Estonian transport industry – from a salt hub to digital logistics
History books claim that Tallinn, the capital of Estonia, is built on salt. Not literally, of course, but the prosperity of this medieval merchant hub is indeed founded on the salt trade. As the easternmost trading city of the Hanseatic League, Estonia was the leading salt trade hub between Western Europe and the East. The tradition of trading between the East and the West has always been held in high regard here, as the transit industry recently still formed approximately 16% of the country’s GDP.
In today’s economy, salt plays a lesser part. Estonia however has maintained its role as the link between the West and the East, being responsible for the increasing trade in e-commerce and the flow of natural mineral resources. The country’s geopolitical position has become one of its greatest assets, complemented by its drive for efficient e-solutions in the field of logistics. As logistics is known to always move in the direction of least friction, Estonia has taken it to its heart to facilitate the transport industry and its development by providing an excellent business environment.
Ranking very high in global logistics indexes for cross-border trade, Estonia’s position is further cemented by transparent governance and the lack of corruption, while being the centre-point for innovation and smooth operations. Just as in medieval times, Estonia should not be viewed as a country of 1.3 million inhabitants, but rather a gateway to accessing a marketplace of 300 million consumers – located across Northern Europe, the Greater Baltics and the western part of Russia.
The Estonian logistics industry relied heavily on the transit flows of natural resources from Russia to the West during the last few decades – the main commodities included coal, fertilisers, heavy oil products and polymers. Modern infrastructure and ample capacity enabled the volume of goods transported to reach into tens of millions of tons per year. Estonia’s railroad network uses the Russian-standard 1520 mm gauge, the Port of Muuga near Tallinn is the deepest and one of the largest ports in the Baltic Sea basin, the Port of Sillamäe is the closest EU port to Russia and Estonian roads are toll-free with no congestion at the borders.
All eyes are now on the rocketing e-commerce flows between China and Europe and Estonia plays a considerable role in this field as well, with Estonian-Chinese joint venture Post11 distributing an ever-increasing volume of Chinese e-commerce goods through Tallinn Airport among its other hubs in Europe. Tallinn Airport is one of the most modern airports in Europe with suitable facilities for import and export operations and cargo handling with one of the longest runways in the Baltics and no restrictions on flight operations.
Other success stories in Estonian logistics include the distribution activities of globally renowned Katoen Natie, the acquisition of the Muuga Container Terminal by Hamburg Hafen und Logistik and the IT development centre of Kühne+Nagel. As Estonia is world-famous for its role as a leading digital nation, information technology and logistics are closely interwoven in business development. Estonia is applying its world-class IT and engineering expertise to revolutionise supply chain efficiency and client experience from the first mile to last. Single Window and e-Customs solutions provide streamlined permissions and reporting in Estonia, setting the standard for cross-border data exchange in Europe today.
As Estonia aims to disrupt the logistics world from a digital and technological perspective, it is still committed to avoiding the disruption of supply chains. The future holds great potential in the development of the north-south freight corridor with plans in place to add a European-gauge high-speed railway link connecting Tallinn with continental Europe. The global e-commerce boom will give Estonia ample opportunities for setting up fulfilment centres and providing additional services in addition to bulk distribution. As the geographical midpoint of Northern Europe, Estonia has the best location for maintaining its importance as a major trading hub.
Estonian Logistics and Transit Association
What is it like to trade with Estonia? How to benefit from the e-solutions and the efficiency of our business culture? What are the opportunities in specific sectors?
The Estonian Trade Development Agency’s team is happy to help you via the complimentary e-consulting service.