02 August 2006

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Business Today

FOI hails first reductions in port costs

James Debono

As port operators issued new port charges yesterday, costs for exporters and importers dropped by a margin of one to nine per cent.
Yesterday’s decrease in costs was still a far cry from the 25 per cent reduction promised by Competitiveness Minister Censu Galea.
“This is a positive first step but Maltese ports are still among the most expensive in Europe. We cannot be happy by these reductions. We will only be happy when costs drop by 25 per cent as promised by the Minister,” Federation of Industry Director General Wilfred Kenely told Business Today.
According to the FOI costs on a 40-foot container for export at the Freeport fell from Lm136.85 to Lm124.41 - a decrease of nine per cent.
The cost on a 20-foot container for export fell by 4.5 per cent.
Import costs on a 20-foot container fell by five per cent while costs on a 40-foot container dropped by a mere one per cent.

But with industry still very much dependent on other cost factors, for these modest reductions to have a positive effect it all depends on shipping agents and cargo haulers keeping their costs fixed. The costs of these categories are not regulated by the MMA.
However, the shipping agents’ representatives have issued price guidelines after an agreement with the MMA.
“I have a guarantee from shipping agents’ representative Ernest Sullivan that these guidelines are being followed,” Kenely told Business Today.
The rates imposed by shipping agents range from Lm15 on a 20-foot container for export to Lm46.45 on a 40-foot container for importing goods.
“We hope that all stakeholders involved will co-opertate by being reasonable. The commercial community cannot afford to look at things through a short term perspective.”
The FOI spokesperson insisted the marginal decrease in costs will only mitigate the disadvantages faced by industrialists competing in international markets.
“While importers can afford to pass port costs onto the consumer by adding a small margin on prices, exporters face the full brunt of competition in the global market place where a small increase or decrease in costs makes the entire difference,” Kenely told Business Today.
Manufacturers are charged double port costs; first when they import raw materials and once again when they export their finished goods.
“We are essentially price takers. Port charges impinge on our competitiveness at a time when fuel prices are taking a heavy toll on our industries,” Kenely said.


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