Over the mid term Latvias freight industry will be reliant on various extraneous variables, as the country is liable to be affected by the eurozone crisis, Russias freight policy and competition from regional neighbours all vying for trade. In terms of tonnage throughput growth, the sector forging ahead in Latvias freight mix is road freight, with annual growth of 5.7% in 2012. This growth figure will also be matched by the port of Riga in 2012.

The European Commission (EC) gave the go ahead for an infrastructure development project on July 25 2011 at Riga International Airport which will see renovation of the runway, construction of an additional taxiway as well as the modernisation of integral infrastructure, such as the lighting system. However, the country urgently needs a new terminal in order to relieve some of the capacity issues affecting Riga International. Latvian transport minister Uldis Augulis explained in an interview with Nozare.Iv, and reported by the Baltic Course, that the terminal project must be completed by 2015, when Latvia holds the EU presidency, but preferably construction will be completed in 2014 when Riga is European capital of culture.

The government has clearly stated that it realizes the importance of the national airline airBaltic, which will be maintained. However, it is also necessary to implement the airports terminal project, declared the minister.

In terms of the maritime sector, good news arrived in the shape of the strong performance recorded by Germanys main port, Hamburg, which defied the countrys macroeconomic woes in H111, seeing a considerable box throughput increase, an achievement attributed in no small part to the integral role of increasing demand from Latvia and its Baltic neighbours.

The port of Ventspils will undoubtedly benefit from once more being added to Russias grain-export supply chain, following four years of being in the dark. Russias decision emphasises a potential softening of that countrys policies surrounding the use of neighbouring countrys maritime facilities and the first rail cars of Russian grain crossed the Russian-Latvia border on September 1 2011.

The snap election called in September 2011 is not expected to affect our freight forecasts in the mid term, with key issues centring on the ongoing austerity push that is affecting the whole of Europe. We therefore expect the incoming coalition government to continue with its fiscally prudent, pro-IMF policy agenda.

Headline Industry Data

- 2012 port of Riga tonnage throughput is forecast to grow 5.73%.
- 2012 Port of Ventspils tonnage throughput is forecast to rise 1.55%.
- 2012 air freight tonnage throughput is forecast to increase 2.50%.
- 2012 rail freight tonnage throughput is forecast to rise 3.25%.
- 2012 road freight tonnage throughput is forecast to grow 5.70%.
- 2012 total trade real growth is forecast to rise 10.25%.

Key Industry Trends

Baltic State Ports Back In Fashion

As Russia Diversifies Grain-Export Route After a four-year hiatus, the port of Ventspils will once more perform a role in Russias grain-export supply chain. We believe this move emphasises Russias willingness to diversify its export routes via neighbouring states, something that had been called into doubt by the development of the port of Ust- Luga.

CargoRix Announces Air Charter Flights With Smart Lynx

Latvia-based air charter broker CargoRix Charters announced at the end of May 2011 that it planned to launch air charter flights to Almaty, Kazakhstan, from Riga with effect from June 14 2011. Business information portal Nozare.lv reported that CargoRix will operate the flights in association with Latviabased airline Smart Lynx, deploying Airbus 320 planes on the route.

Latvia And Russia Mull High-Speed Freight-Rail Link

As Bilateral Trade Rises On the back of hugely increased trade growth in 2010, a high-speed rail-freight initiative between Latvia and Russia is in the offing. The project could provide a conduit for goods to and from Latvias Baltic Sea ports. Despite developing its own maritime facilities in the region in a bid to reduce its reliance on ports in the Baltic States, Russia appears once again to be open to the idea of using its neighbours ports.

Risks To Outlook

Russias new oil terminal at the port of Ust-Luga provides the largest obstacle to Latvian freight growth over the medium to long term. However, although the terminals development highlights Russias focus on building up reliance on a domestic supply-chain network, reducing its dependence on Baltic neighbours such as Latvia in the process, we still see a prominent role for Baltic state ports in Russias supply chain in the years to come.