OF HELSINKI PULLING TOGETHER FINNLINES TO SET SAIL FOR A FRESH START TRANSFORMING FERRIES INTO ENTERTAINMENT COMPLEXES

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1 OF HELSINKI COOPERATION KEEPS LOGISTICS SECTOR ROLLING PAGE 8 FINNLINES TO SET SAIL FOR A FRESH START PAGE 16 TRANSFORMING FERRIES INTO ENTERTAINMENT COMPLEXES PAGE 12 SHIP SERVICES: PULLING TOGETHER PAGE 24

2 ON THE QUAYS BY Arja Vartia PHOTO BY Port of Helsinki HELSINKI LEADS IN VESSEL CALLS Almost one in three of the ships sailing to Finland calls at Helsinki. Of the nearly 30,000 calls last year by vessels in international traffic at one of Finland s 50 ports, about 8, per cent were at Helsinki. Helsinki plays a larger role in Finnish imports than in exports. More than a third of exports are via its port. Of goods arriving in Finland by lorry and trailer, more than half come to the Port of Helsinki, a proportion that has remained stable for years. Container traffic varies more. Last year a quarter of containers passed through Helsinki. Helsinki was the 4th busiest port in Europe in terms of the number of passengers in Good response to maritime strategy A maritime strategy report, produced under the auspices of the Ministry of Transport and Communications and completed in mid-march, has been praised by industry players. The ministry said that maritime transport is essential for foreign trade and crucial for competitiveness. A broad range of maritime experts participated in producing the report. It manages to give a good overall view of the importance and potential of shipping, the Ministry said. It regarded dependability and efficiency as critical objectives. The modernization of icebreakers was seen as essential for uninterrupted foreign trade in the future. The fleet is over 30 years old

3 and contains too few icebreakers for severe winters. Industry welcomed the finding that the costs of modernizing the icebreaking fleet should not be added to freight charges. It sees icebreakers as part of basic transport infrastructure that should be financed from public funds, not paid by companies engaged in foreign trade. The transport sector is already concerned that tougher sulphur emission limits will impose major new costs next year. The Confederation of Finnish Industries EK said it regretted that the strategy contained no clear guidance on how to reduce costs and resist new ones. If additional technical and fuel demands are imposed on the Baltic alone, they will require shipping for which there is no demand in other marine areas. This separate market would be permanently more expensive and a new burden on companies engaged in foreign trade. The EK endorsed the stronger lobbying efforts at the International Maritime Organization IMO that the report itself urged. It also said that a reduction in fairway dues paid by freight vessels would be a fast way of alleviating cost pressures, as already agreed in connection with the employment and growth pact. The EK wants the whole system of fairway dues to be re-examined, because they are levied only by Finland and Sweden. Fairway dues are also a burden on transit traffic because there is no corresponding charge on competing routes via the Baltic States.

4 EDITORIAL SUCCEEDING TOGETHER Continuous change is the new norm, but things are particularly difficult right now in Europe and the world. Economic conditions and perhaps soon the political climate, too are forcing us to seek new business forms and methods. When markets stop growing, the players have to polish up their skills to survive. The strength of the Helsinki metropolitan region lies in its common resolve to do better. The costs and responsiveness of ports are decisive for the competitiveness of the nation. We need new transport solutions. There may also even be a need for traditional marketing and legwork, to spread the word. That cooperation is the key to success is still true and more important than ever. The former Minister of Transport Merja Kyllönen and Olli Pohjanvirta of Nurminen Logistics make the same point in these pages. Helsinki is already world-class, the fourth busiest passenger port with particularly dense ferry connections to Tallinn. We can be proud of these achievements but we must also build on them, developing our operations to bring more prosperity to Finnish enterprise and welfare to the nation. While this issue was being printed, the Minister of Transport Merja Kyllönen resigned because her party, the Left Alliance, left the Government. We are looking forward to a continuing good cooperation with the next Minister of Transport. Eeva Hietanen Editor-in-chief CONTENTS 6 News 8 Cooperation keeps logistics sector rolling Ms. Merja Kyllönen, the former Minister of Transport, envisions representatives of Finland s entire transportation industry including those of the road, sea, and air transport sectors seated around the same round table looking for smart ways to promote Finland s competitiveness and employment at the same time. 12 Transforming ferries into entertainment complexes Shipping companies are outdoing each other with new ships and sailings. The range of at-sea services and experiences keeps growing. 16 Finnlines to set sail for a fresh start With Grimaldi Group managing director Mr Emanuele Grimaldi now holding the reigns of his Finnish subsidiary Finnlines Plc, the company is hoping to turn over a new leaf in the coming years. 20 Nurminen Logistics sees an upturn The new CEO at Nurminen Logistics is piloting his company and its Vuosaari Terminal towards better financial performance. But work on a national level is also needed to ensure that Finland s transport networks are not sidelined in the future. 24 Pulling together Ship services at Vuosaari are now provided by port employees instead of an outside company. The customers of port operators have commented positively on the change. The ship service team makes short work of mooring and unmooring the largest of ships. 28 Vuosaari has space for project cargo Azipod rudder propellers made by ABB, the world s foremost producer of electric propulsion systems, weigh almost 50 tonnes each. These are among the outsize items despatched from Vuosaari harbour. 30 Hydrogen fuel at Vuosaari A hydrogen filling station was opened in March. The operator, Woikoski, sees potential customers among truck operators at Vuosaari. CUSTOMER MAGAZINE OF PORT OF HELSINKI Publisher: Port of Helsinki, P.O. Box HELSINGIN KAUPUNKI tel port.helsinki@hel.fi Editor-in-chief: Eeva Hietanen Edition: Alma 360 Customer Media Producer: Arja Vartia Assistant Editor: Tuula Kontiainen AD: Anniina Rummukainen Picture Editor: Minna Kurjenluoma Cover Photo by: Port of Helsinki Editorial Board: Kimmo Mäki. Kari Noroviita, Antti Saarinen, Tauno Sieranoja, Eve Tuomola Prepress: Aste Helsinki Oy Print: SP-Paino Oy ISSN

