Faltering demand and performance of the logistics service sector in two cities of South-East Finland

Abstract

Emerging markets experienced strong growth since the years 2002-2003, and this was especially the case for import markets in Russia. Many border-sharing countries, as well as nearby sea ports, terminal areas and logistics service companies, benefited from it and revenue growth was the norm for years. This was also the case in Finland, more specifically for South-East cities such as Kotka and Kouvola. However, the situation changed in 2009, mostly due to the global credit crunch. The demand decline experienced then continued after a short recovery in 2010-2011. In this study, small and medium sized enterprises (SMEs) of the logistics service branch in the two Finnish cities will be analysed. The findings reveal that the sea port city (Kotka) suffered more from depressive demand, while a hinterland region (Kouvola) was able to switch from transit import and Russian import to more versatile logistics services. However, the situation is not straightforward, as transit export and railway volumes have maintained their levels rather well during the depression period.