Crumbs at the Freeport

When the ill-conceived privatisation of the whole Freeport to CMA-CGM had just started to take effect, Minister Austin Gatt exhorted us in The Sunday Times of November 21, 2004 that "CMA-CGM appreciates as much as we do the strategic value of our harbour and wants to turn it into its Mediterranean hub for its worldwide activities, not as Mr Bartolo seems to believe 'only a small part of their operations'." He even went further: "CMA-CGM will have every incentive in the world to continue to ensure growing business to Malta Freeport."

Minister Gatt led everyone to believe, that as soon as this French shipping line took over the Freeport, the lowest level of investment that existed in CMA-CGM use of the Freeport, would not only be maintained but increased. No sooner had he made this declaration, that CMA-CGM curtailed its own shipping services from the Freeport when it dropped its FAL service while other shipping lines left the Freeport.

Freeport's managing director admitted with the Financial Times that sectors of the Freeport are idle for want of work. No serious investment has been made by CMA-CGM in the Freeport because they were not committed to any minimum firm investment, as the ministry would like us to believe.

Rather than increase its use of the Freeport, CMA-CGM did the opposite. On April 24 the ministry issued a pathetic statement taking comfort from changes in trading patterns as far away as Asia after so many shipping lines were left to turn their backs on Malta. Our manufacturers and importers are more concerned that the frequency and diversity of shipping coverage that they had, has quickly dissipated to just one physical presence by CMA-CGM on the Northern Europe to Malta run.

On many occasions, the sailing was not even done and CMA-CGM gave priority to other ports over Malta-bound containers. The ministry is silent on these factors, although they have a strong bearing on our international trade.

As guardian of Malta's assets, the PN government had the obligation to promote our best interests, but did not do so in the privatisation process at all. The Financial Times report referred to several shipping lines deserting Malta for Cagliari. A year ago, the Federation of Industries warned the PN government that the Freeport, still under Maltese control, was hitting exporters when Freeport lost business to competitive hub ports, and it was dreading the shipping scenario after the Freeport privatisation.

The PN government simply did not care and has now exposed our importers and exporters to their worst plight ever, in turn also affecting bread-earners employed at the tug operators, pilots, agents, and other port users

While the ministry in its April 24 statement was drafting its list of shipping companies working under slot arrangements, one such line was packing its bags to leave Malta. The ministry knew that Norasia is no longer a regular Freeport user, and that other lines, like China Shipping and Zim, hardly have a presence. If IRISL have increased their throughput, it is welcome but it is not in the liner trade but comes from transhipment business, which is no consolation to our shippers.

What counts to our factories and importers are regularity, reliability and frequency. These are the necessary characteristics in the liner trade on which Maltese shippers must rely to buy and sell their goods if they are to remain in business, as their overseas competitors do naturally.

Very bad deal for Malta

The problem is worse because hardly any real third party feeders now serve the Freeport and those that do are overbooked because of the small size of ships. Feeders are essential components to mother ships in the hub trade, and the chances of new lines being attracted to the Freeport are therefore dim. 

Gioia Tauro has several such feeders in place even though its hinterland is small for the Italian trade. With us, we need feeders both for transshipment and to promote our international trade on the short sea routes, yet there is a dearth of feeders linking Malta Freeport that has only occurred since its privatisation. What is needed is that new shipping lines are induced to the Freeport that will be liner services, rather than one off calls of convenience to hub spot traffic.

Maersk Sealand was implicitly quoted by the ministry as having moved some of its service from Gioia Tauro to Port Said East. The world largest shipping line operates the new Suez Canal Container Terminal (SCCT) and has moved those services linking the east Med from Gioia Tauro to Port Said.

Had the ministry searched Maersk Sealand's Website, it would not have been misguided at all, inasmuch as the shipping line announced that the move "will not only provide customers with a better service of the area including Egypt, Israel, Lebanon, Cyprus and Turkey, but will also release additional capacity in Gioia Tauro for customers in countries served via this port."

Unlike Malta Freeport, Gioia Tauro is bursting at the seams and the move will provide more opportunities for existing and new shipping lines to set their eyes on Gioia Tauro, unfortunately, resulting in greater competition to Malta. Evidently, the horizon remains cloudy for our importers and exporters as our Freeport may find it more difficult to dislodge Gioia Tauro from its dominant position.

One fact is very clear: Maersk Sealand will now have a strong presence in both Gioia Tauro and Port Said and has put its money where its mouth was. The same cannot be said for CMA-CGM, without any thanks to our government, in as much as the Freeport acquisition was so weighted in their favour that their shipping services take precedence over their subsidiary interests in our Freeport.

Our government left our traders and Freeport employees severely exposed to the whims of the French line that can dictate matters, and Minister Gatt still has the audacity to defend the privatisation. And for heaven's sake, please do not lecture readers that the terminal operator, who is a contractor to CMA-CGM, has all the interest to make our Freeport succeed, because the privatisation documents referred to by the ministry only illustrate that the contractor is merely a proxy for CMA-CGM and is obliged to stringently comply with the French line's directions.

Events that unfolded during the last six months have amply demonstrated that the Freeport privatisation in the form it was done, was a very bad deal for Malta. The PN government must not wash its hands of the matter. It has an urgent obligation to ensure that new shipping lines or alliances are attracted to the Freeport that can revitalise the much-needed shipping links to our traders, and with them third party feeders.

evaristbartolo@hotmail.com