5 ECKERÖ LINE, PEKKA KARHUNEN NEW MD AT ECKERÖ Taru Keronen, the new managing director at Eckerö Line, wants the company to grow even faster this year than last. To do so will require over 30 percent more passengers. Following the unexpected departure of Irja Hanelius, Eckerö Line has had a new managing director since the start of March. It is a familiar job for Taru Keronen; she headed the company once before, from 2004 to Before coming to Eckerö last time, she worked for SOK Hotels. This time she joins the company from Area, a business travel agency owned by Finnair. Things have changed but it s a pleasure to be back, she says. The biggest difference is that Eckerö Line has a new cruise ferry, the Finlandia, and a new schedule with two daily departures to Tallinn and back. These are how we reach a more geographically dispersed set of customers. Under her, Eckerö Line intends to focus on cruise products the day cruise and the minicruise. This means that on-board activities and entertainment will be important. Travelling to Tallinn is a strong business. There s always something new to see there, and Finnish visitors are also increasingly driving onwards in Estonia, in their own cars, to places like Pärnu. Last time Keronen modernised Eckerö Line s marketing concept, restaurants and range. What about this time? Obviously customer demands change in ten years but we are going to continue to emphasise fine dining and an interesting range of retail products, she answers. The budget target for the current year is rather ambitious. Last year we increased the number of our customers 30 per cent and this year we want to do even better. Keronen and her businessman husband live outside Helsinki with their two teenage sons. The whole family is into sports, reading and good food. Port of Helsinki 5

6 NEWS THINKSTOCK ST. PETER LINE ST. PETER LINE RESUMES SAILINGS The Princess Maria and Princess Anastasia were out of service from 10 January to 20 March. Both were in Sochi, on the Black Sea, on 7 23 February, acting as two of the seven hotel ships used by the Winter Olympics. The Princess Anastasia resumed services in the Baltic on 21 March, sailing from St Petersburg to Helsinki. St. Petersburg. PRESENTING HELSINKI... The Port took part in the St. Petersburg Logistics Days on March. The event was targeted at senior management of Russian, German and Finnish companies. More information at The Port and its partners Fennoway and Steveco shared a stand at the Logistics Fair in Wanha Satama, Helsinki on 10 April. More information at recording the transport of dangerous materials. 6 Port of Helsinki

7 NEWS BENEFITS OF COLD IRONING Shore power has been available at Katajanokka since October It is used by Viking Line s cruise ferries to Sweden, the MS Mariella and MS Gabriella. There has been a major reduction in airborne emissions and noise from ship engines. These are among the findings of a report on the impact at Katajanokka, commissioned by the Port of Helsinki and completed at the end of last year. It notes that shore power is best suited to ships berthed for several hours, because the connection has to be customised. The total cost of the investment at Katajanokka Quay is calculated at over 1 million euros. PORT OF HELSINKI CRUISE SEASON SEES MANY NEWCOMERS Some 260 cruise ships are booked to call at Helsinki this summer, carrying about 390,000 passengers. Nine of the ships, the L Austral, Celebrity Infinity, Explorer, Seabourn Quest, Royal Princess, Louis Aura, Legend of the Seas, Horizon and Club Med 2, have not visited Helsinki before. The schedule of arrivals is at PORT OF HELSINKI ENVIRONMENTAL IMPACT Cold ironing brings a major improvement in air quality, although particulate emissions are not greatly affected. Shore power produces 84 per cent less airborne emissions than if electricity is generated from onboard auxiliary engines. The reduction in nitrogen oxides is over 98 per cent. The findings reinforce the Port s readiness to provide shoreside electrical power at the West Harbour. COLOURBOX UPCOMING The Port is due to participate in Transrussia, the 19th International Transport and Logistics Exhibition, in Moscow on April. More information at Port of Helsinki 7

