Development opportunities of liner maritime passenger traffic in the Republic of Croatia

Maritime passenger traffic has been significantly expanding globally over the last decade. Modern passenger terminals are the prerequisite for the optimal running and development of liner maritime passenger traffic and cruises. An adequate and well-organized maritime passenger terminal is crucial for the development of many complementary services related to maritime passenger traffic, primarily promoting the upgrade of the tourist supply and development of tourism [1]. For the purpose of satisfying the regular needs for passenger transport from the starting to the destination point (ports), maritime shipping has developed liner passenger shipping, where passenger shipping has gained its type of shipping and its market. Liner maritime passenger traffic is organized on the limited regional markets, where the trips, sail routes and ports of load and discharge are constant and already predefined [2]. Liner passenger traffic is conducted under the current national and international rules and regulations. The participants in this type of traffic are the shipping companies, the passengers and the brokers (intermediaries) in providing transport services [3]. Liner shipping companies that provide global liner services hold an exceptionally important role in attracting the load and developing maritime ports [2].

The presence of a transport complex functioning according to the needs of economy in a certain territory represents one of the basic development conditions [4]. One of the crucial prerequisites for the development of traffic and tourism, and for satisfying the passenger demands for transport, is the presence of maritime passenger ports. It is possible to stimulate a healthy development of the passenger port system by implementing port policies in line with the goals and measures of the overall economic policy framework of the country in question. Ports deliver value to the shipping companies, as well as to the intermediary service providers. They are locations where ships and loads are managed, with achieving operational efficiency [5]. The role of modern maritime ports is particularly important for the overall economic welfare of the specific region [6]. Developed countries have long since realized that the growth of ports and port systems are one of the major preconditions for the development of national economy, i.e. the economy of the gravitational zone that belongs to a specific port. Ports represent a part of the entire country’s traffic system in which all the traffic is accumulated. Ports operate according to the fundamental economic principles in order to provide adequate services, at the lowest costs possible, and help expand economy globally [7]. Considering the growing competition in the shipping industry, providing high quality services that generate pleasure in customers is crucial for the maintenance and the very survival of a company. Generally, a shipping company can satisfy its clients by offering high quality services or by providing a variety of services. One of the ways for distinguishing oneself from the competition is providing high quality services [8].

The very purpose of this paper is to explore the consumers’ satisfaction with the liner passenger traffic services in the Republic of Croatia, with the aim of providing recommendations for the future development. To achieve the goal, the secondary and the primary research have been conducted. After the introductory part, there follows the chapter explaining in more detail the liner shipping, liner shipping disadvantages and measures for further development of this economic branch in the Republic of Croatia. The third chapter gives an overview of the existing research, while in the fourth chapter the instrument used in the primary research is explained, the results of the research are presented and limitations and suggestions for future research are listed.

The term and characteristics of liner maritime passenger traffic

Liner maritime passenger transport is a special type of passenger and vehicle transport from seaport to seaport using special ships, organized on limited regional markets, where there is a need for continuous transportation. One of the key prerequisites for the development of transport, tourism and the satisfaction of passengers’ needs for transport are maritime passenger ports. The economic potential of Croatian seaports is characterized by a favorable geographic position. Shipping agents have played the crucial role in organizing the liner shipping, being initiators and managers of this type of maritime ships exploitation [9]. In liner shipping, freight charges are formed as tariffs, and there are two types of tariffs: class tariff, set for specific groups of load, and commodity tariff, set for every type of load separately [10].

Economic potential of Croatian maritime ports is based on the favorable geographical position. Croatian maritime ports can ascribe their competitive advantage, in relation to other ports in the European Union, to the deep intrusion of the Adriatic Sea, which enables the most efficient and the shortest traffic connection of Croatian mainland with the eastern Mediterranean, and with Asian and East African countries through the Suez Canal. The amount of traffic in maritime ports depends on their geo-traffic position, the area of their gravitational zones, the size of the port capacity, the infrastructure and the substructure, the number of liner services, organization of the port operations and the competence of the port staff [11]. The Republic of Croatia has 409 ports open for public transport, out of which there are 95 ports with a least one regular ferry service [12]. There are six ports open for public transport that are of specific (international) economic interest for the Republic of Croatia, in Rijeka, Zadar, Sibenik, Split, Ploce, and Dubrovnik [13]. Croatian seaports have been integrated in a comprehensive network of European traffic corridors, which is recognized as the development potential that enables the inclusion in the trading flows on the inner, European market, as well as the global market. It also allows the transformation of the port systems into modern logistic and distribution centers [12].

