Category Archives: News

Reflections on Post Covid Scenarios

The problems created by the Covid pandemic to the carriage and distribution of goods caught everyone including the major container carriers unaware and necessitated the introduction of short term measures in order to safeguard both the coherence of the logistical cycle as well as the financial sustainability of the carriers.  The situation that evolved between March and June saw a plummeting of cargo volumes and an unprecedented situation of port closures (mainly in China) which left the carriers grappling at situations never experienced before and which needed immediate solutions. 

The economic downturn in China as a result of the curtailment in manufacturing and exportation had an immediate effect on the amount of cargo available for export from Far East to the rest of the world.  As early as March, the UN had already published a study wherein it estimated that China’s reduced exports cost other countries and their industries over USD 50 billion.  The regions most effected in order of priority were the European Union, the United States, Japan, South Korea, Taiwan and Vietnam. 

The recovery in Chinese exports during the summer months was immediately counterbalanced by the drop in demand particularly in Europe as a result of lockdown measures introduced in the various European countries.  Hence the problem shifted from supply to demand but the net result was the same – less seaborne cargo to be carried. 

The effect of this situation, particularly in the Mediterranean, reflected itself in a drop of the volume of cargo handled, estimated in the region of 35% to 40% which was mainly caused by the measures taken by the main line carriers to cut down on the number of voyages with the aim of reducing operating costs. 

The effect of the blank sailings on container shipping was very well highlighted in the study commissioned by UNCTAD under the heading “Covid 19 and Maritime Transport Impact and Responses”.   The below graph reproduced from this study shows the impact of blank sailings on the port of Marsaxlokk (Freeport) Malta, where the weekly port calls in the first and second quarters of 2020 dropped by 42% and 39% respectively. 

The issue of the blank voyage as an economic tool to stem losses gave the desired results to the carriers who in the meantime started reporting positive results but caused tremendous financial damage to terminals, hauliers and other service providers within the logistical chain.  The application of blank sailings reduced the supply of slots available at a time when exports from the Far East started increasing again and this pushed up freight rates because of the limited space available.  According to a report carried in the Lloyd’s List of 5th October, the Asia-Europe freight rates reached a new high which was not experienced in pre-Covid times.  It is definitely to be expected that the container carriers, having learnt to their satisfaction the outcome of a disciplined approach, will do their utmost in future to maintain this mechanism which is the epitome of the economic forces of supply and demand. 

The other development which evolved throughout the first half of this year and which is influencing logistics to a substantial degree is the purchasing online on a mass level.  Lockdown conditions, fear of contagion and other measures adopted by governments to reduce social contact, generated a demand for home delivery service and this was extended from the food industry to every imaginable consumer good that was facilitated by ordering online.  This movement of goods created a paradigm shift in the logistics of cargo transport whereby the online service provider in combination with courier services replaced to a certain degree the freight forwarder and the line agent whose task it was to source and book cargoes.  The online service providers found themselves in control of so much volume of cargo that they attracted the attention of the container carriers who had already been viewing them as potential clients.  This development has immense ramifications for the future of logistics not only for the Mediterranean but worldwide because once the consumer gets to grips with the convenience of ordering and paying online with guaranteed delivery within a short period of time, it will be difficult to dissuade the consumer from such a system and revert to systems which entailed employment of more time to source and secure delivery of goods. 

Particularly within the Mediterranean these developments can translate themselves into more shortsea intra-European services.  This development brought even more to the fore the concept of intermodalism as a logistical pipeline to channel cargo between producer and consumer.  One is to expect cargo to move on fast means of transport such as trains which link to ports that in turn facilitate services for shortsea fast ferry vessels.  The transport by sea throughout the whole journey, especially on a regional level, will be seriously challenged by intermodal solutions whereby the sea plays a part and not the whole logistics cycle.  Such a scenario however will bring back to the European discussion table the existing bottlenecks that hinder or obstacle the fast movement of cargoes especially through ports.  The lack of the single window and an effective customs union that can do away with customs barriers, will hinder the development of this intermodal solution because the logistics process gets bogged down with bureaucracy and inefficiencies.  Were this development to take its natural course, intra-European traffic will flourish because of:

  1. The just-in-time buying.
  2. The need to diversify sources of supply to avoid the situations created by Covid in China. 

These developments necessitate a functioning infrastructure which involved ports, terminals, vessels, crew, forwarders, customs and receiver.  These represent links in the supply chain and it goes without saying that the malfunction of one link jeopardises the strength and coherence of the whole chain.  Post Covid has to ensure that appropriate protocols are in place to facilitate the proper functioning of each link.  It is only through such an approach that we can look back at this period and feel that lessons have been learnt to sustain impacts of epidemics in future. 

