BMI View: Latvia's port of Riga, the country's top facility in terms of both total tonnage and box throughput, is forecast to continue growth in 2015, after a double-digit increase in tonnage and continued, though more moderate, growth in container throughput over the past year. Riga's total tonnage is still being supported by high transit volumes of oil products and dry bulk, while its stable position in terms of box throughput is enhanced by a robust increase in volumes over the last five years. We expect further throughput growth at the port of Riga over the medium term. At the same time , Ventspils, the country's second - largest port in terms of total throughput, will struggle to resume growth after having suffered two years of decline in freight volumes in 2013-2014.
Headline Industry Data
2015 port of Riga tonnage throughput forecast to grow 2.8%, over the medium term we project a 9.8% increase.
2015 port of Riga container throughput forecast to grow 0.6%, over the medium term we project a 7.5% increase.
2015 total trade growth forecast at 1.5%.
Key Industry Trends
Fighting for Transits and Investment: Latvia is continuing its attempts to attract additional foreign investment and freight transits into its port sector, trends which were underlined during the spring by a delegation of investors from India visiting the port of Riga, as well as the Belarusian Oil Company (BOC), which signed an agreement of intent aiming to organise the transhipment of Belarusian oil products via the port. In addition, Latvia's transport minister has reiterated that the country is open to Chinese investment into its transport sector, including port infrastructure.
Risks to Outlook
The base for container throughput growth at Latvia's ports stems in part from BMI's positive outlook for the country's economy, with real GDP growth of 2.0% anticipated for 2015. Our positive medium-term forecast for Latvia's ports' box throughput also holds upside risks, with Latvia getting better connected, displaying a solid domestic demand outlook and developing its role as a gateway for cargo to and from Russia and Central Asia.
The main risk to our forecasts for Latvia remains the persistent eurozone sovereign debt crisis. A further deepening of the crisis would pose downside risks to most of our forecasts for Latvia's economy and our port throughput projections.
Russia's development of the port of Ust-Luga, near St Petersburg, creates another important downside risk to our forecasts, as Russia seeks to handle a larger percentage of its own trade needs, placing downward pressure on the Baltic states' port throughput. This trend might also be exacerbated by the escalating trade war between the EU and Russia.
However, investments that Russian firms continue to make into Baltic states' ports, in an effort to diversify away from an over-reliance on liquid bulk, as well as the Belarusian Oil Company (BOC)'s intent to tranship Belarusian oil products via Latvia, create upside risks.