Transit and transport

A widespread preconception, especially in Russia, holds that the Estonian economy depends largely on Russian transit. The reality is different — freight traffic between Russia and the rest of the world is an important source of profit for Estonian ports but the role of transit in the Estonian economy has been consistently decreasing.

Slightly more than 75% of the freight flow of the ports and 45% of the rail freight is connected with transit. Such shares are constantly diminishing as Russian oil flow goes through her own ports on an increasing scale. Presently about one third of the freight flow may be related to transit. The principal part thereof is constituted by the export of petroleum products from Russia — first by rail, then by sea with tankers. Other Russian goods that have been transported through Estonia are grain and fertilizers, sometimes other goods as well. The transit from the West to Russia has gradually grown, mostly in the form of containerised freight.

Another important area is passenger shipping which is directly linked to tourism. The return transport of about 8 million passengers a year in the ca 80 km route between Tallinn and Helsinki is profitable for Estonian and Scandinavian companies and the competition between companies is really tough. During the summer season a ferry or hovercraft departs practically every hour from Tallinn to Helsinki and back. Estonia has a regular boat connection with Sweden and Russia (Saint Petersburg). In recent years, Tallink has substantially strengthened its position in passenger shipping in the Baltic Sea, with ships of the company anchoring in the harbors of Finland, Sweden, Latvia and Germany, in addition to Estonia. Local shipping means primarily the routing of ferries between the mainland and the isles. In the inland waters, there is very little transportation.

The national airline of Estonia, Estonian Air, was quite successful at the beginning of the century in terms of cargo amount, as well as in the number of passengers although, in recent years, these areas have not been as prosperous. In 2009 the number of passengers decreased because of the economic crisis, but also because of increased competition. Still, all of the airlines operating in Estonia taken together have increased their percentage of passengers lately. The biggest airport is located in Tallinn, but there are international flights to Tartu and Pärnu, too. Also, four islands have airports (Saaremaa, Hiiumaa, Ruhnu and Kihnu).

A large part of freight transport is still done by road, this applies especially to internal freight transport as the distances are relatively short. Passenger transport is organised with buses for the most part, there are international lines to St Petersburg, Latvia, Lithuania, Poland, Germany and Scandinavia.

46% of the Estonian roads are unpaved, the main reasons being sparse population and lack of money. During the recent years a lot of roads have been repaired and new ones have been constructed, but a considerable number of roads are still in a fairly poor condition. By building larger highways, attempts are being made to improve international connections with Estonia, as well as the connections between different parts of the country. Monetary support from the European Union is quite important in financing these construction projects.

​Although a big part of the income of the transportation section comes from the transfer of goods and passengers, services connected with transportation are also important, especially logistics and warehouses. As many major foreign corporations treat the Baltic states as one country, they have often chosen one of the three countries as a “base”, organizing the supply of goods in the area from the selected center. That’s why Estonian trade, as well as Latvian and Lithuanian, includes a large percentage of imported industrial and consumer goods. The Estonian percentage of this trade in goods and services is relatively high thanks to its fertile business environment, but also because, in some cases, Estonia is used as a trans-shipment point between Finland and northwest Russia. Naturally, the biggest centers of logistics are located near harbors: in Tallinn and Paldiski.

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