Scenario Analysis Including SWOT Analysis. A Baltic Gateway report Work Package 1 September 2005

Transcription

1 Scenario Analysis Including SWOT Analysis A Baltic Gateway report Work Package 1 September Project Part-financed by the European Union Report produced with assistance from TetraPlan A/S in co-operation with ÅF-Infraplan AB, Bjerkemo Konsult AB and Jan-Evert Nilsson, BTH

2 Scenario Analysis 1 Scenario Analysis including SWOT analysis prepared by TetraPlan A/S in co-operation with Infraplan ab, Bjerkemo Konsult and Jan-Evert Nilsson, BTH Table of Contents 1 Introduction Summary of scenarios Liberalisation scenario General Infrastructure development Regulation Scenario General Infrastructure development TREND scenario Three scenarios TREND scenario Economic development Social development Ecological development Cohesion and trans-national co-operation Improve accessibility Improve interoperability of transport systems Strengthen competitiveness of intermodal transport Liberalisation Scenario Economic development Social development Ecological development Cohesion and trans-national co-operation Improve accessibility Improve interoperability of transport systems Strengthen competitiveness of intermodal transport Regulation Scenario Economic development Social development Ecological development Cohesion and trans-national co-operation Improve accessibility Improve interoperability of transport systems Strengthen competitiveness of intermodal transport SWOT analysis Sustainable development Cohesion and trans-national co-operation Improve accessibility Improve interoperability... 43

3 Scenario Analysis Strengthen competitiveness of intermodal transport Annex 1. Summary table of scenarios Annex 2: Description of base level Description of base line Data elements Socio-economic data elements Trade and traffic flows Infrastructure and transport Accessibility in time and cost between sub-regions Flows on selected inter-regional network links Regulation Logistics Environmental data elements Cohesion and remoteness data elements Annex 3: SWOT analysis for ports and cities SWOT analysis for ports Port of Karlskrona Port of Karlshamn Port of Trelleborg Port of Ystad Port of Travemünde and Lübeck Port of Rostock Port of Sassnitz/Neu Mukran Port of Swinoujscie and Szczecin Port of Gdansk Port of Gdynia Port of Baltiysk Port of Klaipeda Port of Liepaja

4 Scenario Analysis 3 1 Introduction The overall aim of the Baltic Gateway project is to develop strategic initiatives to promote economic growth and a sustainable development in the South Baltic Sea area (SBSa) by improved use and availability of transport resources in accordance with the joint political statement signed in Malmö, April Preparation of implementation and financing of intermodal transport system improvements is a prioritized task. It has been decided that one of the end results from the project should be a Baltic Gateway Quick Start Programme (BG-QSP) listing prioritized intermodal infrastructure projects, as well as intelligent transport solutions and service oriented projects in the SBSa of European and Baltic Sea value. Goals and strategic initiatives to promote economic growth and a sustainable development are set up based on political statements related to the Baltic Gateway project, and specific interests of the partners in the project. The scope of the work is: To describe present and future freight and passenger transport developments (at road, rail, and sea) in the SBSa conducted via scenario analysis (up to year 2020). To define appropriate measures and selection criteria s to include in the BG-QSP matrix and subsequently in the final Quick Start Program. To conduct regional impact assessment (RIA) based on three transport development scenarios The present paper describes the scenarios. Three different scenarios are developed for the year The scenarios are labelled Trend, Liberalisation and Regulation. The most important differences between the three scenarios concerning transport system development will be attributable to the combined effect of economic growth and the degree of regulation. The scenarios are further described below.

5 Scenario Analysis 4 Figure 1.1. The Baltic Gateway Area including partner ports, twinning arrangements, corridors and regions. The QSP evaluation requirements have been set forth and approved at the April 2005 meeting in Malmö. These requirements relate to: 1. Trans-national relevance 2. Sustainable development in SBSa. 3. Cohesion and trans-national co-operation. 4. Improve accessibility. 5. Improve interoperability of transport systems 6. Strengthen the competitiveness of intermodal transport and provide a framework for improved logistic solutions The development scenarios define the setting in which these requirements are evaluated. The report contains three annexes. In the first there is a summary in table format of the three scenarios. Annex 2 is describing the base case 2003, and the Annex 3 is describing the SWOT analysis for other areas than the overall Baltic Gateway area.