In the area of maritime shipping, public transport is the important factor in the coastal liner traffic, because it enables permanent and regular connection of the islands and the mainland, as well as travelling between the islands. Without this, there would be no sustainable development of the inhabited islands in the inland maritime waters and territorial waters of the Republic of Croatia. In Croatia, public transport in the coastal liner maritime traffic provides navigation on regular basis between Croatian islands (73 island ports) and the mainland (22 mainland ports). Public transport in the coastal liner maritime traffic is characterized by unprofitability, and is therefore subsidized from the budget resources, in cases when the shipping companies cannot cover the actual costs of the line from their revenue. The shipping companies in the liner maritime traffic provide transport services based on the concession contracts or the public service contracts, which the shipping companies conclude with the Coastal Liner Services Agency. The public transport system includes 56 state service lines (27 ferry lines, 16 fast ferry (catamaran) lines and 13 regular lines). The system is maintained by 13 shipping companies with the fleet of 77 ships: 17 passenger ships, 17 fast passenger ships and 42 ferries. The largest liner shipping company is Jadrolinija Rijeka, fully owned by the state, and there are 12 private shipping companies in the system [12]. Out of 13 shipping companies that provide the liner passenger transport, Jadrolinija holds the first place. It had 86.4% share in the total passenger transport, and 89.7% in the vehicle transport. In the second place, there is Rapska plovidba, but with a considerably smaller share in the passenger transport (6.2%) and with 10.3% in the total vehicle transport.

Liner passenger shipping is of extreme importance for the development of the coastal economy, tourism in particular and of trade. It is crucial for the prevention of emigration from the islands, and it influences the government balance-sheet because of the revenues from foreign passengers. For the steady development of a country, it is important to ensure a sustainable development of the islands and prevent further outflow of the island population. In line with this, coastal liner maritime passenger transport is crucial for the development of the islands, and it is performed by the total of 56 public shipping lines, crucial for the entire country [12]. Prominent factors that have positive influence on maritime passenger transport are tradition in connecting the islands to the mainland and between themselves, expertise, knowledge and experience, continuity and traffic connection, safety and good organization. Characteristics of Croatian maritime passenger traffic are [14]:

• 1)    constant rise in demand,

• 2)    society aiming at the development of the islands,

• 3)    renewal of the passenger fleet supported by the government and

• 4)    state subsidiaries for the unprofitable lines.

  Table 1. Basic guidelines of the maritime passenger transport

  Maritime passenger transport
  BASIC ELEMENTS	BASIC INFRASTRUCTURE
  1.    seafarers and other employees at the passenger shipping companies, 2.    passenger ships as a means of transport, 3.    sea as the traffic route, 4.    passengers and vehicles as the objects of maritime transport.	1.    construction and maintenance of the maritime passenger ports (passenger terminals), 2.    construction and maintenance of the signaling and other devices and equipment at the beginning and the end of the maritime route.
  Источник: Deliba s i c T, Vidu c i c V. Me fl uovisnost putni c kog morskog brodarstva i turizma u Hrvatskoj. Zbornik radova Ekonomskog fakulteta u Rijeci: casopis za ekonomsku teoriju ipraksu . 2003, Rijeka: Faculty of Economics, University of Rijeka, 21(2), p. 80.

  
  

For the economic and, therein, tourist valorization of the Kvarner islands, being among the most frequently visited islands in the Adriatic, traffic connections with the adjacent mainland has always played the crucial role. In the past, these connections were maintained by the steam ships, while today, ferries hold the most important role. The combination of the ferry and road transport has included the islands in the Croatian transport system. This transport is exceptionally important for achieving the integration of the islands with the mainland, i.e. the unification of the entire country’s territory, because of the demographic revitalization of the islands, and as the essential basis for the economic growth of the islands and tourism [15]. The tourist service is closely connected to the transport service. Without the transport service, there is no tourist service, for the transport service always precedes the other one. Transport and tourism are important because they increase the prosperity of individuals, providing them with the transport service, and therefore interconnecting them and giving the possibility of using other material, spiritual and cultural values. Both these activities positively affect other economic branches [16].

Liner passenger transport is important for the improvement of the demographic situation on Croatian islands. Passenger liner traffic should take into consideration the needs of the islands population, those that live there permanently and those that visit occasionally (tourists and holiday homes owners), many of whom stay there for longer periods and have needs like the permanent residents. Most of the 20th century demographic development of Croatian islands was characterized by a depopulation that started in 1921 and ended in the last decade of the same century. It was caused by long-term emigration from the islands, primarily because of the development policy of the State where the emphasis was placed on the industrialization of the land. It is also important to point out that most researchers state that the increase in the number of inhabitants in the last decade of the 20th century has increased due to fact that huge number of Croatians has declared their holiday homes as a place of their residence[17]. Due to the Census of Population, Households and Dwellings from 2011 the number of inhabitants on Croatian islands was 124.955, which was only 2.07% compared to the 2001 [18, 19]. In the period from 2011 to 2014, a slight increase (2.4%) of the population of Croatian islands was achieved, primarily due to the numerous development and revitalization measurements and investments in the islands [20]. For the last few years, there is still no official data, but decrease in number of inhabitants at Croatian island is expected due to imigration of inhabitants and lack of faith in the major life style changes. It is certainly important to point out that the cost of living on the Croatian islands is considerably higher than on the mainland. As well inhabitants on islands are not encouraged with the number of lines and nor high prices of services of liner companies. Even state subsidies are not having a significant influence on keeping inhabitants on islands. If it is observed the number of inhabitants on islands, on the individually level, than it is evident decreasing trend on smaller islands. It is also important to point out that the total number of inhabitants on the islands has increased to a large extent as a result of consequence of the migration of older and economically inactive population.

