Logistics Cluster: Estonia must become goods' distribution center

Photo: TOOMAS HUIK/PM/SCANPIX BALTICS

In today's economic situation and to remain competitive with neighbors, Estonia has to to be substantially more innovative and evolve into a center for the distribution of goods, Illimar Paul, development chief of the Logistics Cluster, said.

"The proximity of the airport and the sea port to each other, along with an educated work force, offer good prerequisites for the establishment of logistics and distribution centers where we could offer value added to goods and which would give us a good position with a view to increasing cargo flows," Paul said at a Logistics Cluster roundtable on Wednesday.

While Estonia has made investments in good infrastructure over the years, transit cargo flows are on the decline and price levels high, meaning that new use need to be found for vacant capacities, Paul said, adding that if no steps are taken the attractiveness of Estonia as a transit country will decline.

Paul said surveys indicate that Estonia has good potential to become a distribution center for foodstuffs. Through Estonian bonded warehouses food preserves and alcohol are moving to Russia and Central Asia now, the tax labeling of which happens immediately before the goods exit the warehouse.

Paul described the distribution of cocoa products as a good example of a functioning distribution center concept. The service of distributing cocoa products has been offered by Estonia already for half a century. At this point approximately 100,000 tons of cocoa products pass through Estonia every year and that cargo flow is serviced on a regular basis by five forwarding companies through different warehouses. Their example demonstrates that the business model of distribution center is relatively crisis-proof too, he added.