6 Scenario Analysis 5 2 Summary of scenarios The scenarios have been developed based on assumptions concerning the future development of the European Union. Two different development paths are identified: The British path, laying the foundation for the liberalisation scenario. In this scenario (LIB) cost effectiveness and market forces are assumed to have a considerable impact on the development in the Baltic Gateway area up to The French path, laying the foundation for the regulation scenario. In this scenario (REG) EU attaches great weight to the environmental impact and the Kyoto protocol. Regulation is necessary to force the development in the right direction. Between these two paths is the TREND scenario, consisting of a balanced mix of the two abovementioned scenarios. It is a basic assumption that economic development in the Baltic Gateway area is more or less the same in the different scenarios. There is, however, a tendency to a slightly higher economic development in the Baltic Gateway area in LIB, and a slightly lower economic development in REG, as pointed out below. 2.1 Liberalisation scenario General EU has developed fast until Institutions are being refurbished reflecting the development within EU. Ratification of the service directive in 2008 ensured the free movement of labour. This has lead to an increase in employment in EU in general but in the Baltic Gateway in particular. Unemployment rate has dropped to 3 %. Workers from Poland and the Baltic states are employed in great numbers in the agricultural and construction sector in Sweden, Denmark and Germany. The overall higher employment creates a higher income in society and also a higher mobility. The regional development is characterized by a dispersed urban location based on residential location in the suburbs and rural areas and employment concentration in urban and other commercial centres. EU s agricultural funds have been abolished. Therefore, EU is a player on the world market and trade is carried out under the WTO regulations. This applies to all commodities.

7 Scenario Analysis 6 Russia has begun a democratic process and the special Russian region, the exclave of Kaliningrad, has obtained a certain self-government where the Kaliningrad duma can make decisions on the infrastructure development in the area. Activities are being carried out based on decisions supported by cost effectiveness. Development of infrastructure competes with development projects within other sector, and if it is more cost effective to invest in elderly peoples homes money will be directed to these. EU s structural funds have been converted to infrastructure funds. A number of Structural fund projects around the millennium showed that cohesion was best obtained with investments in infrastructure projects across major economic, social or demographic rifts. EU has therefore since 2014 supported investments in this type of infrastructure. Priorities are set based on cost efficiency analysis and cohesion improvement. Use of infrastructure is considered a public benefit. Therefore, all infrastructure investments are carried out for public funds. User charges related to operation and maintenance of infrastructure and transport are maintained, meaning each mode of transport pays its own costs. Important ferry links manage the competition with the land transport on routes where major savings are obtained in terms of drivers and resting time. Routes with small ferries cannot create the necessary cost efficiency. The routes which have survived are the routes with a big potential like Trelleborg Rostock, Ystad Swinoujscie, and routes from the Blekinge ports towards central Poland, Lithuania and Latvia. In this scenario bottlenecks and congestion are not accepted. However competition for limited capacity occurs and has resulted in invention of new transport solutions. The effect of the development is a slightly stronger economic development than foreseen in the TREND scenario, i.e. Economic development in old EU Baltic Gateway countries is about 2.5% per annum, development in new EU Baltic Gateway countries about 6% and unemployment in the whole Baltic Gateway area about 3% Infrastructure development The liberalisation scenario is dominated by a high growth of border crossing traffic related to both the increased trade but also to increased passenger travel resulting from the service directive guaranteeing the free flow of persons in and out of the labour market in the individual EU countries. The main flow is carried out by car, but also air transport accounts for a considerable part of the passenger transport within the Baltic gateway area. Development of infrastructure is based on the development plans available from the different Baltic Gateway countries. The maps of the main networks for road and rail in 2020 in the liberalisation scenario are shown below.

8 Scenario Analysis 7 Figure 2.1. Road infrastructure projects, LIBERALISATION scenario : Motorway : Expressway, dual carriageway Figure 2.2 Rail infrastructure projects, LIBERALISATION scenario : New rail projects

9 Scenario Analysis Regulation Scenario General EU has a proper size and apart from Bulgaria and Romania no new members are admitted into the EU. EU maintains high tolls against competition from the outer world. This relates to agricultural products, fish, textiles and machinery. In Russia, a quasi-democracy with a strong president has developed. All EU countries have ratified the Kyoto protocol and are invoking means to reduce the CO2 emissions to the levels foreseen in the protocol. In order to be able to monitor emissions regulation is necessary. This is particularly the case for the transport sector where reduced emissions are strongly related to the modal shift and limitations on transport. EU has decided to continue the existing common agricultural policy (CAP). This means that Poland, Lithuania and Latvia are main receivers of support whereas Denmark, Sweden and Germany are net payers of this support. The service directive has not been approved, meaning that labour cannot move unhindered across the borders. The structural funds continue and the co-operation across borders is supported by these funds. In the new member countries institutions are being established with the same content and purposes as the existing institutions in the old EU countries. Therefore, fees and dues related to transport infrastructure are maintained, also as a possible mean for transferring traffic from road to alternative transport modes. Subsidies for sea transport have been introduced in order to motivate a shift from long distance land transport driving to shorter road trips and long distance sea transport. Subsidies are also used to ensuring that inter modal transfer costs are kept to a minimum. Ferry routes are eligible for support provided the ferries fulfil requirements for low emission of CO2, other gases and particles. Congestion and bottlenecks in the road system are accepted and the alleviation of these is related to improvement of the rail and sea transport systems. Operation of rail services and other public services are negotiated with public transport offices and a certain amount of subsidy is provided for the so-called social transport tasks. Private financing of infrastructure is part of this scenario. However, acceptance of projects eligible for private financing has to be found. The authorities are particularly keen on establishing environmental effects before an acceptance can be obtained. The effect of the development is a slightly weaker economic development than foreseen in the TREND scenario, i.e. Economic development in old EU Baltic Gateway countries is about 1.5%, development in new EU Baltic Gateway countries

