Logistics is the physical network that connects the globe. Supply chains are the backbone of international trade and investment, and are one of the key pillars for development.

Today this has evolved to include freight transportation, warehousing, border clearance, payment systems, and other ancillary ‘value added’ functions.

While logistics is mainly perform­ed by private operators, the sector has become a public policy concern for governments and inter­national bodies. Supply chains are complex , so overall performance also depends on government interventions, particularly in the infrastructure and cross-border trade facilitation.

The World Bank’s Logistics Performance Index ranking is based on a worldwide survey of global freight forwarders and express carriers. The latest 2016 index ranks Malta in the 56th place – a fall from 51st place in 2014 and 43rd place in 2012. This underlines the key challenges the sector is facing in Malta.

These challenges include the scarcity of land and its cost, thus making the financial feasibility of local storage space investment a challenge; the sector is currently within the remit of various ministries and regulators, which is not conducive to a holistic and synergised approach; Malta’s port and container transport charges are among the highest in the EU, and thus a stumbling block for potential investors; existing logistics operators are also facing human resource and training challenges; customs clearance work practices require continuous monitoring due to inefficiencies; and Malta’s de­tach­ment from mainland Europe makes local operations more dependent on roll-on/roll-off services.

Despite these challenges, growth opportunities for Malta do exist. The country has always been at the crossroads of Mediterranean trading routes, and only six miles away from one of the world’s busiest  maritime trade routes. Our key infrastructure is also within close proximity, thus facilitating business processes.

Malta is eminently positioned to become a regional logistics hub

Viewed in this way Malta is eminently positioned to become a re­gional logistics hub. Its geographical position provides potential benefits for the transit of goods to Eu­rope or Africa. Moreover, with the Suez Ca­nal’s expansion and as global trade growth continues, trade flows in the Mediterranean will increase.

There are a number of initiatives Malta could consider to become the port of call for transhipments to Europe and North Africa:

• Integration of various ministerial portfolios into a single regulatory framework is more conducive to a holistic and synergised approach;

• Additional free trade zones under the existing or revised Malta Freeport’s framework would lead to benefits from the customs duty suspension regime;

• Fast-tracking of the new EU rules set out in the Union Customs Code may provide Malta with the impetus to be at the forefront of change;

• The setting-up of a one-stop shop agency to act as the single government interface for companies involved in logistics;

• The undertaking of a comprehensive study to analyse the underlying costs under all modes of transport and having them compared them to those in competing jurisdictions;

• Creating specialised training programmes through synergies between educational institutions and industry, such as the model adopted by Mcast and the aircraft maintenance sector;

• Promoting and repacking Malta’s wide range of incentives that will enhance the sector’s appeal for prospective investors.

The logistics sector would also do well look at other local mature sectors and understand better their key success factors, while also look externally to other logistics powerhouses – such as the Netherlands and Singapore.

Finally, in view of the significant investment required in order to create certainty for businesses, the above identified initiatives should be part of a national logistics policy.

Shawn Falzon is a partner at EY Malta.

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