Shipping fairway dues should be eliminated
Finland should permanently eliminate shipping fairway dues, which distort competition and increase companies’ logistics costs. Eliminating the dues would lay stable foundations for foreign trade by improving the competitiveness of our logistics operating environment. It would also reduce export transport costs, which would help to send export-driven Finland a step further along the path to growth.
Finland is shooting itself in the foot by keeping fairway dues in force. Approximately 90 per cent of Finland’s foreign trade is transported by sea. That is why safeguarding the competitiveness of maritime transport is of paramount importance to Finland’s economy, the competitiveness of our exporters and the availability of industrial raw materials.
No party outside Finland has ever demanded or recommended maritime fairway dues. The dues represent a barrier to trade voluntarily imposed by Finland on itself, and it is unique in its magnitude.
The fairway dues levied by Finland are an exception in the Baltic Sea, as the majority of the countries in the area do not charge fairway dues – and none of the countries levying dues do it on the scale that Finland does. Fairway dues are sometimes justified by ice-breaking and fairway maintenance. Fairway dues depend on the ice class that the ship is built for. However, the dues have no incentivising effect.
On a European level, Finland is a remote island, which means that we have the worst possible starting point for logistics in comparison with our competitor countries. We cannot do anything about our geography but we should do everything we can to reinforce our competitive position. That is why it is strange that we are weakening our position ourselves by levying fairway dues that raise companies’ export costs.
A decision to eliminate maritime fairway dues should be taken in the next government platform. The elimination should take effect from the beginning of 2020 upon the expiry of the decision to halve the maritime fairway dues enacted by the government at its development session in the spring. The final decision would contribute to the creation of new jobs and incentivise export-driven companies to make investments. In terms of the predictability of the operating environment, it is important that the matter is not needlessly dragged on in cycles of several years.
The current government platform states that industrial costs must not be allowed to rise. The next government must continue with this policy as Finnish companies operating worldwide are highly sophisticated in weighing up the differences between operating environments.
Foreign trade requires streamlined solutions that do not discriminate between different entities. The system of fairway dues is not fair from the perspective of different entities as the fee includes elements of direct internal subsidies.
The current system is particularly unfair on those who pay fairway dues for ice-breaking that they never need. These include vessels that visit Finland during the open water season either infrequently or only once, such as large cruise ships.
It should also be noted that fairway dues distort competition between different types of load. Under the current system, vessels that transport low-value goods pay the highest fairway dues. When this is compared with the tonnage price of the load, the distortion is breathtaking.
The author is the CEO of the Finland Chamber of Commerce.