10 Scenario Analysis 9 about 3% and unemployment in the whole Baltic Gateway area about 6% Infrastructure development The regulation scenario attaches in its development goals to the railway and the intermodal centres connecting road transport with sea and rail transport. Therefore, the emphasis in this scenario is placed on the development of the rail system. Figure 2.3 Rail infrastructure projects, REGULATION scenario : New rail projects

11 Scenario Analysis 10 Figure 2.4 Road infrastructure projects, REGULATION scenario : Motorway : Expressway, dual carriageway 2.3 TREND scenario The TREND scenario is a balanced mixture of the two above mentioned scenarios. The TREND scenario could be characterized by a prolongation of the actual development trends up to The scenario contains a balanced mixture of liberalisation issues and regulation issues.

12 Scenario Analysis 11 3 Three scenarios In the following chapter are assumptions concerning the different scenarios set out in detail. The development paths related to the different scenarios are substantiated with data about the existing situation. These data are available in annex 2 of this report. Annex 1 summarises the different assumptions made, in order to compare similarities and differences for the scenarios. The description is linked strongly to the evaluation requirement applied in selection of the Quick Start Programme. However, it should be kept in mind that the QSP consist of different projects and evaluation of projects is different from description of scenarios. 3.1 TREND scenario Economic development. GNP growth Annual economic growth in GNP in the TREND scenario is about 2% in the western part of the area, increasing to about 5% per annum in Latvia, Lithuania and Kaliningrad. Economic development is interrelated with the structure of the society and the framework conditions. Economic development is also interrelated with development in the surrounding areas and thus, local, regional and international trade. The oil price of 80 US$ per barrel in 2000 prices has resulted in development of renewable energy sources, and less dependence on oil as the only energy source. All Baltic Gateway countries except Russia are members of the European Monetary Union and using Euro as their currency. Trade World trade is in 2020 dominated by the Chinese and US economies which have grown with an average of 5% per annum since An important trade flow between China and Europe passes via Minsk into the Baltic Gateway area and is spread to Germany, UK and Scandinavia. Russian trade with the Baltic area is also growing. Russian oil is shipped via the Baltic Sea terminals to west Europe and United States. Productivity is rising in Russia, and there are increasing investments from EU-countries in Russia. The special status of the Kaliningrad exclave in the Russian Federation has created a development potential in the transport and logistics area. Belarus has taken steps in a democratic direction, and relations with Poland, Latvia and Lithuania has improved.

13 Scenario Analysis 12 Trade between countries in the Baltic Gateway area constitute about 18% of total trade in value carried out by the countries. This is an increase compared to 2003 (15%). The recovery of the German economy and the steep growth in the polish economy ensure a major trade potential in the region. Trade, however, is developing fast across the Baltic Sea. In terms of tons the intra Baltic Gateway trade volumes have increased with 75%. Approximately 280 m. tons are shipped between the countries. Trade flows with other parts of the world has increased to new high levels (1,600 m. tons from 1,225 m. tons in 2003). Oil transit via the Russian ports in the Finnish Bay has reached approx. 200 m tons every year from 37 m tons in A certain oil transit is still carried out through the ports of Ventspils, Butinge, Klaipeda and Gdansk. Volumes through Ventspils are about the same as in 2003, whereas volumes through the Lithuanian and Polish ports have doubled. In total 70 m. tons of oil are shipped via these ports Social development. Population The 2003 population of the Baltic Gateway area was approximately 23 m. people. In 2020 population in the Baltic Gateway area has declined slightly to just below 23 m. people. In the western part of the area and particularly in Scania, in Sealand around Copenhagen and in Schleswig- Holstein north of Hamburg there is a positive population development. In the eastern part of the area development is negative except in Warmia-Mazuria and in Pommerania. Population growth is most visible in the suburbs to major functional centres (e.g. Berlin, Sczcecin, Gdansk- Gdynia, Malmö-Lund) with a multitude of functions including universities and administration. Population in the centres of big cities in the area is decreasing. Population is also increasing in medium sized functional centres like Kristianstad, Olsztyn and Potsdam. Figure 3.1. Regional population projection 2020 Population movement from rural areas towards urban or semi-urban areas results in a higher urbanisation throughout the area. Urbanisation

