in Finland making money or spending money? Pekka Levikangas Dr. - - PowerPoint PPT Presentation

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in Finland making money or spending money? Pekka Levikangas Dr. - - PowerPoint PPT Presentation

Jan 21, 2023 219 likes •448 views

Presentation at the Institut Teknologi Sumatra, August 22, 2019 Port Governance & Business in Finland making money or spending money? Pekka Levikangas Dr. Tech., Dr. Econ., Principal Scientist, Docent VTT beyond the obvious

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Port Governance & Business in Finland – making money or spending money?

15.8.2019 VTT – beyond the obvious

Pekka Leviäkangas

  • Dr. Tech., Dr. Econ., Principal Scientist, Docent

Presentation at the Institut Teknologi Sumatra, August 22, 2019

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Congratulations Indonesia, 74th Independence Anniversary!

Diplomatic Reception to celebrate Indonesia’s independence on August 9 in Kalastatorppa, Helsinki hosted by Ambassador H.E. Wiwiek Firman

All material for educational purposes only, Fair Use -principle

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Items covered by this presentation

  • Ports in Finland – an overview
  • Ownership & governance
  • Financial performance
  • Conclusions
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All material for educational purposes only, Fair Use -principle

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18.8.2019 VTT – beyond the obvious

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All material for educational purposes only, Fair Use -principle

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All material for educational purposes only, Fair Use -principle

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18.8.2019 VTT – beyond the obvious

7 Kilpilahti Port: oil refining industrial area – the largest port in Finland measured by exported and imported tonnes

All material for educational purposes only, Fair Use -principle

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Ports are unique and ‘fit for the purpose’

3 main points for a successful port:

  • 1. Location
  • 2. Fit for the purpose = infrastructure + services
  • 3. Marketing
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Ports are ’service centers’

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Stevedoring companies in Helsinki port

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12 https://www.vtt.fi/inf/pdf/workingpapers/2011/W164.pdf

  • Study on the economics,
  • wnership and governance of the

most significant ports in Finland

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Port ownership models (Finland)

  • Most ports are municipality / city owned companies (MOC), and operate as

landlord ports

  • Some private ports associated with specific industries and corporations

(one way or the other, the industrial company is owning the port)

  • There are about 50 ports in Finland
  • 80% of the marine transports goes via 10 largest ports

<= Typical public debate in Finland:

  • “too many ports”
  • “too expensive network”
  • “too much redundant port capacity”
  • “suboptimal logistics”
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Example:

Business segments:

  • Passenger traffic
  • Mainly leisure, some business travellers
  • 6 terminals
  • Cargo
  • Container
  • Ro-ro (full trucks & trailers)
  • Bulk
  • Project deliveries
  • 6 terminals / port locations

Diversification strategy The Board 100% owned by the City of Helsinki

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18.8.2019 VTT – beyond the obvious

15 Turnover Investments Balance sheet (assets) Change in turnover Turnover / employee (1000 EUR) Return on investment (%) Equity / Debt (%) Key financial ratios Profit after taxes (mill. EUR) 11 11 Profit / turnover (%) 11.4% 11.6%

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Example no. 2:

18.8.2019 VTT – beyond the obvious

16 100% owned by the City of Raahe Turnover Operating income / turnover (%) Turnover Operating income Specialised to serve

  • ne steel mill

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”…but we knew all this much earlier…”

Analysis on financial performance of Finnish ports for 2002-2009

Traditional = a municipality unit MOE = municipality owned enterprise MOC = municipality owned limited liability (ltd.) company P = private port (ltd. company)

Table figures from 2009; Rönty, Nokkala & Finnilä: Port ownership and governance models in Finland - Development needs & future challenges. VTT Working Papers 164. 2011. All material for educational purposes only, Fair Use -principle

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Ownership model does not dictate financial performance

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The admin & economic reality: Ports are governed mainly by the municipalities and cities. The state governance is minimal, considering mainly safety, fairway pricing and environment. The ports are ’cash cows’ for their

  • wners.

Ports have substantial spill-over benefits, e.g. tax revenues, jobs. The empirical facts: About 80% of Finnish imports and 90%

  • f exports travel through the ports

(when measured in tonnes).  The macroeconomic importance is paramount! The empirical facts do not support the hypothesis ”bigger is better”. Empirical research does not support the hypothesis ”private is better”.

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How about the Indonesian context?

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Perceptions (some highly personal):

  • Many small and medium-sized

ports

  • Short sea shipping and island

connectivity is crucial for the country’s logistic efficiency and internal market

  • …and even for the national unity
  • For Indonesia, investing in ports

is ’a sure bet’!

All material for educational purposes only, Fair Use -principle

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Terima kasih! Kiitos!

18.8.2019. VTT – beyond the obvious

www.vttresearch.com/vehicle-systems #vttpeople / @VTTFinland