CorporateDispatch Pro - Edition 25

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Corporate DispatchPro

Issue No.25 | November 2021

Corporate DispatchPro The Journal of CI Group

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Issue No. 25 | November 2021

Corporate DispatchPro The Journal of CI Group EDITORIAL TEAM Managing Editor - Jesmond Saliba CONTRIBUTORS Franco Azzopardi Jesmond Saliba Denise Grech Keith Zahra Alfred Zammit Marcel Mizzi Temidayo Akenroye Siraj Ahmed Shaikh Giedre Sabaliauskaite Tom Stacey Ying Xie PRODUCTION ASSISTANT Laura Grima Shirley Zammit DESIGN TEAM Matthew Borg Nicholas Azzopardi

CONTENTS What broke the global supply chain?

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Month in pictures

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In a world of technology, it’s all about humans

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The Perfect Logistics Storm

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The Current Situation Regarding Transport, Logistics and Rising Costs

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Malta Insights

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Unnecessary taxes on energy generation

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The Fit for 55 package will not be enough if the transition does not incorporate a social dimension’

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Communiqeu 47 Malta’s road ahead for de-listing

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Truck driver shortage won’t be solved by quick fix visas

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HGV driver shortage

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Supply chains can easily break

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SOURCES

Published By

ADDITIONAL SOURCES

Design Produced

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Corporate DispatchPro Cover Story

What broke the global supply chain? A study into the increase in the cost of shipping

During the last decade the cost of shipping was, on average, the lowest ever. Competition was fierce and carriers were losing money. Furthermore, wafer thin margins left little capital that could be invested into digitalization that could render carriers more cost effective. Problems with the international supply chain did not start with COVID-19. In the US, President Trump’s introduction of sanctions and tariffs against China led to companies on both sides rushing to stock up on their inventories before the tariffs came into effect. The unfortunate incident that resulted in blocking the Suez Canal also caused backlogs and thousands of stranded containers. At the height of the pandemic people resigned themselves to staying at home and rather than spending their money on travelling, restaurants and so on, they took to buying consumer products which they could enjoy at home. This resulted in a huge surge in demand for these products many of which are manufactured in China. This trend has continued even post pandemic with China trying to catch up on production. The frequent power outages currently happening in China are not helping. Beijing is planning to reach carbon neutrality by 2060 and coal production has been slowed down despite the country still relying on coal for more than half of its power requirements. Figures show that in September 2021, factory production in China shrunk to the lowest it has been since February 2020, when COVID lockdowns were in full force. Shipping costs have dramatically increased to over 4 to 5 times what they were pre pandemic. It is easy to point fingers at the ocean carriers, but the problem is far more complex than that. Post

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Corporate DispatchPro pandemic, the situation is now comparable to the morning rush hour traffic when it rains here in Malta. It’s total chaos and it cannot realistically be blamed on any one single factor. The reality is that there are more ships operating then at any other time in human history. The pandemic also caused significant crew shortages and other operational challenges. Even ships that were not designed to carry containers have been put in service. The long queues of ships waiting to enter clogged ports all over the world has exasperated the problem and the effective capacity is still 25% less than it should be. The pandemic also exposed other weaknesses such as issues at key ports and ineffective collaboration mechanisms between key players in the shipping industry. At the end of September 2021, there were 73 loaded ships anchored off California waiting to enter the port. Markus Grote, captain of a Hapag-Lloyd container ship stated: “From an economic point of view, it’s a disaster because cargo is waiting” Overland logistic issues in many countries especially in the US are adding fuel to the fire. In August 2021, real time data from Kuehne+Nagel showed that there were 353 container ships stuck outside ports around the world. In American ports, containers are stacked 50ft high waiting to be taken to already overloaded warehouses. Before these containers are shipped back to China, the shortage will continue. In Europe, and particularly in the UK, the shortage of truck drivers has certainly not helped and has resulted in even more full containers waiting to reach their final destinations. Needless, to say, before they do, this will mean fewer empty containers available. For business, what this means is that if you are an importer of building materials, for example, your competition is no longer businesses in your sector but also from other importers of goods who are willing to pay more for shipping. This factor alone is unprecedented in history and is contributing to skewing the market beyond recognition. This is especially worrying for lower margin businesses as they simply cannot absorb the increase. In response, China claims to have stepped up shipping container production, but this will take time to have a marked effect and is equally difficult to predict. 5

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SOLUTIONS AND WHEN WILL IT END? It is very clear that before there is a decrease in demand or an increase in capacity, this is not going to go away. It is also clear that demand is not going to decrease any time soon. Therefore, the way forward is to increase capacity and devise ways to use existing capacity more efficiently. Adding more ships will obviously help in the long term but construction of a container ship takes two to three years so vessels that have been ordered now will not help in the short term. Furthermore, new emission regulations will come into effect in 2050 and so ship manufacturers are wary of expanding their fleets. It has been the norm in the last decades to construct bigger ships but now experts are arguing that perhaps it would be wiser to build fleets of medium sized ships that would require less heavy hardware and space at ports and make the supply chain more resilient. The current biggest ships can carry over 20,000 containers. If these were to be loaded onto trucks, the line would stretch from Paris to Amsterdam. Bigger ships also require deeper docks and bigger cranes and are thus restricted to the larger docks worldwide. In the first five months of 2021, 229 new ships were ordered with a combined capacity of 2.2 million TEU (twenty-foot equivalent unit). This will mean an increase of 6% capacity although some of it will be offset by scrapping old vessels. However, this increase will not realistically materialize before late 2023. Bigger businesses, such as Walmart, Home Depot and Ikea have even decided to procure their own containers. They are also chartering their own ships in response to the problem. This will inadvertently have a negative effect on small businesses who cannot afford to do the same and will be heavily outpriced.

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Throwing technology at the problem has certainly helped in other sectors and this case is no exception. The available shipping space is what it is, however, digitalization and machine learning can be utilized to make better use of container volume. There is often unused capacity which now comes at a high cost. Technology will also help in managing port congestion which is a major contributing factor.

