23 July 2018
Turkey has always played a central role in global trade due to its geographical location. During the height of the Ottoman empire, goods following the Silk Road from east to west - and vice versa - travelled through the diverse, and often challenging landscape of what is now known as Turkey. Today, Turkey is once again at the heart of the international trade, acting as a land-bridge between East and West, a key transitional location for the Black Sea region and manufacturing copious amounts of garments for Europe’s retail stalwarts.
Yet, it is the maritime sector where Turkey is making waves. Within four hours of leaving Turkey’s shores, merchants can access 1.5 billion customers in Europe, the Middle East and North Africa - markets with a combined GDP of nearly €21 trillion. Of all the goods transported in and out of Turkey, 85% go through Turkey’s 80 ports, 26 of which are operational container ports. In terms of employment, Turkey’s maritime provides employment for over 300,000 Turkish citizens.
In order to leverage the competitive advantage Turkey has gained from its geographical proximity to key markets, and to secure the future of its maritime might, the current government has undertaken a mammoth investment project seeking to bolster and improve infrastructure throughout the country.
From an investment perspective, it’s full steam ahead to 2023, the centennial anniversary of modern Turkey. To mark this occasion with a powerful and symbolic show of economic strength, the government is set to spend between €350 to €450 billion over the next 6 years on improving roads and building high speed rail, as well as bettering other areas of social and economic infrastructure.
The glut of government cash rolling into infrastructure is not to make up for a shortcoming from the private sector. On the contrary, Turkey’s ports attracts a huge amount of private investment, creating a healthy amount of capacity within the sector and creating a profusion of jobs. In 2016, DP World opened its Yarimca container operation, stretching over 460,000 square metres, with dual-berth capacity, remote control gantry cranes and high-speed x-ray scanners. The yard operation has the capacity to hold and manage 1.3 million TEU containers and uses the very latest technology in asset management to ensure a smooth and streamlined day-to-day operations.
While DP World and other private companies have made significant investment into Turkey’s maritime industry, there is still a way to go. The Turkish government understands this and is investing heavily in the country’s intermodal capabilities, helping connect private ports with better road and rail connections to get goods from origin to destination at a much faster rate. Not only will this allow industry to take better advantage of the existing port capacity, it will also help contribute to other significant infrastructure efforts in the region, such as the revamped Silk Road connection to China via the Caspian Sea.
As the Turkish market matures, it must respond to the trends in international trade that are challenging traditional notions of supply chains. Merchants, and by extension logistics providers, are looking for speed, efficiency and reliability. Turkey’s geographical location, stationed between the consumer wealth of Europe and the booming, resource-rich regions of the Middle East and Asia, make it a key component in the future of international supply chains. But in order to deliver a level of service that merchants and consumers require, Turkish infrastructure needs to be revamped and the logistics and port sectors need to undergo concerted consolidation.
Of the 80 operational ports in Turkey, 26 are container ports, which shows how fragmented the market currently is. In the world of modern logistics, fragmentation equals weakness and this is further exacerbated by suboptimal quality of Turkey’s current infrastructure. The government-led investment aimed at bettering rail and road infrastructure will lay the foundations for greater competition leading - ultimately - to market consolidation.After all, connecting only a handful of ports to rail and road networks is a lot simpler and more efficient than integrating 26.
The logistic providers and port operators that are set to emerge prosperous from market consolidation are those that understand the intricacies and interconnectedness of lean, tech-enabled intermodal operations. Of course, better rail and road connections will play an vital part in the movement of goods - getting freight off ships and onto the next stage of the supply chain in a timely manner - but it is also the day-to-day operations of logistics operators that will separate the best from the rest. The efficiency gains to be captured by slicing minutes of freight loading, unloading and yard operation are enormous.
Better road and rail will improve Turkey’s intermodal offering, which will ultimately strengthen its standing within international trade. The road to supply chain success, however, is not that as simple as laying gravel, asphalt and steel rails. Building efficient networks through multimodal capabilities relies on lean port operations, where technology is utilised to provide transparency and forecasting for both merchant and operator, and expertise are imparted on product cycles and consumer demand. The newly improved infrastructure will lay the foundations in Turkey for success, but there is always room for improvement.