Godwin Xerri, CEO of Combined Maritime Services and also a board member of the Malta Maritime Forum.

The maritime sector’s potential towards the growth, development of the economy

When the Malta Maritime Forum (MMF) was set up in 2015, two of its stated objectives were:

a) To promote the interests of the Maltese maritime sector; and

b) To promote research, education and training within the Maltese maritime sector.

The publication of this unique study is an attestation of these objectives. When MMF commissioned E Cubed Consultants to undertake this study, it aimed at raising the profile of this industry through professional research and economic analysis so that the outcome and the conclusions are based on empirical facts and shorn of any bias. 

The study is unique because it is the first of its kind in Maltese economic literature albeit dealing with an activity which has shaped Malta’s very own existential dimension. The islands of Malta and Gozo would have no identity without the relativity to the sea through which the islands assume their international dimension and enable the undertaking of trading in order to survive. These facts are part of the Maltese DNA as is our mother language but like all things natural, they are generally taken for granted and not  given the appreciation they deserve. This is the glass ceiling the forum wanted to challenge when embarking on this study so that both the policymaker and the public can appreciate the contribution that this activity – rather, a range of activities – makes to the national economy.

The study analyses the data for a seven-year period,  2012 to 2018, and concludes that the maritime sector generated around €853 million in value added in 2018, which translates into approximately 11,864 jobs. Adding the indirect effects, the value added increases to €1,566 million; job creation goes up to over 14,500 full-time equivalent jobs.

Another conclusion deriving from this study is that by applying different types of multipliers to the output data, the maritime industry is found to generate an economic contribution of €2,163 million and the equivalent of 20,515 jobs. The maritime industry accounts for eight per cent of the total economic value added and six per cent of the total economic gainfully occupied.  The contribution to the economy’s total output has been generally on an upward trend, rising from 5.3 per cent to 7.4 per cent during the seven-year period.  These conclusions are supported by statistical tables and comparative graphs which those who wish to study in more depth will find of interest. 

The study also deals with the issue of productivity and observes that whereas the average value added per employee within the Maltese economy stands at €47,000, the same value added or productivity within the maritime sector stands at €72,000, i.e. 53 per cent higher than the national average.  Further comments to these hard facts become superfluous.

The average growth of the value added in the economy is 10 per cent, compared to 12 per cent when it comes to the growth registered in the maritime sector. 

The fourth chapter of the study deals specifically with the economic value of the maritime sector in Malta and the results deriving from the analysis undertaken warrants the full attention of the policymaker as well as of the investor. The analysis in this chapter leads to the conclusion that the average annual increase in value added generated by the maritime activities is 13 per cent, whereas the average increase in the generation of employment is six per cent.

As can be attested by the achievements in the maritime sector, which is the subject of chapter five of the study, over the years, Malta has scored a number of highs in the international maritime industry. Unfortunately, these achievements are difficult to quantify in terms of investment and return because there is no particular NACE category which encompasses the entire maritime investment activities in Malta. Hopefully, this matter will be addressed in the future.

A SWOT analysis is also undertaken in chapter six which deals with the potential of the maritime sector. This analysis is directed towards the identification of the sector’s potentials, challenges and constraints and for this reason it considers six dimensions, namely:

i) human capital;

ii) market demand;

iii) infrastructure;

iv) regulatory;

v) logistics considerations;

vi) general business environment.

Some of the conclusions resulting from this analysis are:

The growth projections for the maritime sector are very positive and it is expected that this sector will soon make up in excess of 14 per cent of Malta’s total GDP.Over the years, Malta has scored a number of highs in the international maritime industry

• A significant skills gap exists in this sector due to a shortage of qualified and skilled employees.

• There is a lack of infrastructural capacity.

• There is a general lack of awareness and appreciation of the maritime sector from the public.

• The industry suffers from an information gap.

The study highlights that there is also a gap in the maritime legal structures, mainly due to the absence of a maritime court as well as to the lack of sufficient recognition of the Malta Arbitration Centre.

There is no doubt that such conclusions warrant the full and undivided attention of the policymaker. The Malta Maritime Forum has long campaigned for the reintroduction of the Maritime Malta business model which was a success story in itself but which the political powers decided to abolish for political expediency. The resulting gaps that are manifest in today’s maritime sector are an attestation of this failed policy which unfortunately was introduced by one administration and retained by the current one.

The study does not stop at dry statistical analysis but it goes the extra mile to put forward recommendations by way of a proposal for a national framework for the maritime sector in Malta.  It advocates that: “The development of a National Maritime Framework would sustainably enhance and develop the maritime industry while protecting the sea resource.”