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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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Corporate DispatchPro Government has taken up this proposal. We will continue monitoring the situation closely while listening attentively to what are members are saying. MARCEL MIZZI MSC BSC (HONS) Vice President (Finance & Admin) Malta Chamber of SMEs

References https://www.sjonescontainers.co.uk/news/why-shipping-container-prices-arerising/ https://focus.cbbc.org/why-has-shipping-between-the-uk-and-china-becomesoexpensive/#. YWvZZHqxVhE https://tamebay.com/2021/07/the-shipping-crisis-2021-when-will-freight-pricescome-down.html h tt p s : //w w w. f o o d l o g i s t i c s .co m /t r a n s p o r t a t i o n /o cea n - p o r t s - c a r r i e r s / article/21545142/flexport-whytodaysocean-freight-crisis-is-everyones-problem-to-solve https://www.washingtonpost.com/business/interactive/2021/supply-chain-issues/ https://www.bbc.com/news/business-58479148 https://www.ft.com/content/10e71eff-e59c-46fb-a9aa-a480bc86c093 https://www.voanews.com/a/economy-business_no-quick-f ix-shipping-crisiscreating-supplychainbottlenecks/6210070.html https://www.forbes.com/sites/garthf riesen/2021/09/03/no-end-in-sight-for-thecovid-led-globalsupplychain-disruption/ https://www.ft.com/content/10e71eff-e59c-46fb-a9aa-a480bc86c093 https://www.bbc.com/news/business-58733193 https://www.thecooperativelogisticsnetwork.com/blog/2021/07/08/current-oceanfreight-marketcrisisand-the-future-scenario/ https://think.ing.com/articles/the-rise-and-rise-of-global-shipping-costs/

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AT LEAST ONE PERSON KILLED AFTER MEDITERRANEAN HURRICANE BATTERS SICILY Fierce storms battered southern Italy for a second day on Monday, killing at least one person, triggering landslides and leaving roads and fields flooded, police said.

ALEC BALDWIN FIRES GUN ON MOVIE SET, KILLING CINEMATOGRAPHER Actor Alec Baldwin fired a prop gun on a movie set in New Mexico on Thursday, killing cinematographer Halyna Hutchins and wounding director Joel Souza, authorities said.

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Corporate DispatchPro WAR OF WORDS IN STRASBOURG AS POLISH PM REJECTS COUNCIL, COMMISSION ACCUSATIONS Poland rejects European Union centralism, Prime Minister Mateusz Morawiecki said on Tuesday and accused the bloc of overstepping its competences, amid a deepening row with Brussels over the rule of law.

DON’T SEND MIGRANTS BACK TO UNSAFE COUNTRIES, POPE SAYS, CITING LIBYA Pope Francis on Sunday urged countries not to send migrants back to insecure countries such as Libya, where he said many suffer violent and inhumane conditions similar to those in concentration camps.

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POPE FRANCIS RECEIVES PRIME MINISTER OF MALTA Handout pictures provided by the Vatican Media shows Pope Francis during the visit of Robert Abela, Prime Minister of the Republic of Malta, and his family, Vatican City, 08 October 2021.

EUROPE DRUG REGULATOR BACKS USE OF MODERNA’S COVID-19 BOOSTER VACCINE The European Union’s drug regulator on Monday said it has concluded in its review that Moderna’s COVID-19 booster vaccine may be given to people aged 18 years and above, at least six months after the second dose.

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Corporate DispatchPro SUSPECT IN KONGSBERG KILLINGS HAD CONVERTED TO ISLAM, POLICE SAY The man suspected of killing five people in a bow-and-arrow attack in Norway had converted to Islam and police had been worried over signs of his radicalisation, regional police chief Ole Bredrup Saeverud told a news conference on Thursday.

UK REPORTS 223 COVID-19 DEATHS, MOST SINCE MARCH Britain on Tuesday reported 223 deaths within 28 days of a positive test for COVID-19, the highest figure since March, according to official data.

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BIDEN SAYS UNITED STATES WOULD COME TO TAIWAN’S DEFENSE The United States would come to Taiwan’s defense and has a commitment to defend the island China claims as its own, U.S. President Joe Biden said, though the White House said later there was no change in policy towards the island.

ITALY’S TURIN TO HOST EUROVISION SONG CONTEST IN 2022 The Italian city of Turin will host the 2022 Eurovision song contest, one of the world’s largest televised events, marking its return to Italy after 31 years, the event’s organizers announced.

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Corporate DispatchPro DONALD TUSK ELECTED LEADER OF POLAND’S MAIN OPPOSITION PARTY CIVIC PLATFORM Former Prime Minister Donald Tusk was elected leader of Poland’s main opposition force, Civic Platform, in party-wide elections this weekend, the party announced Sunday.

SWEDISH WATCHDOG SAYS TO INVESTIGATE CRYPTO TRADING FIRMS Sweden’s Financial Supervisory Authority (FSA) said it would investigate how firms which trade cryptocurrencies implement regulations aimed at preventing money laundering and the financing of terrorism.

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Corporate DispatchPro Editorial

In a world of technology, it’s all about humans Twelve months ago, the world was waiting in trepidation the turn of the year with a probably illogical expectation that 2021 would signal a fresh start to our lives and livelihoods. Fast forward one year, and here we are once again reading reports of increasing infections and deaths, as Western European nations consider new social restrictions and increasing lockdowns to limit the stem of coronavirus cases.

As vaccination drives progressed and restrictions were lifted, growth around the European continent was strong, a 2.2% increase in the third quarter, with employment also rising 0.9% in the euro area. Yet mounting headwinds cast a shadow on such progress, with supply side challenges slowing down a number of key industries, including global logistics and the production of raw materials and microprocessors. Concurrently, supply-side shortages, including labour, as well as surging energy prices, are adding to the disruptions, which will inevitably lead to knock-on effects on consumer consumption and business investment. In this edition of CD PRO, we sat down with key business leaders and sought to get into the deep end of the perfect storm which has seen delivery and transport cost increasing by a staggering 800%. Yet, there are other clouds looming on the horizon. As expected during a pandemic which brought economies to their knees, governments spent and spent, shooting debt levels through the roof. The pandemic-induced recession of 2020 has created the largest one-year surge in global debt since at least 1970. Evidently, not only Covid support measures will come to an end over the 17

