Article by journalist Ain Alvela.

Estonia is making a bold push at the national level to strengthen its image as a maritime nation. The goal is to bring a share of the growing global ship conversion business to Estonia, boost maritime research and development in a variety of areas, and increase the international competitiveness of companies operating in the sector.

The Estonian maritime industry, currently comprising of around 1,700 companies, has never been a marginal economic sector in Estonia and its economic impact is growing steadily. The whole maritime industry accounted for 4% of the national GDP of Estonia in 2023 and has increased to 5% in 2024. Now, with coordinated public and private sector efforts, Estonia aims to accelerate this upward trend even further.

In 2022, the Estonian Maritime Innovation Centre (EMI) was established, opening new doors for local shipbuilding companies on international markets. EMI brings together domestic firms that manufacture equipment, supplies, and fittings for the maritime sector, offering them support in their efforts in entering to global markets. In 2023, a group of entrepreneurs, together with several universities and with backing from the Estonian Ministry of Climate, launched the Estonian Maritime Cluster with a mission to strengthen the global competitiveness of Estonian maritime businesses, support reputation-building efforts, and promote innovation, particularly through research and development initiatives. The latter includes introducing digital solutions to the maritime sector, developing autonomous vessels, and advancing new technologies for pollution monitoring and response. It also encompasses cutting-edge navigation systems, energy projects, and creating new opportunities in aquaculture. But innovation also needs testing, to which end the Ministry of Climate has commissioned a study to identify suitable areas in the Baltic Sea for trial activities. The research is being conducted by OÜ Consultare, which won the corresponding public procurement.

Innovation Arrives to Maritime Sector

Argo Sildvee, a shipbuilding veteran with two decades of experience and one of the driving forces behind the creation of EMI, says that the centre was born out of a pressing real-life need since the major international shipbuilders were not paying much attention to Estonia or its local companies. The feedback was that the Estonian producers were working in isolation, there were too many intermediaries, and navigating the sector, let alone finding the right contacts, was unnecessarily complicated. But Sildvee is confident: he knows that Estonia already has companies capable of competing in the global shipbuilding market, but large international clients simply do not know how to find them.

Since the beginning, the mission of EMI has been to ensure that Estonian companies gain access to the global shipbuilding and ship conversion market, an industry worth billions of euros. But before that could happen, it was essential to establish connections with internationally significant shipowners and builders. A key shift in strategy followed: instead of individual companies attending trade fairs and global expos on their own, Argo Sildvee now takes the lead, representing the whole sector, figuratively carrying with him a briefcase full of information about every maritime company operating in Estonia, promoting them collectively to give them a foothold on the international stage.

“In the beginning, our goal was simply to travel the world together and introduce ourselves, to get a sense of what was actually happening in the market,“ Sildvee recalls. “Today, EMI has grown into a thriving organisation that brings together 22 companies, including seven of the original founding members. Most of them are involved in ship interior manufacturing, interior architecture, and marine engineering.“

Cruise ship conversion is a steady source of work, as these vessels typically undergo major overhauls every five to eight years. This cycle is now further driven by the need to meet increasingly strict climate targets, primarily focused on reducing carbon emissions, but also addressing broader sustainability criteria.

There are two main aspects to cruise ship conversions: the technical upgrades and the interior refits. While the technical side focuses on modernisation, interiors are often not just refreshed but completely redesigned. It is in this second area, Sildvee believes, where Estonian companies, and the country as a whole, have a significant opportunity. He sees 2026 to 2028 as the peak years for ship conversions, calling it the hottest phase for the industry.

“We have already made strong progress: major shipbuilders are now visiting the country, relationships are solid, and Estonian companies are increasingly being taken seriously,“ Argo Sildvee.

“It has been estimated that over the next five years, interior work alone in ship conversions and new builds will account for six billion US dollars, and Estonia should be aiming for a share of it,“ Sildvee explains the ambitions. “We have already made strong progress: major shipbuilders are now visiting the country, relationships are solid, and Estonian companies are increasingly being taken seriously. The capabilities of Estonian companies are currently being mapped, and when a major ship conversion boom arrives, we must be ready for it.“ In his opinion, Estonia could attract large shipping companies mainly with high-quality project management, high-level engineering work, and modern factories.

Shipbuilding Expected to Make a Significant Economic Contribution

Ragmar Saksing, who took the helm as CEO of the Maritime Cluster last autumn, emphasizes that the cluster was founded by entrepreneurs primarily to amplify the voice of private-sector organisations directly or indirectly linked to maritime activities and to ensure that their concerns and interests reach higher levels, including politicians and decision-makers.

The first successes have already been achieved. In September last year, the government allocated €25 million to develop the maritime sector, with a large portion earmarked to support the launch of the Estonian Marine Greentech & Retrofit Hub. The funding comes from revenues generated through greenhouse gas emissions trading and will be channelled over the coming years via the Environmental Investment Centre (KIK) to boost competitiveness of the Estonian ship conversion sector.

