Freeport improves service to industry
The Freeport gate is now open on Saturdays for the release of containers bound for local industries, which until now were restricted from Monday to Friday operations. This additional day was introduced a few weeks ago on a trial basis in agreement with...
The Freeport gate is now open on Saturdays for the release of containers bound for local industries, which until now were restricted from Monday to Friday operations. This additional day was introduced a few weeks ago on a trial basis in agreement with the GRTU.
"There are more and more companies that now operate on a 24/7 basis so they need an extra day on which to work," Freeport managing director Uwe Malezki said.
The Freeport will construct also a new gatehouse next year and it has also improved other procedures for local hauliers.
Things have been happening at the Freeport, which had registered a loss of Lm2.7 million in 2003. CMA CGM, the third largest shipping line world-wide, took over operations of the Freeport in 2004. Mr Malezki did not offer exact figures for the intervening years but said the company had no reason to complain.
So is the Freeport now profitable?
"The company is not yet, but the operations are now profitable," he said.
"We are experiencing a 30 per cent increase in volume, which is of course reflected on the revenue side. During our last interview in 2005, we predicted a turnover of two million TEUs (containers) in three years and we have just about reached that target.
"We have a capacity for 2.6 million, which we could reach by 2010-2011, a year ahead of the forecast we made in 2005.
"We will consider it to be 'full' when it exceeds three million TEU. We can do this with the existing quay space although we may square off the west end of the terminal to create another 300m berth," he said.
What about after that? There is still hinterland that can be developed - while the quay space, although finite, could house more cranes to speed up ship turnarounds. Twenty more rubber-tyred gantries have been bought which can add another layer of containers to the current maximum of four.
"Without taking up one more square metre, you increase your stacking space by 20 per cent," he said.
At the beginning of the year, things looked very different. The Freeport was turning away ships because not enough port workers were available. An often overlooked benefit of the port reform was not related to costs but to the number of workers. A new category was set up - auxiliary port workers - who were no longer linked to the old system of inherited positions.
The flexibility of the new category meant that the Freeport added 72 more drivers to the Port Workers' complement. It is forecasting that another 50 will be needed for next year.
Productivity is growing steadily. The Freeport used to handle 14 container moves an hour when CMA CGM took over. This is now just under 21 on average, although the turnover is faster on mainline vessels, with rates of 24 and even 25 logged in recent weeks.
How was this achieved? Mr Malezki said that the first thing was to improve the maintenance schedule so that all the equipment was available in working order at any time.
It also took on more people - 94 this year so far with 19 more about to be recruited.
"In 2005, we had enough people to form 11 'gangs' (the team for a quay crane). Now we have 15.5 gangs on average, meaning we have a maximum of 17 available," he said.
The number of cranes was also increased. CMA CGM started off with 12 cranes but bought four more last year.
There is another crane coming in March and four more coming in about 14 month's time.
"We have a huge investment programme. We have so far spent E45 million and plan to spend E220 million more."
The space at the Freeport once seemed impossibly large but it has gradually filled up. In fact, one of the new cranes will be put on the west quay of Terminal One, but other ones are being put along existing cranes.
"The more cranes you have, the quicker you can discharge a ship and the quicker it leaves - so you have space to handle another one."
The new cranes are also able, in theory, to work in winds up 22m/s - roughly a Force 7-8, compared to the smaller ones that stop work at Force 7.
"However, it depends on other factors such as the wind direction and whether the vessel is already docked or not. A large vessel can act as a windbreaker so that work can continue...
"We are more likely to be limited by vessel manoeuvres than by the crane capabilities. In a strong south-westerly swell, tug boats and pilots cannot bring the vessels in. This is happening more frequently, especially since the ships are getting larger. New tug boats bought by Tug Malta have resulted in an improvement and a new pilot boat is planned which will also help.
"It is important to put this into context: We have been closed for a few hours on five different occasions this year. And this is something that happens in all ports."
The Freeport may be more efficient but other ports are likewise under pressure to become more competitive. But Mr Malezki explained that Malta had spare capacity while many other ports have already reached a status of congestion.
"Once you hit an occupancy level of 75-80 per cent then it has to level off. Our competitors are quite full. Port Said East is full; Gioia Tauro is very congested because MSC moved there from Piraeus - it will this year probably handle 3.6 million TEUs, compared to 2.9 million last year. That is quite a substantial increase in volume," he said.
