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Sweden the meeting point for Tallink’s lines

Three Tallink ferries under different flags meet in Stockholm: From onboard the Estonia-flagged Romantika (far right) the Finland-flagged Silja Serenade and the Latvia-flagged Regina Baltica is seen. Photo: Madli Vitismann

Right now is a busy time for Tallink: having bought both Superfast ferries and Silja Line, it is time for the company to start utilising the advantages these purchases have given them. But none of the shipping company’s competitors have disappeared from its main line, the Helsinki route.

According to Enn Pant, Chairman of the Management Board of AS Tallink Group, one of the reasons for the purchase of Silja Line was that it would enable the creation of synergy in the shore servicing of ships and for savings to be made on goods and services that are bought. The time has now come for the Tallink, Superfast and Silja Line offices in Finland to be merged. Here, worker redundancies are unavoidable, with 120 of the existing 700 staff having to leave. What is to become of the blue seal’s head logo is not yet known.

Stockholm has become the meeting point for Tallink’s shipping lines. It is the point of arrival for three lines from Finland, two from Estonia and one from Latvia, making it suitable, amongst other things, as an advertising argument in combining different lines of the same company so as to diversify the travel opportunities. Merging the Tallink and Silja Line offices means that 80 of the 270 employees lose their jobs.

The starting point of this development is October 1997, when Tallink, unknown in Sweden, opened up a route with a ro-pax ship between Paldiski and Kapellskär. The company’s next enterprise could be with a Swedish national line, should Tallink choose to participate in applying for the Gotland concession.

	The race in the Tallinn bay continues: Behind Tallink’s Autoexpress 4 the Baltic Jet of Nordic Jet Line follows. Photo: Madli Vitismann

The Silja office is larger
Tallink also has advertising and sales offices in Riga, from where there is a line to Stockholm, and St Petersburg, where a relaxation of visa restrictions is awaited in order to reopen the shipping line to Helsinki and Tallinn. Around the New Year and Russian Christmas holidays Tallink arranges two four-day winter cruises from St Petersburg on the Vana Tallinn to Helsinki, Stockholm and Tallinn.

The office that Silja Line has had in Stockholm is larger than that of Tallink. There are also more passengers on Silja’s Finnish lines than on Tallink’s Estonian lines. For example in the summer 2006 there were 805,314 travellers on the Sweden–Finland routes compared to 257,208 on those between Sweden and Estonia. But while there was 3.1 times more passengers and 2.7 times more cars on the Silja Line-ferries, the number of cargo units was only 1.8 times larger.

Kadri Land, Director of Tallink Sverige, says that there are times when there is simply no space left for cargo on the Estonian lines – there are days when cargo has to be left on the quay. The Riga line is yet to have earned as many loyal customers, but cargo transport is increasing. It is possible that bringing the six shipping lines together in Stockholm will change some of the trade routes.

In Riga no cargo has so far been left on the quay, but Hillard Taur, Director of Tallink Latvija, confirms that the number of passengers on the Riga service will approach the promised 170,000 by the end of the year, even though that number was estimated with two ferries in mind. The average utilization of capacity on the single ferry in use, the Regina Baltica, is 70 per cent; in the summer it occasionally reached 100 per cent. There have even been days when the car deck was full. Establishing the route has clearly justified itself.

Helsinki new meeting point
The latest news from Tallink informs that a decision has been made to leave the port of Hanko on the Rostock line and bring the Superfast ferries to Helsinki. This too will provide an opportunity to weave the lines together and gather shore services under one umbrella, and at the same time bringing the German service to move closer to Estonian travellers and goods haulers. Tallink’s main route is Tallinn–Helsinki in terms of passengers, goods and vehicles. The volume carried during the three summer months corresponds to all Silja Line’s routes between Finland and Sweden together.

Throughout the year 2.5 million passengers travelled between Tallinn and Helsinki on Tallink ferries, accounting for almost half of the line’s 5.8 million total passengers. In spring this year the Galaxy was completed for this line and became quickly popular. The Tallink Autoexpress has been sold as the remaining three Autoexpresses sail with sufficient frequency. When the company’s large, ice-strengthened fast ferry is completed, it is likely that another seasonal Autoexpress will be sold, as they do not provide the opportunity to travel quickly across the Gulf of Finland all year round.

	An occasional visit from the Superfast VIII in Tallinn in October. Normally, the Superfast ferries do not call at Estonian ports. Photo: Madli Vitismann

Under four flags
In Stockholm, Tallink and Silja ships can sometimes be seen to be flying four different flags. Silja and SeaWind Line ferries continue to sail under the Finnish and Swedish flags, while the Victoria I and Romantika fly the Estonian flag and the Regina Baltica adopted the Latvian flag at the end of August.

