Importers are holding talks with the government after freight and fuel prices rose by up to 20 per cent over last year. 

The increase in transportation costs for most products has importers worried about shortages and further price hikes. 

Prime Minister Robert Abela has pledged government support to the business sector in the face of rising costs partly fuelled by the war in Ukraine. Last month, he announced a price stability agreement with wheat importers.

The government is also intervening to keep prices stable in the energy and fuel market. 

David Fleri Soler, who heads the Malta Chamber’s logistics section and is leading the talks on behalf of importers, told Times of Malta the island is at a disadvantage in the EU.

“Malta is already disadvantaged because it is an island and the increase in fuel at the pump [in the EU] and extra costs on bunkers from the ferry lines put it at an even greater disadvantage compared to other EU countries,” Fleri Soler said.

Malta does not benefit from any preferential treatment due to its geographical position, which Fleri Soler said left the country “at the mercy of shipping lines”.  

This is being further compounded by rising fuel costs. 

Fleri Soler said the rise in the price of oil in Europe due to the war in Ukraine and its impact on the cost of freight vessels to Malta is affecting 70 per cent of the cargo in and out of the island. 

This is over and above the 1,000 per cent increase in the cost of freight for China imports last year. 

Transport and logistics company Express Trailers, where Fleri Soler is chief commercial officer, has sent its clients a circular to explain the rise in prices caused by fuel costs.

In March alone, fuel at the pump in Europe increased by 28 per cent and, from April, ferry lines are applying a 27 per cent increased surcharge on bunkering. 

The company now intends to start placing a surcharge for fluctuations in fuel prices by setting a baseline price which is adjusted on a monthly basis.

Normally, revisions to reflect inflation happen towards the end of the year but the idea is to help clients plan for the surcharge a month ahead.

Express Trailers said it has no intention of entrenching fuel price volatility into its agreed freight tariffs, instead adjusting prices through this temporary adjustment mechanism.

It expressed the hope that the official quoted fuel prices, which are not sustainable in the longer term, would correct themselves and that the volatility in energy costs would settle down soon.

Political, US and OPEC interventions were “working forcefully” towards this goal, it added.

Unequal increases

Fleri Soler also flagged how increases in the price of marine fuel charged by roll-on/roll-off vessel operators between Malta and Italy were 50 per cent higher than those from the same Italian port to Tunis. 

“We are talking about the same route and distance, if not further,” he said. 

While the rise in oil prices was a direct result of the war in Ukraine and not a capricious decision, the problem was that the shipping lines that operated to Malta did not provide any benchmarking, he pointed out. 

Despite discussions with the ferry lines on how their surcharge reflected the volatility in the official Brent oil index, “we are not in control of the mechanics being applied to the surcharge on all short-sea Ro-Ro crossings,” he said.  

“This information is not divulged, so we cannot say if the increases are correct,” Fleri Soler continued. 

“We accept that fuel went up but why is there no transparency and why are the increases not the same between Mediterranean ports,” he questioned. 

The lack of an explanation of the increments in relation to market prices has raised suspicion that the situation – and Malta, in particular – is being taken advantage of. 

The industry is currently “haggling” with the shipping lines “in the hope that they will come to their senses and start quantifying the increases, rather than just adopting a take-it-or-leave it approach”. 

Addressing other pressures on transport prices, Fleri Soler said the shortage of drivers had led to “tremendous” increases in their salaries. 

The combined effect of these factors could mean a huge increase in freight rates for the remainder of the year, contributing further to the inflationary pressure already being felt as the cost of transport contributed to the increased price of goods. 

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