TRANSPORT & LOGISTICS
Cargo traffic by mode of transport in thousand tons
Source: Central Statistical Bureau of Latvia
As vitally important export and transit-transhipment points for Latvia itself and for several neighboring countries, the three largest Latvian ice-free ports provide reliable access 365 days a year. Connections to all other transport infrastructure elements, along with attractive tax-free zone incentives, have resulted in the ports becoming regional centers of industrial activity. Nevertheless, there are still a number of port locations available for businesses, within customs-free zones and with direct sea access.
All the ports are equipped with the required infrastructure – tanks for bulk liquids, terminals, warehouses and cranes, communications infrastructure – and have operating service-providers – stevedores, agents, customs brokers, and banks – with a number of internationally recognized names like Kuehne & Nagel and Maersk Sealine, comprising a visible part of the service offer.
The total length of Latvia’s road network is 72 441 km. The average density of roads in Latvia is 1.122 km per km².
The Latvian road system provides direct access to destinations in the east (Russia/CIS) and southwest (central/western Europe). The roads are well connected to northern Europe (Finland and Sweden) via other countries and/or RO-PAX-capable ports. Generally, all roads are fully public and toll-free, as funds for maintenance are collected from excise tax on fuel and vehicle registration fees paid to the Road Traffic Safety Directorate. With financial support from the EU, Latvia has upgraded sections of the Via Baltica – the first pan-European transport corridor, connecting Finland and the Baltic states to Poland and Western Europe. To divert increasing transport flows from the centre of the capital city, Riga City Council has constructed the Southern Bridge over the river Daugava and plans to construct a Riga Northern Transport Corridor – a high-speed road crossing Riga from east to west and bypassing the city’s historic centre.
Forwarding services is a comparatively developed market with a large number of actively competing operators, including international companies like DB Schenker, DHL, and DSV Transport. Transport-freight intensity is increasing rapidly along with the growth in foreign trade and transit operations – international freight volumes passing through Latvia have increased by 58 % since 2004.
Latvia possesses a relatively dense railroad network connecting the country to destinations as far as the Russian Far East, wherever the former Soviet railway-gauge standard is in operation. There are additional opportunities for trade connection with Japan and Southeast Asia. Currently, Latvian railways mostly serve as a transit trunk-line, with as much as 82 % of total freight volume comprising transit from Russia and Belarus to Latvian ports and approximately 35 % of freight rolling-stock consisting of tanker-wagons. Movement in the opposite direction, to Moscow and other parts of Russia/CIS, is dominated by container cargo.
In order to facilitate trade flows in the north-south direction, it is planned to implement a pan-Baltic railway route, Rail Baltica, connecting Tallinn–Riga–Kaunas–Warsaw–Berlin. This project would also serve as the first step in Latvia’s transition to European railway-gauge technical standards.
AIR TRANSPORT CONNECTIONS
There are three operating airports in Latvia: Riga International Airport, Liepaja International Airport, and Ventspils Airport. Airports in Tukums (western part of Latvia) and Daugavpils (southern part of Latvia) are currently in the development stages.
Most of air passenger and freight transport in Latvia moves through Riga International Airport, which is also the leading air transport and transit system in the three Baltic states. The airport currently serves 16 airlines, including Latvia’s national airline airBaltic, low-fare carrier Ryanair, and European leaders like Lufthansa, Czech Airlines, and Finnair. The companies mentioned and others ensure fast and reliable direct travel from Riga International Airport to more than 80 destinations in Asia and Europe, including Helsinki, Stockholm, Copenhagen, Berlin, Frankfurt, Paris, Rome, and London, all of which provide further connections to transcontinental air routes.
In 2013, Riga served 4.8 million passengers and handled 53 539 tons cargo – breaking the record of cargo movement at Riga International Airport (with a 63 % cargo market share in the Baltic Region). Riga International Airport is constructing new terminal to continue its current growth and increase passenger-handling capacity, although it already serves almost half (48 %) of all Baltic airport passengers. Comparably, in 2013 Tallinn (Estonia) served 19 % of total passengers, Vilnius (Lithuania) served 26 %, and Kaunas (Lithuania) served 7 %.
