ST. PETERSBURG -- Aside from all the usual charges and backhanders, a Western company recently received a bizarre demand when it tried to import a consignment of butter through the Port of St. Petersburg. Port officials wanted 1 percent of the butter for themselves.


The importer was prepared for dock workers to steal some of the butter but he was surprised that port officials were so brazen about asking for a share. He broke off negotiations and decided to ship the butter through the port of Riga instead.


Stories like these are not new at the Port of St. Petersburg. Russia's "Window on the West," self-confident in its unique position as the only Russian port on the Baltic, has earned a reputation for high costs, corruption, slow customs clearance and delays.


But faced by growing competition over the past year, Russia's transport bureaucracy appears to have realized that something has to change.


Just like the butter that was shipped through Latvia, a growing share of the transit traffic between the West and Russia is bypassing St. Petersburg and moving through other Baltic ports. These include the former Soviet harbors of Riga in Latvia, Klaipeda in Lithuania and Tallinn in Estonia, plus the Finnish ports of Helsinki and Kotka.


Starting March 1, as part of a unique experiment to try to turn the situation around, St. Petersburg has been allowed to set its own prices. All other Russian ports will still have their charges set by bureaucrats in Moscow until at least the end of the year.


"We are more than happy," said Alexander Rachkov, the St. Petersburg Port's commercial director. "We have been fighting for this for over a year."


Rachkov said the new price system the port was introducing would win back some of the 5 million tons of transit cargo which he estimated is now bypassing his port.


"The prices which we introduced from March 1 are competitive with the whole Baltic," Rachkov said.


Cargo bound for Russia mostly takes the form of consumer goods shipped in containers, which are then trucked across the border. This is a highly lucrative business for ports since containers move through quickly and attract high handling charges.


Cargo heading in the opposite direction is mostly bulk industrial materials such as metals and chemical fertilizers.


St. Petersburg, however, seems to have lost out on cargo traveling in both directions.


"A lot of our capacity is now idle," Rachkov said, although he could not offer precise figures.


St. Petersburg's competitors confirm that they have gained while Russia's second city has lagged behind. For example, Finnish ports said they now move 440,000 tons of containers bound for Russia per year, up from almost nothing in the early 1990s.


The Latvian port of Riga says that transit container traffic doubled in 1994 to a level equaling that of St. Petersburg, while bulk cargo increased by 50 percent.


It remains to be seen to what extent more aggressive price competition will allow the Port of St. Petersburg to claw back lost ground from the other Baltic harbors.


Alan Rosenberg, general manager CIS of Maersk Private, one of the world's biggest container shipping lines, said lowering prices could change the equation. He said he has avoided St. Petersburg because it charged the highest prices in the Baltic, as much as 75 percent more than competitors, but offered service that was in many respects worse.