The Malta Business Weekly
‘Logistics Crisis Reshaping Customer Purchasing Patterns’
Having helped Express Trailers endure and survive one of the harshest periods in recent history, the company’s CEO speaks on how transport and logistics operators are now dealing with the worsening supply chain issues on a day-to-day basis as costs of int
After enduring our fair share of slowdown, at Express Trailers we have seen an upsurge in demand for our operations over the past year. And as a result of the current logistics crisis, we have increased volumes in various ports of origin in the Mediterranean region as customers are purchasing products and raw materials closer to Malta then from China or the Far East, thus enjoying shorter transit times and better supply costs.
Besides the fact that 90% of world trade is shipped by sea, most countries are heavily dependent for their supply of finished goods manufactured in China and the Far East. So, when Covid19 struck, back in early 2020 and most of China went into forced quarantine, production stopped, factories closed, supply of raw materials and finished goods got hugely disrupted and supply chains stopped working.
The world went into lockdown and people just bought food. Then, world trade shot up again and demand for goods grew to extraordinary levels and vessel supply was not enough to meet consumer demand.
Cost of chartering vessels exploded and that is when freight tariffs started to increase exponentially. The situation became an extreme one with not enough container space capacity which was very difficult to obtain. All this spilled over to port terminal hauliers and rail connections with huge delays and port omissions.
Europe’s road network was not as much affected and business was normal as long as goods were not coming from China. But transport costs on the road connections to Malta from the EU have already started increasing.
With current high demand for e-commerce, world trade in semiconductors, sport equipment and cars not keeping up with demand, factories are slowing down. The increase in cost to import has also influenced the cost of purchase and in turn the cost of goods to the consumer. In turn, customers changed their purchasing patterns and we have had to embrace this change by how we operate and think things out.
The many delays that were being experienced changed vessel departure schedules and effected freight costs. Loaded containers were left in terminals at ports of loading and sailings were missed due to vessel overbooking and vessels omitting ports due to schedule constraints or port congestion.
Servicing clients became a nightmare, so we had to change our methods because we had to redouble our operational efforts to keep our customers informed of the movement of their shipments and advising best way forward. We, therefore, had to be innovative and started booking from four weeks in advance, paying extra to have empty containers available for loading, sending our own containers to certain ports to have our own equipment available for our clients, sometimes having to pay higher freight tariffs to have better chance of guaranteed space.
Better communication, reliable correspondent networks around the world and our digitalisation process already in place led to very positive results, results which would have never been possible without our staff’s experience and dedication, which turned out crucial.
Looking forward, I believe that unless vessel capacity is increased to meet the demand, the current situation will remain in favour of the shipping lines. Vessels have, however, been ordered and shipyards are full of orders for mega container ships, which should start becoming available at the end of Q4 2022. Rising costs of fuels and driver shortages, however, keep offering us challenges and pressures on our own road operations within the EU.
This is why, as established operators, we felt we had to forward several suggestions to government through various fora including the Malta Chamber.
The fact is that Malta remains disadvantaged next to its European members because we are an island-state and we have to bear supply costs, which EU countries don’t have. There are no incentives to logistics as there are to manufacturing industries which after all depend heavily on good supply chain networks to deliver their goods to various markets.
As operators, we urge government to support our sector by incentivising the delivery of goods 24/7 and through tax incentives for us to operate outside peak hours and thus help us reduce traffic and operate more sustainably.
Franco Azzopardi, Express