"Transhipment has grown very rapidly. This is why ports like Algeciras and Valencia are full and investments are being made in new facilities," he said.
There are new container terminal projects coming up in the Mediterranean. A facility will open up for business late next year in Tangier (Morocco), which will be operated by a consortium formed by Contship Italia, CMA CGM and MSC. A concession agreement has also been signed for the development of a container terminal facility in Damietta (Egypt). The project includes over two kilometres of quay and an overall capacity of 2.5 million TEUs during the first phase which will be operational in 2009.
It is not only the turnaround of ships that is speeding up; it is also the turnaround of containers. The time each one spends in Malta has been reduced considerably in the past three years, thanks to better use of feeder networks.
Ships are increasing in size, which also has a positive impact on efficiency. One large ship takes less time to handle than two smaller ones. From ships with 3,300 TEUs, feeders have increased from 325 to 600 and even 1,200 containers, a size that would have been considered to be a mainliner 15 years ago.
One thing that does not seem to be on the cards at the moment is for the Freeport to tie up with Grand Harbour operations.
"We can handle everything from here. Why would you want to transport containers from here to Grand Harbour when we have feeder vessels that come here?" he said.
"It would merely add costs."
The Freeport is doing well with containers but has yet to make the same inroads into warehousing and bunkering. The company applied a few weeks ago to open a bunkering subsidiary and is now awaiting approval, with the intention of operating as from mid-2010. But it is holding back on warehousing, not yet sensing much demand from its clients.
"We are keeping our ears open for opportunities but at the same time we are well aware that it is not our core business and that containers is our first priority," Mr Malezki said.
This does not mean that there are no new opportunities. A new company has just been set up at Malta Freeport to handle repairs and maintenance of refrigerated containers (known as reefers) both on the container terminal as well as on board vessels.
"Until now this service was limited in Malta and ships had to go to our competitors in ports like Gioia Tauro," Mr Malezki said.
"Maersk, which is a leader in this sector, is already using this new service. This is a very important move as Maersk handles tuna exports."
Among the wave of investments being undertaken by the Freeport there is also a crane simulator.
"There are two options: You can buy a mobile one that you can rent out to other countries or have a fixed station which then attracts people here for training. Obviously, there is a major difference in price and we have not yet decided which one we are going for.
"Rotterdam's simulator is very successful and there are a few in the US but otherwise there is considerable demand."
Port connections
A ship carrying 11,400 TEU will be visiting Malta every week next year, raising the previous record by almost 3,000 TEU, Freeport director Alex Montebello said.
The Freeport has managed to attract interest from United Arab Emirates, UASC, which made a number of calls in Malta during this year while an announcement is imminent of a new container service that will offer more connections to another "continent".
Water depth - previously a concern - is no longer a problem thanks to regular dredging organised by the Malta Maritime Authority, meaning that depths are now consistently 15.5m, sufficient for vessels with a 14.5m draught.
Will this be enough to placate local industries that have been complaining about the cancellation of a service to Felixstowe in the UK? Perhaps not, but Mr Montebello said shipping was a very dynamic sector.
"You have to remember that shipping routes and services are adjusted constantly, with ports added and omitted, and new partners running services. Local exporters would have a few dozen containers to load whereas a ship would call into Malta to tranship a few thousands. "Epic II was going to Felixstowe until recently but the consortium running the service decided to shift to Tilbury - and also dropped Malta from the route. So even if it decided in the future to reinstate its stop in Malta, it would still not solve the problem of Felixstowe."
There is still a service to Felixstowe provided by Iranian shipping line IRISL. This has been criticised as being unreliable as it stops in ports in Libya on its way here from the Suez, which certain local industrialists said causes delays.
"This is not strictly speaking true. There are many instances when the ship actually bypasses Misurata and comes straight here. The only time it misses Malta would be for commercial or scheduling reasons.
"And there are also indirect routes; it would only add 12 hours to go via Rotterdam and take a feeder from there..."
Of course, it also adds costs, which local industrialists say threaten their competitiveness. The Freeport is sympathetic but also helpless.
