Virtu Ferries protests over port fees
Virtu Ferries is up in arms about the fees it must pay the Malta Maritime Authority for certain port services, saying that these are not required.The Maria Dolores, the fast ferry which operates between Malta and Sicily, does not take unaccompanied...
Virtu Ferries is up in arms about the fees it must pay the Malta Maritime Authority for certain port services, saying that these are not required.
The Maria Dolores, the fast ferry which operates between Malta and Sicily, does not take unaccompanied containers but rather vans and trucks belonging to importers and exporters who make day-trips between Sicily and Malta and therefore do not require haulage or traditional cargo services.
"MMA is charging our company port fees for services which are not rendered and not required. In particular, we are being charged Lm1.25 per vehicle on departure from Malta and the same fee for vehicles arriving into Malta. Such fees are not applicable in other European ports used by our company," director Henri Saliba said.
"We expect that these fees are abolished in the much needed port reform exercise and our company is reserving the right to ask for a refund for monies paid to date."
In the meantime, the company has become embroiled in allegations - including ones from the Chamber of Commerce and Enterprise - that some of its clients are circumventing the normal importation routes, evading Customs and VAT. Mr Saliba's reaction was curt: "That is incorrect!"
"We follow the same procedure as any other vessel that operates to and from Malta. All importers making use of our services are requested by Customs to present a declaration on arrival which includes all relevant information for Customs and VAT purposes.
"If there were any suspicion of abuse, then inspections could - and would - be carried out. Believe me, they are very efficient and, if anything, they are too strict. We would never defend anyone who abuses the law.
"However, it is not fair for importers to be called 'illegal traders' and even 'cowboys' when not one of these allegations has been substantiated. We have replied to the Chamber as we feel that the allegations are quite unethical. Is the Chamber implying that the main supermarkets and large importers and wholesalers are illegal traders, as they use our service too?
"I think that we have upset the status quo of a number of businesses used to protection, who must now face up to the reality of an open market, parallel trading and free movement of goods.
"For many years, the consumers could not benefit from competition and now they are getting better prices."
These issues seem to be the growing pains you would expect from a company that is going from strength to strength. When Malta joined the EU, Virtu realised that it would lose considerable revenue from duty-free sales and therefore started to diversify.
"We had the foresight and we have the energy. And believe me, we haven't even started," he said.
Virtu now operates five ferries. Its original ferries, the 19-year-old San Francisk and the San Pawl, have been deployed, through a subsidiary called Venezia Lines, on the Croatia-Venice route.
"In just five years, we have captured 42 per cent of that market, even though we are competing against three other operators, two of whom have fast ferries," he said. The service offers day-excursions to Venice from nine Croatian ports. The company also realised the advantage of having a fast service from Venice to destinations in north Croatia that have poor air links and has reached agreements with tour operators and low-cost airlines to ferry tourists from Venice airport to their resorts.
In the meantime two more ports in Italy - Ravenna and Rimini - are being served between April and October.
Six weeks ago, it started to operate a service between Bari and Durres in Albania, using the five-year-old San Gwann.
"There are two million Albanians living in Italy and a number of Italians who invest in Albania so the demand is there," he said. "We estimate that 600,000 people and 295,000 cars make that crossing every year."
Venezia Lines will eventually have to consider getting a larger vessel for this route and will probably take over the Maria Dolores.
"So far all the financing has been local," he said when asked about a possible IPO.
"If anything we would consider a bond issue but it is very early days."
In the meantime, the Malta-Sicily operations have been boosted by the new, superfast catamaran, the Maria Dolores. Delivered from Austal in Australia in 2006, it can take 65 vehicles, with reinforced central lanes that can take 40-ton trucks.
"It was designed specifically for Pozzallo and Catania, with an aft ramp for Malta and a side-ramp for the Sicilian ports so that we get a flow of vehicles through the boat, giving us a very fast turn-around," Mr Saliba said.
"We can handle 600 passengers and a full garage in just half an hour."
This makes all the difference as it means that the vessel can make two - or even three - trips a day.
"It does not make sense to have a boat that travels at 36 knots which is then stuck in port for loading and unloading. A ship is built to operate. If it is in port, it is not making money."
The demand has been such that the vessel is making two trips on Thursday even in winter, leaving at 7 a.m. and again at 4 p.m. This means that trucks belonging to importers and exporters can make one-day trips, saving considerably on overnight expenses, and meaning that fresh produce can be on the shelves that same morning.
The vessel has been designed to offer comfort and safety, with 92 first-class seats, snack bars, films, slot machines and even an in-house magazine.
"In good sea conditions, you do not even get a vibration. Even in force six conditions, you would only have to slow down by three to four knots," he said.