8 COOPERATION KEEPS LOGISTICS SECTOR ROLLING Ms. Merja Kyllönen, the former Minister of Transport, envisions representatives of Finland s entire transportation industry including those of the road, sea, and air transport sectors seated around the same round table looking for smart ways to promote Finland s competitiveness and employment at the same time. BY Nina Garlo PHOTO BY Prime Minister's Office The Finnish industry is facing many challenges, and a persistent wave of sluggish economic growth is not making matters any easier. According to the former Minister Merja Kyllönen, Finland s transport industry needs to strengthen cooperation among its various counterparts to help build a successful future for the whole of Finland, including its logistics chain. Because a chain is as strong as its weakest link, the Finnish transportation industry should pull together more. This would benefit Finland s economy, business life, and ultimately the entire transportation chain providing transportation links between Finland and the rest of the world. At the state level a similar change in mindset has also been recognized as necessary. Previously decision-making related to, for instance, the maritime industry was more fragmented, even parochial among various ministries. Moreover, the voices of the maritime sector and operators in that field have not been heard enough, the former Minister Kyllönen admits. Finland s recently released maritime strategy for provides an overall view of the industry that serves Finland s economy, business life, and employment and takes into account the new environmental norms. The drafting process of the strategy was open and was completed together with the maritime sector and operators in that field, making it a good example of the government s efforts to add transparency to its operating model. The maritime transport strategy has the courage to address all of the key challenges and threats to society that the maritime sector is facing. The biggest challenge is related to environmental issues and what potential impact they may have on Finland s logistical costs, the country s harbour network, the development of Finland s logistics links, and how Finland s entire geographical position could perhaps change following cooperation related to the Northern Dimension Partnership policy. A lot has been already done to try to help Finland s maritime industry adapt its practices to comply with EU directives", says the former Minister of Transport Merja Kyllönen. 8 Port of Helsinki

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10 Toward tighter eco-regulations Next year ships will have to reduce sulphur emissions in the Baltic Sea to a tenth of current levels. The directive restricts the sulphur content of fuel used in the shipping industry to 0.1 per cent in the waters off Finland. The Baltic Sea is classified as a Sulphur Emission Control Area under the directive, which means stricter limits than for waters in southern Europe. In waters outside the Sulphur Emission Control Areas, a limit of 0.5 per cent will apply from A lot has been already done to try to help Finland s maritime industry adapt its practices to comply with EU directives. One example is the decision to reduce fairway dues by 50 per cent during the most challenging first years after the sulphur directives come into force. But, with no doubt, the new environmental regulations are a major challenge to Finnish society. In fact, when plans were made to implement the new policy, the global economic situation and outlook were totally different than what they are now. Minister Kyllönen admits that the sulphur directive has been heavily criticized because it is not seen as treating all EU member states equally. Why do countries within the Baltic Sea region have to be pioneers in this matter now, when the global economy is showing only slight signs of a turnaround? Perhaps the biggest concern now is whether Finland and other countries lying on the Baltic Sea will become the model pupils of Europe, who carry their mantles well despite trying economic times, while other EU countries don t follow suit. That s why we want to make sure within the EU and the IMO that plans will go ahead as planned. Is it OK to help your neighbour? Another big concern, much less talked about, however, is the future of Finland s maritime transport industry professionals. How will Finland maintain its high level of expertise not only in the field of winter navigation but also in terms of commercial shipping? In this context, Minister Kyllönen says that the maritime industry should be active in trying to make young people understand and see the Finnish shipping industry as a still-attractive line of business despite temporary challenges that are now on the horizon. Minister Kyllönen also sees signs of transition in the Baltic Sea region s ice-breaking operations. In recent years, severe public arm wrestling has taken place over the issue and Minister Kyllönen admits that the topic is a fragile one with many open questions and various expressed opinions. Additional open discussion here will also help to eventually find new solutions, which will help improve Finland s competitiveness and employment. Because the cost burden of icebreaking operations is a factor influencing the competitiveness of Finland s logistics sector, it is important to search for new forms of collaboration between states in the Baltic Sea coastal area related to, for instance, new equipment procurement, as the icebreaker equipment is aging in many countries. Minister Kyllönen says that now we need to discuss whether it would be useful to share our existing and future icebreaker equipment with various Finnish industries so that that the equipment can be in use all year round and not only during the harsh winter weather. Our icebreaker operating model should also be transparent, so that we can clearly assess the costs of various options. 10 Port of Helsinki

11 Because the cost burden of icebreaking operations is a factor influencing the competitiveness of Finland s logistics sector, it is important to search for new forms of collaboration between states in the Baltic Sea. Changes inevitable in the port field What does the situation look like for Finland s port segment? Finland is a maritime country and its national success and wellbeing are highly dependent on maritime transport. In all honesty I must say that the current situation for the Finnish port sector is truly challenging with so many changes on the way. The structure of Finland s ports will certainly change following environmental changes affecting the maritime transport industry as well as plans to move ports to a company model from other municipality ownership models in the coming years. The port field should be alert and also have the courage to look closely at what is on its way how transport routes will evolve in the coming years, how the Northern Dimension Partnership policy will affect Finland, and how Russia s logistics chain will continue to develop in the future. Political control over the port sector is challenging because ports in Finland are mainly owned by local governments, cities, or municipalities. Because the economic impact of Finland s ports is so important to their surrounding areas, they involve a lot of emotion and passion. Thus even starting a debate on the future of our ports is very difficult. Yes, consolidation will inevitably happen in the port sector and the specialization of ports as well. Transition in the port sector will most likely also be reflected in the strengthening of cooperation agreements between neighbouring ports. If nearby ports are not at all interested in what their neighbours are doing, this will certainly inhibit their own success. This kind of parochial thinking should be completely left out. Port of Helsinki 11