14 Scenario Analysis 13 was already in 2003 quite high in Germany, Sweden and Denmark. The graph below shows that a certain urbanisation is going to take place in Poland, Lithuania, Latvia and Russia up to Development is, however, moderate. Figure 3.2. Development of share of urban population Employment Car ownership Emissions Structural change in employment has led to a slight increase in industrial occupation in Poland, Lithuania and Latvia. Industries have moved from West Europe to the new EU-countries and the industrial sector has continued the transformation to modern and rationalised industries begun in the early 1990 ies. In 2020 the industrial sector s output has doubled in fixed prices but employment is about the same as in Unemployment has declined for the Gateway area seen as a whole (from 9% to about 5%), but has increased in rural areas of the Polish regions, Lithuania and Latvia, because of the transition from agriculture, mining and forestry to administration and services. This has, as indicated above, resulted in a growth in population and employment in the major functional centres. Particularly rural areas located at a distance from main transport corridors or tourism areas are having difficulties in maintaining work places. Income development has resulted in an increase in car ownership. The number of vehicles in the Baltic Gateway area is about 12.5 m. in 2020 of which about 10.7 m. are passenger cars. Each person in the Gateway area is expected to make 2.2 trips per day Ecological development. Development of industrial capacity in the world and the resulting use of fossil fuel have lead to an increase in global emission of CO 2. The quota system introduced in the Kyoto agreement has been initialised and trade with CO 2 quotas has changed the price of CO 2. Production is less polluting and less dependent on fossil solutions. The attitude of purchase

15 Scenario Analysis 14 Noise Accidents and discharge has been regulated to a certain extent of the price of CO 2. The car industry has improved engines and truck construction, but the use of energy and thus, emission of CO 2 (approx 45 m. tons per year related to vehicles in the Baltic Gateway area) constitute a major problem related to use of road vehicles. Other emittants do also expose a problem. NOx, SOx and particles have been drastically reduced in emissions because of technological advances. Some of the advances are related to cleaner technology, reducing emissions from transport modes. Modern road technology has developed fast because of restrictions meant to regulate emissions particularly in central city areas. Emission thresholds are also applicable to ships in ports and to railways not powered by electricity. Also use of new and less polluting fuels for the automotive industry (e.g. electrical fuel cells and hydrogen fuel) is advancing. But commercial use in a big scale is still to be seen. However, in % of passenger cars in the Baltic Gateway area are non-emission cars compared to 25% of all passenger cars in California. Rail propulsion technology is mainly based on electricity, thus making it possible to utilise renewable energy forms for production of electricity. The shipping sector has been slow to follow the road and rail sector in change of technology. EU has established specific norms applicable to the Baltic Sea. Ships not fulfilling these norms are not allowed to use the EU seaports in the Baltic Sea, but they may still use the Russian ports. Sweden was the first country to introduce environmental graduated port dues, but the system is now commonly used in all ports except in Russia. This has particularly improved the emissions from ferries and RORO ships. But many traditional tankers, bulk ships and general cargo ships are still using old technology, particularly ships serving the Russian ports. CO 2 emissions related to ship transport is about 35 m tons. Noise is a particular problem along major roads and in cities. Regulations have been introduced in order to diminish the problem. Regulations include speed limits on motorways through urban areas in order to reduce noise impact, construction of noise screens and use of noise reducing surface layers. However, use of mitigating measures is expensive and progress in curbing the noise problem is counteracted by increase in car ownership. In the Baltic Gateway area environmental regulations have for a long time been applied in Germany, Denmark and Sweden. Within the last few years noise reducing measures have also been introduced in Lithuania and Poland. Accident rates are generally related to condition of and traffic in the road system. Fatalities have dropped considerable in Sweden and Denmark. In Germany congestion of the road system has prevented the full effect. However, recent introduction of general speed limits in Germany is expected to provide the wanted result in terms of a reduction of fatali-

16 Scenario Analysis 15 ties. In Poland car ownership is rising, but improvement of the road system has lead to a marked reduction in fatalities. This is also true for Lithuania and Latvia. General Öresund Germany Poland Eastern Gateway Baltic Sea Cohesion and trans-national co-operation Passenger flows across the borders have been increasing. Improved accessibility to the coast of Poland and the Baltic States has increased tourism flow. Cost of rental of summer cottages and hotel charges are still attractive to visitors from the west, and increased wealth in urban areas in Poland, Lithuania and Latvia has created a segment of tourists to Sweden and Denmark which is continuously growing. Main flows across the borders stem from commuters and shoppers. In the Öresund region commuting has reached more than people per day, and total annual traffic across Öresund is about 55 m passengers. Co-operation across Öresund is further increased, integrating timetables, fares and operating systems for buses and trains. New train services have been established between Copenhagen and a number of Swedish cities, among them Karlskrona after electrification of The coast Rail. There are 6 departures per hour per direction between Malmö and Copenhagen and transit time has been reduced to 30 minutes after opening of the Citytunnel. Passages across the Polish German border have increased. Traffic has increased particularly between Berlin and Szczecin, where a new rail service has been introduced with 2 passenger departures per hour in each direction and a number of freight trains providing intermodal traffic between Berlin and Szczecin. Trans-national co-operation is increasing between Warmia-Mazuria and Kaliningrad and between Kaliningrad and Lithuania. Easing of visa requirements for crossing of the border has meant a considerable increase in people moving across the borders in the region. Connections across the Baltic Sea have been improved in the western part of the area with establishment of the fixed link across Fehmarn Belt and new bus operations between Copenhagen and Lübeck, Kiel and Hamburg. But also frequencies of the ferry routes have been improved mainly serving the fast increasing freight market, but also providing better access for passengers. Low cost flights are giving easy access between a number of destinations in the Baltic Gateway area Improve accessibility Accessibility has two dimensions, one is to provide access to main functional centres, the other is to ensure sufficient access to remote areas. Therefore, accessibility has to do with availability and operation of infrastructure, including time and costs for travel between two places. Infrastructure Development of infrastructure depends on investment capacity. With the same economic development potential different scenarios may as-

