The Nordic Transport Industry and Market
The implementation of the internal market, the enlargement of the European Union and the changes in Eastern Europe will lead to increased economic activity and, as a result, a substantial increase in goods transportation in Europe.
The Nordic transport industry is well prepared for this new situation and will compete for new business in the growing European market with expertise, investment and new business concepts.
Despite the size of their populations, the Nordic countries are industrially advanced. Since their domestic markets are limited, they have built up extensive foreign trade to underpin their economic growth. Foreign trade currently accounts for close on sixty per cent of the total GNP of the Nordic countries.
The Nordic countries are each other's largest single trading partners. Around 25 per cent of what each country produces is sold to other Nordic countries. Industrial enterprises in the Nordic countries supply each other and often form consortia together for major projects in foreign countries.
Europe dominant
Western Europe as a whole accounts for 60—70 per cent of Nordic foreign trade. This was not changed by the referendum in which Norway decided to remain outside the EU. Norway continues to have ties with the EU through the EEA Agreement.
Compared with the rest of Europe, the Nordic countries have extensive long-haul goods transportation. In round figures, the transport sector accounts altogether for 4 per cent of GNP, 7 per cent of investment and 5 per cent of employment in the Nordic countries.
In the period after World War II, goods transportation in the Nordic countries increased steadily by about six per cent each year until the start of the 1970s, since when growth has been uneven. The oil crises of the seventies and the recessions at the start of the eighties and nineties left a clear mark in the statistics.
The levelling off of goods transportation in recent years has its natural explanation in technical and economical developments. There has been a gradual increase in the degree of processing in industry. Manufacturing is increasingly economising on materials, while at the same time the value of goods is rising, most markedly in the electronics industry. The relative importance of products of low added value is declining.
A lot of bulk transport in the North
The volumes of goods transported vary considerably from one Nordic country to another. They are lowest in Denmark and highest in Sweden and Finland, the reason being that northern Finland and Sweden have very large bulk traffic (forestry products and ore) over long distances, while Denmark has neither bulk traffic nor long distances.
Norway has extensive bulk transport of oil, some of which enters the country by pipeline, although most of the oil is exported directly from the fields in the North Sea and consequently is never included in the domestic volume of transport.
Shipping and the railways carry most of the large bulk flows in the Nordic countries. The railways also carry a high proportion of ordinary long-distance traffic, mainly in the form of waggonloads from one private siding to another. In Denmark rail is also used for transporting single consignments.
Road haulage dominates the transport scene and its share of the market is increasing steadily. The reason is a strongly growing goods value per unit weight, more JIT production methods and more frequent, though increasingly smaller, consignments. The flexibility and reliability of road haulage in regard to door-to-door deliveries are decisive factors. Another reason is substantially increased demand for short-haul traffic, where lorries are the only option.
Ferries important
A typical feature of the Nordic transport market is the extensive ferry traffic, with ferries involved in almost all imports and exports. Some fifty ferry routes connect the Nordic countries with each other and with Eastern and Western Europe.
After the fall of communism in the Soviet Union and in line with the increasing scope for trade with the former Comecon countries, east-west traffic has started to grow.
In this respect the Nordic countries provide an effective springboard towards the east. Established ferry services already exist between Sweden/Finland and several Baltic ports. From Finland there are also direct railway and road connections via Vyborg to St Petersburg and further inland in Russia.
Nordic trade with the east is growing, although the route across the Nordic countries is also very convenient for many continental importers/exporters, who find this alternative both faster and more reliable than the overland route via Poland, with its time-wasting border crossings.
A thousand forwarders
In the Nordic countries there are close to 750 freight-forwarding companies with some 30,000 employees and a total turnover, excluding taxes and customs duties, of more than 12 billion. Through their national organisations, ninety per cent of forwarders are members of the Nordic Association of Freight Forwarders.
During the 1980s and the 1990s the Nordic freight-forwarding sector has undergone structural rationalisation, as a result of which the sector today consists of a few large and many small companies.
The smaller forwarders frequently specialise in a single market or mode of transport. They handle their foreign transportation in collaboration with partners, agents or, less commonly, their own subsidiaries. The entry of Denmark, Finland and Sweden into the EU saw the disappearance by and large of the specialised frontier forwarders, necessitating the laying off of some 1,500 forwarding staff employed in customs-related activities.
Both the large and small companies operate with a high degree of logistical and commercial expertise and with modern administrative and operating techniques. Unit loads, multimodal transport and integrated transport from door to door are a natural part of their businesses.