12 TRANSFORMING FERRIES INTO ENTERTAINMENT COMPLEXES Shipping companies are outdoing each other with new ships and sailings. The range of at-sea services and experiences keeps growing. BY Timo Kiiski PHOTOS BY Viking Line, Eckerö Line, Tallink Silja Last year 10.7 million passengers passed through Helsinki s harbours, about 10 percent more than in By far the greatest number travelled between Helsinki and Tallinn, where the increase was nearly 4 per cent. Helsinki Stockholm, on the other hand, was about five per cent less popular than before. The route recorded 2.36 million passengers, counting journeys in both directions. Eckerö Line, operating between Helsinki and Tallinn, reported a magnificent increase of nearly 30 per cent. Its ships carried about 1.13 million passengers in Bringing a new cruiseferry into service at the start of the year was a major investment for Eckerö. Its schedule was revised at the start of this year, to emphasize day sailings. Instead of an evening departure, the MS Finlandia now leaves Helsinki each day at 8:30 and 15:30. We have adjusted our schedule; no extra sailings are being planned. Our main product is a Day in Tallinn cruise but we have also launched a new, six-hour minicruise, says Ida Toikka-Everi, head of Eckerö marketing. It gives the customer six hours on the ship to enjoy fine dining and entertainment. Meanwhile, the morning departure suits business and is an excellent alternative to holding conferences ashore. Tallink invests in ships to Sweden Passenger figures for Tallink on its two routes between Finland and Sweden fell by several per cent last year in all months except May and December. Correspondingly its passenger numbers between Helsinki and Tallinn were higher in every month except January. 12 Port of Helsinki 12 Port of Helsinki

13 Viking Line is adding an extra daily sailing from Helsinki to Tallinn and back during summer 2014, when its morning arrivals from Stockholm will pop across the water before returning. Port of Helsinki 13

14 Tallink Group is investing in a better shopping experience: many of the products sold on board are not available elsewhere. Tallink had 265,000 fewer passengers on Helsinki Stockholm and Turku Stockholm, but nearly 2 per cent more on Helsinki Tallinn. The Tallink Group is investing heavily on the Helsinki Stockholm route; about 20 million euros this year. Silja Serenade spent six weeks in the early winter being remodelled in Naantali shipyard. Silja Symphony is to be modernised in the autumn. The result is a new look for its upperrange cabins and shopping areas. In place of the old deluxe conference cabins on bow deck 9, three new junior suites have been built, each with a colour palette reflecting a season spring, summer and autumn. Small whirlpool baths have been built in each suite, although the ship s Sunflower Oasis spa on its aft deck already contains the largest whirlpool of any ship in the Baltic. More than half of takings from passengers already come from retail sales and the company aims to boost this. Supermarket facilities have almost been doubled. The new floating shoppers paradise has retail floor space of 1,115 square metres. Extra Tallink passenger class Last year the Tallink Group introduced an entirely new passenger class on its shuttle vessels between Helsinki and Tallinn, comfort class between deck and business. It has also constructed an entirely new Fashion Street on the Baltic Princess. Our vision is to make all our ships into experience complexes that meet the constantly changing demands of today s passengers, says communications manager Marika Nöjd of Tallink Silja. We are constantly developing the supply of entertainment and restaurants, and introducing new shops and brands. Some of these are not available ashore at all. Tallinn leg for Stockholm ships Viking Line s big investment in passenger services this year is an extra daily sailing from Helsinki to Tallinn. Viking s fast XPRS cruiseferry makes the crossing all year round Linda Line is investing in making it easier to buy tickets for its catamarans that speed between Helsinki and Tallinn. CRUISE VISITORS SET NEW RECORD More international cruise passengers, 420 thousand of them, visited Helsinki last year than ever before. Most were from North America, Britain, Spain and Germany. Australians, too, were more than before. Last year 12,000 arrived, topping the number of Italians (10,000) for the first time. The Japanese and Chinese are starting to discover Baltic cruises to Helsinki although their numbers are still fairly small compared with the total. Visitors from Latin America are also on the rise. 14 Port of Helsinki