17 Scenario Analysis 16 Road infrastructure sume different investment capacities. Further, investment capacities may be utilized in different ways, thus creating different framework conditions for the future freight transport business. Investment capacity and its utilization will therefore impact on future infrastructure investments. The baseline for the different scenarios regarding infrastructure investments is indicated below. Infrastructure investments have been carried out according to existing plans. Therefore, the motorway and expressway systems in Poland have seen an immense improvement ensuring fast and efficient transport both in the north south and east west direction of the country. The Fehmarn Belt fixed link has been established with the necessary road and rail investments. In Germany, Denmark and Sweden general road pricing has been in existence for several years. In Germany the revenue has been used for significant investments in road and rail infrastructure and terminals. In Denmark and Sweden road user charges are seen as general taxes and used as such. In the context of United Nations Development Account Capacity Building Project on Interregional Transport linkages the link Kaliningrad Minsk is part of the new development of the Europe Asia road connection. Certain parts of the road have been finalised. A number of smaller projects have been established, among them the improvement of E22 in Sweden. But also a number of bypasses have been constructed along the Via Hanseatica, among them bypasses round Slupsk and Koszalin.

18 Scenario Analysis 17 Figure 3.3. Road infrastructure projects, TREND scenario Rail infrastructure Green roads are road projects implemented in the TREND scenario. Also improvement of rail infrastructure is progressing, the pace, however, is slower than development of the road network. After a decline in rail transport in the beginning of the century there is now (2020) recorded a moderate growth because of a change from national towards international traffic. Main projects which have been implemented include the Baltic rail from Riga via Vilnius to Warsaw, the rail link between Katowice and Gdansk and the rail link Warsaw Gdansk. Also, the Fehmarn Belt link with rail extensions to Copenhagen, Hanover and Bremen has been carried out. Other rail projects which have been achieved by 2020 are: Upgrading of the coast line from Kristianstad to Karlskrona. Upgrading of the mainline from Rostock to Berlin. Upgrading of the main line from Berlin to Sczcecin. Upgrading of the main line from Swinoujscie to Wroclaw Also connections to ports have been improved, this is particularly valid for Klaipeda, Liepaja and Kaliningrad (Baltijsk).

19 Scenario Analysis 18 Concerning the north-south relations the main axis Hamburg- Rhein/Main constitutes a major bottleneck. Apart from that no significant network bottlenecks are identified. Figure 3.6 Rail infrastructure projects, TREND scenario Ports Red lines indicate implemented rail projects in TREND scenario. Freight transport by ship has experienced a significant rise, too. Ports in the south of Sweden, especially Karlshamn, Trelleborg, Ystad and Malmö, have experienced large terminal investments in order to handle expanding amount of goods from rail and ship in an efficient manner. In Denmark only the ports of Copenhagen and Aarhus are influential players with respect to international ship transports. Other ports in Denmark, especially in the southern parts of Denmark, have not expanded due to competition from Copenhagen-Malmö Port, Swedish and German ports and the Fehmarn Belt fixed link. The proposed development of a major container hub in the south western part of Sealand or in the Fehmarn Belt south of Rödby has not materialized. In Germany the ports of Travemünde, Lübeck and Rostock have experienced major investments and operate as important gateways to the continent in the north-south relation. However, serious competition is experienced from the Polish ports located close to the German border like Szczecin and Swinoujscie, particularly because the railway linking Szczecin and Berlin has been reinstated and upgraded. As a result of the competiton from both the fixed link and the other ports the route between Trelleborg and Sassnitz has been closed down. In Poland the ports of Szczecin and Swinoujscie close to the border of Germany and Gdynia are playing important roles. Development of the