The MMF  looks forward to engage in an exchange of views both with its members as well as with the government and public entities for a sustainable strategy for the development of the maritime sector. Environmental considerations are paramount to ensure sustainability as well as shedding of misconceptions about maritime activities and the environment. The  concept of the ‘blue economy’ is based on the harmonious balance between maritime activity and marine ecology.

This study is unique not only because of the highly-professional economic analysis undertaken by E Cubed Consultants, but also because it serves as a point of reference for the policymaker, the players within the industry and the academic researcher who wishes to delve deeper in this economic activity.

A final word of praise is reserved to Mediacoop, who were entrusted with the design and layout of the publication, and to Gutenberg Press for the high-quality printing. 

Anyone wishing to have an electronic copy of the study can send an e-mail to admin@mmf.org.mt or info@shortsea.org.mt.

Godwin Xerri, CEO of Combined Maritime Services and also a board member of the Malta Maritime Forum.

Source: The Times of Malta

Link: https://timesofmalta.com/articles/view/the-maritime-sectors-potential-towards-the-growth-development-of-the.832138

The Value of the Local Maritime Industry – a Critique

In a study commissioned by the Malta Maritime Forum and which is to be published in the coming weeks, the conclusions derived from the analysis and economic assessment are that the Maltese maritime sector is a mature and robust industry that contributes substantially to the Maltese economy.

Quoting from the study which was conducted by Dr Gordon Cordina and his team at E-Cubed Consultants: “The maritime sector was found to have directly generated around Euro 853 million in value added in 2018. This translates to approximately 11,864 jobs in full time equivalent. Including the indirect effects, the value added generated is estimated at Euro 1,566 million, sustaining around 14,579 jobs.

The overall economic contribution, including also the induced multiplier effect across the economy, is estimated at Euro 2,163 million, generating 20,515 jobs. The 2018 direct economic contribution of the maritime sector is equivalent to eight per cent of the total economic value added and six per cent of the total economic gainfully occupied in full-time employment.”

The analysis undertaken in the course of this study highlights another interesting factor of the maritime industry. This is the linkage that there is between the maritime and a wide range of other economic activities which explains the relevance of the maritime service to the rest of the national economy. There is no doubt that the maritime industry is a backbone to most of the economic activity which is manifested through the increase in the economic contribution and employment generation once the multiplier effect is introduced into the equation.

It is interesting to note that the sector which exhibits relatively higher linkages with the maritime sector is the financial and insurance sector which covers also the legal profession. The activity generated by the maritime industry in the legal, financial and insurance sectors is underestimated and barely realised.

The international maritime activity by its very nature is capital-intensive and highly regulated – hence the need for legal guidance and direction. Malta has contributed and continues to do so through illustrious legal personalities who do credit not only to Malta but to the international maritime industry. Furthermore, Malta’s fiscal, legal and corporate support structures are an attraction to foreign investment within the maritime industry where the total effort can be stalled through bureaucracy. Malta does have some way to go in the dismantling of bureaucracy which is still, unfortunately, stifling development and initiative.

One can cite a list of examples which are stifling expansion in the maritime sector, but suffice to highlight two topical examples that can be drawn from the local scene, namely the procurement of services for cargo consolidation and the port facilities. From time to time, we hear about the promotion of Malta as a logistics hub or the setting up of a consolidation hub. These activities are so fraught with bureaucracy that the time and money invested in the promotion of same, go to waste.

The last international tender issued for expressions of interest to establish a consolidation hub in Malta drew a nil response as far as we are aware.

This activity entails the manipulation of cargoes which are imported into Malta and re-exported to other countries. There are various methodologies of undertaking such operations by using sea-air or sea-truck combinations.

In a preliminary study undertaken by our company on multi-country consolidation, it resulted that what Dubai can do for €850 for a container, Rotterdam can do for €1,000 and Malta comes at over €1,500. This is not bad publicity for maritime Malta but a wake-up call to address reality and put things right. Unfortunately, it all starts with political decisions because unless there is direction from the top, the rest cannot follow. The Maritime Forum can bring to the table sufficient expertise if it were to be consulted on the matter.

A similar situation is to be found in the development of facilities in the Grand Harbour. The port situation in Malta is a direct derivative of our limited size. This limitation is further compounded by bureaucracy, vested interests to defend the status quo and lack of determination to get things done.

Some feathers may be ruffled but it all depends how one wishes to address a situation. It is not all gloom and doom because there are landmarks in our ports which have been achieved, but whatever regeneration and port development plan is in the latest edition, this needs to be translated into strict time schedules and delivery periods, so that maritime Malta can move on, market and attract more investment that generates wealth and employment.