'This is out of our control. Not every port serves every port. I think it is important for people to remember that they have 126 direct options, which is not bad for a country this size. In fact, local industries have more options than many of their competitors on mainland Europe because Malta is a hub port. There was a time when we had no connections to the US and now we have two.
"We just have to understand that just as a door may close, other ones may open."
"There are more and more companies that now operate on a 24/7 basis so they need an extra day on which to work," Freeport managing director Uwe Malezki said.
The Freeport will construct also a new gatehouse next year and it has also improved other procedures for local hauliers.
Things have been happening at the Freeport, which had registered a loss of Lm2.7 million in 2003. CMA CGM, the third largest shipping line world-wide, took over operations of the Freeport in 2004. Mr Malezki did not offer exact figures for the intervening years but said the company had no reason to complain.
So is the Freeport now profitable?
"The company is not yet, but the operations are now profitable," he said.
"We are experiencing a 30 per cent increase in volume, which is of course reflected on the revenue side. During our last interview in 2005, we predicted a turnover of two million TEUs (containers) in three years and we have just about reached that target.
"We have a capacity for 2.6 million, which we could reach by 2010-2011, a year ahead of the forecast we made in 2005.
"We will consider it to be 'full' when it exceeds three million TEU. We can do this with the existing quay space although we may square off the west end of the terminal to create another 300m berth," he said.
What about after that? There is still hinterland that can be developed - while the quay space, although finite, could house more cranes to speed up ship turnarounds. Twenty more rubber-tyred gantries have been bought which can add another layer of containers to the current maximum of four.
"Without taking up one more square metre, you increase your stacking space by 20 per cent," he said.
At the beginning of the year, things looked very different. The Freeport was turning away ships because not enough port workers were available. An often overlooked benefit of the port reform was not related to costs but to the number of workers. A new category was set up - auxiliary port workers - who were no longer linked to the old system of inherited positions.
The flexibility of the new category meant that the Freeport added 72 more drivers to the Port Workers' complement. It is forecasting that another 50 will be needed for next year.
Productivity is growing steadily. The Freeport used to handle 14 container moves an hour when CMA CGM took over. This is now just under 21 on average, although the turnover is faster on mainline vessels, with rates of 24 and even 25 logged in recent weeks.
How was this achieved? Mr Malezki said that the first thing was to improve the maintenance schedule so that all the equipment was available in working order at any time.
It also took on more people - 94 this year so far with 19 more about to be recruited.
"In 2005, we had enough people to form 11 'gangs' (the team for a quay crane). Now we have 15.5 gangs on average, meaning we have a maximum of 17 available," he said.
The number of cranes was also increased. CMA CGM started off with 12 cranes but bought four more last year.
There is another crane coming in March and four more coming in about 14 month's time.
"We have a huge investment programme. We have so far spent E45 million and plan to spend E220 million more."
The space at the Freeport once seemed impossibly large but it has gradually filled up. In fact, one of the new cranes will be put on the west quay of Terminal One, but other ones are being put along existing cranes.
"The more cranes you have, the quicker you can discharge a ship and the quicker it leaves - so you have space to handle another one."
The new cranes are also able, in theory, to work in winds up 22m/s - roughly a Force 7-8, compared to the smaller ones that stop work at Force 7.
"However, it depends on other factors such as the wind direction and whether the vessel is already docked or not. A large vessel can act as a windbreaker so that work can continue...
"We are more likely to be limited by vessel manoeuvres than by the crane capabilities. In a strong south-westerly swell, tug boats and pilots cannot bring the vessels in. This is happening more frequently, especially since the ships are getting larger. New tug boats bought by Tug Malta have resulted in an improvement and a new pilot boat is planned which will also help.
"It is important to put this into context: We have been closed for a few hours on five different occasions this year. And this is something that happens in all ports."
The Freeport may be more efficient but other ports are likewise under pressure to become more competitive. But Mr Malezki explained that Malta had spare capacity while many other ports have already reached a status of congestion.
"Once you hit an occupancy level of 75-80 per cent then it has to level off. Our competitors are quite full. Port Said East is full; Gioia Tauro is very congested because MSC moved there from Piraeus - it will this year probably handle 3.6 million TEUs, compared to 2.9 million last year. That is quite a substantial increase in volume," he said.
"Transhipment has grown very rapidly. This is why ports like Algeciras and Valencia are full and investments are being made in new facilities," he said.
