14 June 2006

The Web
Business Today

Time to bite the bullet

Restoring competitiveness is sine qua non for economic growth and port reform is a crucial element in this process.
After years of empty promises the port reform process has finally kicked off with the award of the cargo handling tender to a new company composed of Singapore-based Portek and a subsidiary of Tumas Group.
The details made public last Saturday during the signing of the agreement with the new company, Valletta Gateway Terminals, point towards a healthy investment programme by the new operators in our port and a new way of doing things.
It looks like a new beginning even if the tariff reductions, a mere five per cent, leave much to be desired, given the fuss government exponents have often made in the past over the tariffs charged by the GWU’s Cargo Handling Co. Ltd.
Government has insisted that further reductions in port charges are in the pipeline once the whole reform process is complete. There seems to be some hesitation in setting a benchmark for tariff reductions, with Minister Censu Galea reiterating that a 25 per cent cut in costs is the “ideal” scenario.
This leader takes the minister for his word and expects reductions to be “hefty” as stated last Saturday. The last thing this country needs is a reform process that will only deliver token cost reductions, which will not be enough to give industry the required breathing space after years of enduring complicated, inefficient and labyrinthine tariff structures that made Grand Harbour one of the most expensive ports in Europe.
The new cargo handling company has committed itself to charging a single all-encompassing tariff for port work, which would go a long way to ease the confusing payment structure currently in place.
The company will also, as of 1 July, be responsible for all cargo handling in Grand Harbour. This means that shipping agents will no longer be responsible for the transfer of cargo from ship to shore and haulers will not be required to transfer the merchandise from quay to stack.
This measure in itself will mean that both shipping agents and haulers could reduce their tariffs since they will not be rendering part of the service they currently offer.
And given the MMA’s commitment to ensure that nobody would simply pocket any windfall profits derived from services not rendered, it is hoped that industry could see the start of cost reductions in that aspect as well.
The reform process must continue in earnest. Times have changed and ensuring that our port works in an efficient manner, at the lowest cost possible, is crucial to growth. It is also important that any cost savings made are transferred to the consumer and the exporting industries, a commitment the MMA has insisted upon with the new cargo handling company.
In this context one hopes that the Chamber of Commerce, which represents the shipping agents, and the GRTU that represents cargo haulers, will now live up to their very own belief in the free market by accepting changes that would bring costs down in our port.
Any urge to resist change should be quashed. These two organisations have been at the forefront of the commercial community’s cry for leaner government, liberalisation, competition, lower costs and a general business-friendly environment. Port reform is crucial to achieve a business-friendly environment and stifling the reform simply to protect small interest groups would be suicidal.
As for the port workers represented by the General Workers’ Union, they need to realise that yesterday’s problems are not today’s ills and so different solutions and working practices are required.
The reform needs to be thorough and radical. Any attempt to engage in patch-work should be avoided. Industry and consumers need to feel that they are tangibly benefiting from the changes currently being discussed with the stakeholders.
The time to bite the bullet is now.

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