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Logistics: the next frontier

Date: 12/06/2014

The news that Economics Minister Chris Cardona is proposing ways to facilitate logistics in Malta could not have come a moment too soon for John Portelli. The Valletta Cruise Port CEO is also the president of the Malta branch of the Chartered Institute of Logistics and Transport, one of the first ever to be set up.

‘Logistics’ is a fairly recent buzz word in the Maltese economy but it has long and deep roots.

“Logistics has been around for as long as wars – as wars are all about armies getting the right things to the right place at the right time and in the right condition. All that has changed in the commercial world is the addition of ‘and at the right price’,” Mr Portelli said.

“All you need to consider that Malta has €9 billion worth of exports – and all of those require logistics.”

The Libyan crisis a few years ago showed how well placed Malta was for humanitarian logistics, coping with everything from trucks and tents to medicines. But there are several other areas where Malta has a role to play, Mr Portelli believes.

“There is scope for the Freeport and Medserv to expand for example. They are both considering more warehousing.

“But there are also other activities beyond these locations. Malta is already one of the leading trans-shipment hubs for maritime trade in the Mediterranean but we could do a lot more for aviation.

“We could easily be a distribution depot for international sales of pharmaceutical and retail products. There are other questions to ask: Should we allow an element of partial manufacturing? This is where Malta Enterprise and Malta Industrial Parks have a role to play...”

Mr Portelli believes that Malta has accumulated significant expertise over the years, thanks to the established manufacturing and services companies.

Joe Gerada, the managing director at Thomas Smith Group, agrees that skills are the key and believes the time has come for a more professional approach.

“Local players in shipping and logistics are not subject to any level of competence or qualification. Any player can join the industry without any preparation or need to qualify. This is not helping standards and there should be some level of minimum qualification to practise in the field,” he said.

He welcomed the government’s plans to introduce a policy for logistics and called for more space – ideally on the waterfront.

“Professional players need a site which should be considered a common user site, subject to similar terms and conditions for all, so that competition and standards of service can prevail. Adequate space is limited by Malta’s very geographical nature so giving previous scarce space to a limited number of players or one player, even if not competent, will reduce the level of service and Malta will suffer. At the end of the day the brand is Malta,” he said.

Apart from space for operations, he also sees other barriers to growth in this growing sector, such as instability in North Africa, as well as bureaucracy and lack of interdepartmental cooperation as issues do not site squarely with one specific authority.

But he is optimistic about the future opportunities.

“The country has a very solid reputation... We offer a high level of service, and consequently all Mediterranean movements can be tackled. From our company’s point of view, we believe our strength comes from belonging to solid specialised networks of professionals in various logistic fields, from employing good, competent and hard-working achievers, and from giving quality of service priority. This has also resulted over the years in considerable goodwill and return business.”

Certainly some of the key players in the industry are investing in this growing sector. Express Logigroup International Freight Service CEO Jonathan Vella believes that as global trade flows become increasingly complex, they demand more and more flexibility in the supply chain.

“As a company you want to be alert to these changes, and the new situations and opportunities they offer. We at Express Logigroup understand that this requires innovative transport solutions, solutions that match our client’s specific needs,” he said.

“As company we have been investing heavily in our fleet to be able to expand our reach, but that alone is not enough. We have also been investing in procedures and staff training to keep quality checks and procedures in place. Presently, Express Logigroup is in the process of implementing the ISO 9001 standard which will be finalised and fully implemented in the coming weeks.”

Franco Azzopardi, the CEO of Express, expressed the hope that Malta Enterprise would include logistics as a qualifying activity for incentives especially in terms of investment tax credits.

He believes that making Malta a successful hub for logistics would rely on having sufficient connections by air and sea, noting that only have one Ro-Ro shipping line from Genoa could be a limiting factor.

“In spite of all the reforms, port charges are still expensive, making Malta less competitive. However, on the positive side we should leverage the sophisticated fiscal regime and advantageous financial services bundled in the Malta offering, using them for the movement of goods from the Far East through Malta to EU and North Africa,” Mr Azzopardi said.

Logistics – Where are we now?

The government is now looking at logistics as a new source of foreign direct investment, but there are already 3,600 local companies involved in the sector – of which 110 are institute members. The number may seem surprising but when you consider that according to the 2012 Transport Statistics, there are 1,500 land transport companies, 992 involved with sea transport and another 989 in warehousing, the figures quickly add up.

In all, the sector employs over 9,000 people – with 106 relatively large firms employing more than 10 people.

According to the NSO’s Malta in Figures, the transportation and storage sector increased by 34.6 percentage points since 2005 in terms of turnover, with the Transport Statistics reported €170 million in salaries and wages.

The Chartered Institute of Logistics and Transport (CILT) believes that the growth in the sector will see more growth and is concerned that the skills might not be available. It is tackling this along two pillars. It is footing a considerable part of the bill for a human capital survey, which will be started as soon as it has finalised support from other stakeholders. It has also been active on the education front and has been running courses for the past 15 years. Five years ago, the University of Malta introduced a higher diploma in transport and logistics management which saw its first graduates last year. The institute is the trustee for a fund which has been used to pay for books for the University among other things, while other studies are also underway or planned. CILT organises regular conferences, each dedicated to one of the sectors involved, such as maritime and aviation. It is also in the process of drawing up a position paper on road transport.


Source: Times of Malta

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