newsletter nr 5

NEWSLETTERDEVELOPING AND PROMOTING THE MIDNORDIC GREEN TRANSPORT CORRIDOR

February 2013

www.midnordictc.net

Topics in this letter: - Consequences of sulphur regulation

- Visiting Petrozavodsk, Russia

... and other related news

North America

Europe

Russia

Asia

www.midnordictc.net

NEWSLETTERFeb 2013

2/10

DEVELOPING AND PROMOTING THE MIDNORDIC GREEN TRANSPORT CORRIDOR www.midnordictc.net

The year of grace 2013...

Per-Åke Hultstedt is the Project Manager of NECL II -project, represent-ing the Leadpartner County Administrative Board of Västernorrland. per-ake.hultstedt(at)lansstyrelsen.se, tel. +46 70 190 4195.

Two years to go before the grace period is over and the sulphur directive kicks in with full force ...

The strange thing is that it looks as if everyone is just waiting for a miracle...

It seems all are waiting for someone else to solve the problems. No one really grasps the problems at any level. Everyone seems to be more or less paralyzed…perhaps the truth is too tough to handle or to accept. Too tough to accept the fact that this is the beginning of the paradigm shift everyone has been talking about.

The project has made a study regarding the impact of the sulphur directive, looked at EU White Paper, looked at other studies and tried to figure out what the future might look like. We do not claim in any way to be the owner of the truth. We have simply tried in a pedagogical way to describe what it’s all about, how it might affect individuals (people), companies as well as different nations. We have set out these possible developments in some scenarios to further exemplify our theories about the possible future.

The reactions to our study have been very variable...

• Some have cursed the study claiming that it is pure falsehoods

• Some have with curiosity read the information

• Some have contacted us and wanted to get more information

• Some have invited us to lecture

• Some intends to investigate the issue further

• And we have been published in various official occasions

The evil root to the current situation is that national levels of management (Government level) have handled the issues around the sulphur directive as a “One Case Issue”…as if it is all about changing vessel fuel when in fact the fuel change is just the action decided when the problem is the actual impact of the decision, not only creating ripples at sea but ocean waves.

We are in no way against the sulphur directive…

No one who still wants to create opportunities for future generations to exist can be against it.

However since the sulphur directive will have such major impact on all levels it must be handled in a powerful way by the governments. We can’t afford to jeopardize export companies competiveness on the global market. The national welfare and in the next step individual welfare is at stake here.

The major problem right now is that it’s not happening enough to solve the problem. Things proceed to slow. The low number of orders for remodelling existing vessels or orders of new vessels leads to the conclusion that marine diesel will be the short team solution. Why? It takes time to build or rebuild ships and the shipyard capacity isn’t endless. So mainly looking at timeframes it’s not possible to have enough amounts of new ships ‘till 2015. This will lead to increased worldwide demand for diesel and probably higher fuel costs and higher freight costs.

Fuel question is a dear topic of debate. There are those who argue

that one can only predict the price up to 3 months in advance. We looked at trends over time without any practically scientific analyse regarding all possible influencing factors. We simply added a trend line based on the historical price development. We have not included the entire period since it is not considered as relevant in terms of availability of oil in the early part of the period.

Looking at the picture a t t a c h e d you can see that the price of oil, p r o v i d e d t h a t p r o g r e s s co n t i n u e s in the same d i re c t i o n , will be around 300 USD per barrel in 2050. One can think the price is ok…looking the general price situation in 2050. The problem is that there are estimates clearly saying that the market cannot handle a price higher than 150-160 USD per barrel. So even if the price is not rushing up to 300 USD per barrel the price will most likely increase to more than 150-160 USD per barrel and the ultimate question then rising is: What do we do about that?

The answer is R & D. It is here the national innovation policies comes into play. One must realize politically, that we are not going to fix this without conscious political action. We have to counterweight the cost above 150-160 dollars per barrel with new technology ... R & D.

This picture is based on the curves in the picture above, s h o w i n g that new t e c h n o l o g y must replace increased oil price from around 2025. Accepting it for a fact that there is a risk that this actually happens, you all realize we have not the time to 2050 to solve the challenges ahead.

