Forest industry is one of the main industry branches in Finland. The sector has 49 pulp, paper or paperboard mills and over 200 sawmills, panelboard production or other wood processing units in different parts of the country. Forest industry accounts for approximately 20 per cent of Finland’s export revenue, employs 44 000 professionals directly and 160 000 indirectly, taking into account the whole production chain. Over 90 % of Finnish forest industry's total production is exported, Europe as the main export market.
Long transport distances from raw material source to production sites and further to customers are typical for forest industry. As transport chain usually consists of two or three transport modes and several links and nodes, functionality of logistics really counts. Within Finnish borders, forest industry's products and raw material are some 80 million tonnes, so 4000 vehicle combinations and 40 freight trains every day. In export and import, sea transport is the dominant transport mode with a 90 % share. Annually, some 20 million tonnes and daily, some 20 vessels carrying forest industry products and raw material are loaded or unloaded in several ports along the Finnish coast. The biggest volumes are transported via the ports of HaminaKotka, Rauma, Hanko, Kemi, Oulu, Pietarsaari, Helsinki, Loviisa and Kaskinen but also other ports are constantly used. The port choice is, naturally, a company-specific decision.
Logistics competitiveness is strongly dependent on national and international decisions affecting the industry's operating environment. In transport within Finnish borders, important factors for forest industry are the condition of roads and bridges and the service level of rail transport and rail network. When it comes to the competitiveness of foreign trade and its transport chain, international environmental rules for sea transport, reliability and flexibility of port operations and well-functioning winter navigation have a critical role.
International Maritime Organisation and its MARPOL Convention for the Prevention of Pollution from Ships is a basis for environmental rules followed in international shipping today. Within EU, the IMO rules are put into practice via directives.
EU sulphur directive entered into force in the Baltic and North Sea and English Channel in January 2015. In those sea areas, the maximum sulphur content of fuel used in vessels decreased from 1.0 to 0.1 %. For the rest of Europe the maximum limit remained at 3.5 %, decreasing to 0.5 % in 2020 or 2025. To reach the stricter 0.1 % target, the vessels have to switch from heavy fuel oil to diesel oil, get sulphur scrubbers installed or, use LNG as ship fuel (which in practice requires a new vessel and availability of LNG bunkering infrastructure). The estimated annual cost increase due to sulphur directive for Finnish forest industry is remarkable, some 65-90 million euro. The exact cost impact depends on e.g. the price difference between the two fuel types and the level of use of scrubbers in vessels carrying forest industry products and raw material.
Also other environmental regulation is currently under preparation in IMO and EU. They include e.g. restrictions to nitrogen oxide emissions, ballast regulation and attempts to monitor the CO2 emissions from ships. Every now and then, EU has shown interest to act as a forerunner and get stricter limitations into force within EU area before the rest of the world.
Critical for industry is that the timetable for regulations is the same in different sea areas and thus, does not distort competition. The sulphur directive cannot be cancelled but the main lesson learned from it is that no regulation should be agreed upon without in-depth, anticipatory cost impact assessments.
Illegal strikes in Finnish ports are a national, home-made bottleneck in export and import transport chain. The daily loss of export revenue for Finnish forest industry, caused by those type of sudden disturbances amount to several dozens of million euro. At the same time, the sanctions paid by the trade unions for stopping the whole Finnish foreign trade are typically some thousands of euro. This disparity should somehow be solved on political level and among labour parties. For example in Sweden, the sanctions of being on illegal strike are personal that may be one reason why our neighbouring country rarely has similar problems.
Winter conditions are a Finnish 'specialty' and a fact that needs to be considered even in IMO rules. That has recently related to, for example, inclusion of ice class feature or parameters in common rules for ship design. As for the winter navigation in general, crucial is, naturally, the icebreaking capacity. In challenging winter conditions, the vessels carrying forest industry products may have been stuck in ports for few days or more due to lack of icebreaking capacity. The co-operation in winter navigation between Baltic Sea countries e.g. Sweden has been strengthened and seems to be an efficient way to assure the functionality of winter navigation. The need for renewal of Finnish icebreaking fleet in coming years, however, also exists. Essential for the foreign transport chain is the availability of icebreaking services when needed, whether the winter navigation is based mainly on new national fleet, solid co-operation with neighbouring countries or both of those two.
Functionality and efficiency of sea transport has a remarkable role in forest industry logistics competitiveness. That requires wise political decisions on both national and international level.