20 Scenario Analysis 19 Sea transport Travel time port of Gdynia as an important container hub in the south eastern part of the Baltic Sea has been concluded as part of the integration of Motorways of the Sea and land transport. This has also involved improvement of the hinterland connections. The port of Hamburg is still one of the most important key players in the sea transport system in 2020 and the envisaged enlargement of Bremerhaven is not affecting the overall picture of the distribution pattern in the northern parts of Europe, but has of course resulted in an increased competition in the area and lower handling prices as a consequence. Port development is taking place in Kaliningrad, Lithuania and Latvia. The need for a bigger capacity has been sparked by economic development in Russia. In Kaliningrad a deep-sea port at Vostochny (Baltiysk) has been developed mainly for ferry and container traffic. These types of traffic require fast turn-a-round times and that is not obtainable in the old port of Kaliningrad accessible only via a 42 km long and 9 m deep canal. Ferry transport between Baltijsk and Ust-Luga has increased in volume, and the other leg of the route (Baltijsk Mukran) is also of increasing importance. Other port development is typically linked to import or export of bulk goods like the oil terminals constructed in the Finnish Bay and at Butinge 35 km north of Klaipeda. In relation to port development it is also evident that hinterland connections to ports require attention. Access to the ports in Kaliningrad, Lithuania and Latvia has been improved both concerning roads and railways. Motorways of the Sea have been implemented providing an efficient connection from the Finnish Bay to Gdynia, and also providing flexible and guarded routes from the Finnish Bay to the North Sea. Goods by ship passing the Danish Straits and the Kiel Canal are about 550 m. tons per year corresponding to about 170,000 ships per year. Deepening of the Kiel Canal allowing an increase of the 2003 draught of 9.5 m to 10.5 m has diverted about 10% of the ships passing through the Danish waters to the Kiel Canal. The canal fees remain fixed. A possible deepening of the Drogden allowing draughts up to 9.5m from the existing 7.7 m has not yet been financed. A possible dredging and deepening of the canal leading to Kaliningrad may make Kaliningrad a more viable option for Russian import and export. Access to the Kaliningrad port is however a problem. Use of infrastructure Travel times have improved between Sweden, Denmark and Germany due to the Fehmarn Belt fixed link. Travel time by car and truck across land-based borders has also improved considerable. Travel times on the ferry links across the Baltic Sea have not changed. Therefore, in general

21 Scenario Analysis 20 Travel cost Infrastructure charges Regulations the relative time distance across the sea has increased in comparison with the non sea based time distance. Travel costs have increased for freight transport, both because a diesel price of EUR 1.6 per litre, and because of the user charges for heavy trucks of EUR 0.35 per km for trucks. The latter is only valid in Germany, Denmark and Sweden. Poland and the Baltic States are still using a vignette, but are considering introducing an automatic user charge system. Infrastructure charges for the use of road, rail and ports and canals are now fully implemented. The high fuel costs combined with the CO 2 quota system has meant a dramatic increase in transport costs. This has resulted in difficult transport conditions for remote areas, and location close to important corridors has been more of a competition issue than it was in the beginning of the century. Road user charges have been extended to the complete network to avoid the negative effects of haulers trying to avoid payment of the motorway charges. Therefore, the use of main arteries and motorways are relatively cheaper than using the underlying network. This policy has concentrated the traffic on the main roads. Revenues from infrastructure charging are used as a general tax in Sweden and Denmark. In Germany, Poland, Lithuania and Latvia the revenue is being used for the transport sector. About 50% are used for improving the road infrastructure, whereas the remainder is used for improving conditions for inter modal transport. Rail infrastructure charges have been reduced in Poland, Latvia and Lithuania to cover only the marginal costs of use of infrastructure. This has increased the competitiveness of the railways. The use of infrastructure charging has improved the viability of the Motorways of the Sea. Another way of ensuring equal and fair competition between transport modes is enforcement of regulations. This is particular valid for the road haulage sector, but is also of overwhelming importance in the context of seaworthiness of oil tankers and other ships carrying dangerous goods. The railways are also maintaining a system of certifying rails and equipment in order for the equipment to pass borders and operate in other railway systems. Harmonisation of the rail sectors of different countries has not been fully accomplished in 2020, but a number of main lines have been certified for the most common types of equipment and unit loads. Enforcement policies within the road sector have been facilitated of GPS technology which makes it possible to automatic monitoring a huge number of lorries in context of driving times, speed limits and other traffic and regulation offences. This has further reduced the number of accidents involving heavy trucks.

