Consumers will continue to pay rising prices for goods if the costs connected with logistics keep going up, the CEO of a leading logistics company in Malta has warned, amid fears the authorities might not be “sensitive” to the ongoing issues.
If Brent crude oil continues its upward trajectory or if shipping lines carrying trailers on Ro-Ro (roll on, roll off) continue increasing their prices for trailers carrying cargo to the island, goods will continue to cost more, Franco Azzopardi from Express Trailers said.
“In that case, the gap between consumer prices of goods in Malta compared even to Sicily will only continue to widen,” he added.
Brent oil prices are currently hovering at around US$90 per barrel, having topped US$122 in May. Prices in recent months are close to a 10-year high.
Malta’s rate of inflation has topped 6 per cent this year and has been trending upward since late 2021.
Transport costs, which constitute a major sector when measuring inflation according to EU criteria, have also skyrocketed, registering a 6.7 per cent annual rate of inflation as of July.
According to National Statistics Office data, imports of consumer goods were up by just over 20 per cent between January and June, when compared to the same period last year.
The value of such imports reached €894.9 million, according to June 2022 data.
Disappointment with EU regulation
Azzopardi also expressed his disappointment at the way the country has been “severely shortchanged” when it comes to connectivity-related issues at EU level.
“These regulations all work against Malta and they not only load operators with added burdens but have created more issues due to lack of people that can be employed and more C0² emissions,” he said.
And although Sicily, like Malta, is further from mainland Europe than the rest of the other European Union countries, its importers and exporters are not as disadvantaged because the Italian government subsidises ferry costs to and from Italy’s ports.
“There is another huge competitive disadvantage for Malta… the massive subsidies that the Italian-Sicilian importers or exporters benefit from, which are not available to Maltese importers and exporters, a fact which, then, negatively affects our consumers,” the CEO said.
Operators in mainland Europe are also eligible for incentives, unlike their Maltese counterparts.
“My gut feeling is that perhaps the local authorities have not been sensitive or sensitised to this reality.
“From the point of view of government, I do not think that Malta’s government is in a position to afford grants or subsidies to Maltese importers and exporters hard-hit by this double whammy,” the CEO said.
Times of Malta has contacted the government for a comment but no reply was forthcoming at the time of writing.
Malta ‘disadvantaged in massive way’
Azzopardi believes the way forward would be a form of “consideration towards this effect in the public service obligation agreement which the government signs with the shipping lines connecting Malta to mainland Europe.
“Until then, Maltese consumers, service providers, importers, exporters and all affected in commerce will remain disadvantaged in a massive way,” he said.
In recent months, local importers have expressed concern over the increase in transportation costs that is translating into shortages and further price hikes.
On its part, the government has repeatedly said it is doing its part by intervening to keep prices stable in the energy and fuel market.