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Freeport to run out of space ‘in a few years’ – CEO

Date: 18/01/2016

The Freeport is already handling 3.1 million TEUs a year – getting worryingly close to its capacity of 3.5 million – but the CEO of the Freeport Corporation, Aaron Farrugia, is well aware that getting extra space will not be without its controversies.

Apart from objections to the use of the land, reading between the lines of what Dr Farrugia said, there may also be wrangling for the corporation to take control of the free trade zones promised as part of the Industrial Maritime Policy.

Until 2004, the corporation was both operator and regulator of the Freeport part of the site in Birżebbuġa, which now hosts Freeport Terminals, Oiltanking and Medserv. The terminals operation was then privatised and taken over by CMA CGM – for 65 years following a concession extension – leaving the corporation as regulator.

This is why, in spite of the fact that the corporation owns the land there, it was Freeport Terminals Ltd which recently applied for an extension “on the corporation’s behalf” to the first terminal, which was turned down by Mepa because of its environmental impact.

“We were very fortunate that Maersk and MSC did not pull out of Malta when they merged to form the 2M alliance, especially since our competitor Gioia Tauro is owned by MSC and especially as CMA CGM (the current operators at the terminal) merged with China Shipping Container Lines (the world’s seventh largest shipper) and United Arab Shipping Company (the world’s 18th largest), to form Ocean Three.

“They stayed in Malta because of our position and our reputation but it means we need more space. Freeport Terminals has a 15-year expansion plan but now one of the main elements – the quay extension – was turned down because there was an environmental problem, and because the Freeport is so close to the Birżebbuġa urban sprawl.”

The space constraint is clearly a source of frustration for Dr Farrugia, who said that all the current operators want to expand, in addition to which the corporation received requests every day, “not only from locals but also from foreigners – especially China and India” which had to be turned down.

“They would love to have warehouses here, just six kilometres from the main nautical route from Gibraltar to the Suez Canal,” he said.

There are other options. In the long-term, the corporation could reclaim land, as it did for the second terminal, he said, adding that Oiltanking was already actively pursuing this option.

For Freeport Terminals, there is a short-term solution which would almost certainly run into opposition from environmentalists: the 100,000 sq.m. former Go land, just up the road on the way to Ħal Far would make an ideal container handling facility.

“But I have no idea what the government intends to do with this land,” he admitted.

Dr Farrugia’s vision stretches even further, encompassing the one million sq.m. from the Freeport to Ħal Far, which he believes could be turned into a logistics hub creating up to 1,000 jobs.

“Even though we would be well away from the cliffs, it would mean occupying areas outside the development zone, agricultural land and private property – some of which would need to be expropriated – and so on. We would have to face the music!” he shrugged.

“But there is a very clear government commitment in the Integrated Maritime Policy.”

“I think that the system has to be changed once the national logistics policy is set. Both the government and the Opposition are firmly in favour of logistics. But if we are to turn Malta into an international logistics hub, it needs to be addressed – and in a holistic way across all the stakeholders.”

Source: Times of Malta

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