OBG talks to Ahmet Musul, Chairman, Ekol Logistics

Interview: Ahmet Musul

What are Turkey’s competitive advantages as an international logistics centre?

AHMET MUSUL: Given its strategic location, Turkey has always had the potential to become a global logistics centre. However, only in the past 10 years has the country had the political stability and economic performance needed for this to materialise. Moreover, recent global developments have reinforced Turkey’s logistics position. As production centres in Western Europe have begun relocating elsewhere to reduce costs, many multinational companies have developed manufacturing facilities in Turkey to benefit from our inexpensive but highly skilled human resources. This means that more products bound for global markets – from automobiles to fast-moving consumer goods – are of Turkish origin. As a result, “Made in Turkey” products are now perceived not only as cheap but also as good quality.

What is being done to ensure investment in logistics infrastructure keeps up with economic growth?

MUSUL: It is true that Turkey’s transport system suffered from underinvestment in previous decades. Moreover, from a logistics perspective, many investments in the industrial sector were ill-conceived. Bursa, for example, was positioned as the nation’s automobile manufacturing centre; however, the city has no connections to railways or ports. On the positive side of the ledger, the current government has launched an ambitious transport infrastructure development and privatisation programme under its 2023 strategy. In addition, private companies based in Turkey are making supply chain performance imperative, largely because competitiveness in the modern economy demands efficiency. Major automotive firms are only designing new manufacturing plants in areas with strong transport links.

What do you identify as the greatest weaknesses in Turkey’s logistics network?

MUSUL: Turkey’s railway system is severely underdeveloped, which is why most cargo transiting the country goes by roadway. In addition, our Customs regime is a notable barrier to increased trade. However, some neighbouring countries are relatively poor and unstable, which has made it difficult for the authorities to develop a fast clearance system. As Turkey continues its EU membership talks, it is important for our inspectors to demonstrate that we do not have porous borders. Still, in the coming years Turkish Customs officials need to better streamline operations and upgrade their IT systems to improve traceability.

Outside of the logistics system itself, high energy costs represent the single greatest obstacle for our transport and trade network. For example, for some of the destinations serviced by Ekol – particularly those that require travel of 300 km or more – diesel fuel accounts for over 60% of our total freight costs.

Given high domestic energy costs, green logistics practices have become essential. One such practice is using fuel-efficient trucks; however, the sector is highly fragmented and the many smaller logistics firms lack the profit margins and upfront capital required to purchase such vehicles. I believe that with additional investment and cooperation by sector players, the threats to the sector can be transformed into opportunities.

Has the EU-Turkey Customs Union created competitive disadvantages for Turkish logistics firms?

MUSUL: The EU has established a one-sided business relationship with Turkey in some respects, with the Customs union in particular creating barriers for the local transport industry. For example, visa procedures for Turkish nationals are restrictive, and hidden rules exist in which transport fees for Turkish firms are often higher than those paid by our EU competitors. In addition, the definition of the European cabotage policy needs to be revised to allow for the use of Turkish personnel to load and unload cargo carried by Turkish logistics companies in European territory. Even if these regulations were loosened, the cost structure is still more favourable in Eastern European markets than in Turkey.