There are no easy solutions, there are no shortcuts ... there is only hard work and bold decisions.

www.midnordictc.net

NEWSLETTERFeb 2013

3/10

DEVELOPING AND PROMOTING THE MIDNORDIC GREEN TRANSPORT CORRIDOR

NECL II -delegation met Khudilainen and discussed cross border issuesThe delegation of Midnordic Green Transport Corridor met the Head of Karelia, Mr. Alexander Khudilainen in early November 2012 and the conclusion was that the development of Syväoro check point in Russian Karelia is under positive wings - but same must be done on the Finnish side in Parikkala.

There are for example several road projects in Russia which improve the traffic connections. The internationalization of Parikkala-Syväoro border crossing points are strongly supported in Russia and also in Finland the matter should be seen as a positive thing, because the new route would decrease congestions and bottle necks at other check points in South-east Finland. Head of Karelia Mr. Khudilainen expressed his worry that in Finland the progress with Parikkala is not emphasized in the same level as the work with Syväoro.

The internationalization of Parikkala check point has been registered in the region´s border strategy, but already before that the check point could be opened for restricted person traffic, because the check point has the capacity with current resources to enable as much as 90 000 border crossings per year.

Unfortunately according to a work group consisting eg. Finnish Border Guard and Finnish transport Agency there are already enough of border crossing points in Finland, but at the same time admits that current resources are not adequate to respond the growth of border crossings.

Also Finlands President was recently informed about the issueFinland´s President Sauli Niinistö visited Lappeenranta and Eastern Border in the middle of January. Entrepreneurs from Parikkala got the opportunity to tell about the internationalization needs of Parikkala border crossing point.

The President explained for example: - It is important to the whole of Finland that growing mobility is managed in such a way that we – Finland and Russia – fully benefit from it while, on the other hand, avoiding the related problems to the maximum possible extent.(source: http://www.tpk.fi/public/default.aspx?contentid=267851&culture=en-US)

Parikkala plans next to arrange a seminar in June 2013 about the issue and welcomes all interested to attend. Program later on our webpage www.midnordictc.net.

More information: - Aune Ritola-Grahn, Business Development Officer, municipality of Parikkala, Tel. +358 44 781 1266, aune.ritola(at)parikkala.fi

- Ari Berg, Chairman of Parikkala municipality council, tel. +358 40 566 7328, ari.berg(at)ariberg.fi

In the photo below (from the left): Leader of Lahdenpohja district Vladislav Vohmin, Governor of Västernorr-land Bo Källstrand, Head of Karelia Alexander Khudilainen, Chairman of Parikkala municipality council Ari Berg and Project Manager Per-Åke Hultstedt.

www.midnordictc.net

NEWSLETTERFeb 2013

4/10


The recently published report studies the consequences of the stricter sulphur limits in northern Sweden, Finland and Norway. It is based on known facts but also on analyses and estimates from academy, industry and authorities.

The report is structured in three perspectives; Maritime, Industry and Logistics. The consequences and threats and opportunities are elaborated with the time scenarios 2020 and 2030, but starting in the current situation 2012 and what most likely will happen in 2015.

Our prerequisite is that the stricter limit of 0.1% will be effective 1 January 2015 and we do not think it will be postponed.

The consequences of the sulphur directive can be very dramatic for the forest industry (paper, pulp and sawn timber) but also for the chemical and metal industry. These are all major base industry in the Mid Nordic Region. These industries are already today

The sulphur regulation on Baltic Sea - scenarios for Midnordic Cargo Transportsexposed to harsh competition from other countries. This means that companies might be very vulnerable to raising costs of transports. The report treats possible logistic consequences but also opportunities. The higher cost of sea transport will drive both technical and fuel innovation but also give incentives for optimizing sea routes so ships goes as fully loaded as possible in all directions. Major industrial companies, associations, regions and other stakeholders are currently very active in trying to get the governments to apply for postponing the implementation of the directive in 2015. We do not think this is possible. What governments can do is to implement mitigating measures for eliminating the consequences and stimulate the needed change in ships, fuel technology and infrastructure. These measures should also be coordinated between the countries in the Baltic Sea region. The option from the industries may otherwise be to close down or invest somewhere else.

