One of Malta’s largest logistics companies has said it will be forced to increase its prices from January in the face of a new EU environmental tax on shipping.

Express Trailers CEO Etienne Attard told Times of Malta the upcoming Emissions Trading System (ETS) “punishes” Malta for being an island state.

Attard would not provide details of the revised prices as he is waiting for both heavy goods vehicle-carrying shipping companies servicing Malta to announce their emissions rates.

“These, together with other inflationary costs, including the COLA increases, will have a bearing on our prices, forcing us to revise our tariffs accordingly as of 1st January,” he said.

“And given that most of our road operations are based in Europe, we will also need to factor in the eventual toll increases and other inflationary increases there.”

Express Trailers describes itself as a transport and total logistics operator that connects Malta to mainland Europe, the Mediterranean, North Africa, China, North and South America, the Middle and the Far East.

The news comes less than a month after Italian shipping company Grimaldi Euromed announced it was raising its prices to offset upcoming ETS charges, with its routes connecting Malta and the Italian ports of Genoa, Livorno, Salerno and Catania affected by the move.

Under the new rules coming into effect this year, all vessels above a certain cargo capacity will have to buy emissions ‘allowances’ to offset 40% of their carbon emissions when calling in at European ports. By 2027, they will have to offset 100% of their emissions.

And as the spectre of ETS looms closer, industry stakeholders have described their apprehension at the scheme which is expected to add millions in annual costs for long-haul carriers.  The EU Commission describes the tax as a “cornerstone” in its policy to combat climate change.

The EU needs to provide amendments and solutions

Last month, Malta Freeport CEO Alex Montebello warned it would lead to more costly imports and higher export costs, while in October the Malta Council for Economic and Social Development (MCESD) met with Transport Minister Aaron Farrugia to voice its concerns.

Describing his company’s “huge disappointment” at the introduction of the scheme, Attard said it would hit Malta especially hard due to the country’s reliance on shipping when compared to its land-locked neighbours.

“As things stand, ETS is going to punish us over and above the fact we are an island totally dependent on maritime connections for our imports and exports,” he said.

“This directive should not be seen only as an economic issue but rather as a matter of national priority that ultimately will affect our daily needs.”

Economic ‘pillars’ and employment

Echoing Montebello’s concerns that shipping companies could instead simply choose to divert to non-EU ports to avoid paying ETS levies, Attard stressed this could prove particularly damaging to certain sectors of the economy.

Crediting the Malta Freeport with having helped certain industries to grow and thrive, Attard highlighted the pharmaceuticals sector – which he described as a “big pillar” of the economy – as one such industry which could lose out.

“These sectors rely a lot on fast transit through Malta through a modal shift of goods arriving from non-EU ports and re-exported by road into Europe, thus helping export volumes out of Malta. All this may be at risk”, he said.

And while not envisaging any impact to Express Trailers employees, he warned that ETS could impact jobs if businesses reduced their operations in Malta. 

“Employment is not an issue, and our employees will not be affected. The risk that ETS can have on employment is if business moves away from Malta which will lead to a reduction in work volumes.”

But what about the environment?

While ETS has the maritime sector worried, its introduction comes at a time of increasing fears over climate change.

This summer saw Malta swelter in temperatures topping almost 43°C and wildfires sweep through Greece as Europe experienced its hottest July on record.

And with the global shipping industry estimated to produce more carbon emissions each year than all of Germany, does Attard agree that despite the downsides, ETS could be necessary to help the world avoid the worst impacts of climate change?

“We are not against the principle of the ETS directive, and we operate in a sector that is considered to be a major polluter,” he said, adding it was right the industry carry a certain level of responsibility.

“However, transport operators in Malta cannot be put on the same level as those operators who are not burdened with our commercial disadvantages,” he said pointing to other costs affecting Maltese companies such as port charges.

Stressing he was a “huge advocate” for sustainability, Attard said the company had made efforts to optimise its operations and had achieved “very interesting results” in efficiency and reducing emissions.

Where do we go from here?

Attard would like to see ETS not applied to ferry services connecting Malta to the rest of Europe and more solutions found to prevent the Freeport losing business to non-EU ports.

“For Malta, the ferry is an essential part of our connection to mainland Europe, and as such, indispensable. Therefore, ideally, ETS should not apply.”

“The Freeport and its activities are also vital because EU transhipment ports in the Mediterranean will be threatened by non-EU ports in the Mediterranean, so the EU needs to provide amendments and solutions,” he said.

While the European Commission recently moved to include Morocco’s Tangier Med port and Egypt’s East Port Said in the scheme in a bid to prevent shipping companies from simply skirting Malta and calling at the North African hubs instead, the Freeport has said it would like to see more ports added to the list.

And despite their inclusion in the Emissions Trading Scheme, carriers from the Moroccan and Egyptian ports will still only be required to pay half the fees they would when travelling between two European ports.