The high value of the maritime industry to the national economy is empirically proven and factual notwithstanding the negative PR that unfortunately stigmatises this industry. Recent events that played out over the last COVID-19-ridden months proved what we all fear, namely that as an industry, and even more as a maritime forum, we are not given the due respect from the authorities.

The underlying strain caused by lack of consultation created a disruption to the level of trust that has been built over the years between the private and public sectors. 

This is a pity because it is only through dialogue and consultation that we can hand over this industry to the younger generation to continue creating wealth through our prime national resource – the sea that surrounds our islands.

Godwin Xerri, managing director, Focal Maritime

Source: Times of Malta

Original Article: https://timesofmalta.com/articles/view/the-value-of-the-local-maritime-industry-a-critique.809601

Supporting Measures to the Maltese Shipping Industry during the Covid-19 Pandemic

SUPPORTING MEASURES TO THE MALTESE SHIPPING INDUSTRY DURING THE COVID-19 PANDEMIC


Merchant Shipping Notice 160


Notice to Shipowners, Ship Operators, Managers, Masters,
Owners’ Representatives and Recognised Organisations


Further to the measures implemented by the Directorate to continue to provide an uninterrupted service to the Maltese shipping community under the current exceptional circumstances, the Directorate wishes to inform all concerned of supporting measures that have been implemented as from 1 April 2020.


The Directorate is fully aware that the shipping industry has been severely impacted by COVID-19 and is currently facing serious cash flow issues. In an effort to support shipping companies, owners, managers and operators of Maltese merchant ships and to enable them to address the difficulties encountered due to the wide spread of the COVID-19 outbreak, it has been decided to defer the due payment date of the relevant Registration Fees and the Annual Tonnage Tax of merchant ships (Merchant Shipping Act – First Schedule), of which the anniversary date falls on or after 1 April 2020, by a period of three months from the anniversary.


To this effect, requests to issue renewal Certificates of Registry are still to be made to the Registrar as provided in article 19(4) of the Merchant Shipping Act, accompanied by a request for the deferral of payment of the relevant registration fees and annual tonnage tax, where applicable.

All requests are to be addressed on shipreg.tm@transport.gov.mt.
Merchant Shipping Directorate 03 April 2020

European shipowners support the proposal for better waste handling Port Reception Facilities

The recently published proposal for a new Directive on Port Reception Facilities is welcomed by ECSA, as it addresses major issues with the current system in place. The new proposal will help in ensuring there are adequate port reception facilities available, require an advance waste notification from ships as well as a waste delivery receipt for reception facilities, and facilitate monitoring and enforcement through existing systems for electronic reporting and the exchange of information.

 

It also suggests a reasonable, transparent and functional fee system forming an incentive to shipowners to deliver waste ashore. “We believe that the procedures in ports should be as efficient as possible, to keep costs at acceptable levels. Therefore, the 100% indirect system for MARPOL Annex V residues should exclude hazardous waste, as not all ships deliver this type of waste all the time”, said Martin Dorsman, ECSA Secretary General.

 

“Additionally, by requiring that ships have to deliver all their waste every time they leave for a port outside the European Union, the EU would ignore the importance of International Maritime Organization’s (IMO) international database of port reception facilities, in which IMO’s member states list all their approved port reception facilities. A better alignment with IMO rules and procedures would ensure that ships can deliver their garbage in any facility which is included in IMO’s Global Integrated Shipping Information System (GISIS) database and thus not only in European facilities”, he added.

 

With regard to Short Sea Shipping, the movement of cargo and passengers by sea over short distances, Martin Dorsman commented: “Shifting transport from land to water has many advantages. It would reduce current road congestions and lower external cost and the impact on our environment. This could well be achieved with the Directive if the right choses are made. Short sea vessels that are not sailing on fixed routes according to a published schedule, but may be calling regularly and frequently at the same ports, should be allowed to skip delivering waste every time they call at a port under the same conditions as for example ferries. This is not the case in the current proposal. Short Sea Ships should also be guaranteed differentiated fees as this will increase the competitive position”.

 

ECSA believes that applying differentiated fees for ships that treat waste in an environmentally sound manner is good. However, ECSA does not support defining a new concept of “Green Ships” at the EU level, as it is already carried out by the IMO. In addition, it would create yet another ranking system with already many such ranking systems operational.

 

Finally, vessels not having received a waste receipt will not be allowed to leave the port. ECSA suggests to have special arrangements in place for small ports, since they may need more time to issue a waste delivery receipt, especially outside normal working hours.
Source: ECSA (European Community Shipowners’ Associations)

Posidonia 2018: Shipowners Stand Alone in Cutting CO2 Emissions

The new environmental regulations have been at the center of attention at this year’s edition of Posidonia trade show in Athens, Greece, which took place from 4-8 of June.

