28 NOVEMBER 2001

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Exorbitant port charges make Malta expensive base

By Kurt Sansone

Industrialists wanting to import or export goods by shipping have to face a complex scenario of mismanagement and inefficiency resulting in exorbitant port charges that make Malta almost three to four times more expensive then other European ports.

The port charges levied on a 20ft container the moment it makes it to the Grand Harbour amount to approximately Lm140 while a 40ft container could cost Lm240.

In complete contrast, the cost to ship over a container from any European port to Malta ranges between Lm200 and Lm270. This laughable situation means that it costs the same price to transport a container from Grand Harbour to San Gwann industrial estate as transporting the same container from Rotterdam to Malta.

Industrialists told The Malta Financial and Business Times that the port charges quoted above reflect the average costs because normally they go even higher because of delays and inefficiencies in the whole system.

"Sometimes charges are invented for mundane things," was the general comment received.

The system complicates itself even more if the goods exported or imported are considered to be bulk cargo such as wood, cement and meat. In such cases the charges are calculated on a per cubic metre basis.

The scenario is not an easy one to understand because it involves among others, cargo haulers, shipping agents, customs officials, the Maritime Authority, stevedores and port workers. All of these have their own cost structures. It is unclear who is doing what and who is accountable to whom, a situation, which sees industry bearing the global cost.

Industrialists suspect that some private stevedore companies operate cartels between them thus keeping their charges fixed at a high price. The situation gets trickier when port workers are involved because they have a guaranteed monopoly. If a company decides not to make use of port workers to unload its containers, the company will still have to pay the port workers even though somebody else is doing the job.

Asked to comment on the situation at our ports, Federation of Industry Secretary General Edwin Calleja said that the charges are an extra cost on industry and could serve as a deterrent for foreign direct investment.

"Port handling is a crucial aspect for this country. Being an island already puts industrialists at a disadvantage and the exorbitant port charges only make things worse," Mr Calleja remarked.

He added that the port charges could serve as a disincentive for industrialists wanting to use Malta as their base because they threaten industry’s competitiveness.

Mr Calleja said that the charges were a result of a complex inefficient system at the ports, which involved different players each with there own interests. Amplifying on the general feeling among industrialists, Mr Calleja said that in most cases the high charges reflect the bottlenecks and bad management in the procedures adopted.

Industrialists are clamouring for the introduction of a terminal operator who would act as the sole point of reference thus streamlining costs.

Mr Calleja explained that the introduction of one or more terminal operators would mean, less fingers in the pie.

"The whole issue boils down to responsibility and accountability. A solution must be found even if compromises have do be made," the FOI secretary general added.

The FOI wants the Maritime Authority to develop its role as a regulatory body thereby ensuring no cartels operate in the industry and the port is managed in the best interest of the country.

In a bid to reach a plausible solution Transport and Communications Minister Censu Galea has set up the Ports Joint Consultative Council. The council brings together the different players involved, including the unions and industry representatives.

In the next few months work in the sub committees set up by the PJCC should be finalised. Mr Calleja told The Malta Financial and Business Times that only then will the whole situation be clear enough to start talking about solutions.

"All parties involved need to find the necessary will to reach a compromise," Mr Calleja said. He then chided Malta Freeport for deciding not to send a representative on the PJCC. "The Freeport is still government owned and the authorities should see to it that the company participates in the meetings of the PJCC," Mr Calleja concluded.

While the future of our ports is uncertain because of the necessary changes that must be undertaken, one thing is definitely certain; the current mismanagement is shifting the burden on industry and eventually on the consumer.


Comments and reactions to this article: kurt@maltamag.com



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
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