The report is available on: www.midnordictc.net.

Summaries of the report are in English, Swedish, Finnish and Russian. The scenarios have been collected eg. during public hearings.

NECL II will continue following the issue.

More information: • Hans Dunder, subscriber of the report, City of Sundsvall, SwedenPhone +46-60-19 17 69, Mobile. +46-70-668 68 05, e-mail: hans.dunder(at)sundsvall.se

• Per-Åke Hultstedt, NECL II Project Manager, Mobile. +46 70 190 4195, e-mail: per-ake.hultstedt(at)lansstyrelsen.se

Project Manager Per-Åke Hultstedt points out the following:

“There are always threats regarding implementation of new regulations. One threat is that the issue is handled domestically isolated in each country affected and this might end up with different regulations and migration of problems between countries.

Another major threat is that decisions made and actions taken are not done in symbiosis between different transport modes (not looking at the whole picture) with modal back-shift as a result and that might jeopardize the whole idea with the new regulation.”

www.midnordictc.net

NEWSLETTERFeb 2013

5/10


The sulphur regulation on Baltic Sea - scenarios for Midnordic Cargo TransportsA closed paper mill in Sweden or Finland remains a closed paper mill, and it will never start up again when times have improved.Photo: The paper mill in the middle of Jyväskylä city was closed in 2010. Source: http://commons.wikimedia.org/wiki/File:Kankaanpaperitehdas_027.jpg

Political measures for eliminating the negative consequences:EU approved Finland’s investment aid to sulphur scrubbers

On 23rd of January 2013 the European Commission approved amendments to Finland’s state aid scheme on vessel investments improving the level of environmental protection. Following the approval, investment aid may also be granted for the purpose of retrofitting vessels with exhaust gas cleaning systems, such as sulphur scrubbers.

In the 2012 budget negotiations, the Ministry of Transport and Communications proposed an investment aid of EUR 30 million for the retrofitting of existing ships with emission abatement technologies.

Earlier Finlands´s Minister of Transport Merja Kyllönen has stated that the adaptation to sulphur regulations cannot be funded from basic infrastructure maintenance.

Sweden considers tonnage tax

The Swedish Government is considering introducing a tonnage tax and will be investigating the matter imminently. A special investigator, who will review current maritime aid, will carry out the research. It is expected to report its findings in November 2014. The aim is to have a competitive shipping industry in Sweden. The international

What are the governments doing?maritime competition has increased in recent years and the number of Swedish flagged vessels has decreased.

For the first time the Swedish Government will also present a plan of action to strengthen the Swedish shipping industry’s competitiveness. Swedish Maritime Affairs are facing major challenges, but also opportunities. The plan was presented in late January 2013, and will be finished by 2014.

The Norwegian NOx Fund

is used as an instrument to reduce emissions from ships which means eg. that the Fund has about 70 mill. € available for support of NOx reducing measures each year. Reduced NOx emissions are the primary objective of the Environmental Agreement relating to NOx and the Business Sector’s NOx Fund. The Fund is a cooperative effort where Participant enterprises may apply for financial support for NOx reducing measures. Payments made to the Fund shall replace the governmental NOx tax for Participant enterprises.

Sources:

- Finnish Transport Ministry: www.lvm.fi

- Swedish Government: www. naringsbloggen.se

- The Nox Fund: http://www.nho.no/nox/english

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NEWSLETTERFeb 2013

6/10


Railway between Kaskinen and SeinäjokiNew report claims that the renovation could be done cheaper

The rehabilitation efforts of the track between Kaskinen-Seinäjoki have not been lost in southern Ostrobothnia. According to a recent study the track could be upgraded to a quarter lower than expected. Increasing timber transports is the goal.

The objective with the study was to examine the potential for improving the track and grounds for improvement. The future of the railway track is unfortunately unclear and local actors including municipalities, business life and forest industry are appealing for investment money for the track.