The upcoming sulphur cap in 2020 and the initiative to halve shipping industry’s carbon footprint by 2050 have been in the spotlight together with the immediate implications of the ballast water management convention.

Despite being supportive of the overall aim behind the decarbonization drive, the “tsunami of regulations“ has not been very welcome by the industry due to the lack of pragmatism in their application and the availability issues with respect to effective infrastructural solutions to enable the switch to a cleaner future.

In particular, John Platsidakis, Chairman of Intercargo and managing director of Anangel Maritime Services, believes that the overall burden for reducing emissions from shipping is being unfairly put on ships and shipowners.

Speaking during the 6th Analyst and Investor Day within Capital Link’s Shipping Forum, Platsidakis stressed that such an approach “will take us nowhere“, adding that providers of assets, i.e., shipyards and engine manufacturers should be pushed to provide better equipment to owners.

“As a result, we have to stand up and raise our voice about the real issue here. Therefore, we are asking the providers of assets to come up with the adequate solutions and we will be the first ones to adopt it,” he emphasized.

Furthermore, the very fact that refiners have not committed to make the sufficient amounts of alternative fuel available by 2020 poses another uncertainty for shipowners.

In addition, he pointed out that it was “unfair“ and “highly regrettable“ that at the end of the day the consumers would be paying the price for the implementation of the new regulations.

George Prokopiu, Chairman of Dynagas LNG Partners, agreed, urging that the new regulative framework should be a task for manufacturers and shipyard, not owners.

Prokopiu insisted that shipping companies have very little voice in the overall decision making process about the new rules and that they were standing alone in the implementation process.

The message was echoed by Theodore Veniamis, President of the Union of Greek Shipowners, during the opening ceremony of the event saying that “shipping is often held disproportionately responsible for meeting environmental standards compared to other industries.”

“However, as shipowners, we have no say in the manufacturing of the ships’ engines, nor are we responsible for the quality of the fuels that we have to use. It is obvious that, while the links in the chain of responsibility are many, it has so far proved to be more expedient, at a political level, to solely focus on shipowners, a choice that is misguided and practically ineffective in the end,” he pointed out.

There is no silver bullet and the way forward for the industry to become complaint with the 2020 sulphur cap is attainable through three solutions: scrubbers, slow steaming and low sulphur fuel, Prokopiu said.

Finally, Platsidakis expressed concern over “what comes next in terms of regulations“, emphasizing that the industry is not afraid of new rules as long as they are pragmatic.

However, he stressed that a huge issue in the introduction of new regulations was the lack of proper analysis and understanding of the problem at hand.

“Regulators, with all the noble intentions in the world, often don’t know what they are talking about. Secondly, a lot of the said issues are politically motivated and promises politically motivated were not realistic,” he said.

Specifically, referring to the promise to halve shipping’s emissions by 2050 by upgrading propellers and ship designs, Platsidakis said that this was not feasible.

As explained, the only way for these reduction targets to be met is to introduce a carbon free fuel.

“With the existing types of fuel, we will never achieve the promised reductions,” he went on to say.

Reported by Jasmina Ovcina Mandra

Source: World Maritime News

ESPO Calls For The Full Recognition Of The EU Added Value And Cross-Border Impact Of European Ports In The New CEF

On 6 June, the Commission published the proposal for the next Connecting Europe Facility (CEF II). The proposal sets out the objectives of the financial instrument and the funding modalities. In total, the Commission proposed a CEF budget for 2021-2027 of €42.3bn, with a transport envelope of €30.6bn.

The CEF II proposal supports three overarching transport objectives: 1) the development of projects of common interest relating to efficient and interconnected networks (with a focus on core network, 60% of the budget), 2) infrastructure for smart, sustainable, inclusive, safe and secure mobility (core and comprehensive network, 40% of the budget) and 3) the adaption of the TEN-T network to military mobility needs.

 

The European Sea Ports Organisation (ESPO) welcomes the new proposal. The budgetary envelope, the integration of missing ports in the corridors, the rebalancing between the investments in basic infrastructure and the investments in smart, efficient and sustainable infrastructure projects, the focus on climate-proof investments and the synergies between transport, energy and digital are all elements to be supported by ESPO.

 

The new CEF proposal is clearly prioritising cross-border projects, both in the identification of projects as in the levels of co-funding. ESPO believes that the definition of the “cross-border” element should not be limited to the land-based connections, but should include the cross-border impact of projects, as well as the maritime dimension. Seaports must be seen as internationally cross-border in nature and thus be placed on an equal priority with other cross-border projects.

