Turgut Erkeskin, President, Association of International Forwarding and Logistics Service Providers (UT KAD): Interview

Interview: Turgut Erkeskin

What factors are driving logistics demand in Turkey?

TURGUT ERKESKİN: The Turkish economy has made significant strides over the past 15 years and has grown into one of the largest and most dynamic in the region. Rising production and consumption, a growing population and heightened income levels have resulted in a substantial increase in the amount of goods circulating domestically, posing considerable opportunities to providers of logistics services. Furthermore, the country’s large surface area requires the continued development of an extensive infrastructure network.

Demand for logistics services, however, is not just a function of domestic forces. It is also affected by international trade. Turkey has long been a centre for imports and exports, and its role as a transit state looks only to be increasing, especially given its advantageous geographic location between the major production areas of the East and the major consumer economies in the West. As the US and Europe recover and the Chinese economy shifts towards consumption, Turkey stands to benefit from increases in the global flow of goods. Furthermore, the country is a natural production and distribution hub for multinational firms looking to tap the markets of the region, especially Northern Iraq, Africa and the Commonwealth of Independent States.

While there are not good statistics on the industry, and this is one area that is in need of improvement, growth has been considerable in the past few years. Demand for logistics services in 2013 grew between 22% and 25%, spurred on by strong private and public investment – over 32% of government investments were in logistics-related projects. This growth has also manifested itself in the amount of people entering the industry; there are around 60 different high school and university programmes dedicated to the profession.

What infrastructure improvements are needed to sustain growth in this sector?

ERKESKİN: First, I believe that the plan for a third airport is a major step in the right direction. Turkey is a centre for air transport – 67% of goods transported by Turkish Airlines are transit goods. If the country can develop its infrastructure properly, it can be the centre of a global trade network from China to Brazil. Already, more and more European companies are flying through Turkey to ship goods to Africa via Turkish Airlines. Second, the composition of international trade has shifted over the past few years and requires extra investment in more advanced infrastructure. The mix of products and countries has changed from low-level goods being traded with neighbouring countries, to higher-value-added products being transported all over the world, requiring more advanced, high-tech facilities such as cold storage warehouses. Third, Turkey’s rail infrastructure is in serious need of investment. Only 1% of goods are transported on the country’s rail lines. Upcoming projects include improvements to a line from Izmir to Germany, via south-eastern Europe, and the establishment of alternative rail links between China and Western Europe. In general, rail is much faster than sea transport and less prone to interruption. Following the completion of the Marmaray tunnel under the Bosphorus, Turkey is well-placed to serve as a link between regions. Finally, Turkish logistics firms must also start to think about constructing infrastructure in target export markets, such as Russia, Northern Iraq and Africa, where there is a lack of quality warehouses and packaging facilities. For example, Turkish produce often goes bad during storage in Russia, because there are not sufficient cold storage facilities.

How is the current Customs regime affecting the development of the sector?

ERKESKİN: European Customs controls, including quotas, additional charges at borders and visa issues for drivers, make shipping Turkish goods to European countries extremely difficult and expensive. Ultimately, the European consumer is the one the most hurt by these measures, as costs are passed on through price increases. It is essential that these barriers be lowered.