Like many small island nations, Malta’s success – be it sink or swim – has become inextricably linked to the sea that surrounds it. Unlike other small island nations however – which have often lamented their aquatically imposed separation from the mainland as a barrier to progress – Malta has relished its role as a relative dot on the landscape.
Diminutive though it may be, for what it lacks in size, Malta has benefited immeasurably from its strategic position on the map, bang in the middle of the Mediterranean. With its natural harbours and established ports, Malta has been able to style itself as a world-class maritime centre, offering a vast array of services to the maritime industry. Despite being one of the smallest states in the European Union, it today boasts the largest maritime registry in the bloc and the sixth largest in the world.
While a major prerequisite to Malta’s achievements in this sector has been the establishment of a robust regulatory structure – having carefully developed the legislation required to tap into unrecognised market opportunities, a foremost symbol of this national success is Malta Freeport.
The Freeport, a main transhipment hub in the region, and one of the island’s most important companies, has become an indispensable tool for Malta’s economy as it connects the nation and its industries to the EU, and the proverbial seven seas. As a barometer of its national significance, last year it contributed more than 2 percent of Malta’s GDP on its own.
“The importance of Malta Freeport to the local economy is of a strategic nature, because we provide connections to practically all major ports around the globe, through regular services which call at the Freeport on a weekly basis”, says CEO Alex Montebello.
“If we look at the number of ports that are served from Malta Freeport today, there are in excess of 130 worldwide – from the Far East, South America, and Central America, from India and Pakistan, all with Malta as part of that port call rotation. That puts our local importers and exporters at a huge advantage over the neighbouring countries.”
Though Malta Freeport’s competitiveness is driven first and foremost from its location, location is far from the only factor attributable to its success, the CEO stresses. Over the past two decades, the port has attracted various shipping lines to its facilities through “services built on efficiency and years of experience in the transhipment sector”.
Reaping the Benefits of Privatisation
Much of this advantage is a result of the port’s privatisation, in 2004, to CMA CGM, a French company, which is the third largest shipping line in the world. Today, Malta Freeport Terminals is jointly owned by Terminal Link holding a 50 percent shareholding in Malta Freeport Terminals, with the other 50 percent being held by the Yildirim Group. The shareholders of Terminal Link are CMA CGM (51 percent) and China Merchants Port Holdings Company Limited (49 percent).
“Training plays a vital role on our agenda”, Alex Montebello, CEO of Malta Freeport
“Since privatisation, we have invested over 250 million euros in upgrading the facilities at the Freeport, both in terms of infrastructure and equipment”, says Montebello. “We have also invested in manpower, which is crucial to providing the level of service requested by our customers.”
Being a small island, human capital is one of the company’s biggest challenges – as it is for the maritime sector and the Maltese economy in general – it is therefore an area which Malta Freeport has been very active in developing. As one of the largest employers on the island, training provides a key tool in attracting people, and nurturing the skills needed to keep the port running at optimum levels.
“Training plays a vital role on our agenda”, explains Montebello, who epitomises career development at the company, going from an IT specialist, when he first joined in 1989, to taking over as CEO in 2014.
“There are even unskilled people who apply for jobs at Malta Freeport. We start by training them on heavy equipment: trucks, trailers; we move them onto lifters, eventually to RTG cranes, and finally to the largest piece of equipment in our facility, which is the quay cranes. This whole process of training takes more than nine months, a process which obviously comes at a cost – but we consider this as an investment in our human capital.”
It is an investment that seems to be paying off, too. With the increased number of hands on deck, 2018 was a record year in terms of container traffic, with 3.31 million TEU containers having been processed through the Freeport. This compares to the 1.3 million TEUs per year the company was handing when it was first privatised, in 2004.
Sailing Over Choppy Seas
However, besides human capital, another major challenge relating to Malta’s size constraints is how it can continue its impressive rate of expansion. In that respect, Malta Freeport is undertaking a capacity analysis on how it can further increase the volume handled by its terminals – with various methods of equipment, coupled with technological advancements in terminal operating systems being considered, in order to achieve this.
“The shipping industry is going through a period of transformation”, Alex Montebello, CEO of Malta Freeport
Yet, with the expansion in operations, greater consideration must be given to the port’s growing environmental impact. As with the skills of its employees, this is something the company is taking very seriously. The Freeport is currently employing various environmental sustainability initiatives, based around noise pollution and light pollution, including state-of-the-art white noise alarm systems fitted on its RTGs, and a programme to install full cut-out lighting fittings on the lighting masts, which provide optimal illumination on the operational area while minimising light impact concerns.
While the steps it is taking to protect its immediate environment and boost sustainability will stand the company in good stead going forward, it is another wider growing trend for protectionism – in this case economic rather than environmental – that could provide Malta Freeport’s sternest challenge yet, as the business navigates its future.
“The shipping industry is going through a period of transformation”, says Montebello. “With the latest acquisitions, mergers and takeovers, today we have three shipping alliances compared to 25 different shipping lines that we had ten years ago. So, in reality, for a transhipment hub which is operating in a cut-throat competition market, all you can do is to focus your energy on the three major alliances.”
“Looking ahead, it will be more challenging for Malta Freeport, given the constraints that are surrounding us in terms of international competition. But we remain committed to delivering an attractive product to our customers which is both cost effective and efficient, to the standards required by the international shipping community.”