One of the characteristics of the maritime passenger shipping is its seasonality which has negative influence on the organization of the passenger ships. The negative aspect is seen in high technological overload for old ships and long working hours for the crew members. The positive side of the seasonality is the possibility it provides to the shippers of generating considerable revenue, which enables business activities during the off-season, when the costs surpass the revenue. The biggest challenges shipping companies in liner maritime transport in Croatia face are unfavorable age structure of the fleet, high fuel prices in the total transport costs, and significant seasonal oscillations. Technical, technological and organizational inferiority in relation to the ports of the developed countries, slow port manipulations, low investments in modernization of the port capacities and their poor maintenance have lowered the appeal and competitiveness of Croatian ports. Most neglected are the small ports that serve the needs of the locals, and investing in them would ease the transport of goods and passengers between the islands and the mainland, as well as among the islands. The biggest limitation in the development of the maritime passenger traffic mostly comes from the low demand for shipping capacities in the off-season, i.e. the problem of seasonality.

Croatian liner shipping has come into a crisis because of the slow replacement of classic general cargo ships with container and semicontainer ships and irresponsible usurious credits, which has led the largest domestic shipper “Croatia Line” to go bankrupt, along with some other smaller shipping companies. This has brought a major blow to the once strong liner fleet, and liner services in domestic ports have also considerably decreased at the expense of national economy. There are also other limitations to further development of maritime economy, most obvious being: lack of the investment and working capital, unfavorable exchange rate, exodus of many workers and experts into developed countries, low investments in research and modern technologies development, strong competition of specific maritime economy branches in developed countries on the global maritime market, regular conjectural fluctuations, crises and recessions on the market, considerable slow technical and technological development of some maritime branches as a consequence of the Domestic war and long-term low investment, insufficient coordination and competence inconsistencies of the government in the public guidance of some maritime branches [21]. In the Republic of Croatia, the greatest drawback in liner maritime passenger traffic is the monopolistic position of Jadrolinija - the company for passenger and cargo transport. Jadrolinija, with its high prices, slow modernization of the fleet and lack of ships in the high season, affects passengers and gives the tourists a poor picture of Croatia. Likewise, Jadrolinija, with its monopolistic policy, smothers smaller shipping companies and makes fair competition impossible. More and more European tourists decide to travel to Croatian coast, and most of them opt for travelling by road. Tourists that choose Croatian islands as their destination are the most significant users of liner maritime passenger transport, and it is therefore important to ensure a good mainland traffic connection of the maritime passenger ports with the emissive tourist areas. Maritime passenger transport depends on the successfulness of the tourist season, especially on the Croatian islands. As has already been stated, one of the limitations to the development of maritime passenger transport is insufficient demand for shipping capacities during the off-season. The problem of seasonality can be mitigated by prolongation of the season and supply on the islands, and attention should be directed towards the tourists of higher purchasing power. In line with that, modernization of liner passenger ships is necessary in order to navigate during the heavy winter conditions, and the prolongation of the tourist season would lead to more frequent lines. In order to impose more control over the budget, i.e. exceptionally high privileges the population on Croatian islands enjoys, the Coastal Liner Services Agency has started a project of informatization of the coastal liner maritime transport (SEOP). The SEOP system has introduced more control over the privileges used by the passengers, and over the shippers as well. The buying of the tickets is made simpler, the privileges of the islanders are identified with a special kind of island pass, the preconditions for keeping the accurate record and control of the number of passengers and vehicles and the use of the budgetary resources have been ensured.

In the context of the coastal passenger liner traffic, the goals and associated measures have been adopted, relating to [12]:

GOAL 1 : Improve the system for providing public services of connecting the islands with the mainland and among the islands with the aim of contributing to the sustainable development of the islands through the development of socially sustainable, economical and efficient system of public coastal maritime liner transport in the Republic of Croatia.

MEASURE 1: Redefine the liner traffic system (the line system, the relation of ferry, classic and fast ferry - catamaran lines);

MEASURE 2: Connect the coastal maritime liner traffic with other types of traffic, in line with the traffic strategy of the Republic of Croatia;

MEASURE 3: Conduct a gradual, effective and transparent system of privileged transport for the islands’ population and economy.

GOAL 2: Enable providing public services based on the principles of safety, stability, punctuality and commodity.

MEASURE 1: Introduce informatization in coastal maritime liner transport, which will enable business transparency and upgrade the availability of the service;

MEASURE 2: Plan and construct assigned ships for the lines that connect small islands with no road infrastructure;

MEASURE 3: Stimulate development and the use of new technologies in coastal maritime liner transport, and the use of ecologically acceptable ships in the coastal maritime liner shipping system.