Local actors and NECL II -project arranged a seminar in late November 2012 for the track and presented the new study. The renovation would demand ca. 100 M€ from the state and some savings are possible, eg. by using old, used rails. Increasing timber transports by rail is one future possibility and also aligned to EU:s goals.

Earlier in fall 2012 the Finnish Minister of Transport Merja Kyllönen visited Kaskinen and the issue was presented to her by local concerned companies, but although the Minister could not promise any additional funding to renovate the track, the track will be maintained in traffic as for now.

The improvement is though not only a transport infrastructure issue, but it has a direct impact on regional development and the economy, employment and the industrial and business operating environment. Also a petition to support the track has been opened and can be signed at: www.adressit.com (search: kaskinen-seinajoki_rautatien_perusparannuksen_puolesta, petition in Finnish and Swedish).

The track is an esstential link between the port of Kaskinen and the logistic centrum of Seinäjoki where plans to expand and develop intermodal transports are far. The track serves especially national forest industry as the port of Kaskinen was in 2011 one of Finland´s most important ports of saw and timber export. The cargo freight on the railway line between Kaskinen and Seinäjoki could be multiplied if the track was renovated and the east-west transport corridor would be realized.

The study is available (only in Finnish) on our website:

Photo above : illustrates the export of wood to Finland. Source:The Finnish Forest Research Institute (Metla), fromthe study of the track (SITO 2012) Seinäjoki–Kaskinen-radan parantaminen - Alueellisten vaikutusten ja vaiheittain toteuttamisen selvitys.

www.midnordictc.net Also a business plan for a liner connection beween Kaskinen and Sweden will be published in April 2013.

More information: Marlene Svens, City director of Kaskinenmarlene.svens(at)kaskinen.fi, tel. +358 400 868 780.

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NEWSLETTERFeb 2013

7/10


An electrification of the Norwegian Meråker railway line — which in Sweden continues as Mittbanan — has been on the agenda for many years, but funding has not been undertaken. The Midnordic region now demands that the money needed must be put in the coming Norwegian National transport plan for the period 2013-2024.

Linking the Swedish and Norwegian railway network together through electrification of the Meråker Line has been on the Court list for years, but have so far floundered due to a lack of commitments from the Norwegian side. Electrification of the Meråker Line is not suggested for realization in the National Transport plan (NTP), despite the positive feasibility study, made by The Norwegian National Rail Administration and the NECL II partnership.

Investigations have shown that a joint renovation of the two railway tracks north of Trondheim, the Meråker and Trönder Line, entails significant cost rationalisation. Regardless of this fact, a separate development of the Trönder line is suggested in the NTP documents.

In order to ensure soon electrification of both tracks the County Authorities in South- and North-Trøndelag have allocated 20 million NOK to finance planning of the detailed design of the new installations. Together

Meråker Line - the future or ever missing link between Sweden and Norway?

with the regional Confederation in Jämtland, the County Authorities have founded Elbanen STS, and the association has signed a contract with the Norwegian National Rail Administration regarding physical planning of the Meråker and Trönder line. A proposal from the Government is expected in April, and the Norwegian Parliament is expected to vote on its National Transport Plan in June 2013. In early February also a Swedish delegation visited the Norwegian Parliament´s transport committe in order to provide arguments for the investment money for the Meråker Line. Read more about the delegation: www.midnordictc.net/sve(copy adress: http://www.midnordictc.net/svenska/nyheterevenemang/nyhetsarkiv/stortingetuppvaktadesomnyamerakerbanan)

More information: Milian Myraunet, leader of Elbanen STS, milian(at)loqal.no

Sources above: - interreg.no and

- http://www.stfk.no/no/Politikk_og_demokrati/Elbanen/

Photo: the visit of Swedish delegation to Norway (by Jan Rönngren).

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NEWSLETTERFeb 2013

8/10


A first version of the ICT portal has been tested with data from the pellets transport system at the port of Söråker located about 20 km North of Sundsvall. This successful test used a pool of available transports from the database in the shipping agent part of the portal partially depicted in Figure 1. This database management system can be connected to most of the available databases on the market to promote a swift integration to existing IT systems. A launch of the first version of the system is planned for the end of February and the system will be available for demonstrations from the homepage of the project at that time.

