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ITE Transport and Logistics

In the city: urbanisation & logistics in Turkey

After the perfect recipe for mass urbanisation? Then take a look at Turkey. With its growing population and expanding economy, Turkey’s cities are growing ever larger. Good for the country, sure, but what about transport and logistics? 

New realities means a shakeup in urban logistics services is needed nationwide in Turkey. 

Let’s dive into urbanisation in Turkey, the transportation trends likely to emerge as more and more Turks head to cities to live and work, and how logistics providers can react to shifting paradigms.

Turkey’s urban expansion

Over the past half century, Turkey’s economic composition has changed. Turkey does not rely so strongly on agriculture for its economic health anymore.
Now, services and industry account for 26% and 64% of Turkey’s GDP respectively. More jobs are subsequently centred in industrial sites and urban areas, necessitating a rural exodus to secure the best opportunities. 

The change has been ongoing since at least the 1950s. Back then, a quarter of Turkey’s population lived in cities. In the present day, the reality is that 75% of Turks now dwell in urban areas.

Turkey is home to 30 cities the World Bank terms “metropolitan cities” i.e. those with extensive suburbs and greater metropolitan areas. This is an increase over the 16 identified in 2012 – showing urbanisation is no joke in Turkey.
Istanbul is Turkey’s largest city, and one of the biggest in the world, with a population of over 14 million. Seven Turkish cities have populations in excess of 1,000,000 people, but this number will very likely shoot up as the 21st century continues.

E-commerce, expanding consumer bases driving Turkish inner city logistics shifts

The growing percentage of Turkey’s population living in urban spaces is also being fuelled by a general expansion in the population. The population totalled nearly 80 million in 2016, after growing at an average rate of 1.6% over the decade.

Subsequently, levels of retail spending are rising, in tandem with Turks enjoying greater purchasing power. Individually, its great news for your average person on your average Turkish street. For transport and logistics firms, however, it presents new distribution challenges – namely, how to fulfil deliveries in busier cities?

E-commerce is booming in Turkey too. 44% of Turkey’s population actively shops online. By 2021, around 72% of Turks will be online shoppers. As much as $11.6 billion a year will be digitally spent by Turkish consumers by this time. That’s a lot of goods requiring fast, efficient delivery.

Also putting strain on logistics services is the growing number of vehicles in city centres. In Istanbul alone, an additional 136,000 vehicles, including, vans, trucks and cars, hit the city’s streets every year. Working around greater inner-city congestion levels will also present significant obstacles for 3pl logistics companies.
Lastly, there is Turkey’s massive regeneration, expansion, and infrastructure development programmes hitting urban areas nationwide to contend with. In some locations, such as Istanbul or the capital Ankara, spatial footprints are changing. Industrial and manufacturing zones are being moved out of cities and into the suburbs – meaning logistics infrastructure and warehousing is being moved too. While this places it at the point of origin, it creates a disconnect with customers living in the inner city.

A “polycentric” logistics approach required?

JLL, a global corporate management investment, and development company, suggests a “polycentric” approach is the best way for transport and logistics operators to rise to Turkey’s urban logistical challenges. 

Polycentrism, in this context, essentially means each link in supply chains requires individual management to ensure smooth processes and delivery fulfilment. Essentially, it’s all about striking a balance between improving customer service and the cost-containment of retailers and logistics providers.

JLL offers the following recommendations for supply chain professionals operating in Turkey’s growing cities:

• Shippers – Move from supply chain to demand chain by running predictive analysis on end customers’ demands, and employ one of two distribution models: devolved distribution to logistics providers or operate all or part of the supply chain oneself.
Logistics service providers – Transform production-led supply chains into customer-centric demand chains via improving visibility of consumer demand, enhancing supply chain responsiveness, and step up the ability to track and trace orders.
Logistic centre operators/builders – Logistics facilities should be relatively close to the cities they serve. They should also channel shipments for different companies, creating an integrated logistics system by offering storage, sorting, consolidation and deconsolidation facilities as well as a number of related services such as accounting, legal counsel, and brokerage.
Warehousing operators -  Logistics depots that are located in city centres and serve one or more companies in optimizing distribution processes with regard to delivery time and cost by getting closer to their customers.

From this, we can take that logistics firms across all supply stages should really be operating with customers’ needs at the forefront of their mind. Any storage and distribution centres should ideally be as placed to the heart of urban areas as possible, reducing distances between start and end points considerably.

Turkey continues to be an exciting market for transport and logistics – and not just in the actual movement of goods. For transport and fulfilment technology suppliers, it remains a tantalising prospect. Expect opportunities to supply both products and services to Turkey’s transport and logistics centre to blossom as Turkish cities expand into the next decade and beyond.

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