22 Scenario Analysis 21 General Modal split Rail systems Toll collection systems Improve interoperability of transport systems Interoperability of transport systems is a requirement for changing the modal split from road based solutions to transport solutions involving other transport modes. Interoperability between sea transport and land based transport is established in ports. Slightly less than 40% of import and export to and from the Baltic Gateway countries is carried by ship. Due to construction of the Fixed Link across Fehmarn Belt, the infrastructure improvement program carried out in Poland and the Baltic States and the user charges levied on truck transport rail transport has been able to maintain its modal share of about 13% of the goods transport between the Baltic Gateway countries. Road transport has increased, but to a lesser extent than experienced in the period Road pricing and increased control of driving regulations have had a negative impact. Development of the rail sector has led to increasing (local) distribution from terminals. All together road transport has increased resulting in more congestion (despite road pricing), and road congestion is considered a serious bottleneck in In 2010 the use of modular carriage (25.5 m combinations) was allowed on specific links. In the Baltic Gateway area it is in all Sweden and on the motorway system in Denmark, between Travemünde/Lübeck and the port of Hamburg, between Berlin and Szczecin and between Gdynia and Gdansk. Rail transport is still suffering from lack of harmonisation and lack of interoperability. The mixture of passenger transport and freight transport is hampering the free flow of freight by rail. Also the different rail gauges applicable in the Baltic Gateway area makes the smooth operation of rail transport across the borders difficult. This problem is considerable between Poland on one side and the Baltic States and Kaliningrad on the other side. Freight freeways have been established between Riga, Warsaw and Katovice, between Szczecin and Berlin, between Gdynia and Katowice and between Rostock and Duisburg. Also a freight freeway has been established from Halsberg in Sweden to Hamburg and the Ruhr area via the fixed Fehmarn Belt link. From Rostock a rail service linking the Mediterranean and the Baltic Sea has been established and is in increased use. Other freight freeways are being negotiated between Klaipeda and Minsk, and Kaliningrad and Minsk. Route guidance, law enforcement and automatic road charge payments are now part of the operation of the on-board equipment installed in all trucks operating in EU. The implemented user charge collection systems have been established based on different systems. Germany is applying the Tollcollect system, and Denmark has implemented a similar system. Sweden Tango collect

23 Scenario Analysis 22 has been implemented in another system design. Other systems are also applied throughout Europe. Poland and the Baltic States are presently considering which system to introduce. Intermodal operation Strengthen competitiveness of intermodal transport In 2020 the transport business has been deregulated in all EU-countries. At the same time there has been a tendency to concentration. The transport scene is dominated by 5-6 big players, having established international networks comprising mainly logistical services related to transport chains and their execution. Haulers and other transport providers are contracted by the big logistic companies. Intermodal transport, both rail and ship, have increased considerably due to improved quality, efficiency and interoperability and thus a reduced price for transport compared to unimodal transports. The improved operations on the German rail network have been one of the major reasons for that. Intermodal operations have mainly been strengthened in north-south relations whereas the intermodal development in the west-east relation has been more modest because of strong competition from the trucking industry. Intermodal operations by rail in Poland, Lithuania, Latvia and Kaliningrad are hampered by an undermaintained infrastructure network. However, main lines running north - south and east west have been upgraded and provide an efficient network with terminals located in the main centres e.g. Gdynia, Poznan and Warsaw. EU regulations on railway operations have been implemented for a long time. However, harmonisation issues are still required to be solved particularly at the borders to Russia and Belarus to obtain a better intermodal operation. Already in 2003 an intermodal rail service connected Klaipeda and Odessa, and the development of trade up to 2020 has seen an intensified use of this corridor. Transports to and from Sweden are for a big part using ferries and RORO ships from south of Sweden to Germany or Poland, even though a Fehmarn Belt fixed link is present in High infrastructure charges and insufficient terminals in Denmark have kept many intermodal transports away from Denmark in the north-south relation. Increased rail transport (as a part of an intermodal transport) has been obtained through a successful development of efficient production systems to bundle volumes through gateways and hubs, i.e. fewer but more specialised terminals. As a result a concentration of rail freight goods have been experienced, and the transport is to be found in corridors where shuttle trains and block wagons are the dominating concept. Due to this specialisation and concentration of goods in corridors, the start/end distribution by (smaller) trucks has increased. Systems for better utilising spare capacity in trucks and ensuring an efficient pick-up and delivery system in distribution and consolidation haulage has added to the efficiency and thus to lowering costs of the transport chains. Also construction of major terminals has concentrated flows and provided better opportunities to utilise available capacity.

24 Scenario Analysis 23 Terminals Containerisation The change in trade structure has lead to an increased focus on major hubs in the south Baltic Sea. Container transport hubs have been developed in the Baltic Sea, and this has been combined with regular calls of intercontinental ships. Transport terminals are experiencing an increasing specialisation. This is mainly related to the type of equipment they are able to handle, and inter modal solutions to be presented at each terminal. An important aspect is concentration of flows in order to make terminal to terminal transport by rail operable. Transport terminals are also specialising in different fields. Among the specialisations are handling of dangerous goods, cold storage, and terminals serving one type of commodity or one type of store. Some transport terminals have grown to mega terminals. In order to create economic operations these terminals have established secondary hubs in which stripping of containers and other terminal facilities can be accommodated, and in order to move goods fast in and out of the mega terminals. Hamburg has developed to a mega terminal and Gdynia is also developing towards a mega terminal handling major shares of the north south goods flows in the eastern part of the Baltic Sea. Unfortunately, many terminals will be bottlenecks in this new set-up, since not all inter modal terminals have carried out sufficient investments in order to keep up to the increasing volumes. Containerisation is growing. Use of containers has now spread to a considerable amount of goods which previously was not considered fit for containerisation. However, the major part is continuously manufactured products. Containerisation is an advantage for intermodal transport, and therefore use of containers has been an important prerequisite for improvement of intermodal transport by rail. The use of 45 containers were abolished in the EU in However, after negotiations the use was again allowed in Use of combination of semi-trailers and rail wagons for intermodal transport has been supported by the Commission via the Marco Polo programme. In order to avoid road charges these types of transport have gained a visible market share on routes from Gdynia/Gdansk to the Warsaw and Katowice areas, and also on the routes from Rostock to the Berlin and Ruhr areas. 3.2 Liberalisation Scenario GNP growth Economic development. The Liberalisation scenario (LIB) is based on a development in EU promoting free market and free flow of goods, information and labour across the borders. Also quota systems and tariff walls are done away with. Therefore, EU is open to world market competition. This framework condition results in an economic development in the western part