The forwarder a transport organiser
Nordic forwarders normally operate by arranging transport with carrier's responsibility, offering customers market-adapted transport solutions in the form of either fixed transport arrangements or tailor-made solutions for individual customers. They assume responsibility for the entire chain of transport in a single document, the Fiata Combined Transport Bill of Lading.
Freight forwarding is now a concept which takes in many activities associated with the field of transport. This observation was made as early as fifteen years ago at the time of preparation of the 1985 edition of the General Conditions of the Nordic Association of Freight Forwarders (NSAB) governing transportation, forwarding and storage. The 1985 conditions (now replaced by NSAB 2000) marked a significant step on the way from the agent's role of the forwarder towards the general image of the forwarder as an independent transport organiser with liability towards the customer.
Peripheral services
The new activities comprise, for example, the operation of short-term warehousing with associated services of an administrative or manufacturing nature. They may also involve labelling and packing of products, arranging deliveries of products according to customer orders, invoicing, accounting and receiving payments.
In trade with a non EC country the forwarder acts as an intermediary in connection with customs formalities, seeing to the clearance of goods and assisting the principal with export and import documentation.
The overall aim is to develop effective and customised logistical solutions, which provide principals with a high degree of competitiveness.
The Nordic forwarders do not normally have their own fleets of vehicles; instead, almost all transport needs are purchased from subcontractors, i.e. rail companies, shipping companies, airlines or haulage contractors.
With regard to road transport on the forwarder's established traffic routes, long-term cooperation is often involved. A haulage contractor is contracted for all traffic on a particular route, regardless of the fluctuations in the quantity of goods. The haulier is guaranteed a certain level of revenue for the route and operates vehicles painted in the forwarder's colours.
Road haulage
The Nordic haulage firms are mostly small companies. About sixty per cent of the Finnish, Norwegian and Swedish hauliers are family businesses with only one vehicle, while in Denmark the number of such hauliers is around 45 per cent, firms with more than ten vehicles numbering only about 1,000. There is a marked tendency towards fewer single-vehicle firms in Denmark and Sweden.
In all, there are 40,000 haulage contractors with 120,000 vehicles in the Nordic countries. About 3,000 of them engage in some form of international transportation. Apart from the haulage firms' vehicles, there are 40—50,000 commercial vehicles, which are usually smaller and used to a much lesser extent than the vehicles of hauliers.
The relationship between forwarder and haulier varies somewhat in the Nordic countries. In Denmark it is much commoner for hauliers to market their transport services themselves. Companies act both as forwarders and hauliers.
Many small hauliers in Finland, Norway and Sweden are affiliated to an "LBC", a kind of lorry cooperative which receives and allocates transport assignments in local markets.
Collaboration between hauliers and forwarders is common in inter-Nordic transport. A Swedish haulier, for example, may work for a Danish forwarder or a Finnish haulier for a Swedish forwarder.
Railways becoming more efficient
Among the players involved in Nordic rail freight, the state-owned railway companies of the four countries are dominant, with altogether 60,000 employees and about 45,000 goods waggons.
In the Nordic countries work has been carried out in recent years on increasing the effectiveness of the railways through improvements to the rail network and freight rationalisation. Since 1950 Sweden, which had a particularly large rail network in relation to its population, has got rid of thirty per cent of the network. During the nineties the railway system in Sweden reduced its workforce by 50 per cent, the number of goods waggons by 40 per cent and the number of terminal locomotives by 70 per cent, while at the same time increasing its freight volume.
In 1988 the Swedish railway administration was divided into two — the Swedish Rail Administration, which is responsible for the track, and the Swedish State Railways, which is responsible for traffic. The Swedish State Railway's, goods transport arm was made an independent company under the name of Green Cargo AB in 2001, and is now run along strictly commercial lines and pays a fee for use of the track which is based on the economic cost.
Goal-oriented cooperation
Since 1991 the Nordic railway administrations have engaged in formal cooperation with a view to coordinating investment and the availability of transport across frontiers. The idea is for the overall benefit from cooperation to outweigh the total contribution made by each country.
On the agenda for cooperation are joint forecasts, shared concepts for vehicle development and ordering rolling stock, and measures for streamlining the operation of trains, e.g. by coordinating signalling systems and having the same crews from start to finish on inter-Scandinavian trains.
Other collaborative projects are a Nordic combined traffic system, a uniform system for the use of information technology, and similar guidelines for quality work. Among bilateral projects can be mentioned Swedish-Danish cooperation in the organisation and operation of rail traffic on the new fixed link between Malmö and Copenhagen and Norwegian-Swedish cooperation on behalf of the successful Arctic Rail Express, a direct train for combined transport between Narvik and Oslo via Sweden.