 

“We welcome the new Commission proposal on CEF as a good basis for addressing the huge investments requirements ports are facing at the moment. While we are supporting the general priorities of the new proposal in terms of strengthening the connectivity, the efficiency, sustainability and smart mobility, we must focus on applying these concepts in the right way to achieve a better integration of European seaports into the network. European ports are nodes of transport, energy, industry and blue economy. We must ensure that this important and complex role of European ports as spiders in the transport web should be better reflected in the new CEF,” comments Isabelle Ryckbost, ESPO’s Secretary General in a first reaction to the proposal.

 

The Commission proposal is going to be discussed by the European Parliament and the Council. The Commission hopes to finalise the text before the end of the legislative period (mid 2019).

 

In order to contribute in a constructive and substantiated manner to the preparation of the CEF II and the negotiations to follow, the European Sea Ports Organisation (ESPO) commissioned a study with a view to:

• Identify the Drivers and Investment needs of European ports;
• Analyse the ports’ ability to make use of EU funding and financing instruments;
• Recommend how CEF can be further improved.

 

The study reveals that the ports’ investment needs amount to 48 billion EUR for the coming ten years. The needs are very diverse and mirror the complex and diverse role of ports in Europe. Many investments create high societal value, but the limited and slow return on investment makes external funding necessary.
Source: ESPO

NEW LAW ON TONNAGE TAX

SUMMARY ON THE NEW LAW ON TONNAGE TAX

On Friday 13th April, 2018 Legal Notices 127 and 128 were published amending Malta’s tonnage tax system in order to comply with the European Commission’s decision which was published at the end of last year. The new law will come into force on the 1st of May.

Legal Notice 128 seeks to clarify certain provisions relating to the applicability of Malta’s tonnage tax system and in particular it lists the type of vessels to which tonnage tax shall apply as well as those which are excluded. New provisions have also been included in relation to the treatment of tonnage tax benefits to (i) bareboat chartering; (ii) tugs; and (iii) dredgers.

A revised list of registration fees and tonnage tax payments have also been issued by Legal Notice 127 whereby a distinction has been made between the two and the possibility for non-Maltese companies owning vessels registered in Malta to opt to pay tonnage tax in Malta.

 

MORE DETAILED UPDATE

The European Commission on the 19th December, 2017 conditionally endorsed the Maltese tonnage tax system. Following such endorsement Legal Notices 127 and 128 have been published, which amend the current tonnage tax system. The new law will come into force on the 1st of May, 2018.

The salient features of the new law include the following:

 

  1. Ships excluded from the Tonnage Tax Regime

 

As will be highlighted later on, the Malta Tonnage Tax System, in line with EU Guidelines, will apply to ships which are involved in the international carriage of goods or passengers by sea. Therefore, in line with this reasoning the following vessels are excluded from benefiting from the Malta Tonnage Tax System:

(i)                Fishing Vessels;

(ii)               Private Yachts;

(iii)              Fixed offshore installations and floating storage units;

(iv)              Non-ocean going tug boats and dredgers;

(v)               Ships whose main purpose is to provide goods or services normally provided on land;

(vi)              Stationary ships employed for hotel and/or catering operations;

(vii)             Ships employed mainly as gambling and/or casinos;

(viii)             Non-propelled barges.

 

  1. Shipping Activities and Tonnage Tax

 

In order to qualify as a tonnage tax ship and thus benefit from the Malta tonnage tax system, the vessel has to be declared a tonnage tax ship by the Minister. Therefore, the Shipping Organisation which will own the vessel will need to show that the vessel is a sea-going vessel engaged in the international carriage of goods and/or passengers by sea. A number of documents would need to be provided to the Registrar-General in order for the vessel to be declared a tonnage tax ship.

 

Should the vessel qualify as a tonnage tax ship then the Shipping Organisation would not be liable to pay any income tax to the extent such income is derived from shipping activities. Furthermore, no income tax or capital gains will be paid on proceeds derived from the sale of a vessel which is declared a tonnage tax ship.

 

It is important that separate accounts are kept for the income derived from shipping activities and any other income derived from non-shipping activities. A simplified income tax return can be filed by the Malta Shipping Organisation for income derived from shipping activities. On the other hand, if the Shipping Organisation also derives income from non-shipping activities then the full income tax return would need to be filed.

 

The new law also seeks to clarify a number of grey areas in relation to Tugs and Dredgers. In order for these type of vessels to benefit from tonnage tax, they would need to be registered under an EU or EEA flag and spent at least 50% or more or their time in activity which constitutes maritime transport.

 

As regards to bareboat chartering, Shipping Organisations who derive income from chartering out vessels on a bareboat basis will benefit from the tonnage tax system if (i) the amount of the vessels bareboated out does not exceed 50% of the shipping companies’ fleet; (ii) the term of the bareboat is limited to a maximum period of 3 years; (iii) it is shown to the satisfaction of the Registrar General that the ship was bareboat chartered due to short term over capacity.