There are new container terminal projects coming up in the Mediterranean. A facility will open up for business late next year in Tangier (Morocco), which will be operated by a consortium formed by Contship Italia, CMA CGM and MSC. A concession agreement has also been signed for the development of a container terminal facility in Damietta (Egypt). The project includes over two kilometres of quay and an overall capacity of 2.5 million TEUs during the first phase which will be operational in 2009.
It is not only the turnaround of ships that is speeding up; it is also the turnaround of containers. The time each one spends in Malta has been reduced considerably in the past three years, thanks to better use of feeder networks.
Ships are increasing in size, which also has a positive impact on efficiency. One large ship takes less time to handle than two smaller ones. From ships with 3,300 TEUs, feeders have increased from 325 to 600 and even 1,200 containers, a size that would have been considered to be a mainliner 15 years ago.
One thing that does not seem to be on the cards at the moment is for the Freeport to tie up with Grand Harbour operations.
"We can handle everything from here. Why would you want to transport containers from here to Grand Harbour when we have feeder vessels that come here?" he said.
"It would merely add costs."
The Freeport is doing well with containers but has yet to make the same inroads into warehousing and bunkering. The company applied a few weeks ago to open a bunkering subsidiary and is now awaiting approval, with the intention of operating as from mid-2010. But it is holding back on warehousing, not yet sensing much demand from its clients.
"We are keeping our ears open for opportunities but at the same time we are well aware that it is not our core business and that containers is our first priority," Mr Malezki said.
This does not mean that there are no new opportunities. A new company has just been set up at Malta Freeport to handle repairs and maintenance of refrigerated containers (known as reefers) both on the container terminal as well as on board vessels.
"Until now this service was limited in Malta and ships had to go to our competitors in ports like Gioia Tauro," Mr Malezki said.
"Maersk, which is a leader in this sector, is already using this new service. This is a very important move as Maersk handles tuna exports."
Among the wave of investments being undertaken by the Freeport there is also a crane simulator.
"There are two options: You can buy a mobile one that you can rent out to other countries or have a fixed station which then attracts people here for training. Obviously, there is a major difference in price and we have not yet decided which one we are going for.
"Rotterdam's simulator is very successful and there are a few in the US but otherwise there is considerable demand."
Port connections
A ship carrying 11,400 TEU will be visiting Malta every week next year, raising the previous record by almost 3,000 TEU, Freeport director Alex Montebello said.
The Freeport has managed to attract interest from United Arab Emirates, UASC, which made a number of calls in Malta during this year while an announcement is imminent of a new container service that will offer more connections to another "continent".
Water depth - previously a concern - is no longer a problem thanks to regular dredging organised by the Malta Maritime Authority, meaning that depths are now consistently 15.5m, sufficient for vessels with a 14.5m draught.
Will this be enough to placate local industries that have been complaining about the cancellation of a service to Felixstowe in the UK? Perhaps not, but Mr Montebello said shipping was a very dynamic sector.
"You have to remember that shipping routes and services are adjusted constantly, with ports added and omitted, and new partners running services. Local exporters would have a few dozen containers to load whereas a ship would call into Malta to tranship a few thousands. "Epic II was going to Felixstowe until recently but the consortium running the service decided to shift to Tilbury - and also dropped Malta from the route. So even if it decided in the future to reinstate its stop in Malta, it would still not solve the problem of Felixstowe."
There is still a service to Felixstowe provided by Iranian shipping line IRISL. This has been criticised as being unreliable as it stops in ports in Libya on its way here from the Suez, which certain local industrialists said causes delays.
"This is not strictly speaking true. There are many instances when the ship actually bypasses Misurata and comes straight here. The only time it misses Malta would be for commercial or scheduling reasons.
"And there are also indirect routes; it would only add 12 hours to go via Rotterdam and take a feeder from there..."
Of course, it also adds costs, which local industrialists say threaten their competitiveness. The Freeport is sympathetic but also helpless.
'This is out of our control. Not every port serves every port. I think it is important for people to remember that they have 126 direct options, which is not bad for a country this size. In fact, local industries have more options than many of their competitors on mainland Europe because Malta is a hub port. There was a time when we had no connections to the US and now we have two.
"We just have to understand that just as a door may close, other ones may open."