Liverpool port operator eyes cargo handling contract

Portia, the overseas arm of Mersey Docks and Harbour, is the proposed operator of a consortium that has been formed to tender for cargo handling in Grand Harbour.

Consortium spokesman George Hyzler said Mersey Docks and Harbour Company is an established international port operator.

It is the second largest port group in the UK and, in addition to the Port of Liverpool and Liverpool Freeport, owns and operates ports in Sheerness, Chatham and Heysham.

The company also operates container terminals in Cardiff, Belfast and Dublin and owns and operates three container shipping lines serving north European routes. The consortium comprises most of the 19 ship agents, the burdnara (cargo clearing and handling agents) and port foremen.

The participation of two other port service providers is as yet unconfirmed.

"We believe you need to have an international operator, both because of their experience, positioning and expertise, as well as being able to operate at arm's length from local operators. That way no one will have an advantage," Dr Hyzler said.

"We approached Portia after we were advised that they were the best for Malta's needs. It will be a fresh approach. You do not need an international operator if the port is run the way it is today."

Dr Hyzler is optimistic that Portia's marketing would enable it to identify new sources of business to regenerate activity in Grand Harbour. Traffic has been generally static over the past decade, particularly when compared to pre-1990 years.

The concession is for 10 years but may be renewed through bilateral agreement.

"We would be looking at about 30 years' involvement although we believe 10 years is still viable, especially as the consortium members already have most of the equipment required," Dr Hyzler said. "However, you have to go into this assuming you are going to be able to increase the volume of work."

Dr Hyzler said another important consideration would be the tender conditions: Who will be responsible for the maintenance of the quays? Will Malta Maritime Authority retain this role and in return collect berthing fees?

The other consortium so far confirmed will be made up of a subsidiary of the General Workers' Union - although it is not expected to be Cargo Handling Co. - the port workers and a company from the Hili group.

There had been fears expressed that this would mean CMA-CGM, which is represented by a Hili company, could be involved in running both Grand Harbour and the Freeport.

Sources pointed out, however, that the CMA-CGM company involved in the Freeport was part of a consortium and was completely independent of the shipping line represented by Carmelo Caruana Ltd.

A spokesman for this consortium, who declined to be named, said the government was only offering operations at the Deep Water Quay and Laboratory Wharf and warned that these quays did not offer sufficient scope to justify investment.

"There is simply not enough activity at the moment - Grand Harbour has been killed off. I believe it can be revived if it is seen as part of a master plan for the regeneration of activity."

The spokesman queried various comments on whether the new contract should bring down rates: "No one can be expected to invest money and at the same time bring down the rates. In this way they would never recoup their investment.

"The volume would have to increase but that would only come about through the allocation of more quay space. They are only offering a fraction of the space that could be available."

The Hili consortium spokesman said there was still hope that the government would reconsider the scope of the concession, perhaps even incorporating Marsa Shipbuilding, which he said was the "only suitable space available if you want serious growth".

Dr Hyzler, on the other hand, does not hold out any hope that it will be included.

In the meantime, sources lamented that the government had not completed negotiations with the port workers before the tender was issued.

The tender documents lay down that the government intends to reform the systems that operate in Valletta port and adds: "It is probable that such reform will be in place before the new contractor takes over operations".

The sources said this was not likely, especially as this tender is expected to be adjudicated by year's end.

"They have put the cart before the horse. I suppose a new agreement could be reached before then but it would be a miracle. Unless something drastic happens between now and when the new contract is signed, port prices will go up and not down.

"The new operator will still be bound by law to the tariffs, which are made up of nine different items, most related to port workers," the sources said.

Dr Hyzler admitted that ship agents and exporters were adamant that the costs had to come down to make the port more competitive and thereby attract additional business.

It is also likely that the new consortium would no longer be paid a compensation tariff for containers handled at the Freeport, which accounts for one fourth of the revenue.

"Really, what is on offer is a pittance if you look at the volume being handled at Grand Harbour. Whoever takes this on has to do so with plans to increase the work," Dr Hyzler and the Hili consortium spokesman concurred.

The call for expressions of interest closes on September 16.

www.mma.gov.mt/tenders.asp