 

Furthermore, the new law provides for a list of vessels which to the extent that they are involved in  the  international  carriage  of  goods  or  passengers  by  sea  in accordance  with  the  EU  Maritime  State  Aid  Guidelines  and provided that they satisfy the criteria set out in the regulations, may also benefit from the tonnage tax system. These vessels include:

(i)          Cable laying ships;

(ii)         Pipe laying ships;

(iii)        Crane vessels;

(iv)        Research vessels; and

(v)         Multi-purpose, break-bulk and other types of support vessels.

 

Specified provisions have also been included in relation to tonnage tax ships which are owned by the Malta Shipping Organisation which however are not flagged in Malta. If such ships are flagged under an EU or EEA flag, then there is the option to pay the equivalent of 25% of the tonnage tax if the vessels had been registered in Malta to the relevant authority and such vessel would be entitled to benefit from the Malta tonnage tax system.

 

If however, the vessels are flagged under a non-EU flag, then it would be possible for such vessel to qualify for the Malta tonnage tax system if it is shown that the strategic / commercial management of all ships by such shipping organization is actually carried out from the EU and it is proved that the shipping organization owns, manages or operates at least 60% of its total tonnage under an EU flag or  percentage  of  the  tonnage  owned,  managed  or operated by the shipping organisation is Union-flagged and that the  percentage  of  Union-flagged  tonnage  that  is  owned, managed,  administered  or  otherwise  operated  by  shipping organisations established in Malta has not decreased on average over a period of three years. The law further provides that at least 25% of the applicable tonnage tax on such vessels is paid to the relevant authority in Malta.

 

For further details, contact us on:

Tel: (00356) 21 651387
Fax: (00356) 21 651384
Email: management@combinedmar.com
Website: www.combinedmaritime.com

IMO and EBRD sign new partnership to support sustainable shipping

The International Maritime Organization (IMO) has signed a new partnership agreement with the European Bank for Reconstruction and Development (EBRD). The agreement will help promote sustainable shipping through a range of safety- and environment-focused capacity-building activities in the maritime and port sectors in selected countries.

It brings together IMO, the United Nations maritime agency which sets global standards  for safe, secure, efficient and environment-friendly international shipping, and the multilateral development bank EBRD, which has experience in supporting comprehensive transport related development activities and practices in the maritime and port sectors.

A Memorandum of Understanding (MoU) was signed on Thursday (8 February) by IMO Secretary-General Kitack Lim and the First Vice President of the EBRD, Phil Bennett. (Photos here.)

“This strategic partnership, combining IMO’s global mandate and outreach and EBRD’s experience and expertise on investment and finance, is expected to contribute a great deal to sustainable maritime transport and the implementation of the United Nations Sustainable Development Goals,” said Secretary-General Lim.

As part of the United Nations family, IMO is actively working towards the 2030 Agenda for Sustainable Development and the associated SDGs. Most of the elements of the 2030 Agenda will only be realized with a sustainable transport sector supporting world trade and facilitating the global economy.

The IMO/EBRD MoU represents the first such arrangement to be established between IMO and a multilateral development bank.

In addition to providing investment financing, IMO and EBRD will work together under the agreement to provide technical advisory services, project preparation and planning, capacity building and institutional development, focusing initially on joint projects with the national authorities of Azerbaijan, Egypt, Georgia, Morocco, Tunisia and Turkey.

Gap analysis will be carried out with specific projects likely to focus on a range of safety- and environment-related issues, centred on implementing and enforcing IMO regulations.  These projects could include:

  •  investment opportunities in sustainable transport
  • safe transport of solid bulk cargoes and dangerous goods
  • facilitation of maritime traffic and electronic business and implementation of a maritime single window
  • identification of locations and business models for port reception facilities for ship-generated waste
  • sensitivity mapping and oil spill exercises
  • promoting acceptance and implementation of IMO’s 2012 Cape Town Agreement on fishing vessel safety
  • assessing emissions in ports and developing emission-reduction strategies;
  • looking at opportunities to improve ships in terms of reducing air pollution and greenhouse gas emissions and improving energy efficiency
  • potential regulatory and policy reforms associated with ships using shore-based power sources in port (known as ‘cold ironing’)
  • identifying opportunities to invest and propose investment for LNG bunkering infrastructure
  • risk assessments for marine bioinvasions and identifying key locations for port-based reception facilities and contingency measures, as well as appropriate commercial models.

