Leftovers for Malta

My recent visit to China showed me the strong economic growth going on there; a far cry to what Malta is experiencing. In China all shipping lines are continually investing in the expansion of their services. Their major source of container manufacture lies in China and there they have all the cargo to fill their new boxes. Indeed, insufficient capacity is inhibiting further expansion in shipping as the demand from Chinese exporters continues to outstrip shipping capacity.

There was a time when Malta took some benefit from the Chinese trade because much of the inter-Mediterranean trade passed through Malta Freeport for trans-shipment to other ports. No longer.

The Financial Times (FT) on April 4 carried a back page report on Mediterranean hubs entitled 'The tide may be turning for minor ports on major routes". According to Tim Halhead, COO at Medcenter in Gioia Tauro, Italy, the general rise in container shipping volumes has brought such large cargo volumes to Medcenter it has sometimes struggled to cope. "We are close to our present capacity" Mr Halhead says. While it works on expanding, Medcenter is doing little to seek new business.

There are different problems at Malta Freeport. The FT then refers to the Grand Alliance's move away from Malta Freeport to Cagliari and that Malta lost significant business last year when a consortium of lines running services to India and Pakistan moved their transhipment business to Cagliari." Here the FT is referring to CP Ships and the EPIC services that left Malta in June 2004.

The FT report concludes: "Medcenter's main opportunity may be to take advantage of its strong market position to put up rates. Malta Freeport, meanwhile, can now offer more spare capacity than most of its rivals.

"Yet, for now, he (Uwe Malezki of Malta Freeport) admits, cranes at the Freeport, on a pretty bay in southern Malta, spend too much time idle. As a former director of Gioia Tauro's Medcenter, he can only wish his new port faced the same problems of excessive success" (i.e., at Gioia Tauro).

The FT is highlighting the market situation that Medcenter can raise rates because it is working to full capacity, whereas Malta Freeport is obliged to drop its rates to fill its sagging capacity. Gioia Tauro's Medcenter is bursting at the seams whereas Malta Freeport can only be content with the leftovers!

Unfortunately for our economy, as had been predicted, Malta Freeport has seen its business diminished since the PN government privatised it by turning it over to the French shipping line, CMA-CGM. The consequences of such a bad decision to privatise Malta's only deep-sea cargo port to a shipping line, instead of a terminal operator, quickly appeared because since October our economy has seen a steep drop in shipping services passing through Malta Freeport. The number of mother ships and feeder vessels has decreased. This has not only brought a downturn in the Freeport's prospects, but worse still has adversely affected our exporters and importers, as well as pilots, mooring men, tug services, shipping agents, and other port users.

Malta is now worse off

Since October on the UK/North West Continent/Baltic-Malta-to/from Far East route only CMA-CGM has a physical presence with mother ships in using Malta Freeport in its services between North Europe and the Far East. CMA-CGM has also curtailed its own services to Malta because it dropped one of its services - the French Asia Line service (FAL string).

A glance at the list of CMA-CGM ships entering Malta Freeport will quickly dispel any illusions that CMA-CGM has embarked on any expansion exercise at the Freeport. On the contrary, the number of ship calls has dropped.

Running piggyback are a handful of lines that have slots on CMA-CGM's ships, but which no longer send any of their ships to Malta. Slot arrangements obviously restrict the ability of these lines to actively compete in the domestic trade because while shipping lines working within an alliance are not bound to a fixed freight structure, economic factors under slot arrangements severely restrict, if not obliterate, their interest to compete. In any case, the element of additional shipping services is eliminated once only CMA-CGM physically calls at Malta with its ships.

The biggest losers are not the Freeport and its employees, but Maltese factories and importers that are stuck without their cargo, whether raw materials or consumer goods. We all recall the concern voiced by Brandstätter Malta that without efficient links to their suppliers and markets, factories would look elsewhere to set up factory.

To make it worse, CMA-CGM shut out Malta traffic during February/March on a number of their sailings because they were full to other ports, thus giving priority to other destinations. Government's privatisation deal has brought us to the desperate situation where the French shipping line is providing the only real service linking our Island to the outside world.

Other shipping operators as IRISL, China Shipping, Zim, Hamburg Sud do not fall within the equation of liner services inasmuch as shippers are not given a reliable service on a fixed schedule. For example, IRISL only call Malta if big loads of containers can be mustered on to a sailing, so the odds are invariably against shippers that their shipment will take place. China Shipping had just one sailing in March and it was not pre-announced to the trade, as could be seen from their Website.

Shipping agencies have already shed workers because they were in the front line when the shipping operators stopped using Marsaxlokk. As Mr Malezki, Malta Freeport's CEO admitted to the FT correspondent, it too is suffering and its cranes and workers are idle over long periods.

Minister Austin Gatt bragged so much that the Freeport privatisation to CMA-CGM was a blessing that will bring new investment and improved shipping services. These have not materialised. Government's success has been that at one stroke the deal with CMA-CGM has worsened Malta's deficit and public debt and its vital sea links with the rest of the world.

evaristbartolo@hotmail.com