Corporate DispatchPro Perhaps a lesser known solution is using the “Iron Silk Road” which is a network of trains that stretches between Europe and China. Whereas before the breakdown of the shipping supply chain, its cost was higher than shipping but lower than air freight, many are now looking into it because its use can now be justified because of the exaggerated shipping costs. In 2020 a total of 1,135,000 TEU were transported by rail, which is 56 % more than the previous year, although still miniscule when compared to shipping.
THE LOCAL PERSPECTIVE Just like any other country, Malta is feeling the strain caused by the astronomical rise in shipping costs. Many businesses in Malta import goods from the European Union and the UK but this does lessen the impact of these rising costs. European importers have no other option but to include the increased costs of logistics in their product prices. Therefore, Maltese businesses suffer just the same regardless of where they import from. Furthermore, Malta being an island nation suffers further as overland haulage of freight is affected by the shortage of truck drivers. Malta’s long business history with the UK, were the driver shortage is being felt more since Brexit makes this even worse. At Chamber of SMEs, we have been discussing these problems since they started. Many of our members flagged the rapidly increasing costs immediately. Government has been sympathetic, however there is not much Government can really do in this situation. We discussed the possibility of deferring VAT on freight costs. In reality, the effect that this would have would be marginal and the charges would still need to be paid later. As part of our Budget 2022 proposals we suggested that Government would subsidize rent payments on new warehouses. The thinking behind this was that importers, all facing these exaggerated prices would be encouraged to import more volume and maximize the space they can get their hands on. This will mean that they will need larger local storage facilities. Admittedly, this cannot work for all products but at least it is a step in the right direction. 7
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