Tallink’s ships sail to Finland and Germany under the Estonian flag, but this did not deter the Finnish Seamen’s Union from involving itself in the relations of the crews working under the salary agreement between the Estonian employer and the Estonian trade union. The Finnish union’s boycott of the Superfast ferries was well-timed: as the Tallink Group was due to hold negotiations to buy Silja Oy Ab, the company was seemingly in agreement with everything; the main thing was that the purchase of Silja should not be jeopardised. ‘Everything’ for the Superfast ferries meant salary levels at 60 percent of those received by Finnish seamen at short notice with an increase to 100 percent within two years.

Salaries are a problem
Nevertheless, the Finnish trade unionists’ demands that Finnish-level salaries should be paid on ships sailing under the Estonian flag and Estonian ownership were met with astonishment within Estonia. The only reason for this could be pressure placed on the Estonian shipping company to register the ships under the Finnish flag and employ Finnish seamen. To pay Finnish salaries under the Estonian flag would be nonsense, as it would mean salary costs higher by a third than those incurred by Finnish shipowners. Even 80 percent of Finnish salary levels would force the ferries to fly the Finnish flag, as the salary costs for the shipowners under the Estonian flag would be greater than under the Finnish.

The long-term result of the brotherly assistance provided by the Finnish trade union is a marked worsening in the work atmosphere on Tallink’s ships. It is illogical that Estonian crews on three of the company’s ferries are paid at a different rate to those on the eleven others flying the Estonian flag. And yet taking into consideration that Tallink does not enter into employment contracts with its staff for work on specific ships, it allows them room for manoeuvre with those who earn a higher salary than others as well as those who hope to find work on Superfast ferries.

As such the protest of the Estonian Seamen’s Independent Union (EMSA) against different salary levels on the ships of one company is understandable, as its their desire to see all salaries raised at a faster pace than currently. All workers’ salaries in Estonia have increased rapidly in recent times and, as a result, in signing a salary agreement with Tallink over several years it was not possible for the EMSA to foresee such a significant percentage growth in salaries.

It was for this reason that the EMSA has launched new salary negotiations ahead of time. Needless to say the employer here will highlight the large investment it has made in new positions and expect concessions from current workers in their demands. If salaries aboard ship remain lower than those on dry land, as can already be seen in the case of several employee categories, the shipping company will be faced with the same shortage of available labour force that is being experienced in a number of other sectors in Estonia.

No state aid
The trade union is the ally of the Estonian Shipowners Association in applying for shipping support from the Government. At the same time as its neighbours are adopting ever improving measures to promote their own flags, the Estonian Government remains deaf to all reasoning. The comparative calculations made by shipowners – how much larger salary costs are for Estonian employees in terms of the same salary levels under the Latvian flag – similarly had no effect until Tallink clearly demonstrated this by bringing the Regina Baltica under the Latvian flag.

This increased the net salary of employees but reduced the salary costs of the employer. Hillard Taur identifies the advantage of the Latvian seamen’s taxation system as being that although gross salaries are equal under both the Estonian and Latvian flags, Latvian crew members receive a 15–20 per cent higher net salary depending on their position. The employer gains just as much benefit as the seamen from lower social taxes; and the fixed amount of social tax allows costs to be better forecast in paying new employees.

The Estonian Government in the end has planned EEK 30 million (EUR 1.92 million) as part of the 2007 national budget, which bears little resemblance to the EEK 400 million promised prior to joining the European Union; a promise is all it remains.

Estonia’s seamen continue to pay the same amount of income tax as all other employees, and Estonia’s shipowners pay as much social tax as all other employers. It is for this reason that the EMSA feels it is too late for state aid for shipping companies and that additional measures need to be developed if ships that no longer fly the Estonian flag are to be brought back under it.

Competitors remain
Enn Pant emphasises that Tallink is not a monopoly. Its nearest competitor on the Finland–Sweden routes and on the Tallinn–Helsinki route is Viking Line. Finnlines and Transfennica also transport trailers on routes between Finland and Germany. Tallink is only the sole shipping company on its Tallinn–Stockholm and Riga-Stockholm lines.

The purchase of Silja has not taken any competitors away from the Tallinn–
Helsinki line, as the SuperSeacats were not sold and these two fast ferries continue to operate separately under the SuperSeacat trademark, having freed themselves from their ties with the Silja Line trademark and loyal customer programme and having organised separate ticket booking and sales.

As before, there remain 15 ships belonging to six companies sailing on the most popular route, between Tallinn and Helsinki: four ordinary ferries, two ro-pax vessels and nine fast ferries, offering a total of 39 departures from each port in the peak season.

//Madli Vitismann

Latest update 24-11-2006 11:25