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ITE Transport and Logistics

A guide to Turkey’s transport & logistics industry

Turkey’s strategic location, bridging continental Europe with the Middle East and Asia, makes it the perfect transport and logistics hub. The Turkish sector is relatively young in but is expanding rapidly, in parallel with the nation’s impressive economic growth. 
Turkey itself is in strong global position, compared with its Central Asian neighbours when it comes to logistics. The nation ranks 30th on the World Bank’s Logistics Performance Index, far above its closest regional competitor, Greece, which ranks 44th.
In the long term, Turkey is committed to exploiting its advantageous location by positioning itself as the region’s leading transport and logistics centre. The sector was worth $44 billion in 2013, but, as mentioned above, is growing at an almost identical rate compared with GDP growth, which presently stands around 4%.
This isn’t surprising. The Investment Support and Promotion Agency of Turkey (ISPAT) stated that the logistics industry contributes roughly 10-15% of the total GDP. According to the World Bank, Turkey’s current GDP sits at $798.4 billion, which correlates to a transport and logistics market valuation of close to $80 billion – and still growing. Estimates from the ISPAT indicate that the sector will be worth $150-200 billion by 2023.
Transport & logistics in Turkey – the market composition
A contrast exists in the domestic and international transport networks established by Turkey. Road transport, for example, dominates internal freight distribution. Overseas trade looks much different, as shipping holds the greatest market share.
85% of domestic freight by volume is handled by trucking and road transport – an overwhelming majority compared with the next largest market sector, rail, with 5%. But, once freight leaves Turkey, the story is quite different. Foreign trade is dominated by shipping, which accounts for 85% of freight by volume, followed by road transport with 11% and air with 1%. 
Comparatively, the market composition changes when we look at foreign trade by value. Sea freight still claims 50% of the market, closely followed by road with 35%, air with 10% and railway with 1%. Railway’s contribution is expected to remain at 1% until at least 2025, according to the International Transport Forum.
It will be interesting to see changes in the market’s overall composition if Turkey fulfils its ambitious foreign trade goals. The government is hoping to see trade levels rise to $1.1 trillion by 2023. Half of this total is to come from exports, which will have knock on effect on the transport & logistics sector as a whole.
Third party logistics (3PL) companies are seeing significant dividends due to the fact that the sector remains relatively unorganised in Turkey at present. While some major retail firms handle their own distribution networks, many rely on third party support to ensure cargo reaches its destination.
Domestic 3PL suppliers’ performance gives insights into the enormous opportunities Turkey can offer. Leading local firms, such as Ekol, Mars, Omsan and Netlog, enjoyed a CAGR of 21% during 2008-2012, a report from ISPAT revealed, due to the growing demand for their services.
A changing retail landscape is likely to positively affect demand for transport, logistics and warehousing services across Turkey. The population is certainly changing its buying habits. Frozen and preserved food consumption, for example, is on the increase – creating a gap in the market for cold chain service providers to exploit.
Urbanisation and increased e-commerce sales, now worth in excess of $8 billion according to EcommerceNews.eu, will also play their part in providing small-to-mid size transport firms scope for Turkish expansion too. 
Road transport in Turkey – the dominant logistics force
According to the European Parliament, the modal share of road freight transport stood at 87% in 2013. In terms of tonnage versus kilometres (TKM), Turkey’s road logistics suppliers saw a 47% increase over a decade. 2003’s numbers stood at 152,163 tonnes carried per kilometre of road, whereas 2013 saw a TKM of 224,084 tonnes. 
Turkey also possesses Europe’s largest truck fleet. Some 756,000 vehicles made up fleets across the nation in 2013 the European Parliament reported. Consequently, maintaining a solid motorway network is a priority for the Turkish government.
Currently, the total of length of Turkey’s paved road network totals 65,400 kilometres. A number of build-operate-transfer highway construction projects are underway, such as the $4 billion North-Marmara Highway, which will add a further 5,500 kilometres to Turkey’s motorways. 
Turkish rail transport – investment, liberalisation & expansion