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Corporate DispatchPro

coming months, but expenditure and investment by governments around the world will have to scale back their activity in order to reign order in their finances. Decision-making at this critical juncture will determine the livehoods of millions around the globe. As the logistics and energy crisis both proof, the future of nations is increasingly interconnected. This is why, looking within Malta’s neighbourhood, the European Union needs to rise to the occasion, identifying concerted and coherent strategies to deliver a longer-term, sustainable regeneration. It is evident that no nation can take these multitude of challenges on its own. In this context, the European Union is strategically equipped to drive the recovery based on new technology, environmental leadership, sustainable business models, energy justice and social inclusion. Yet, such bold ambition is bound to fail unless political and social divergences are addressed with urgency. At the centre of these efforts, an unprecedented drive to invest in skills is fundamental, to ensure that European citizens drive, but also benefit from, the creation of a new, sustainable future. JESMOND SALIBA 19

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Corporate DispatchPro FRANCO AZZOPARDI – CEO OF EXPRESS TRAILERS

The Perfect Logistics Storm 2021 was meant to be the year of recovery as the world economy recaptures momentum thanks to improved vaccination rates and lower hospitalisations related to Covid-19 across the globe. Yet, 2021 seemed determined to not want to be undone by its predecessor. While the virus originating from Wuhan could easily assume the image of the fictional monster ruining 2020, the situation is much more complex this time round. Retail outlets, restaurants and other service providers are finding themselves having to grapple with rising transport and logistics-related costs sometimes reaching up to 800%. As often happens, when a big crisis hits home it is the result of a mix of situations – and that is what seems to have cooked the perfect logistics storm. Although business in Europe has regained traction during the first half of year, surges in Covid-19 numbers in South-East Asian countries have necessitated new curbs which included the closure of factories not only in China, but also in major manufacturing hubs such as Vietnam, Malaysia and Thailand. A quick glance at the packaging of most consumer products that we purchase on a regular basis, from clothing to smartphones, from domestic appliances to fashion apparel will likely indicate such countries as their origin. More than that, factories in such countries produce basic components, without which the rest of the process ends up completely stalled. Big manufacturers in Europe and the US are shutting down factories because of a lack of semiconductors. Apple stopped production of 10 million iPhone 13s due to chip shortages. Ironically, all this happened practically over the same timeframe where consumer demand was rebounding in spectacular fashion.

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Corporate DispatchPro As countries opened up again, people began purchasing products again, having saved over US$5 trillion during the lockdowns. Added to this, a severe worker shortage is grappling industrialized nations across the globe, particularly in the transport and haulage industry. The pandemic is partly to blame, with foreign-based workers seeking refuge to their home countries while disputes on working conditions kept adding to the pressure. Then, there was Brexit, which continues to haunt Europe, months after the conclusion of this complicated divorce. More than 1.3 million foreign-born workers have left the UK since then, a period which covered both the pandemic and Brexit. At the same time, there are around one million vacancies in the country. While the UK Government still points at Covid-19, it is undeniable that foreign workers leaving the country are generally those from sectors such as the haulage industry, warehousing, hospitality, and food production. Similar shortages are also being experienced in Germany and other European nations with many East European truck drivers and haulage workers leaving their jobs. The lack of truckers and haulage workers at first meant that ships remained docked in ports. But as the problems grew, there was no space left in ports, and ships began to queue outside ports. This increased freight costs in a frightening manner, with the vicious circle seeing exporters holding off on shipping goods until they can get low profit margins. Importers, on the other hand, are also attempting to outbid one another, offering extra cash over-and-above already premium rates to ensure timely delivery. To add insult to injury, these challenges posed by these three elements – supply side, transport and labour – are coming together to drive up inflation to unprecedented levels, with eurozone inflation hitting 4%, double the amount of the traditional reference rate sought by the European Central Bank.

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Corporate DispatchPro The big question facing the industry is how long this situation will persist. A survey carried recently among a group of global logistics leaders found that less than 40% could foresee improvement by the end of next year. The rest, look beyond. And even if by then the distribution issue gets better, there is no guarantee that freight rates will normalise soon, with shipping companies facing a gigantic task in decarbonising their huge vessels as the world pushes the carbon-neutral agenda on the industry. With such a perfect logistics storm engulfing the world, disruption might be here to stay for a long time, and with businesses already considering how regional or local supply chains may be more resilient in such turbulent times, it might be high time to ask whether the biggest loser from all this drama is going to be globalisation as we know it.

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The current situation regarding transport, logistics and rising costs 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 twopronged 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. 27

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10% OF PEOPLE IN MALTA LIVE IN DARK DWELLINGS – EUROSTAT Just under 10% of people in Malta, the third highest rate in the European Union, reported not having enough daylight in their dwelling, meaning their dwelling seemed too dark and was viewed as a problem for the household. Data published by Eurostat shows that across the bloc, some 5.9% of people reported similar conditions. The data updated to the end of 2020. Access to daylight in dwellings helps improve the health and wellbeing, while it can also help improve energy efficiency by reducing the need for artificial lighting. In 2020, over 10% of people living in Spain considered their dwelling too dark (10.6%), which was the highest share recorded among the EU Member States. Spain was followed by France (9.5%; provisional data), Malta (9.4%) and Hungary (7.7%). In contrast, the lowest shares were recorded in Slovakia (2.6%, provisional data), Italy (2.6%, 2019 data), Cyprus (2.8%) and Czechia (3.1%). MALTA: DEFICIT CLIMBS TO OVER €900M BY SEPTEMBER By the end of September 2021, the Government’s Consolidated Fund reported a deficit of €906.8 million, the NSO reported today. In the first nine months of 2021, Recurrent Revenue amounted to €3,627.0 million, 23.8 per cent higher than the €2,930.3 million reported a year earlier. The largest increase was recorded under 31