In 2014, the airport was awarded Top European Airport Cost Competitiveness Excellence award by The Air Transport Research Society as the most competitive airport in Europe in terms of costs and tariff structure per one passenger.
The countries with direct flights from Riga include Austria, Azerbaijan, Belgium, Belarus, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Ireland, Israel, Italy, Lithuania, Netherlands, Norway, Poland, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, United Kingdom, Ukraine, United Arab Emirates, Uzbekistan and others.
The air cargo and/or express package services of international providers like Lufthansa, Schenker BTL, DHL, and TNT ensure one-day delivery within Europe and two days for the rest of the world.
A number of Latvia’s utility services are still state-owned or corporate monopoly operations. In order to ensure reasonable pricing in these areas, the Public Utilities Commission of Latvia – whose responsibilities include utilities, telecommunications, and post and railway services – regulates the tariff policies of monopoly utility providers. Also, certain utility sectors are being liberalized by opening markets to other service providers.
Latvia is endowed with a unique natural resource – the Incukalns Gas Reservoir, which is the largest natural gas-storage reservoir in Europe, with a capacity of approximately 4.4 billion m3. As a result, the country is in a very favourable position in terms of gas supply costs, also providing gas storage for the two other Baltic states and the western border areas of the Russian Federation. The reservoir enables the operator Latvijas Gāze, owned by E-On Ruhrgas International GmbH, Gazprom, and ITERA Latvija, to overcome the problems arising from seasonal demand fluctuations and to more effectively utilize existing gas pipeline networks.
Natural Gas Infrastructure in Latvia
In addition to supplying the domestic market, natural gas in Latvia is used in heat generation, power generation, the manufacture of construction materials, agriculture, the food industry, and many other areas. Latvijas Gāze supplies natural gas to industrial clients through its centralized gas supply network, also carrying out and financing engineering and installation works, or parts thereof, for the establishment of new connections.
State-owned Latvenergo provides about 95 % of all the electricity consumed in Latvia and ensures its import, transmission, distribution, and supply to consumers. The company operates the whole electrical energy cycle from power generation (combustion and hydro-electric plants) through to distribution to sub-stations and user networks. Approximately 70 % of electricity produced by Latvenergo is made from renewable and environmentally friendly energy sources. More than 100 independent producers, operating small-capacity hydro-electric plants, wind generators, or heat and electricity co-generation plants, produce a very small proportion (approximately 1.5 %) of electricity in Latvia. All the same, “new energy” generation is growing substantially and is expected to be of increasing importance in the future.
Connection of a new facility to the electricity network can be carried out by Latvenergo or by any other licensed electrical-engineering supplier. Until 2010, Latvia was the only Baltic state which had fully opened its electricity market, allowing domestic and foreign companies to participate. Currently, customers can choose to buy electricity from Latvenergo or from the alternative market participant Enefit.
DISTRICT HEATING & WATER SUPPLY
District heating and water supply services are generally provided by separate operators in each municipality. However, where necessary or more convenient, any company is free to construct its own system as long as it meets existing technical/environmental regulations. The municipalities mostly own local operators, but some have been privatized and have attracted foreign investors. The most notable suppliers are located in Latvia’s largest cities.
Several local and regional waste management companies throughout the country provide general waste disposal services. The waste produced in Latvia is recycled both locally and in foreign countries. Several facilities exist for the recycling of metal, glass, paper, and polyethylene. The most modern polyethylene recycling facility in the Baltic states is located in Latvia. Several types of hazardous waste (car tires, oil, and oil filters) are recycled in Latvia. Electronic and electrical equipment are collected and transported abroad for recycling. Latvia also has installations for hazardous waste incineration, mercury recovery from luminescent lamps, water-oil separation facilities, incinerators of oil- and medical-waste, and installations for disinfecting medical waste.
