launched in accordance with ongoing planning in 2008.
• Steps shall be taken to introduce in international transport a system of electronic transport documents that covers all modes of transport. • Efforts shall be made to agree on the rules for paperless trade in international cooperation.
The study proposed measurements in following fields:
- Know-how, innovation and application of technology
- Markets, regulation and intensified dialogue
- Connections and infrastructure
- International lobbying and interest protection
Furthermore the economic impact of the proposed measures was estimated.