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Income Tax (€351.5 million), followed by Value Added Tax (€175.6 million) and Social Security (€140.1 million). On the other hand, total expenditure stood at €4,533.8 million, 11.4 per cent higher than the previous year. During the reference period, Recurrent Expenditure totalled €3,965.1 million, a rise of €644.9 million in comparison to the €3,320.2 million reported by the end of September 2020. The main contributor to this increase was a €534.4 million rise reported under Programmes and Initiatives. Furthermore, increases were also witnessed under Personal Emoluments (€81.0 million) and Contributions to Government Entities (€32.8 million). The largest development in the Programmes and Initiatives category was related to the Pandemic assistance scheme (€278.4 million), which includes the COVID-19 Business Assistance Programme. Other increases under Programmes and Initiatives were reported under EU own resources (€78.2 million) and Hospital concession agreements (€31.6 million). The interest component of the public debt servicing costs totalled €137.1 million, a decrease of €1.6 million when compared to the previous year. By the end of September 2021, Government’s capital spending amounted to €431.6 million, €178.8 million lower than 2020. The drop largely resulted from the reclassification of the COVID-19 Business Assistance Programme (€237.0 million), which featured under Capital Expenditure between March and December 2020 but is now classified under Recurrent Expenditure. This decline outweighed an increase of €58.2 million reported in other capital projects. MALTA: DECLINE IN TAX REVENUE SHOWS EXTEND OF PANDEMIC IMPACT Total tax revenue in 2020 decreased by €317.9 million over the previous year, amounting to €3,973.8 million, the NSO said today. This sheds further light on the adverse economic impact of the pandemic, as well as Government measures aimed at mitigating the crisis, particularly the tax deferral scheme. Indirect taxes amounted to €1,420.3 million or 35.7 per cent of total tax revenue, a decrease of €218.2 million from 2019. This drop was mainly triggered by lower Taxes on Production (€134.3 million), following declines in duty on 32

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Corporate DispatchPro documents (€62.5 million) excise levies (€53.4 million) and motor vehicle registration tax (€11.9 million). Furthermore, Value Added Tax (VAT) also dropped by €83.2 million over the preceding year. The second largest decrease was recorded in direct taxes, which declined by €140.6 million, for a total of €1,712.5 million, equivalent to 43.1 per cent of total tax revenue. The two key components of direct taxes, namely Personal and Corporate Income Tax were also signifi cantly aff ected by the pandemic. Corporate Income tax declined by €159.9 million over 2019, while Personal Income Tax registered an increase of €25.6 million, though at a slower pace when compared to previous years. Social contributions paid by employees, employers and self- and non-employed persons represented 21.2 per cent of total tax revenue in 2020, standing at €841.1 million. An increase of €41.0 million over 2019 was registered, reflecting the resilience of the labour market. The overall tax burden denotes the total amount of taxes and social contributions, expressed as a percentage of GDP. In 2020, the tax burden for Malta was 30.4 per cent of GDP, which reflects a decrease of 0.2 percentage points when compared to the total tax burden of 30.6 per cent of GDP recorded in 2019. Over the past 10 years, the total tax burden has been consistently above 30 per cent of GDP, with the lowest rate recorded in 2020, while the average tax burden for the 1995 to 2020 period stands at 30.7 per cent. By the end of last year, direct taxes (which also include Capital taxes) amounted to 13.1 per cent of GDP, compared to the share of indirect taxes which stood at 10.9 per cent. Meanwhile, the share of Social contributions stood at 6.4 per cent of GDP, increasing by 0.7 percentage points over 2019. MALTA OUTPERFORMS EU IN EMPLOYMENT RATES, LACKS IN EDUCATIONAL ATTAINMENT Malta’s employment and activity rates continue to surpass EU averages, according to an analysis of labour force numbers carried out by the National Statistics Office, but lags behind in a number of education-related criteria. 33

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Corporate DispatchPro Over the last six years, the activity rate – that is either in employment or still in education, for the 15-64 age group rose from 68.8 per cent in 2015 to 77.1 per cent in 2020. Females played an important role in labour market growth. In this regard, the female activity rate increased 12.1 percentage points. On the other hand, the contribution of males to the overall increase in activity rate was of 3.9 percentage points between 2015 and 2020. The highest activity rate was recorded among those aged 25 to 54. On average, out of every 100 males aged between 25 and 54 years, 96 were active. For females in this age group, activity rates registered a substantial increase and in fact between 2015 and 2020, there was a rise of 11.9 percentage points. The overall national activity rate (15-64 years) for 2020 was 4.2 percentage points higher than that recorded for EU27. National activity rates were higher than EU 27 indicators for all age groups except for the 55 to 64 year olds. In fact, in spite of the considerable growth observed over the past six years, EU 27 activity rates for the 55 to 64 age group were found to be 8.2 percentage points higher than national rates. Employment and Unemployment: In 2020, on average, out of every 100 persons aged between 15 and 64 years, 74 were employed. During these years, male employment rates increased by an average of 0.9 percentage points per year whereas female rates increased by an average of 2.4 percentage points per annum. At a national level, more males and females tend to be in employment when compared to the EU 27 average. The largest gap was recorded for the 15 to 24 year olds with the national employment rate recorded at 48 per cent as compared with 31.5 per cent for the EU 27. On the other hand, the 55 to 64 age bracket showed that the EU 27 employment rates were 6.9 percentage points higher than national rates. Unemployment rates have been declining steadily during the past years, however during 2020 the rate increased again to 4.4 per cent. In 2020, the male and female unemployment rates stood at 4.3 and 4.5 per cent respectively. When comparing to 35

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EU 27 levels, national rates for 2020 were lower for both sexes across all age groups. The largest diff erences between EU 27 levels and national rates were however prevalent in the younger cohort where, the difference was 3.6 percentage points for males and 8.5 percentage points for females. EDUCATION Another Europe 2020 headline indicator is the rate of early leavers from education and training (ELET). In 2020, the ELET rate stood at 12.6 per cent, recording a drop of 3.7 percentage points from 2015 levels. The ELET rate registered a decrease for both males and females at 4.5 and 2.9 percentage points respectively over the last six years. Although Malta’s levels for the early leavers from education and training indicator declined significantly over the years, national values were still higher when compared to European averages. In 2020, the rate was 2.6 percentage points higher than the EU 2020 national target of 10 per cent. At the same time, data for 2020 show that the number of persons aged 20 to 24 years achieving at least an upper secondary level of education was 85.1 per cent, with the national rate being 0.8 percentage points higher than the EU 27 average. Another Europe headline indicator is the tertiary educational attainment for the 30 to 34 year age group. Within this age group, there has been an increasing trend of persons attaining tertiary education for both males and females. Tertiary educational attainment increased by 10.7 percentage points over the past six years. In 2020, tertiary educational attainment stood at 39.8 per cent, hence surpassing the EU 2020 national target of 33 per cent. 83% OF MALTESE USE INTERNET EVERY DAY – EUROSTAT The percentage of adults (16 to 74-year-olds) in Malta who use the internet every day has risen in line with EU levels, to 83% in 2020, three points above the EU average. Data published by Eurostat, which focused on regions, found that in 2020, the majority of northern and western regions of the 36