Once lagging behind in telecoms infrastructure, Latvia secured major “hard” investment after regaining independence in 1991, when it concluded a privatization deal with Tilts Communications (now owned by TeliaSonera AB), which became a minority shareholder (49 %) in the national telecommunications operator Lattelecom. The country is now extensively equipped with digital communications networks. Since January 1, 2003, the fixed telecommunications sector has been open to competition, thus shortening Lattelecom’s period of monopoly rights. New participants have entered this sector of the telecommunications market and are offering their services. Licenses to operate in this sector have been issued to many companies; the biggest of them are CSC Telecom, Baltkom, Telecom Baltija, Latvijas dzelzcels, and Izzi.
Indictative telephone call tariff, 2014 (lowest available, peak EUR/min, including VAT)
Source: Lattelecom, Bite, LMT, Tele2, 2014
Internet services ranging from simple dial-up or radio links to optical broadband lease-line connections are available from several hundred ISPs. International connections are provided by high-capacity, broadband optical-network links to Estonia, Lithuania, Russia, and Sweden. WiFi, GPRS, and, more recently, 3G services have been launched in Latvia. Currently, public wireless internet hotspots are available in almost all public areas in Latvia.
Major investments in telecommunication infrastructure have resulted in very good figures for Internet upload and download speeds in Latvia. Furthermore, in November 2011 the European Commission approved a funding plan in Latvia worth EUR 100 million (USD $139 million) for the deployment of superfast broadband networks. With an average internet connection speed of 13.5 Mbps, a peak connection speed of 53.8 Mbps and with 44 % of all connections having a speed higher than 10 Mbps, Latvia is ranked in this regard among the top 10 countries in the world (“State of the Internet Report”, Q2, 2014, Akamai).
Source: “State of the Internet” report Q2 2014 by Akmai
According to the Akamai (www.akamai.com) “State of the Internet” report in Q2 2014, Latvia ranks 7th globally for average measured Internet connection speed (13.5 Mbps).
Latvia has three mobile operators – LMT, Tele2, and Bite – with almost 100 % of the population as subscribers and an additional number utilizing pre-paid cards. The GSM network coverage of these mobile operators is as much as 99 % of Latvia. Mobile operators offer a wide range of data-transmission services using 4G technologies. Each of 3 major networks (LMT, TELE2, BITE) declares that 4G network covers more than 90% of state territory. Some tests of 5G technology are provided.
As a country with a relatively low density of population, Latvia can provide a range of location choices for both industrial and office operations. There are a number of vacant factory buildings in all the largest cities, along with historic city centers that are gradually developing new functions, evolving from residential into commercial, entertainment, and shopping areas. In addition to the availability of individual properties, a number of business-hosting parks have been established or are being developed for different types of tenants.
The largest developer and manager of industrial parks in Latvia is NP Properties, which has eight industrial parks with a total area of 150 ha in Riga, Olaine, Jelgava, Salaspils, Rezekne, and Daugavpils (www.industrial-park.lv). Their success story is based on acquiring large, vacant factories, the complete or partial renovation of buildings, and attracting foreign companies to set up their businesses in Latvia by providing an advantageous business environment and an extensive range of services. It is also popular for local companies to launch their businesses in a modern and safe business environment like the Nordic Industrial Park and Nordic Technology Park territories.
Some industrial parks have been established and designed for specific industrial branches, or for the large-scale needs of particular tenants. For example, Business Park Ogre (www.bpogre.lv), developed as a new industrial park in Ogre, was specifically designed for the Norwegian SME sector.
The majority of Latvian industrial parks continue to expand by constructing new or renovating out-dated premises. Experience shows that business and industry is also moving to other cities and regions of Latvia.
Source: Colliers International, Ober-Haus Real Estate Advisors, Latio Overview Commercial Estate Market, 2nd quarter 2014
For greenfield projects, there are no barriers to using the services of local real estate agents and construction companies. The construction services market in Latvia is very competitive with a number of local and international players, like Constructus, NCC Konstrukcija, and PEAB. The real estate business is also well developed and competitive, featuring companies such as Latio, Ober-Haus, Arco Real Estate, and Colliers International.
Construction permit in Latvia can be obtained in approximately three months, but for large and technically difficult projects more time might be required for dealing with necessary procedures.