With the creation of the ship retrofit centre, Estonia aims to secure a stake in this global industry. Estimates suggest it could generate an additional €170 million in sales for the maritime sector and create a couple of hundred new jobs locally. “In the coming years, the Maritime Cluster is determined to prove that this project works,“ says Saksing. “We have also set clear annual targets and established dedicated working groups focused on key areas such as small port development, advancing digitalisation, sustainable fuels, green technologies including autonomous vessels, maritime education, and the future workforce.“

The Maritime Cluster has also submitted a series of proposals for inclusion in the new coalition agreement currently being drafted. One key recommendation concerns the taxation of ship crews, with companies suggesting that crew members on both passenger and cargo vessels should be treated under a unified tax framework. There is also a strong push for reforming the shipowners’ registry, seen as essential for ensuring fair competition for Estonian companies with the neighbouring countries. Proposals have also been developed to tackle the issue of shadow fleets. In this context, the Maritime Cluster is involved in the Sea Wolf initiative, an effort focused on monitoring maritime space. The project includes developing methods for safeguarding underwater infrastructure and reducing related security risks.

A key part of the Maritime Cluster’s active agenda is research and development, reflected in its close collaboration with universities, with the goal to bring innovation into everyday solutions, whether it is the procurement process of new vessels, port development, the creation of environmentally friendly marine fuels, or the digital transformation of maritime businesses.

“The maritime sector makes a significant contribution to the Estonian economy, and it is constantly growing,” Ragmar Saksing.

“One of the goals of the Maritime Cluster is to raise public awareness about the maritime economy in Estonia. The maritime sector makes a significant contribution to the Estonian economy, and it is constantly growing,” says Ragmar Saksing, describing the sector’s growing role. “Another objective is to improve Estonia’s reputation as a maritime nation, both at home and internationally. It is true that relatively few ships sail under the Estonian flag, but reputation is multi-faceted. Supporting the business environment of maritime companies is also part of this, and a big part of the cluster’s role is to build a unified voice for the industry.”

New technologies need to be tested at sea

The study exploring potential maritime test zones in Estonian waters has involved Riina Otsason, a junior researcher and PhD candidate at the Estonian Maritime Academy. According to Otsason, the study examines how and under what conditions maritime testing can be carried out, identifies suitable locations, and defines the objectives such tests aim to achieve. The study focuses on three key areas, each covered by expert contributors: energy solutions; autonomous or remotely operated vessels and various forms of small-scale robotics; and thirdly, aquaculture and the blue bioeconomy.

“The concept behind these maritime test zones is to create opportunities for all of these activity areas. Energy, for example, is a hot topic right now, but many of the innovations tied to large offshore wind farms are currently being developed elsewhere,“ Otsason explains, outlining the study’s rationale and objectives. “The goal is to enable such testing right here, so that we can fit them for our own specific conditions and needs.“

It is also crucial to combine or coordinate different types of tests within a single designated area to ensure that all key sectors are covered, while avoiding an excessive number of separate test zones. It is also important to ensure the seamless communication of different digital platforms and devices between each other. Otsason is hesitant to predict when a self-navigating vessel might start transporting waste from a small island to the mainland, or when an autonomous mail delivery service between islands might become a reality. According to her it depends largely on international maritime legislation, which currently does not yet allow for the widespread use of unmanned vessels.

“I do believe that in the future, many maritime operations will be possible through remote control or autonomous vessels,” Riina Otsason.

“I do believe that in the future, many maritime operations will be possible through remote control or autonomous vessels,“ Otsason notes. “Right now, remote piloting is a trending topic, which could help cut both emissions and extra costs. Another promising area is pollution detection using automated monitoring systems. New technologies could also play a key role in improving maritime rescue capabilities.“

WHAT IS WHAT: Estonian Marine and Manufacturing Initiative – EMI

• Established in 2022.
• EMI unites 22 companies eager to contribute to shipbuilding and make their mark both domestically and on the international market.
• For Estonian-origin companies, key attributes include trust, quality, and flexibility.
• Companies specialize across various sectors, offering tailored solutions for maritime and land construction projects.
• The solutions offered cover the full spectrum – from project management, design, and engineering to the production of turnkey solutions.

Source: EMI

WHAT IS WHAT: Estonian Maritime Cluster

• Established on December 13, 2023.
• 13 board members, 56 members in total in the cluster.
• Brings together companies operating in the maritime sector, their umbrella organizations, and educational institutions.
• Its goals include enhancing the international competitiveness of sector companies, representing them under a unified umbrella organization, and promoting innovation, research and development within the maritime industry.

Source: Ministry of Climate