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Corporate DispatchPro EU reported relatively high proportions of adults using the internet on a daily basis; the highest shares of adults using the internet every day were generally recorded among people living in cities rather than those living in rural areas. The highest share of adults making daily use of the internet was recorded in Helsinki-Uusimaa in Finland (96%). This was closely followed by Hovedstaden in Denmark, Stockholm in Sweden (both 95%) and another 2 regions in Denmark: Syddanmark and Midtjylland (both 94%). On the other hand, the lowest share of adults making daily use of the internet was recorded in Severozapaden in Bulgaria (53%). This was closely followed by the region Nord-Est in Romania (55%) and three other regions in Bulgaria: Severen tsentralen (also 55%), Yugoiztochen and Yuzhen tsentralen (both 56%). In some countries, there were significant regional discrepancies: for example in Italy, the affluent region of Emilia-Romagna saw usage reach 83%, while that in Sicily was anchored at a lowly 68%.

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Unnecessary taxes on energy generation must be eliminated, MEP says MEP Cyrus Engerer has called for the European Union to work towards joint procurement of gas supplies for all its Member States. Direct and indirect unnecessary taxes on energy generation must be eliminated and the European Union must work to become selfsustainable in energy production, he added. He was speaking as Europe was experiencing its biggest hikes in the price of energy production in its history. Ahead of a European Council summit to discuss the increase in energy prices, BusinessEurope called on European politicians to acknowledge that the current increase in energy prices has serious implications on households and businesses. “It is essential that national measures do not impact competitiveness or disrupt the Single Market,” BusinessEurope said. “The ‘toolbox’ of measures that Member States can take in the shortterm to tackle energy price spikes fully respecting EU rules, is an important step by the European Commission. Recent developments show how sensitive our economies are to energy prices. This should be thoroughly considered when discussing the Fit for 55 package, in particular long-term price energy signals to incentivise low carbon investment,” it added. “Against this situation, we need to ensure that vulnerable European citizens are protected,” Engerer noted. “No person in the Union should

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Corporate DispatchPro have to choose between the medicine they need, or heating their home; food for their famility of cooling their home; and in this century no one should have to switch off their electricity or not be able to pay rent,” he added. “Electricity, water, cooling and heating must be considered as a basic right and the European Union must ascertain that the infrastructure is in place to leave no island or remote region behind,” he said. This article is part of a content series called Ewropej. This is a multinewsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains.

This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains.

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The Fit for 55 package will not be enough if the transition does not incorporate a social dimension The ‘Fit for 55’ package will not be enough if the transition to a greater European economy does not incorporate a social dimension, Member of the European Parliament Josianne Cutajar said. The “Fit for 55” package proposes an unprecedented set of ambitious objectives and plans to be implemented by 2030. A key component is the significant revision and strengthening of the EU Emissions Trading System (ETS) targets and carbon pricing signals in line with the proposed 2030 ambitions. She noted that there is strong consensus of the public in favour of the achieving climate neutrality. An overwhelming majority of 78 % of European citizens, and 86 % of Maltese citizens consider climate change to be a very serious problem, according to Brussels’ chief statistics office. She was speaking as energy prices soared across Europe. Electricity prices are hitting record highs, slamming people with higher power bills and putting politicians on the spot. In Spain and Portugal, average wholesale power prices are around triple their level half a year ago at €175 per megawatt-hour. In the U.K., they’ve reached an eye-watering €183.84 per megawatt-hour — now the most expensive rate in Europe. Politicians are rushing to protect industries, and especially consumers, from higher bills. “It’s true: the sharp rise in energy prices is caused by several factors, including our dependence on suppliers from outside the 43

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EU,” Cutajar said. “However, this is a call for us to show more unity, more pragmatism and, ultimately, more solidarity that is just as important,” she added. “We cannot ignore the fact that the road to a cleaner Europe will be costly, but we cannot accept that the most vulnerable pay the bill. Definitely not,” Cutajar said. “Those in social housing, rural and island communities, small businesses — to name but a few examples: we need them with us to make our Continent carbon-neutral, and they are crucial to change things on the ground,” she noted. This article is part of a content series called Ewropej. This is a multinewsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains. This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains.

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Corporate DispatchPro KEITH ZAHRA

ENERGY

EU leaders address energy price spike The European Council invited the Commission to study the functioning of the gas and electricity markets, as well as the EU ETS market with the help of the European Securities Markets Authority (ESMA).

Subsequently, the Commission will assess whether certain trading behaviours require further regulatory action. EU leaders also invited the member states and the Commission to urgently make the best use of the toolbox to provide short-term relief to the most vulnerable consumers and companies, taking into account the diversity and specificity of the situations of the member states. Member States agreed that other measures will be considered with the aim to contribute to energy at a price that is affordable for households and companies and increase the resilience of the EU’s energy system and the internal energy market, while providing security of supply and support the transition to climate neutrality, taking into account the diversity and specificity of the situations of the member states.

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Corporate DispatchPro KEITH ZAHRA

ACCOUNTANCY

Supervisory authorities submit report on Sustainable Finance Disclosure Regulation The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have delivered to the European Commission (EC) their Final Report with draft Regulatory Technical Standards regarding disclosures under the Sustainable Finance Disclosure Regulation (SFDR) as amended by the Regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation). The disclosures relate to financial products that make sustainable investments contributing to environmental objectives. The draft RTS aim to provide disclosures to end investors regarding the investments of financial products in environmentally sustainable economic activities, providing them with comparable information to make informed investment choices; and establish a single rulebook for sustainability disclosures under the SFDR and the Taxonomy Regulation. The EC will scrutinise the draft RTS and decide whether to endorse them within 3 months of their publication. The Commission has informed the European Parliament and Council that it intends to incorporate all the SFDR RTS, meaning both the original ones submitted to the Commission in February 2021 as well as the ones covered in this Final report, in one instrument.

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Corporate DispatchPro KEITH ZAHRA

INTERNATIONAL RELATIONS

Commission approves €1bn package for Afghanistan President of the European Commission, Ursula von der Leyen has announced a support package worth around €1 billion for the Afghan people and neighbouring countries, addressing the urgent needs in the country and the region.