15 Linda Line's catamarans are the fastest way to travel centre to centre. More than half of takings from passengers already come from retail sales and the company aims to boost this. but between 12 June and 21 August, Viking ships arriving each morning in Helsinki from Stockholm will cross to Tallinn and back before returning to Stockholm. Viking Line carried 6.5 million passengers last year, an increase of nearly 3 per cent. The number travelling between Helsinki and Tallinn rose 1.3 per cent. Its Helsinki Stockholm route lost four per cent of its passengers, compared to 2012, but the number travelling between Turku and Stockholm rose by a full 20 per cent. Such is the attraction of the new Viking Grace on this route. Like its competitors, Viking Line is investing in fine food, a range of interesting shops and a wide variety of entertainment. Its packages include a holiday from Helsinki with a spa hotel at the Tallinn end, a dancing cruise with star singers, and Brazilian theme weeks. We are modernising our offerings and adapting them for various target audiences, says Viking s marketing director Anni Kallioniemi. Linda Line makes it easier Linda has two catamarans, the Merilin and the Karolin, that sail between Helsinki and Tallinn from spring to autumn. In 2013 they carried about 300,000 passengers. The ships were bought in 2008 and In 2012 Karolin s Linda Class was modernised and in 2014 its upper deck will be remodelled. Our catamarans are the fastest way to travel centre to centre. The terminals are easy to reach and the ships are quick to board. Business passengers appreciate the personal service and privacy, says Linda Line s administrative manager Jaanika Rohula. While other lines make more money from retail sales than tickets, catamarans do not have room for big shopping areas. Purchases by Linda s passengers are generally gifts for friends ashore. With tickets as its main source of income, Linda is currently investing in making them easier to buy, Rohula says. A peaceful journey for drivers Finnlines operates ships for freight and passengers on Helsinki Travemünde, Helsinki Rostock, Naantali Långnäs Kapellskär, Mälmö Travemünde and St. Petersburg Lübeck. The Helsinki Travemünde route is a venerable one and remains the company s most important line for freight and passengers. Finnlines ships sailing between Vuosaari and Germany carried 144,000 passengers last year. This was 25,000 fewer than in 2012 but the company says it is content with the total. Its new Star-class vessels entered service on the route in 2006 and They were modernised in spring 2011 so no major remodelling is now required. Small changes are made every year. Oriented mainly at the freight market, Finnlines optimises its routes according to cargo volumes. No major revisions are in sight for its passenger-freight routes although it seeks constantly to improve the customer experience in travel planning and purchase of tickets for outward and return journeys. The core of our operations is specialisation in carrying vehicles for freight and passengers, and in offering an alternative to overland driving, says Kaj Takolander, head of passenger sales and customer service at Finnlines Plc. People who travel on traditional cruise ferries may want entertainment, food, drink and shopping, but our passengers appreciate peace, time to themselves and a civilised way of getting their cars from Finland to Germany, Sweden or the Åland Islands. St Petersburg without a visa St.Peter Line has no shipping competitors. Its Princess Anastasia and Princess Maria are the only passenger vessels that sail between Helsinki and St Petersburg. It also has an advantage over the railways. Passengers on its cruises to St Petersburg don t need a visa if they stay no longer than 72 hours. No new investments are being planned, says Sirje Kaivola, terminal manager for St.Peter Line Finland. We are continuing with the same ships and the same routes, although in the early year both vessels were serving as Olympic hotels in Sochi. The company does not release passenger numbers but Princess Anastasia carried slightly more last year while Princess Maria s numbers were largely unchanged. Kaivola adds that St.Peter Line passengers enjoy not only service and food but also entertainment by artists of the St Petersburg Music Hall. PASSENGER TRAFFIC IN SIX DIRECTIONS The Port of Helsinki had passenger connections to 6 foreign ports last year. Counting journeys in each direction the totals were as follows: Gdynia 185 St Petersburg 356,259 Rostock 7,213 Tallinn 7,860,235 Travemünde 136,876 Stockholm 2,355,982 Port of Helsinki 15

16 FINNLINES TO SET SAIL FOR A FRESH START With Grimaldi Group managing director Mr Emanuele Grimaldi now holding the reigns of his Finnish subsidiary Finnlines Plc, the company is hoping to turn over a new leaf in the coming years. This he expects to realise by learning from past mistakes. BY Nina Garlo PHOTO BY Kalle Kataila Since the end of 2006, Italian familyrun shipping company Grimaldi Group has been the majority shareholder of Finnish shipping company Finnlines. Last November, the head of Grimaldi Group took the helm of Finnlines as Mr Uwe Bakosch stepped down to head Finnlines German unit. This is not Grimaldi s first time acting as the CEO of Finnlines: in the spring of 2009 he took personal charge of his newly acquired company for a period of six months. During that time the company was reporting monthly losses in the region of 13 million euros. He stepped down from that interim role when the company returned to a breakeven point, but now his goal is set higher to see growing profits despite a persistently challenging market situation. The last four and a half years didn t culminate in a return to significant improvements. The European economic crises didn t help, and, despite the management s efforts, capital and cash injections by the Grimaldi Group and other shareholders, Finnlines couldn t work out what companies stand for: value creation, Grimaldi explains his decision to take charge of the company once again. Moving forward despite headwinds Several factors have dampened Finnlines performance in the past years most notably the severe global financial crises, but also some faulty strategic decisions made by the company s previous management such as the decision to order five Star-class Ro/Pax vessels when three would have been enough to meet Finnlines needs for new capacity in the current market situation. The market for Finnlines hasn t been good since There has been a recession practically throughout Europe hitting the forest industry and automotive sectors especially hard. In other words, those industries which produce some of the most important items transported by Finnlines. Although the five Star-class Ro/Pax vessels the company recently purchased are perhaps the best ships in the world for the type of business Finnlines operates, one should not build super ships without having the need for all of them. Just as the entire Finnish port industry, Finnlines port activity is also feeling growing pressure from Russian competition. Finland is no longer a logistic platform for the whole of Russia as once was the case when the whole country was flooded with new cars waiting to be imported to Finland s Eastern neighbour, Grimaldi says. I remember visiting Finland in , when the whole country was flooded with Russian cars. Back then, when I was asked by Ford and many other international automotive groups to find a Finnish port Finnlines has more ships now under the Finnish flag than ever before. where to discharge the Russian cars, it was virtually impossible. Now this is no longer the case because Russians import the cars themselves. In retrospect, the fact that Finland invested so heavily into its port sector to serve the Russian market was a mistake. Market misjudgements were made, but what can we do? At the time the business was there and so was the opportunity. Finnlines and many other companies took their chances, but unfortunately at a huge expense. This applied not only to Finnsteve, but also to companies such as Steveco: a company also participated by Finnlines. Grimaldi says that all port actors have to acknowledge the current situation and adjust their costs to the new market conditions, seeking proactively to attract traffics. This is also valid for Port authorities which must, in my opinion, lower call costs or at least even them out among operators in order not to lose important traffics. The North Sea and Baltic transport market is 16 Port of Helsinki

