by The Malta Chamber
The long-term economic fallout of the Covid-19 Pandemic has been characterised by the manner with which the global logistical supply chain has buckled under the sheer weight of the resurgent demand.
The resulting surge in freight activity coupled with pandemic related infrastructural constraints has created costly bottlenecks in the global supply chain. It has become apparent that these inflationary pressures are attributable to momentous increases in the cost of renting and acquiring shipping containers due to lessened container ship traffic – this has decreased container availability and also increased expenses related to port congestions and logistical frictions.
These developments are of particular salience to Malta due to the country’s high dependence on maritime shipping. The increase in shipping costs inevitably burdens Maltese importers and exporters and erodes their international competitiveness. These costs will likely be passed on along the supply chain, further exacerbating Malta’s chronic economic disadvantage of being a micro island state already struggling with diseconomies of scale.
Malta has struggled from being on the EU periphery long before the pandemic took hold. A pragmatic long-term solution is required. A two-pronged strategic approach is recommended. On the one hand support is required, in the immediate, to enhance the robustness and international competitiveness of local operators. On the other hand, a concerted effort to formally draw the EU’s attention to Malta’s micro island state disadvantage is required, particularly focusing on levelling an unbalanced commercial playing field upon which Malta has had to shoulder idiosyncratic costs and burdens that are alien to our partners in the bloc.
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