The announcement follows the discussion of the EU Ministers for development to have a calibrated approach to give direct support to the Afghan population in order to prevent a humanitarian catastrophe without legitimising the Taliban interim government. The Afghan support package combines EU humanitarian aid with the delivery of targeted support on basic needs in direct benefit of the Afghan people and neighbouring countries. The package includes the €300 million for humanitarian purposes which had already been agreed to. This humanitarian support is accompanied by additional, specialized support for vaccinations, sheltering, as well as the protection of civilians and human rights. This funding will be in direct support of the local population and will be channelled to international organisations on the ground, while respecting the principles of engagement established by the Council Conclusions agreed by EU Foreign Ministers on 21 September.

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Corporate DispatchPro KEITH ZAHRA

EU POLICY

Conference on the Future of Europe’s Second Plenary reaches conclusion On Saturday, 23 October, the second Conference Plenary meeting of the Conference on the Future of Europe took place in the European Parliament in Strasbourg to discuss contributions brought forward by citizens.

The 80 representatives of the European Citizens’ Panels took their seats as Members of the Plenary and discussions focused on citizens’ contributions from the European Citizens’ Panels, the national panels and events, the European Youth Event, and the second interim report from the Multilingual Digital Platform. Vice-President Dubravka Šuica stated: “This is a historic moment where, for the first time, citizens deliberate on a par with their elected representatives at all levels. Bringing citizens to the core of European policymaking will reinforce our representative democracies, as we set sail towards our common future.” The next Conference Plenary will take place on 17-18 December. In the meantime, the European Citizens’ Panels will meet online in November, and the first two will finalise their recommendations and present them in Plenary in December. The next Conference Plenary will take place on 17-18 December.

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Corporate DispatchPro ALFRED ZAMMIT - DEPUTY DIRECTOR, FINANCIAL INTELLIGENCE ANALYSIS UNIT

Malta’s road ahead for de-listing Financial crime has long posed a deep-rooted challenge for international financial jurisdictions; however, it has become much more complex in recent years with the rise of technology. Online and often complex financial transactions and products and cryptocurrencies have opened new opportunities for criminals. International institutions have rushed to adapt to these developments, with a wave of regulations being developed over the past decade. In recent years, international standards have also been revised in line with the risk-based approach to strengthen the requirements for higher risk situations, allowing countries to take a more focused approach in areas where high risks remain or where implementation is not effective enough. For long years, Malta had demonstrated conformity with such requirements and even the most-recent Moneyval assessment confirmed that the country has a high level of technical compliance with the international standards and has the right legislation in place. Yet, the Financial Action Task Force (FATF)’s decision to place Malta under increased monitoring (the so-called grey list) indicated that further efforts are needed to ensure that the Maltese anti-money laundering system is effective and yields the intended results. To achieve this objective, an action plan has been agreed between Malta and the FATF, together with a political commitment to implement it within agreed timeframes. The implementation of the FATF action plan is backed by the commitment of all Maltese authorities to take a significant number of actions resulting in deliverables that are intended to achieve the level of effectiveness expected by the FATF, and to do so sustainably. 55

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Corporate DispatchPro In this context, it is heartening that a mere few weeks after the original decision by the FATF, a recent follow-up assessment by the same taskforce found that Malta has shown serious commitment and has made swift and encouraging progress in implementing the agreed action plan. Although further work is needed to reach the levels of effectiveness desired, Malta is on the right track. It is also encouraging that it noted good progress in the only two issues, i.e., monitoring of beneficial ownership and combatting money laundering of illicit funds arising from tax crimes. These were highlighted in the original assessment which led to Malta’s grey listing. The issues are the key elements in the action plan devised and agreed with the FATF. Malta has also put in place a wave of reforms at institutional and governance level, which are aimed at strengthening Malta’s jurisdictional reputation. It is encouraging that the string of reforms at different levels are capturing the attention of international institutions. In her recent State of the Union address, European Commission President Ursula von der Leyen praised Malta for reforms undertaken in the field of rule of law, particularly regarding judicial reform. This included the introduction of new, more transparent, and independent systems for the appointment of members of the judiciary, the President, and the Commissioner of Police. This was followed-up by the International Monetary Fund, which in its Article IV assessment on Malta remarked how the authorities have been implementing the recommendations of the Council of Europe’s Venice Commission and the Group of States Against Corruption (GRECO). A few days later, an in-depth assessment by German credit rating agency, Scope, noted in its research that Malta had made good progress in strengthening its AML/CFT frameworks highlighting specifically the allocation of significantly more resources to regulatory, supervisory, and investigative agencies. As one example, the FIAU has registered an increase in its operational budget from Eur 1.6 million in 2018 to Eur 8.5 million this year and has increased its staff complement from 70 at the end of 2019 to 116 by end 2021. 57

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Corporate DispatchPro All authorities involved in the fight against money laundering and other financial crime are working hard to address the issues raised by the FATF to enable Malta to exit the grey list within the shortest time possible. There is also an increased recognition by subject persons, practitioners, and other stakeholders that a collective effort will yield the desired results for the common benefit. This collective effort requires that gatekeepers to the financial and corporate services industry only let in clean and reputable business. All subject persons, whether individuals or large financial institutions are expected to comply with their AML/CFT obligations without fail, including obtaining and providing accurate beneficial ownership information and reporting suspicions of money laundering and proceeds of crime, including tax evasion. AML/CFT supervisors are expected to monitor compliance and to impose proportionate, effective, and dissuasive sanctions where they identify compliance failures. This is what the FATF expects, and this is what the authorities are committed to. Working together during the upcoming weeks is crucial to ensure a timely withdrawal from the FATF’s monitoring procedure and grey list.

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Corporate DispatchPro TEMIDAYO AKENROYE, THE CONVERSATION VIA REUTERS CONNECT

Truck driver shortage won’t be solved by quick fix visas – here are three ways forward The current shortage of heavy goods vehicle (HGV) drivers in the UK is hitting consumers hard, leading to distribution problems in food, fuel and groceries. Long queues have been seen at petrol stations across the UK and service stations are rationing fuel for customers. The supply-chain problem has also triggered empty shelves in some major supermarkets. With a shortfall of over 100,000 HGV drivers, logistics operators are struggling to meet supermarket demand, and facing increased costs for hiring additional truck drivers to reduce delays. Meanwhile, Morrisons, the UK’s fourthlargest supermarket chain, has already warned that a shortage of drivers will increase prices. While many people are quick to blame the UK’s exit from the EU, there are a number of contributing factors: tax charges to truck drivers, drivers approaching retirement, training delayed by COVID-19, and increased competition for drivers from haulage companies are all contributing. In response, some logistics providers are offering sign-on bonuses of about £2,000 to attract new drivers. The government also has a plan to issue 10,500 temporary visas to foreign HGV drivers. However, this is a short-term fix and can only lead to minimal improvement until Christmas.