25 Scenario Analysis 24 Trade Population of Baltic Gateway area of about 2.5 % annual increase in GDP, and a 6 % annual increase in GDP in the eastern part of the area. The world market is developing fast due to free market conditions. The cost effectiveness of investments ensures that production is carried out in areas and regions where there is a proper balance between labour force skills and salaries, availability of raw materials and energy and sufficient transport resources. Therefore, certain production industries have moved from the Baltic Gateway area to other parts of the world. Research and development, distribution and production of certain high value commodities are maintained or increased in the Baltic Gateway area. Ukraine and Belarus are negotiating association agreements with EU. The closer relationship with these two countries has increased trade flows between Poland, Lithuania and Germany on one side and Ukraine and Belarus on the other side. Compared to the TREND scenario trade in value between the Gateway countries has declined and makes up 15% of the countries total trade in value. Trade with non Gateway countries, particularly Ukraine and Belarus and countries in the third world, has grown fast. Intra Baltic Gateway trade volumes constitute about 260 m tons. Trade flows with other parts of the world are up to about 2,000 m tons. Valueweight ratio for goods traded between the Gateway countries is higher than it is for goods traded with other countries. This was also the case in the beginning of the century. Improvement of refinery capacity and improved extraction methods have resulted in a price of oil at 50 US$ per barrel in 2000 prices. New pipelines have been established between Russia and China. Oil volumes shipped through the Baltic area is at the same level as in TREND scenario, slightly less than 300 m tons per year Social development. Total population of the area is slightly higher than 23 m people. There has been a migration towards the area, because the area offers vivid historic cities with cultural events, a breathtaking nature along the coast line and in the sea lands in Mecklenburg, Brandenburg and Warmia- Mazuria. Some people like to escape from the congested living conditions in central Europe and settle in the more peaceful Baltic Gateway area. The socio-economic development has lead to dispersed location of settlements. Mobility is high and distance work has grown in importance. The increased population in rural areas has lead to new employment opportunities. This scenario is characterized thus by a more equal development between urban and rural population, and also between different groups in urban societies. Agriculture, particularly in Poland, is reorganised and productivity is increased strongly. Car ownership shows a strong increase in the area.

26 Scenario Analysis 25 Employment Car ownership Emissions Noise Accidents The socio-economic development has lead to a faster shift in employment from the primary economic sector to the tertiary economic sector. The free movement of labour has lead to a high mobility in the job market. Vacancies are filled quickly. Commuting increases, and this is true for both daily and other types of commuting facilitated by the free movement of labour. Wage differences are obvious in the Baltic Gateway area and there is a certain mobility towards the higher wages. Rural areas are used for agricultural business and particularly in the Polish regions of the Baltic Gateway area are a number of intensive production units established, like pig farms, chicken farms and milk farms. These farms create a solid income in the areas where they are located. A high share of jobs in the tertiary sector is related to research and development making the Gateway area an important centre for development in biotech, agrotech and transport and logistics. The higher income in the population creates basis for an increased import. However, also the construction sector supporting national demand is thriving. Income is increasing and fuel prices are stable compared to This has resulted in a total amount of vehicles in the Gateway area of about 15 m. and an average number of trips per person per day of 2.4. The carownership is particularly growing in Poland, and there is also a tendency to cars being bigger and thus more fuel consuming Ecological development. Manufacturers of vehicles are advancing the development of less polluting engines, but this is counteracted by relatively low fuel costs and a growing mobility on one side and number and size of cars on the other side. Low price of fossil fuel and growing demand for fast and efficient connections across the Baltic Sea has led to re-introduction of fast ferries on long distance trips across the Baltic Sea. Although technology has been improved compared to fast ferries from the beginning of the century the ferries use considerable more fuel than an ordinary ferry, thus increasing emission of CO 2. In general however, CO 2 emission in the Baltic Gateway area is considered at about the same level as in TREND, but transport is accounting for a bigger share (in total about 100 m. tons per year). Nuclear power is increasing its potential for the development of the Baltic Gateway area. New power plants are commissioned and old power plants are improved for a higher utilisation. Similar to the TREND scenario except traffic is increasing because the number of cars is 25% higher. This results in heavier noise loads. More roads are being subjected to speed limits. Number of accidents related to transport are higher than in the TREND scenario because of increased number of cars.