17 Market misjudgements were made, but what can we do? At the time the business was there and so was the opportunity, says Emanuele Grimaldi. Port of Helsinki 17

18 Grimaldi credits the success of the Naples-based Grimaldi Group largely to its tight management and the entrepreneurial attitude of its owners, now in three generations. Finnlines CEO Mr Emanuele Grimaldi together with son Mr Guido Grimaldi, Grimaldi Group Corporate Truck & Trailer commercial director. The North Sea and Baltic transport market is changing and every operator of the supply chain has to bring his contribution to make the Finnish logistic system succeed in the long term. changing and every operator of the supply chain has to bring his contribution to make the Finnish logistic system succeed in the long term. Full speed ahead Although Finnlines is addressing and taking care of a variety of issues, the company is still one of the few vessel operators in Northern Europe and on the Baltic Sea to report a positive cashflow and net profit result. Results improved especially in the last three months. Now Grimaldi is determined to pick up the pace and achieve even better results to help match Finnlines performance with the stellar performance of its mother company, family-run Grimaldi Group. So what plans does Grimaldi have for Finnlines at this stage? Grimaldi credits the success of the Naples-based Grimaldi Group largely to its tight management and the entrepreneurial attitude of its owners, now in three generations. It is this particular business mindset Grimaldi hopes to transfer also into the Finnlines structure. However, further concrete measures are required at Finnlines, such as a more speedy reduction of debt as well as cost cuts through, for instance, additional personnel reductions at its loss-making Finnsteve unit. It is true that we are offering fewer jobs in Finnish ports because they no longer exist they were meant to serve Russian business, not Finland. However, we are now creating hundreds of new jobs for Finnish seamen instead. Finnlines has more ships now under the Finnish flag than ever before, because we have been moving so many of our ships from 18 Port of Helsinki

19 Sweden and Germany to Finland during the past year and a half. Grimaldi adds that the move of ships under the Finnish flag can be largely credited to the country s tonnage tax reform. The new tax regime came into force in March 2012 offering tax incentives to Finnish ship-owners and encouraging ship-owners to undertake new investments and to register ships under the Finnish flag. The tonnage tax system in Europe came into force about 15 years ago. Most European countries took advantage of it at its early stage, but Finland didn t. Thus, in the old days Finnlines was moving ships outside Finland, but today is the opposite we are moving more and more ships to Finland giving new opportunities also to Finnish seafarers. Benefits from belonging to big company With orders slowly picking up and the company in better shape than ever before, Grimaldi is confident that Finnlines is facing a sustainable turn for the better. Profitability of Finnlines has improved significantly during the last quarter; Finnlines has improved not only as a company, but volumes have improved as well. However, Finnlines can still further enhance its business. Significant cost reductions will continue to take place during 2014 and we can also reduce the consumption of fuel in our vessels. When discussing the tightening of environmental regulations, Grimaldi says that Finnlines as a core part of the Grimaldi Group is working hard to find a feasible solution that will pay off in the long run. After 2015, the sulphur content of fuel in any ship sailing on the Baltic Sea must not exceed 0.1 per cent, or alternatively the exhaust gas must be cleaned with a scrubber to an equivalent level. For Finnlines, meeting such regulatory changes can require less effort compared to its competitors thanks to of the company s highly efficient and modern fleet sailing on the Baltic Sea. Since Finnlines has the youngest ships in the Baltics with the lowest fuel consumption and the highest productivity, most probably the changes will offer a good opportunity for us. The biggest concern is not how much the new legislation will cost the industry someone will have to pay for it most likely the final consumer. The question is more a relative one: who has the best or the worst ships sailing on the Baltic Sea? Since Finnlines is operating the youngest fleet with the lowest fuel consumption and the highest productivity, we are already in a better starting point to meet the targets. Grimaldi is reluctant to say how the company plans to be prepared for the new obligations next year, but 3 4 alternatives will be tested during the course of the year to find out which one provides the best results. Making any move right now would be a gamble different options need to be examined first. Firstly, nobody knows whether, for instance, a scrubber will be a necessity because it could well be that refineries will do the job to meeting the 0.1 per cent sulphur emission target. Secondly who is producing the best scrubbers, if they are necessary? Competition is severe in the industry and many companies are producing various scrubber technologies. We need proof first before that everything is a gamble. Whilst saying that, Grimaldi signalled to be engaged in serious and constructive talks with the two most important scrubber providers in the world, to have most part of the fleet with scrubber installed. He admitted also that Finnlines mother company is in cooperation with a major scrubber company to develop a new exhaust gas cleaning technology, which could prove to be much cheaper as well as lighter than other existing alternatives. ABOUT FINNLINES EUR million IFRS IFRS Revenue Average no. of employees 1,861 2,023 Finnlines is a leading shipping operator of ro-ro and passenger services in the Baltic Sea and the North Sea. The Company is a part of the Grimaldi Group, one of the world s largest operators of ro-ro vessels. Port of Helsinki 19

