Maritime industry has vast untapped opportunities
13,090 ship calls in 2016
This feature has no pretence to be a professional economic analysis of the contribution which the Maltese maritime industry makes to Malta’s gross domestic product. I hope that in the near future the Malta Maritime Forum will be able to undertake such a study which is essential to raise awareness about this industry.
Rather, what I aim to achieve instead is highlight the economic drivers which are generated by the maritime industry. But even then one has to narrow the definition of the term maritime industry because it is so vast and diverse that to make a reasonable assessment one has to segmentalise and focus. The focus here is on ships, terminals and related services such as ship repair.
According to Oxford Economics, the economic value of the EU shipping industry amounts to €140 billion by way of total GDP contributions. The same analysis concluded that the EU shipping industry generates a total of 2.1 million jobs and, more important, that it has a multiplier effect of 2.6. Hence, crudely speaking, for every €1 spent in this industry there is the creation of another €2.6. One can go into much deeper analysis of these economic criteria to differentiate between direct and indirect impact as against induced impact or catalysed impact to assess the total impact of the shipping industry on the economy. However, as stated above, this is not the scope of here.
To understand better the economic value generated by the maritime industry, one can perhaps take into consideration the economic activity generated when a vessel enters our ports. Such a normal occurrence entails: a communication system to record the ships arrival and an authority (Transport Malta) to ensure that the arriving vessel is conforming with rules and regulations applying to ships’ traffic and port entry; a customs authority to control the movement of vessels, personnel and cargo; a shipping agent to coordinate the ships’ arrivals and organise the services required; a pilotage corps to provide qualified and professional pilots to assist a vessel to come into port; tug boats to assist the vessel during its manoeuvring operations; mooring men to moor the vessel to a quay; a terminal where the ship is moored and where it can undertake its discharge and loading operations; and stevedores or terminal operators to undertake the cargo operation.
Considering that in 2016 there were 13,090 ship calls, one can appreciate better the turnover generated by ships calling at Malta.
The list is endless if one were to factor in the range of services that a vessel might require while calling in a port or when a vessel is calling in Malta to undertake repairs or other services. Each one of these service providers is in turn employing personnel and generating an economic turnover which runs into millions.
Taking some real examples, Malta Freeport Terminal employs 836 personnel and has invested over €270 million since its privatisation. During 2017 Malta Freeport handled over 3.15 million TEUs (20ft containers). The Valletta Gateway Terminal handles over 1,000 vessels per year, employs about 100 personnel and generates a turnover of over €12 million.
These two terminals, apart from their own personnel, also employ the licensed stevedores who between full-timers and casuals amount to almost 500 persons. Another 113 licensed hauliers (burdnara) are engaged in the transport of cargo from and to the terminals.
Other stakeholders such as Palumbo Shipyards which undertakes ship repairs at Malta, employs a workforce of about 220 persons and handles an average of 200 ships per year. It is estimated that over the last seven years this enterprise generated over €250 million for the local economy.
This is not taking into account other ship repair facilities such as Bezzina Ship Repair Yard Ltd (120 employees) and Cassar Ship Repair Ltd (150 employees). Other entities that go to make up this market segment include Medserv PLC (turnover of €32.8 million in 2016) and Malta Maritime Hub (turnover of €12.6 million in 2016). These are but a few examples of contributions that are made by the local maritime industry to the Maltese economy.
If one were to bring into this equation the Malta flag, which is the sixth largest flag in the world and under which are registered 8,123 vessels, this contribution takes an even wider perspective with the inclusion of professional services such as legal and financial which in turn generate employment in interesting numbers.
As things stand today, the income from this market segment is mainly generated from services related to ship registration, but other countries, in competition with Malta, have managed to attract other services such as ship management, crewing and ship finance. In recent years Malta has attracted some key players from these activities, but more needs to be done to bring in more investment through these maritime activities which are not insignificant in terms of economic contribution. Just by way of example, ship management companies in Poland are estimated to generate on average €25 million per annum to the Polish economy.
In Malta we have been fortunate that the maritime industry has always kept away from partisan politics and all administrations have realised and supported the positive value of this industry. It is however a considerate opinion that more value can be obtained from this industry by having more focus from the administration and long-term planning with a holistic approach to guide within the geographical constraints of Malta and the environmental considerations that need be respected to strike an appropriate balance.
The local maritime industry has come a long way in its development but the opportunities that still need to be tapped are enormous and time is of the essence.
Godwin Xerri is managing director of Combined Maritime Services and a member of the Malta Maritime Forum.