The system has a secured logging making sure that data is properly handled and distributed in the system. However, first of you have to log in to the system depending on if you are an administrator, shipping agent or supplier. Depending on role, access is granted to different parts of the system that automatic match transport needs with available transport capacity.

• The supplier: Wants one or more transports of goods to be send to its destination (Figure 2)• The shipping agent: Holds a pool of transport carriers in the system that can be empty or partially loaded (Figure 1) • The administrator: Has access to the whole system. As a supplier you can add in one or more transports sequentially in the system (Figure 2).

When you as a supplier has put in all your transports in the portal these are matched against the shipping agent database (Figure 2). The best transports regarding cost, time and emissions are presented. Figure 3 shows an example of an output when the cost has been minimized sequentially and three best transport suggestions have been chosen. However, the optimization can be performed in anyway the supplier wishes. For instance, it is possible to present the best transport with respect to time, cost and emissions instead. The system also detects and notifies the supplier ordering the transport if some transports are not possible. In that case this information is also flagged to all shipping agents connected to the system notifying them about the current transport needs.It will furthermore be possible to get weighted solutions with respect to all three criteria of cost, time

Launch of the first version of the ICT portal

Figure 1: The shipping agents part of the portal connected to the database of available transports. This picture only shows a small portion of the data.

Figure 2: The supplier part where transports can be sequentially added.

Figure 3: Transport suggestions to the supplier, this can also be tracked down to the details of every transport through a click on the arrows to the right.

www.midnordictc.net

NEWSLETTERFeb 2013

9/10


Photo: Norden.org

Promoting the corridor again at TransRussia 2013Last spring April 2012 the Midnordic Green Transport Corridor was promoted at TransRussia 2012 -exhibition in Moscow and this year more operators from the corridor join the stand.

The Midnordic Green Transport Corridor/NECL II will again have a joint stand at the TransRussia 2013-fair with the Ports of Kaskinen, Vaasa and Gävle; Nordic Logistic City Seinäjoki, Innoroadpark in Central Finland and other operators from the corridor. The goal is to promote and present stronger the services along the corridor to Russian and Baltic operators, and to get important business contacts far east.

Last year the interest towards the east-west transport corridor in the Nordics was positive, alternative routes and new initiatives are explored and welcomed.

TransRussia -exhibition is a major marketplace for transport services, each year attracting leading professionals from Russia, the CIS and Baltics. www.transrussia.ru

and emissions although this is not included in the first version.

These findings were presented and discussed with the scientific community at the Industrial Engineering and Engineering Management conference (IEEM) in Hong Kong at December 2012 . These findings will be available as two scientific papers through the IEEE publication system during the spring. The ICT -system was also presented at VTI Transportforum 2013 in Linköping in January.

Leif Olsson, the WP5-leader tells: - The ICT portal is currently going through some layout changes before the first launch. During the spring we will present a survey that will reveal the market potential based on the suppliers and shipping agents impression of the system. However, we have already interviewed some potential users and they are especially interested in that the green dimension is included without excluding important economical and time related aspects when matching the transports in the portal.

More information about the ICT-system: Leif Olsson, WP5-leader, MidSweden University (MIUN)leif.olsson(at)miun.se, tel. +46 70 260 0327.

Photo above: A representative from the project team at MIUN that presented one of the articles at The IEEM 2012 conference in Hong Kong.

www.midnordictc.net

NEWSLETTERFeb 2013

10/10


Upcoming NECL II -events(changes still possible)

Programs will be published on: www.midnordictc.net

North East Cargo Link II - a Baltic Sea Region 2007-2013 -project

• Ca. 2,7 M€ budget• Duration: 2010–2013 • 22 partners from Finland, Sweden and Norway.

Leadpartner: County Administrative Board of Västernorrland.

More information: www.midnordictc.net

• Introducing new Business Plan for Port of Kaskinen 16th of April

• Border Crossing -seminar in Parikkala 3 - 4th of June

• Final conference of NECL II -project - in Sundsvall 21-22 August

newsletter nr 5

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