20 The new CEO at Nurminen Logistics is piloting his company and its Vuosaari Terminal towards better financial performance. But work on a national level is also needed to ensure that Finland s transport networks are not sidelined in the future. BY Timo Hämäläinen PHOTOS BY Jussi Särkilahti Extremely difficult times is how Olli Pohjanvirta describes the past five years at Vuosaari harbour. It was only last November that he became CEO of the company but he has long experience of its business operations. He joined the board of John Nurminen Company in When it demerged in 2008, he continued as a director of Nurminen Logistics, where he has been chairman of the board for the past three years. When a new harbour was built at Vuosaari some five years ago, a modern terminal for Nurminen Logistics was erected alongside it. However, the volume of freight has been far less than anticipated. The premises are first-class but the state of the market when they were built was very different from the one we encountered as soon as the harbour opened. Even today freight volumes have not risen back to the level preceding the collapse. Pohjanvirta feels that costs are high compared with the total income that the terminal yields. Fixed costs at the harbour have not been adjusted to market conditions as they have been elsewhere in southern Finland, he says. Vuosaari harbour has become less competitive than the logistics areas along Ring Road Three. Conditions are also difficult for other companies operating at the harbour, he believes. It is hard to imagine that many are happy with the present situation. Streamlining operations The railway hall at the Nurminen Logistics terminal can load 16 railway wagons at a time. Various value-added services such as packing and labelling can be provided in its flow-through hall. A special goods hall is designed for handling heavy items. The company s freight forwarders also work in the building. The terminal, like the whole of Vuosaari harbour, mainly handles imports and exports. Transit traffic is negligible. At a time when the market is not growing, know-how is crucial. This is why we are concentrating on making our operations more efficient and on developing quality. 20 Port of Helsinki

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22 The opening of major transport routes through arctic areas would be a major change that could create north-south transport flows in Finland, says Olli Pohjanvirta. Vuosaari and the companies that work there need to improve their marketing to exporters and importers. We focus on the customers who need these skills. Active sales work is very important. The terminal has made losses for Nurminen Logistics throughout its existence but the CEO believes that things are distinctly improving. Last year the terminal reported an operating loss of 2.2 million euros compared with 2.8 million the year before. Its utilisation rate has been improved by an agreement signed with forest products company Sappi last year. Nurminen Logistics now handles Sappi paper at Vuosaari, boosting its turnover by more than 5 million euros. It also handles paperboard for Metsä Board at Vuosaari. The terminal has a throughput of 350,000 tonnes of paper and board a year, the container equivalent of 31,000 TEU. What can be done to lift the whole harbour out of the doldrums? Vuosaari and the companies that work there need to improve their marketing to exporters and importers and thereby boost NURMINEN LOGISTICS PLC (2013) Turnover MEUR 63.8 Operating profit MEUR 0.2 Services: Rail, project and special transport, terminal and value-adde services, freight forwarding Nearly 1000 of its own railway wagons, including 450 covered wagons in service between Finland, Russia and other CIS countries. Terminals in Finland of 130,000 sq.metres Subsidiaries in Finland, Russia, Estonia, Latvia and Lithuania 22 Port of Helsinki