Demand has been growing steadily. The vessel is full on most trips and has been operating five times a week throughout winter, compared to the original schedule of two or three trips a week.
"Importers and exporters can use smaller trucks meaning that they can make more frequent trips rather than having to wait for groupage containers. This means smaller quantities, faster turnaround, better cash flow and less risk," he said.
Mr Saliba believes that the competition offered by the big wholesalers in Pozzallo has driven down local prices.
"The vessel carries all sorts of goods, from fresh food to furniture. Sicily was very close to us but we managed to bring it even closer so that we can benefit from the economies of scale of a much larger market," he said.
Another important advantage is the freight cost, at Lm500-600 per container, almost half the cost of other ships.
"There are now more Italian products than ever being offered here through franchises, mostly because the lower price of freight has made them competitive. We were instrumental in attracting three or four investors from Sicily who teamed up with Maltese partners."
"It was to be expected that there would be opposition but a very small proportion of freight is accompanied - less than three per cent - so we are offering an alternative to those who drive their own vans or trucks."
What about the future?
Newly-independent Montenegro has already approached Virtu but Mr Saliba does not see this fitting into its business plan just yet. Its targets are closer.
"It might be interesting to connect Gozo with Sicily - from Malta - as long as Gozo is marketed well as a tourist destination. We are already considering this.
"Other destinations like Lampedusa were also considered but they are very seasonal and would not merit a regular, frequent service. On the other hand, Lampedusa attracts north Italians seeking an upmarket, quiet destination and Gozo would be ideal for them."
Tunisia poses its own problems as the distance is that much further, making it difficult for Virtu to compete with cheap flights.
"The market there is increasing and we may one day consider offering a combined Malta-Sicily-Tunisia package but not for now," he said.
And Libya?
"There is a good market for cars but not necessarily for passengers. If anything, Sicily to Libya would be more interesting," he said. "However, this is again not something that we are contemplating in the near future."
When asked about Gozo, he laughed out loud. This is obviously a subject that has been brought up many times before.
"We are the only Maltese carrier with a successful track record in so many places. So it is only natural that we should be the ones to knock on the government's doors," he said.
"The market there has potential and the moment that a licence is granted, we would be there, ready to service it with conventional and fast ferries. A fast ferry from central Malta would mean far better access than at present as you would have a choice between a half-hour trip or the drive up to Cirkewwa and the 20-minute crossing.
"The government's public service obligation to Gozo Channel runs for three more years and to be honest we see very little chance that anything will happen before then," he said.
The Maria Dolores, the fast ferry which operates between Malta and Sicily, does not take unaccompanied containers but rather vans and trucks belonging to importers and exporters who make day-trips between Sicily and Malta and therefore do not require haulage or traditional cargo services.
"MMA is charging our company port fees for services which are not rendered and not required. In particular, we are being charged Lm1.25 per vehicle on departure from Malta and the same fee for vehicles arriving into Malta. Such fees are not applicable in other European ports used by our company," director Henri Saliba said.
"We expect that these fees are abolished in the much needed port reform exercise and our company is reserving the right to ask for a refund for monies paid to date."
In the meantime, the company has become embroiled in allegations - including ones from the Chamber of Commerce and Enterprise - that some of its clients are circumventing the normal importation routes, evading Customs and VAT. Mr Saliba's reaction was curt: "That is incorrect!"
"We follow the same procedure as any other vessel that operates to and from Malta. All importers making use of our services are requested by Customs to present a declaration on arrival which includes all relevant information for Customs and VAT purposes.
"If there were any suspicion of abuse, then inspections could - and would - be carried out. Believe me, they are very efficient and, if anything, they are too strict. We would never defend anyone who abuses the law.
"However, it is not fair for importers to be called 'illegal traders' and even 'cowboys' when not one of these allegations has been substantiated. We have replied to the Chamber as we feel that the allegations are quite unethical. Is the Chamber implying that the main supermarkets and large importers and wholesalers are illegal traders, as they use our service too?
"I think that we have upset the status quo of a number of businesses used to protection, who must now face up to the reality of an open market, parallel trading and free movement of goods.
"For many years, the consumers could not benefit from competition and now they are getting better prices."
These issues seem to be the growing pains you would expect from a company that is going from strength to strength. When Malta joined the EU, Virtu realised that it would lose considerable revenue from duty-free sales and therefore started to diversify.
"We had the foresight and we have the energy. And believe me, we haven't even started," he said.
Virtu now operates five ferries. Its original ferries, the 19-year-old San Francisk and the San Pawl, have been deployed, through a subsidiary called Venezia Lines, on the Croatia-Venice route.