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THE PROBLEM WITH THE QUICK FIX The proposed temporary visa scheme seems condescending by nature – it depicts foreign truck drivers as “disposable workers” that can be used and discarded after a short period. This is a recurring theme in UK history. About 600,000 African soldiers were recruited to fight for Britain during the second world war, but these men were abandoned when the war was over. Similarly, the UK needed people to rebuild the economy after the war and some workers were recruited from the Caribbean. These immigrants worked in critical sectors like health, public transport and manufacturing, but were treated unfairly afterwards, denying certain legal rights to the workers and their families. The current stress and pressure that migrant workers face during visa renewal presents a systemic obstacle to relocating and living in the UK. The temporary nature of the proposed visa presents uncertainty in terms of career stability and long-term socioeconomic planning, especially for families. THE BIG PICTURE To help understand the reality of the present, the UK needs to critically review its past regarding migrant worker recruitment. The government needs a more robust and sustainable solution to the national shortage of truck drivers. The government should offer long-term benefits tor foreign HGV drivers and new incentives and schemes to develop skills domestically. 1. TRAINING GRANTS FOR FUTURE HGV DRIVERS The UK has an ageing HGV driver workforce, with few young people considering a career in this sector. To build a lasting solution to the current problem, the government needs policies and programmes to facilitate and incentivise HGV training for the local population, especially young people. Pertemps Driving Academy, with branches in England, Scotland and Wales, is setting the pace by offering free licence acquisition training (worth £5,000) to new drivers at its Worcestershire and 62

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Corporate DispatchPro Yorkshire branches. In return, the beneficiaries are required to sign a two-year work contract with Pertemps. The government should collaborate with driver recruitment agencies in the logistics sector to scale up this idea. 2. ENABLING CROSS-SECTOR JOB TRANSITION Workers who have lost their jobs during the pandemic might need to consider truck driving as a new career – they may even make more money. HGV drivers earn up to £35,000 per year on average, higher than the median annual earnings in the UK. The main players in the UK logistics sector should provide easier and quicker pathways for other professionals and workers in relevant sectors to transition to new jobs where there are staff shortages. For example, the Chartered Institute of Logistics and Transport should develop a programme to fast-track training and certification of transiting workers from other sectors. 3. INVESTING IN AUTONOMOUS VEHICLES Undoubtedly, technology will impact future transportation. With Abiola Oladipo, the CEO of Manchester-based Tiwakiki Consulting, I am investigating the impact of smart logistics technologies like driverless trucks on global sustainability challenges. Driverless trucks could support the UK logistics infrastructure for moving people and goods from a warehouse or distribution centre to the final delivery destination. The UK can tap into the potential of automated transport to proactively avoid future labour shortages in the logistics sector. This might not be a short-term solution but it is where we are heading, as we currently have self-driving cars and automated railways. The government should spend some money to encourage small businesses and truck manufacturers to invest in smarter selfdriving technologies that can drive the country’s logistics system more effectively. 63

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Corporate DispatchPro SIRAJ AHMED SHAIKH & GIEDRE SABALIAUSKAITE, THE CONVERSATION VIA REUTERS CONNECT

HGV driver shortage: remotecontrolled lorries could prevent future logistical nightmares The current HGV driver shortage is the latest chapter in the UK’s supply chain jitters, disrupting wholesale food delivery, cancelling bin collections and leading to the panic buying of fuel. While there is a good chance the country will overcome this temporary problem, the driver shortage is calling into question the long-term viability of logistical transportation on the roads. One intuitive long-term solution to future HGV driver shortages is to take the driver out of the driver’s seat altogether. Self-driving car technology, which can also be applied to HGVs, promises to bring about substantial change to how we transport people and goods. But, despite advances in automation technology and operational techniques, self-driving vehicles remain distrusted and difficult to build. One possible solution sits at the very interface of technology with the human: teleoperation, or the replacement of the behind-thewheel driver with a combination of automation technology and remote-controlled human oversight. We’re involved in work that’s trialling this approach as a more realistic, less distant solution to crises in road logistics in the coming years. There has long been a desire to create intelligent and autonomous HGV solutions. Over a decade ago, the Safe Road Trains for The Environment project set out to understand the feasibility of road trains, or “platoons”, to address not only HGV emissions and traffic congestion, but also to enhance logistical efficiency and driver comfort. 65

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In this case, the lead vehicle in the platoon controls all the vehicles behind it, with a necessary gap maintained and altered when other vehicles pass between them. The trailing vehicles require less human input, but the driver still remains in the loop – and in the cabin. That driver would still require HGV training, which doesn’t help during driver shortages. REMOTE-CONTROLLED LORRIES A more realistic and potentially labour-saving solution comes in the form of remote-controlled HGVs. The notion of remotely controlling systems isn’t new – it dates back to the late 19th century, when the electrical engineer Nikola Tesla trialled an unmanned torpedo boat controlled by radio waves. The same basic technology has been used for decades to drive toy-sized vehicles. Of course, teleoperating road vehicles won’t be the same as controlling a shoebox-sized car. It will take advantage of advances in vehicular automation while still maintaining an element of remote human control over a wireless link. As such, HGV teleoperation can realise the benefits of automation – in terms of scale and reliability – while also taking advantage of human vigilance, enhancing their safety. Some training would still be involved in this solution, but teleoperation has two key labour benefits. First, the human overseer could feasibly be located anywhere, reducing disruption when drivers are in the wrong place at the wrong time. But it’s also possible that, with continued improvements, trained drivers could oversee more than one HGV at a time – enabling fleets to require fewer human operators. Teleoperation is currently being trialled up in north-east England, where a 40-tonne HGV is being piloted over a 5G communication network. The £4.8 million project is funded by the UK’s Department for Digital, Culture, Media & Sport to realise the benefits of cutting-edge technological developments in both telecommunication and vehicular teleoperation. Such a combination of emerging technologies could result in optimal route planning, reduced emissions, reduced labour movement and safer journeys. At present, the teleoperated lorry is being put through its paces at the Nissan test track in Sunderland as part of a “last mile delivery” system – 66