23 the flow of goods. International visibility is important and we can certainly improve it. He also points to relative transport costs. Rail freight needs to be priced more competitively in Finland, he believes. Anticipating change Olli Pohjanvirta encourages Finland to be proactive about future freight patterns and modes. The opening of major transport routes through arctic areas would be a major change that could create north-south transport flows in Finland. Meanwhile on the southern side of the Gulf of Finland, the EU is promoting the Rail Baltica route. This project is intended to create a rapid rail connection from Tallinn through the Baltic States to Warsaw. If freight flows shift to other routes, it will be hard to get them back. This is one of the areas where we need to safeguard our future competitiveness. Rail Baltica has a shipping dimension and may even continue in a railway tunnel from Tallinn to Helsinki. If Finland s cost level is too high when Rail Baltica opens, Vuosaari could simply become a transit area, and goods will not be handled in Finland but in Tallinn. There s even the possibility that the route will be continued to St Petersburg first, he predicts. Finland needs to be vigilant and to safeguard the competitiveness of its transport and ports. If freight flows shift to other routes, it will be hard to get them back. In the meantime, unused Finnish infrastructure will decay. Our costs are pegged to various indices which are too high to start with. Labour legislation applied in the ports is also inflexible. Major changes in matters like these are not achieved in a year or two. Finland does not even exist on the Russian railway map showing the most important transport routes, he points out. Our decision-makers and politicians should be asking why. A better future Despite the recession of recent years, Pohjanvirta believes that Vuosaari can improve its performance. To develop the harbour, he believes that companies must have the patience to put their own operations on a healthy footing. The harbour and the companies working alongside it have a common interest in getting more customers, increasing the volume of freight handled and improving profitability. All the preconditions for this exist. After all, Vuosaari is Finland s number-one harbour and it is surrounded by a vibrant economic area. But he remains concerned about the near-term economic outlook in Finland, where investments have dried up almost completely. Without investments it will be difficult for the economy to recover. ADAPTING TO MARKET CONDITIONS Nurminen Logistics has completed a series of measures for financial health, aimed at safeguarding the company s profitability, competitiveness and viability. The profit improvement programme was launched last September, after the statutory negotiations with employees representatives that must precede reorganisations affecting staffing. The company was streamlined and its terminal capacity was reduced. In the reorganization the number of employees fell by 67 last year to 261. We have eliminated unnecessary activities. Our operating environment has changed and the company s structure is now better suited to market demand. This rationalization does not reduce the company s capacity nor its ability to grow, says CEO Olli Pohjanvirta. My top priority is to get the company profitable and growing. I also carry out and refine the adopted strategy together with the management team and employees. We have to create conditions in the company where we can make the best use of employee skills and good customer relationships. An expert in Russia A large part of the turnover of Nurminen Logistics is generated from services related to Russia and neighbouring areas. For example, the company has nearly a thousand of its own railway wagons in service between Finland and Russia and between Russia and its other neighbours. It also operates wagons owned by partners. We are seeking significant growth in railway logistics and project deliveries in the Russian market. We predict that our turnover and profits in general will improve from 2013 s result, Pohjanvirta says. He is well acquainted with Russian business people, practices and legislation. He has a degree in law and established a lawyer s office in St Petersburg in It expanded to other parts of Russia, as well as Kiev and the Baltic States, before he sold it in In 2009, together with Ilpo Kokkila, the founder of SRV Construction, he established Russian Capital Management to manage real estate and capital investments in Russia, the other CIS countries and Finland. Port of Helsinki 23

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25 PULLING TOGETHER Ship services at Vuosaari are now provided by port employees instead of an outside company. The customers of port operators have commented positively on the change. The ship service team makes short work of mooring and unmooring the largest of ships. BY Timo Kiiski PHOTOS BY Mikael Kaplar / Studio Point Oy, Jussi Särkilahti Port of Helsinki 25

26 With skill and experience, a 218-metre Star-class vessel like Finnlines Finnlady can be moored to the quay bollards in as little as 15 minutes. The day dawns bright and cold at Vuosaari in early February; at half past seven there are 10 degrees of frost. It s Thursday and the service team is preparing for the arrival of Finnlines Finnlady, a 218- metre Star-class freight and passenger vessel. The Finnlady left Travemünde, Germany a day earlier but the team soon hears that she will miss her scheduled arrival time of 8 a.m. by a couple of hours. Tuukka Toiviainen and Tommi Simolin read the new time from an inside computer monitor. They have a fairly easy day today, with only four arrivals. Yesterday, when a full nine vessels arrived, was different. After starting at five in the morning, they did not have time for a proper sit-down and coffee break until 12, an hour before their shift ended. Since the start of the year, the Port of Helsinki has been providing ship services that were previously outsourced. These include mooring and unmooring, water supply, waste water reception and crew transport. Ship services are available around the clock, every day of the year. The team consists of eleven people plus foremen. They can also provide general assistance in the harbour yard. Give them a call any time, says Andreas Slotte, Vuosaari traffic manager. Flexibility brings efficiency Before coming to work at Vuosaari, Toiviainen and Simolin both worked in ship services for passenger shipping, Toiviainen in the West Harbour and Simolin in Katajanokka. For Toiviainen the change means a shorter journey to work; he lives in the residential part of Vuosaari. You can set your watch by the arrival of cruise ferries, he says. At Vuosaari ships can be hours or even a day late. We have a lot of responsibility but at the same time the work is less tense because we re not racing against the clock. The Port of Helsinki decided last year to start providing harbour services at Vuosaari because of the synergy from using its own employees. Terminal workers at the port went over to periodic working hours in early 2013, explains traffic manager Slotte. This made it possible for us to start producing harbour services at Vuosaari, and it also became good sense. No competitive tendering was needed to take back duties that used to be outsourced. Working hours were previously a lot more rigid, and it was harder to optimise our human resources. Now the guiding principle is to schedule more men for the work when there s more work to be done. Responsibility and freedom In contrast to passenger harbours, a cargo harbour like Vuosaari has a consistently irregular rhythm. Even the berth of the ship may change entirely without warning just before its arrival. It means a great deal of responsibility for harbour service workers, who need to monitor what is happening from a computer screen, VHF phone calls and pilot orders. It s independent work that requires initiative, Slotte says. All the terminal workers responsible for ship services are Port of Helsinki employees, experienced in the job like Toiviainen and Simolin. They already knew what the work entailed but went through a training course last autumn to become familiar with the spe- 26 Port of Helsinki