Reliability Since 1248

According to an old saying he who cannot remember the past, lives without a future.


Early Estonian history, the emergence and development of medieval towns was based on geographical advantages and the transit trade. For example, history knows Narva as the traditional centre of international trade. Waterways along River Narva were already set up during the Viking era (5th-9th century). It was one subsidiary of the famous Baltic-Mediterranean river route, which is known in the Old Russian scripts as ”The Road from Varangians to Greece".


The use of the trading route through the Gulf of Finland livened up during 9th–10th centuries. Port of Tallinn was first mentioned in written in 1154. In 1219, Estonian lands were occupied by Danish and German crusaders. Between 1227–1238, Tallinn and North Estonia were ruled by the German Order which had temporarily overthrown the Danes from power. In 1238, Tallinn and North Estonia were returned to the Danish crown under the Stensby Agreement.


Ten years later, on 15 May 1248, the Danish King Erik IV bestowed Lübeck Rights on Tallinn, with which Tallinn was merged into the joint legal sphere of German trading towns. This date is considered as a start of organized transit trade in Estonia, and is celebrated as TRANSESTONIA's anniversary. In the end of the thirteenth century Tallinn joined the Hanseatic League and over the next couple of hundred years it played an important role in the relations of the Hanseatic League with Russian, especially Novgorod tradesmen. From that period the land road from Tallinn to Novgorod, which goes through Narva, has been used actively. In the thirteenth century, a trading settlement emerged on the Narva River crossing. Owing to the privilege of the Danish King Valdemar IV, the settlement received city status in 1345. This marked the birth of the town of Narva.


Medieval Estonia played a large role in the Baltic trading system, which developed under the aegis of the Hanseatic League and the German Order. In the end of the fifteenth century, after the Republic of Novgorod merged with Moscow, the historical role of Novgorod as the facilitator of Russian-European trade was transferred to Narva. In the second half of the sixteenth century, the troops of the Russian Tsar Ivan the Terrible occupied Estonia, and for the next twenty years the country became Russia’s main sea trading centre on the Baltic Sea. A new and most meaningful period of prosperity in the history of Estonia as a trading centre took place under the Swedish rule. At the time known as the ‘golden age’ roads through our territory linked the Baltic countries not only with Russia, but with Persia and the Far Caucasus. Estonia can therefore be rightfully called the ancient stronghold of foreign trade and transit. The geographical advantages of Estonia have not diminished in the slightest during the centuries.


Estonian position as one of the most important sea gates of Russia only started to diminish due to the founding of the city and port of St Petersburg. For more than two hundred years Estonia became the borderland of Russia. Gaining independence in 1991 signified a breakthrough. As Narva River once again became the border between two different economic rooms, it reawakened the role of Estonia as a transit state. The context and reasons of Estonian transit trade today differ from those centuries ago. Our main advantage remains the favourable geographical location. We are situated next to important ship routes on the Baltic Sea and we border the richest area, the northwest of Russia, and we are sometimes called the ‘near-abroad’ by the russians. The key to modern transit business is the good old relations and wide networks that the businessmen living in Estonia have on the territory of the former Soviet Union.


In 1998 oil became the new gold mine of Estonian transit. Due to the crisis in Russia, our neighbour state’s pressure on the export of fossil fuels and raw materials increased. At the time it was one of the few ways of earning foreign currency. As the development stage of Russian ports at the time was not up to meeting the sharp growth in demand, oil flows were directed through the Baltic states and Finland. It was good timing that a modern oil terminal had been built in the Port of Muuga. Thanks to this the Dutch-Estonian joint company Pakterminal became the leading oil transit enterprise in the whole Baltic Sea region. The success model of Pakterminal was followed by other terminal developers. Nonetheless there is reason to presume that the transit volumes of oil products will slow down. The rapid development of Russian ports on the Baltic Sea has a significantly higher impact on Estonian transit, in comparison to the fluctuation of oil prices on the world market. St Petersburg and the explosive growth of Primorsk have a strong leading position in Russian oil export. The completion of the Murmansk pipeline will influence the situation to the disadvantage of the Estonian transit corridor even more. The transit of oil products, however, will remain in Estonia until local terminals and railway companies represent the interests of Russian capital. Recent heyday is history though.


However instead of oil there are new transit flows into Estonia. In the last few years Russian economy has grown by an average of 7% per year. This is manifested in the rapid rise in Russian purchasing power and consumption, due to which Russia is becoming more and more a recipient of transit flows. In the Baltic Sea region this is mainly demonstrated by the continuous growth in the transit volumes of passenger cars and consumer electronics. Traditionally the transit of those high-cost product groups has taken place through Finland. The northern shore of the Gulf of Finland has seen many new container terminals and millions of square metres of transit warehouses rise in the last five years. Thousands of jobs have been created in the transport of goods, reloading, storaging and the administration of customs formalities. Estonia’s main advantage in front of Finland is cheaper labour. For some time to come Russian importers will prefer storing goods supplies that reach millions of dollars outside Russian territory. At the same time they want it to be logistically convenient and as near the border as possible, where containers can be sent by sea and by the Transsiberian Railway. Warehouse complexes will be created in such logistics parks to organise the emptying of containers and the combining of different shipments for their daily sending to Russian department stores by truck transport. By importing relatively small lots of goods at a time minimises the risks of importers, which derive from the relative instability of the Russian economic environment. The organisation of import through a transit country also enables to use methods for optimising taxes. This is Estonia’s opportunity to offer serious competition to Finland in servicing the transit of high-cost goods.


Estonia has become a state with a liberal and secure market economy. Our tax policy favours the concentration of foreign capital. Additional motivators, which each year help to increase the volume of investments into the Estonian transit sector, are the 0%- enterprise income tax and the inviolability of private property. In the last three years Russian capital has really started to reinforce its interests. There is reason to believe that the current boom will be equal if not larger than the economic boom in the Middle Ages and during the period of Swedish rule.


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