Issue link: https://maltatoday.uberflip.com/i/1435356
maltatoday | SUNDAY • 5 DECEMBER 2021 NEWS 11 It is not a problem felt only by industrial producers – the com- plaints are similar for Maltese food importers, pharmaceutical importers, and restaurateurs. The root of this dislocation in the global supply chain is the COVID lockdown, but that dis- ruption lingers on. It is just that government hand-outs on 2020 kept Maltese consumer confi- dence up. But the 'new normal' is about to get tricky. The lockdown reduced spend- ing on food and restaurants. That low demand dovetailed with the drain of foreign work- ers and the international slow- down on global freight ship- ping. Food producers limited operations to cut back costs. When the lockdown was over and people wanted to get back to normal, the supply chain was overwhelmed. People wanted to spend money, but even Mal- tese restaurants were struggling to hire back the foreign staff they had at low costs. Container shipping from Chi- na shot up too, especially for food which requires temper- ature-controlled containers – costs shot up 1,250% from China to North America, an av- erage of $17,970; up 850% from China to Northern Europe. The containers that stayed behind in European ports rather than sending them back empty to China, are idle, slowing down the chain. The share of Euro- pean companies which say they are suffering from lack of mate- rials or equipment to manufac- ture goods, has shot up to 39% in the last quarter of 2021. Brian Muscat told MaltaTo- day that Malta needs support from the EU, because the island cannot be competitive with the rest of the mainland. "The next six months are cru- cial. Everyone knows food pric- es are increasing. How much more can they increase when consumers start reacting to the increases? "And if there is pressure on wages, then it will be bad news. I fear the government does not have the tools to intervene in the market at this stage," Mus- cat says. Muscat's concerns echo those recently made to this same newspaper from major manu- facturers. In the furniture busi- ness, price quotes keep change due to exorbitant hikes in freight costs. Domestica CEO Chris Vassallo Cesareo said shipping from the Far East had risen by around 300%. For a pharmaceutical firm like Aurobindo, which gets 15 con- tainers every week from its par- ent company in India, the price of a single €4,000 container had almost trebled, managing di- rector Frederick Schembri had said. "Containers are stranded around the world and to se- cure space we now pay for the round-trip, to get the container from Asia to Europe and send it back." But like Muscat said, a fur- ther problem for Malta are high tariffs at the Malta Freeport – which is where government could intervene to minimise costs. The Freeport increased its tariffs by 3.4%, causing con- sternation among industrialists and wholesalers, a rate hike linked to the inflation rate of the past three years. And for export companies like beer producers Farsons, freight costs make Maltese companies uncompetitive. "The extent of these increases makes it impos- sible for our customers to ab- sorb these freight cost increases resulting in some lost opportu- nities," Aquilina had told this paper. mvella@mediatoday.com.mt seeing problems in the first half of 2022'