At present, rail transport in Turkey is being hampered by a poorly optimised rail network and a lack of overall investment. Less than 5% of all freight, by volume, is transported by train. The government hopes to increase this market share to 15% by 2023. 
How will this goal be achieved? With the expansion of the network and liberalising of the rail market for the first time. 9,000 kilometres of new high speed train lines are pledged for construction by the 2023 deadline. By then, the total track length should total 26,000 kilometres including high speed lines.
In April 2016, it was announced that private freight operators will have access to Turkey’s rail network for the first time - a move that could see rail freight volumes rapidly expand. Turkish State Railways (TCDD), which currently controls Turkey’s railways, will move away from operational roles into infrastructure management. Private firms will utilise the network while paying TCDD. 
Befitting Turkey’s beneficial location, the country is collaborating with China on a number of domestic and international rail projects. A $30 billion high speed network linking Edirne and Kars is one such development.
Indeed, a new freight corridor from Lianyungang to Istanbul, crossing three Central Asian states and two sea transit segments, was established in January 2016 – ably demonstrating how Turkey can serve as the perfect rail gateway to the East.
Turkish air freight - set to soar?
Air freight in Turkey is expected to reach new heights despite constituting a negligible share of domestic freight, around 750,000 tonnes in 2014, at present. Revenue generated by the sector has grown exponentially over the past decade. In 2003, $2.2 billion of revenue was established with this figure increasing tenfold by 2014 hitting $24 billion. 
Commercial aircraft numbers increased by 180% during this period. Airports open to commercial traffic doubled as well, rising from 26 to 52. Turkey is emerging as an international air fright hub, as these figures tell us. Reinforcing this is the 165% increase in international air cargo volumes witnessed during 2003-2013. Freight of this nature grew in volume from 700,000 tonnes to 1.9 million tonnes across this time range.
Istanbul’s Ataturk Airport processes 47% of Turkey’s air cargo. Antalya Airport sees 29% of air freight pass through it with while another Istanbul airport, Sabina Gocken, handles 9%. 
Expanding its airport network, to increase both passenger and trade capacity, is of vital importance to Turkey’s government. As such, a third airport is under construction in Istanbul. As this will be the largest airport in the world upon completion in 2018, with a passenger capacity of 150 million a year at peak, the new site will play a large role in expanding Turkish trade networks. 
Cargo facilities at the $10.2 billion airport will be extensive. Air Cargo Week reported that it will have the capacity to handle 5.5 million tonnes of cargo per year – potentially increasing Turkey’s current international air trade volumes five times over. 
Maritime freight in Turkey – remaining buoyant?
In terms of modal share, sea freight and maritime transport has a roughly 7% share of the cargo transportation market. The government is hoping to expand this over the next 7 years to hit 10%. As mentioned above, shipping dominates Turkish overseas trade with a market share of roughly 86%. 
The European Parliament has noted that the importance of maritime freight transport is rising in importance in Turkey. An 105% increase in sea freight volumes over the previous decade is testament to this.
220 ports are open to commercial ventures across Turkey’s 8,200 kilometres of coastline. Port capacity is expected to increase 100% by 2023. By this year, it is hoped that the value of cargo unloaded and loaded at Turkish ports will reach $966 million. Who better to help Turkey achieve this figure than international operators? 
Increasing traffic calls for new investments. Funding is mainly through the private sector: around 130 of Turkey’s 220 commercial ports are currently operated by private companies and this number should further increase through privatisation and public-private partnerships (PPPs).
Currently, there are 33 projects (increase in capacity or new ports) on track. 19 relate to container ports, including the new ports of Mersin, which will feature a final capacity of 11.4 million TEU, and Çandarli with a total capacity of 4 million TEU. 
14 projects relate to bulk and general cargo ports, including the new 16 million tonne captivity Filyos Port. The Filyos facility is to be completed around 2020.
A solid future for transport & logistics in Turkey
With serious government backing, space for international and private investment to make an impact, and an expanding market, transport & logistics in Turkey is going from strength to strength. The country should be firmly on all transport and logistics professionals’ radars for the lucrative rewards they could reap in Turkey. 


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