Editorial

The debate on port costs looked at one point like it would drag on as long as port reform. The issue was not to score political points; port costs are a fundamental factor in striving to improve competitiveness.

The Federation of Industry kept getting negative signals from its members, with some claims made that prices had in fact gone up rather than down. It recently released a table which showed single digit decreases for exported cargo. Had that been the case, it would have been worrying news indeed.

Malta Maritime Authority chairman Marc Bonello finally laid the issue to rest with a comprehensive breakdown of all the charges (The Times Business November 15). But more importantly he managed to identify why the FOI figures differed so greatly.

The main reason was that the FOI compared costs this August with costs last August, thereby taking into account the decrease in regulated port worker costs that came into effect in July this year.

However, Dr Bonello pointed out that other reductions were effected in July 2006, when the operations in Grand Harbour were put into the hands of Valletta Gateway Terminals. These were obviously not captured in the FOI figures.

To understand the reductions, you have to understand how the fees were compiled. Take a deep breath; they were extraordinarily complex. In fact, much of the reduction came from simplifying matters and streamlining the entire approach.

The costs were split into three main sections: The terminal operator charges, the regulated port workers' fees and the ship agents' fees.

But within this picture were additional - sometimes ludicrous - complications. The ship agent was also the cargo agent for the ship operations and engaged a foreman who would in turn engage port workers. The terminal operator handled the shore operations and engaged a separate foreman who would engage other port workers. There were also tally clerks who had nothing to tally, MMA administration fees to cover its work invoicing for the port workers, and heavy lifting charges. The list of costs was longer than a five-year-old's wish-list to Santa Claus.

The first step was to hand ship operations to the terminal operators, thereby saving the duplication of effort involved in engaging and invoicing for foremen and port workers. The MMA absorbed the tally clerks as its workers and dropped its administration fee. Bit by bit, the fees came down.

The figures provided by the MMA and those reported by the FOI for terminal costs and for the regulated workers were identical.

So why was there a discrepancy? A breakdown of the FOI survey showed that this was due to the ship agents' costs in August 2007, which were higher than those laid down in guidelines agreed between the Association of Ship Agents and the MMA. This initially caused a frisson of concern: The ship agents operate in a liberated market and can charge whatever they want but the MMA had hoped that they had all understood the importance to the national economy of keeping these reasonable.

There was no cause for panic. It emerged that the FOI figures were based on total bills sent by the ship agents, which included other services from third party providers.

The bottom line is that the port costs have, thankfully, gone down. By how much? It would be naïve to hope for one snappy figure in such a complex scenario but the reductions range from 5-17 per cent for containers at the Freeport, 13-19 per cent for containers at Grand Harbour, and 7-19 per cent for trailers in Grand Harbour.

Not quite 25 per cent... But should this overshadow slicing through the Gordian knot?