Source: International Maritime Organization

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The Economic value of Malta’s Maritime Industry

This feature has no pretence to be a professional economic analysis of the contribution which the Maltese maritime industry makes to Malta’s gross domestic product. We hope that in the near future the Malta Maritime Forum will be able to undertake such a study which is essential to raise awareness about this industry.

What this paper aims to achieve instead is to highlight the economic drivers which are generated by the maritime industry but even then one has to narrow the definition of the term maritime industry because it is so vast and diverse that to make a reasonable assessment one has to segmentalize and focus. The focus here is on ships, terminals and related services such as ship repair.

According to Oxford Economics, the economic value of the EU shipping industry amounts to Euro 140 billion by way of total GDP contributions. The same analysis concluded that the EU shipping industry generates a total of 2.1 million jobs and, more important, that it has a multiplier effect of 2.6. Hence, crudely speaking, for every Euro 1 spent in this industry there is the creation of another Euro 2.6. One can go into much deeper analysis of these economic criteria to differentiate between direct and indirect impact as against induced impact or catalysed impact to assess the total impact of the shipping industry on the economy. However, as stated above, this is not the scope of this feature.

To understand better the economic value generated by the maritime industry, one can perhaps take into consideration the economic activity generated when a vessel enters our ports. Such a normal occurrence entails:

  • A communication system to record the ships arrival and an authority (Transport Malta) to ensure that the arriving vessel is conforming with rules and regulations applying to ships’ traffic and port entry.
  • A customs authority to control the movement of vessels, personnel and cargo.
  • A shipping agent to coordinate the ships’ arrivals and organise the services required.
  • A pilotage corps to provide qualified and professional pilots to assist a vessel to come into port.
  • Tug boats to assist the vessel during its manoeuvring operations.
  • Mooring men to moor the vessel to a quay.
  • A terminal where the ship is moored and where it can undertake its discharge / loading operations.
  • Stevedores and / or terminal operators to undertake the cargo operation.

Considering that in 2016 there were 13,090 ship calls, one can appreciate better the turnover generated by ships calling at Malta.

The list is endless if one were to factor in the range of services that a vessel might require while calling in a port or when a vessel is calling in Malta to undertake repairs and / or other services. Each one of these service providers is in turn employing personnel and generating economic turnovers which run into millions of Euro.

Taking some real examples, Malta Freeport Terminal employs 836 personnel and has invested over 270 million Euros since its privatisation. During 2017 Malta Freeport handled over 3.15 million TEU’s (20ft containers). The Valletta Gateway Terminal handles over 1,000 vessels per year, employs about 100 personnel and generates a turnover of over 12 million Euros.

These two terminals, apart from their own personnel, employ also the licensed stevedores who between full timers and casuals amount to almost 500 persons. Another 113 licensed hauliers (burdnara) are engaged in the transport of cargo from and to the terminals.

Other stake holders such as Palumbo Shipyards who undertakes ship repairs at Malta, employ a work force of about 220 persons and handle an average of 200 ships per year. It is estimated that over the last seven years this enterprise generated over 250 million Euros to the local economy. This is not taking into account other ship repair facilities such as Bezzina Ship Repair Yard Ltd (120 employees) and Cassar Ship Repair Ltd (150 employees). Other entities that go to make up this market segment include Medserv PLC (turnover of Euro 32.8 million in 2016) and Malta Maritime Hub (turnover of Euro 12.6 million in 2016). These are but a few examples of contributions that are made by the local maritime industry to the Maltese economy.

If one were to bring into this equation the Malta flag which is the sixth largest flag in the world and under which are registered 8,123 vessels, this contribution takes an even wider perspective with the inclusion of professional services such as legal and financial which in turn generate employment in interesting numbers. As things stand today, the income from this  market segment is mainly generated from services related to ship registration, but other countries, in competition with Malta, have managed to attract other services such as ship management, crewing and ship finance. In recent years Malta has attracted some key players from these activities, but more needs to be done to bring in more investment through these maritime activities which are not insignificant in terms of economic contribution. Just by way of example, ship management companies in Poland are estimated to generate on average 25 million Euros per annum to the Polish economy.

In Malta we have been fortunate that the maritime industry has always kept away from partisan politics and all administrations have realised and supported the positive value of this industry. It is however a considerate opinion that more value can be obtained from this industry by having more focus from the administration and long term planning with a holistic approach to guide within the geographical constraints of Malta and the environmental considerations that need be respected to strike an appropriate balance.

The local maritime industry has come a long way in its development but the opportunities that still need to be tapped are enormous and time is of the essence.

Source: Times of Malta

For further details, contact us on:

Tel: (00356) 21 651387
Fax: (00356) 21 651384
Email: management@combinedmar.com
Website: www.combinedmaritime.com

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