22 October 2003

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Containerisation, globalisation pushing shipping to new heights

Carmelo Caruana Company Chief Executive Beppe Hili speaks to DAVID LINDSAY about what the advent of globalisation and containerisation has meant for Malta’s shipping industry

The Carmelo Caruana firm has been at the forefront of the shipping industry since the company was first conceived back in 1923. Now headed by Beppe Hili, himself involved in the industry for the last 30 years, the company is looking forward to the future of shipping, with Malta now about to accede to the European Union and with globalisation pushing the need for transnational and transcontinental shipping to new levels.
At the helm of Carmelo Caruana, Mr Hili has seen the shipping industry change drastically over the years, thanks particularly to the advent of containerisation in the industry.
Asked to what extent the industry has developed, Mr Hili explains, "Things have certainly developed. I wouldn’t say that in those days things were primitive, but they were close to it. Back then we used to handle shipments by discharging them on barges, with cargo coming in loose boxes – a state of affairs that led to all sorts of problems such as theft and breakages.
"Now the advent of containerisation has changed the face of the industry when it comes to general cargo. The oil shipping business, however, has remained the same but the vessels have become larger, more sophisticated and safer - especially now with more stringent safety measures being introduced. But, personally speaking, the single and double hull issue all boils down, at the end of the day, to how well the company maintains its vessels and how experienced the crew is. You can have a 40-year-old vessel in tiptop condition, is well maintained and which is as safe and strong as any vessel.
"The main change in the industry has been in general cargo transportation. For example, it was even unheard of 30 years ago to have cargo transported by trailer. And as time passes, more and more commodities are being transported by means of containerisation. Up to about four or five years ago, I would say particular commodities, such as sugar, were still being imported in bulk in loose bags as opposed to utilising containerisation methods. Today this has changed and much of these commodities are coming in containers as well.
"In this respect, also because of the Freeport, local industry has been assisted greatly. As an example, if you had a factory or bottling plant and you were ordering large amounts of sugar, you would have had to bring in no less than a 2,000 tonne parcel, as it wouldn’t have been feasible to bring in a smaller quantity. That obviously meant these companies needed more storage area and a larger capital outlay for the orders.
"Nowadays the same bottling plant or factory can buy sugar to suite its weekly needs, as opposed to ordering in such bulk. Because the service is reliable, you can bring in just one container if you need only 20 tonnes. Other commodities have also gone in the same direction."
More and more cargoes are being containerised for this very reason, coupled by the fact that freight rates, although increasing slightly of late, are still low enough to be attractive.
Mr Hili also sees a large scope for growth due to Malta’s impending EU membership come May next year and the ensuing increased business from China and the Far East.
Mr Hili explains, "At the moment, you can have a Chinese factory, for example, competing with a European or North African factory. These Far Eastern countries’ manufacturing industries stand at a disadvantage given the 17-day shipping distance from Europe, especially for short orders.
"However, if these companies were to already have their goods in Malta, they would be in a better position to compete with European factories and have their goods sent over in a mere day or two."
Containerised world trade has increased tremendously since its introduction and forecasts predict the segment to continue increasing at 10 to 12 per cent a year.
This growth is, in part, the result of increasingly globalised trade. Mr Hili explains, "Before you would have a factory manufacturing goods in Germany, now these are moving to China. As such the goods have to be transported and this is a two way stream, with raw materials being shipped from Europe to China and with the end product has to be shipped back to Europe. This is one of the main reasons why containerisation is doing so well at the moment, how long this will last, we don’t know, but it should last at least for the next few years.
Port competition in the Mediterranean region has undoubtedly been on the increase lately, I ask Mr Hili how he sees the Malta product weathering the storm.
He comments, "I see no reason why Malta won’t fare well with the competition levels in the Mediterranean, there is lots of room for improvement, but with the right management there is no reason why we won’t continue to compete healthily."

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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