Ferries dominate short-haul routes
Nordic shipping companies operate 3100 vessels with a total of 100 million deadweight tonnes (dwt), which is equivalent to about fifteen per cent of the global trading fleet.
Norway is the largest Nordic seafaring nation, with a fleet of 35 dwt under its national flag, plus 17 million tonnes under foreign flags. Under its own flag Denmark has 7 million dwt, while the figures for Sweden and Finland are only 2.5 and 1.2 million dwt respectively. In Sweden, which unlike Norway and Denmark has no international shipping register, there are 18 million dwt under foreign flags.
Of most interest in the context of Europe are Nordic short-haul routes, which have many centuries of tradition behind them on the North Sea, the Baltic and the Gulf of Bothnia. Short-haul routes are today to a large extent the same as ferry routes. Most of the finished goods in which the Nordic countries trade go to and from Europe by ferry.
The first Nordic ferry service was established over the Little Belt in Denmark in 1872. Other classic ferry routes are Helsingborg — Helsingör (1892) and Trelleborg — Sassnitz (1909).
High-class connections
At present about twenty shipping companies operate some fifty or so ferry services within the Nordic countries and between the Nordic countries and the Continent. In virtually no other part of the world are such well-developed, frequent and high-class ferry connections to be found. One of these shipping lines, with a turnover (including offshore acitivties) of about 2,6 billion, is the largest ferry operator in the world.
The Swedish and Finnish ferry operators, especially, have developed a concept of combined traffic for cargo transport and cruise passengers which evens out seasonal variations and provides an even load factor on vehicle decks throughout the year.
Until the fixed link between Sweden and Denmark is supplemented by a fixed link between Denmark and Germany across the Fehmarn Belt, the dominance of ferry transport between the Nordic countries and the Continent will scarcely be affected. For goods carried by rail and road, is it judged in both cases that the ferries will for the foreseeable future remain the most economic and practical alternative.
The extent of the remaining Nordic short-haul traffic is relatively modest, at any rate in comparison to transportation on the inland waterways on the Continent.
One curiosity of interest is the Hurtigruten fast-speed service in Norway, which has been operating daily between Bergen and Kirkenes since 1893. The ships make 34 ports of call along the coast, the topography of which makes for poor communications by road. This makes the service unparalleled as an express operator in the north of Norway, although the tourist traffic is of most significance for the economy.
Two clear aviation markets
The players in the Nordic air-freight market are the airlines, the integrated express companies and the freight forwarders, which may be either large-scale forwarders with separate flying operations or specialised air forwarders. According to this definition, about 4 000 employees in 200 companies work in the air-freight sector.
The annual volume of Nordic air freight is approximately 300,000 tonnes, most of which makes up international and intercontinental traffic. The value of goods is on average about one-hundred times larger than the average goods value for surface goods.
The predominant category of goods consists of engineering products. Another large group is perishables, with large amounts of fresh salmon, for example, being flown from fish farmers in the north of Norway to markets in the Far East. Within the Nordic countries a lot of mail and newspapers go by air.
Besides the Scandinavian and Finnish national airlines , the one which is most involved and successful in all the Nordic countries is German. Dutch and British airlines are also prominent in air freight. Fifty percent of the Nordic air freight is trucked via hubs on the Continent which are linked to international routes.
Air-freight forwarders and the large international express companies work mainly in their own sectors of the relatively clearly defined air-freight market. The integrated companies are to a large extent constrained by their standardised production systems, whereas the forwarders work more flexibly and are market-driven.
It is not uncommon for air forwarders to offer their "own" express products, which have, in fact, been purchased from an integrated operator with whom the forwarder has a cooperation agreement.
Outlook for the future
Industry and commerce to an increasingly greater degree view logistics as part of production. Transport, forwarding, storage and distribution account for about thirty per cent of the value of production. Steadily rising added value and increasing goods values demand a higher and higher quality of transport. The factor of time is becoming more important and the demands of freight customers for rapid and accurate transport information are increasing.
In the future, demands from customers who are increasingly aware of the environment and improved quality of what is offered by the railways will result in a greater proportion of long-distance goods travelling by rail. If the European railway administrations are able to agree, among other things, on uniform technology in regard to electric trains, signalling and traffic management and achieve effective, market-oriented cooperation, the railways may well in the future become an even more attractive alternative for Nordic traffic to the Continent.
The Nordic forwarders, who are already the largest customers of the railways at present, would view with satisfaction such an opportunity of improved service to their customers, in the same way as they welcome the removal of the technical and bureaucratic barriers which currently make coastal traffic a less competitive alternative in the Nordic transport market.