"In just five years, we have captured 42 per cent of that market, even though we are competing against three other operators, two of whom have fast ferries," he said. The service offers day-excursions to Venice from nine Croatian ports. The company also realised the advantage of having a fast service from Venice to destinations in north Croatia that have poor air links and has reached agreements with tour operators and low-cost airlines to ferry tourists from Venice airport to their resorts.
In the meantime two more ports in Italy - Ravenna and Rimini - are being served between April and October.
Six weeks ago, it started to operate a service between Bari and Durres in Albania, using the five-year-old San Gwann.
"There are two million Albanians living in Italy and a number of Italians who invest in Albania so the demand is there," he said. "We estimate that 600,000 people and 295,000 cars make that crossing every year."
Venezia Lines will eventually have to consider getting a larger vessel for this route and will probably take over the Maria Dolores.
"So far all the financing has been local," he said when asked about a possible IPO.
"If anything we would consider a bond issue but it is very early days."
In the meantime, the Malta-Sicily operations have been boosted by the new, superfast catamaran, the Maria Dolores. Delivered from Austal in Australia in 2006, it can take 65 vehicles, with reinforced central lanes that can take 40-ton trucks.
"It was designed specifically for Pozzallo and Catania, with an aft ramp for Malta and a side-ramp for the Sicilian ports so that we get a flow of vehicles through the boat, giving us a very fast turn-around," Mr Saliba said.
"We can handle 600 passengers and a full garage in just half an hour."
This makes all the difference as it means that the vessel can make two - or even three - trips a day.
"It does not make sense to have a boat that travels at 36 knots which is then stuck in port for loading and unloading. A ship is built to operate. If it is in port, it is not making money."
The demand has been such that the vessel is making two trips on Thursday even in winter, leaving at 7 a.m. and again at 4 p.m. This means that trucks belonging to importers and exporters can make one-day trips, saving considerably on overnight expenses, and meaning that fresh produce can be on the shelves that same morning.
The vessel has been designed to offer comfort and safety, with 92 first-class seats, snack bars, films, slot machines and even an in-house magazine.
"In good sea conditions, you do not even get a vibration. Even in force six conditions, you would only have to slow down by three to four knots," he said.
Demand has been growing steadily. The vessel is full on most trips and has been operating five times a week throughout winter, compared to the original schedule of two or three trips a week.
"Importers and exporters can use smaller trucks meaning that they can make more frequent trips rather than having to wait for groupage containers. This means smaller quantities, faster turnaround, better cash flow and less risk," he said.
Mr Saliba believes that the competition offered by the big wholesalers in Pozzallo has driven down local prices.
"The vessel carries all sorts of goods, from fresh food to furniture. Sicily was very close to us but we managed to bring it even closer so that we can benefit from the economies of scale of a much larger market," he said.
Another important advantage is the freight cost, at Lm500-600 per container, almost half the cost of other ships.
"There are now more Italian products than ever being offered here through franchises, mostly because the lower price of freight has made them competitive. We were instrumental in attracting three or four investors from Sicily who teamed up with Maltese partners."
"It was to be expected that there would be opposition but a very small proportion of freight is accompanied - less than three per cent - so we are offering an alternative to those who drive their own vans or trucks."
What about the future?
Newly-independent Montenegro has already approached Virtu but Mr Saliba does not see this fitting into its business plan just yet. Its targets are closer.
"It might be interesting to connect Gozo with Sicily - from Malta - as long as Gozo is marketed well as a tourist destination. We are already considering this.
"Other destinations like Lampedusa were also considered but they are very seasonal and would not merit a regular, frequent service. On the other hand, Lampedusa attracts north Italians seeking an upmarket, quiet destination and Gozo would be ideal for them."
Tunisia poses its own problems as the distance is that much further, making it difficult for Virtu to compete with cheap flights.
"The market there is increasing and we may one day consider offering a combined Malta-Sicily-Tunisia package but not for now," he said.
And Libya?
"There is a good market for cars but not necessarily for passengers. If anything, Sicily to Libya would be more interesting," he said. "However, this is again not something that we are contemplating in the near future."
When asked about Gozo, he laughed out loud. This is obviously a subject that has been brought up many times before.
"We are the only Maltese carrier with a successful track record in so many places. So it is only natural that we should be the ones to knock on the government's doors," he said.
"The market there has potential and the moment that a licence is granted, we would be there, ready to service it with conventional and fast ferries. A fast ferry from central Malta would mean far better access than at present as you would have a choice between a half-hour trip or the drive up to Cirkewwa and the 20-minute crossing.
"The government's public service obligation to Gozo Channel runs for three more years and to be honest we see very little chance that anything will happen before then," he said.