Logistics seems to be the buzz word at the moment. Conference workshops dedicated to it always seem to be the most dynamic, with a variety of stakeholders putting forward complaints about past limitations, updates on present opportunities and ideas for the future.
Warehousing and storage has until now been largely linked to the oil and gas industries, thanks to our geographical location, the Freeport and more recently Medserv. However, the government has already started to promote Malta as a hub for ‘third party logistics’, and has been promising legislative changes for some months, with a number of proposals on the table, ranging from the creation of free trade zones to the inclusion of logistics as a qualifying activity for incentives.
But it is clear that the sectors involved are not waiting idly by. They clearly believe that logistics can provide an exciting new range of activities and that it is never too soon to start working on the infrastructure this will require.
Arrow Express, for example, recently invested in new premises which it describes as an “e-fulfilment centre”, basically a logistics centre catering mainly for businesses involved in e-commerce.
Managing director Nikki Zammit explained that the company spent some time looking for the right location which had sufficient space to house offices as well as warehousing under one roof. Like many of those involved in logistics, he is quick to dispel the impression that warehousing is just somewhere to store clients’ goods, he explained.
“The value-added that we can offer clients as a company are complementary to our freight forwarding, express courier services and domestic distribution/delivery activities. Such value-added activities could relate to ‘pick, pack and dispatch’ activities among others. As an example, a client who would have his stock in storage on our premises would be able to send us his sale orders periodically as required. We would pick the ordered items, pack them according to the sales order and then dispatch each order individually both locally and overseas as required and directed by our client. We would also be in a position to provide clients with reports for any stock held on an ongoing basis, while also providing the service of periodical physical stock takes as required.”
The creation of additional free trade zones, announced as part of the maritime policy, would complement the Freeport. Peter Bonavia, the general manager at Carmelo Caruana Co. Ltd, believes they would offer a number of benefits to traders.
“The economic benefits include the deferral of customs duties and tax for items imported from outside the EU and operational benefits such as the possibility of having indefinite customs tax-exempt storage opportunities.
Market trends point towards increased online shopping, not only of small items but also bulky and heavy items such as furniture
“Other benefits include the consolidation of items transported from various countries from the EU and third countries, the application of value-added services and the re-distribution to regional countries which are non-EU,” he said.
Like Mr Zammit, Mr Bonavia sees value-added services as going well beyond storage, suggesting that this could include product labelling, packaging, assembly and kitting for products in transit.
For freight companies, hubbing solves one of the fundamental problems of operating in a country which has far more imports than exports: the empty return leg to suppliers in Europe.
Franco Azzopardi, the chairman and chief executive of Express Trailers, said in an interview (see pages 12 and 13 “There are 101 things that could be done, from hubbing to re-processing and packaging. It would narrow the gap for us between import and export, as the products would almost certainly be sent to mainland Europe by Ro-Ro and then road freight,” he explained.
Mr Azzopardi also raised a few red flags, including the need for more space at Ħal-Far and rising port fees – including a charge for containers filled with empty pallets. The topic of port fees, however, is complex and Joe Gerada, the managing director at Thomas Smith, has spent long enough in the industry to be wary of the blanket statements that crop up regularly in the media.
“Port fees are a wide term and such statements should be more specific. Which port fees are going up? By how much have they done so over the last 10 years? How does that compare with other costs that have gone up which affect our competitiveness? In principle all costs effect our competitiveness,” he said.
“Costs are usually our suppliers’ selling prices, and those are determined by supply and demand. The larger the number of suppliers, i.e. the more competition there is, the more prices will trim themselves. Shipping services are supplied in a market of quite fierce competition and port fees are also partially determined by this.
“I would, however, also invite anyone who wishes to check if there are any components in port costs that are not influenced by supply and demand, but are a result of old port practices. This is a very old subject and having worked in shipping in Malta for so many years, I no longer have any aspirations that this part will change. All involved know the age old story,” he shrugged.
In the meantime, amid of all this talk of Malta being a hub, another logistics operator is creating its own network of hubs around the world to cater for freight coming to Malta.
Following the success of hubs in the UK and the US, Maltapost launched new hubs in Germany, the UK and another one in Italy which will be functional in the coming weeks.
Mark Vella, Maltapost’s chief commercial officer, said that the company’s new hubs in Germany and the UK were geared up to truck heavy items – within specified dimensions.
“Market trends point towards increased online shopping, not only of small items but also bulky and heavy items such as furniture. Besides handling the delivery of items from the EU and the US, Maltapost also handles the last mile delivery: to the clients’ address of choice or preferred Post Office.
“This is one of Maltapost’s competitive edges as it collects and delivers from and to every address on the islands, six-days-a-week and operates through a comprehensive retail network of outlets,” he said.
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