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Corporate DispatchPro transporting goods on the final, shortest leg of their journey – to support manufacturing logistics. It’s a fitting example of how human effort can be relieved from the most intensive stage of the logistical chain. To bring this vision to reality, the retailer Wilko recently made a £3 million investment into StreetDrone – one of the key partners with us on the teleoperated HGV project. StreetDrone is now aiming to bring this technology to UK roads by the end of 2023, albeit initially in smaller vehicles than HGVs. SAFETY AND SECURITY Such reliance on technology, however, brings about a different set of challenges. Chief among them are security threats posed to the system itself which, like any other digital system, is vulnerable to hacks. The integration of 5G communication, remote control and a vehicle into one system opens the door to possible manipulation. Developers of teleoperated HGVs know they must be mindful of ransomware attacks by ordinary criminals, or more sophisticated attacks to critical infrastructure by aggressive nation states. As part of the teleoperated HGV project, Coventry University is spearheading an extensive cyber-threat analysis and risk assessment to address these threats. Our work is attempting to understand the nature of potential hacks and cyber-attacks, building the defences that will ensure the vehicle’s safety and security when released on public roads. Ultimately, as with self-driving technology, a major obstacle to the deployment of remote-controlled HGVs is public distrust. The general public is already concerned about the safe manoeuvring of autonomous vehicles – add in the potential for them to be hijacked or deactivated on the roads, and distrust could be a major impediment in the adoption of vehicular teleoperation. Technology undoubtedly has to be a part of any future solution to overcoming our transport and logistics issues, including driver shortages. And if full autonomy is too uncertain a solution for our society, perhaps we need to “teleoperate” our way into the future instead: automating where possible while keeping a sharp, human eye on the road ahead. 67

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Corporate DispatchPro TOM STACEY AND YING XIE, THE CONVERSATION VIA REUTERS CONNECT

Supply chains can easily break – here’s how they can be made more resilient to prevent shortages Supply chains are essential to everyday life, bringing materials to factories, food to your plate, and fuel to your car. The links in those chains – the manufacturers, logistics companies, warehouses and retailers – combine to form dynamic systems driven by customer demand. But a small, unpredictable change in demand can have major ramifications, as seen with the recent queues and rising tempers at petrol stations in the UK. This is because modern supply chains are not designed to cope with large levels of uncertainly around time, supply or demand. Instead, businesses have focused on developing operations which reduce costs But a cheaper supply chain often means a weaker supply chain. And problems arise when lean systems lack resilience and flexibility. This was perfectly illustrated by the disruption to the fuel supply chain in the UK which started in the distribution of supplies to petrol stations. Then the temporary closure of some forecourts triggered widespread stockpiling and panic buying. This, in turn, created a surge in demand for fuel, exacerbating the original disruption. There have been warnings that a similar situation could arise with supplies in the coming months – for everything from food and toys to Christmas trees. And it will take more than a few thousand extra lorry drivers to truly strengthen these supply chains. That said, more lorry drivers would be a good place to start. The UK currently needs at least 90,000 people driving HGVs, a shortage

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which leads to longer waiting times at ports, more congestion, and more frequently empty shelves. But the government’s plan for 5,000 three-month visas for European drivers is not going to make a huge difference (and might not even attract any, given that Europe itself needs another 400,000) Current applications to the scheme are said to total 27. Longer lasting visas would probably be more attractive to some foreign drivers, and allow them to get familiar with the road networks in the UK, and make appropriate personal arrangements. The next step to addressing the long standing shortage would be to look at improving working conditions, reviewing pay levels and even tax incentives. A LONG ROAD Beyond driving vehicles, there are about 2.5 million people working in haulage and logistics in the UK, covering road, rail, air and water. And while that sounds like a lot, it has been estimated that around 840,000 additional workers are needed in the sector to manage growing demand. The logistic sector has a reputation for being low paid and harsh with long hours and poor working environments. Improving that reputation would attract more young people, as would more apprenticeships and better training. In the long term, major infrastructure changes are needed, with improvements to ports, road, rail and inland waterways. One freight train removes 43 to 76 lorries from the roads, and one freight barge can remove about 24. But using these alternatives is restricted by a lack of network and capacity. The new high speed railway linking up London, the Midlands, the North and Scotland (HS2) will free up additional capacity on the existing railway network, to allow more freight trains to be run. Higher efficiency and effectiveness in operation is also necessary, through consolidating consignments into fewer shipments to 72

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Corporate DispatchPro reduce cost, to reduce the number of lorries in road, to reduce damage risk, and to improve quality control. The whole sector needs to improve its use of digital technology to automate processes and improve efficiency and productivity while reducing reliance on labour. This would make the whole industry more resilient and dynamic, and not as exposed to the effects of staff shortages. Reliance on fragile global supply chains can be somewhat rebalanced by investing in localised production and diversification of supply. This could involve firing up an old coal power plant (albeit this is at odds with climate goals) to meet the electricity needs in the UK temporarily, or investing in domestic production of controlled environment vegetable crops (currently 69% of fresh vegetables are imported from Spain and the Netherlands). This would reduce the UK’s dependence on “risky” overseas sources of energy, food and pharmaceuticals, and transporting less food would mean fewer emissions and longer shelf life. Away from the industrial side of things, that key element of the supply chain – the customers – need to be mindful of the way they consume goods. They need to shop responsibly and sensibly, so that the links they depend on are not put under too much strain. If consumers get a sense that there are shortages, then panic buying ensues as it did with toilet rolls and petrol, and this causes repercussions down the supply chain. Politicians and industry leaders are often at pains to get across the message that there is enough to go round – and usually there is. Only by taking a broader approach to improving the supply chain and logistics industry will we be able to ensure that it is fit for purpose – and that global, or even national events do not cause shortages in shops or at fuel pumps. This means an approach supported by the industry and governments working together, but also by consumers, who will need to manage their own actions and expectations.

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BRIDGING THE INVESTMENT GAP

SUPPORTING SMEs, INNOVATION, INFRASTRUCTURE & SOCIAL INVESTMENT

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