Turkey advancing major transportation projects with new highway, train and airport infrastructure

The Marmaray tunnel, a rail link beneath the sea connecting Istanbul’s European and Asian districts, was a panacea for beleaguered commuters when it opened in October 2013. Plans to connect the two shores via an underwater tunnel date back to at least 1891 during the glory days of Ottoman rail, when a French engineer proposed to Sultan Abdülhamit II to build an underwater steel tunnel. However, linking the Üsküdar neighbourhood in Asia and the Seraglio Point in Europe has remained on the drawing board until now.

The inauguration of the Marmaray, which coincided with the 90th anniversary of the founding of the modern Turkish Republic in October 2013, was followed a year later by the opening of Istanbul’s Taksim-Hacı osman metro line extension to Yenikapı, connecting it with the Marmaray and Aksaray-Airport routes. President Recep Tayyip Erdo ğ an, during his time as prime minister, told local press, “Today we are realising the dreams of 150 years ago, uniting the two continents and the people of these two continents.” The €3.27bn Marmaray is just one of Erdo ğ an’s “mega projects”: dozens of construction plans, most of them in the transport sector, will cost an estimated €188.33bn. Among them are high-speed rail links, bridges, motorways, the world’s largest airport and a 50-km channel that will transform half of Istanbul into an island.

Extreme Engineering

Istanbul’s most attractive feature – the 30-km Bosphorus Strait – is also its most challenging, thwarting engineers and creating a transport black spot in Europe’s biggest city. Indeed, the Marmaray’s €4.14m tunnel section proved to be one of the world’s most technically complex railway projects, consisting of a submerged tube some 60 metres below sea level, rather than a bored-out tunnel. It skirts a major tectonic fault line, and its construction unearthed a Byzantine port and other archaeological finds dating back eight millennia.

The Japanese-Turkish-built tunnel has capacity to take 75,000 passengers per hour to and from either side of the city in little more than four minutes. The Marmaray is expected to carry 1.5m passengers per day by the end of 2015 and 1.7m by 2025. As of October 2014 the line was estimated to have transported 50m commuters over the course of its first year of operations.

The project has not been without controversy. Istanbul University is suing the Ministry of Transportation, Maritime Affairs and Corporation (MTMAC), the municipality and the contractors for damage to its Cerrahpa şa medical faculty. Historians fear much of the Theodosian harbour that was discovered has been destroyed. However, the Marmaray has been deemed a landmark in Istanbul’s transport history: “In 20 years we will look back at the Marmaray as a milestone that changed the course of Istanbul’s development,” said Murat Güvenç, director of the Urban Studies Research Centre at Istanbul Şehir University. “It dramatically shrinks the city, bringing distant geographical positions, such as Kadıköy in Asia and Taksim Square, into close coordinates. Nearby rents will increase dramatically, driving out current residents and business owners and encouraging further development of the historical peninsula.”

Big Budget

Turkey’s 2014 budget allocated TL47.5bn (€16.72bn) to transport, of which TL5.8bn (€2.04bn) was earmarked for rail, almost double that going to the road network. At TL9.3bn (€3.27bn), the Marmaray project topped the list of spending in 2014, as more stations were opened on the line and rolling stock was acquired. The line extends beyond the subsea section in both directions and will link with existing suburban commuter trains, extending from Halkali in Thrace to Gebze in Anatolia along 77 km of track passing through 37 new and refurbished stations. The line is expected to be completed by the end of 2015. Rolling stock of 440 new cars are being built by Korea’s Hyundai.

After the Marmaray, the biggest rail investments were TL850m (€299.3m) for track renewal, TL640m (€225.3m) more on the Istanbul-Ankara high-speed link and a combined TL632m (€222.5m) for new rolling stock and infrastructure improvements. The Istanbul-Ankara high-speed train began running trips in August 2014, and the government announced in late 2014 that the following year would see a call for tenders for a new line between the cities that would reduce travel time even further, from the current three hours and 45 minutes to around one hour.

Road Tunnel

The Marmaray’s twin is the Eurasia Tunnel, known in Turkish as the Avrasya Tüneli, a 14. 6-km road tunnel that includes a 5.4-km double-deck portion running below the Bosphorus. Located a kilometre south of the Marmaray, the tunnel will sit 25 metres below the seabed and is designed to withstand an earthquake of a magnitude of 7.5 on the Richter scale. Construction began in April 2014. The $1.25bn project, financed with loans from the European Bank of Reconstruction and Development (EBRD) and private banks, is being constructed by a Korean-Turkish consortium under a build-operate-transfer (BOT) model. It will serve 120,000 cars and other light motor vehicles each day. In addition to the underwater portion of the Eurasia Tunnel, the project consists of 9.2 km of access roads, transit tunnels and bridges.

Turkey would become the fourth country in the world with undersea vehicular tunnels, after the US, France and Malaysia. The Eurasia Tunnel is expected to significantly cut down travel times between the city’s busiest centres, as well as reduce traffic congestion on the Fatih Sultan Mehmet Bridge and E-5 highway. The high-speed inter-city train will be able to accommodate 1.5m passengers daily, bringing the total capacity of Istanbul’s metro lines to 6.5m passengers per day. The tunnel is expected to be completed and open by 2020.

The engineering design for the tunnel has been challenging, and a tunnel-boring machine was designed exclusively for the project. Prime Minister Ahmet Davuto ğ lu said the Eurasia Tunnel’s most important contribution will be the integration of existing transport infrastructure, from major expressways to the city’s metro and train lines. The project design has also taken into account the region’s susceptibility to earthquakes and the need to cut down on greenhouse gases, with CO emissions and fuel oil expected to be lowered by 175,000 tonnes and 54m litres annually, respectively.

Third Bridge

Since 60% of workplaces are located on the European side, the majority of the city’s dwellers in Asia are forced to travel across the water every day, said Ela Babalık-Sutcliffe, a public-transport expert at Ankara’s Middle East Technical University (METU). “The Istanbul municipality is aware of this issue in their latest metropolitan plan. They are proposing new town and employment centres on the Asian side to make the current central business districts of Beyo ğ lu, Şişli, Levent and Maslak less of a trip attractor.”

But the government is also racing to build more roads. Another jumbo-sized transport project is a third bridge across the Bosphorus, which broke ground in May 2013. The Yavuz Sultan Selim Bridge, named after the 16th century Ottoman sultan, will be the world’s widest and longest bridge for rail and motor vehicles and the eighth-longest suspension bridge when it opens at the end of 2015. Construction of the two 320-metre high towers at the northern end of the strait were completed in mid-2014, and in early 2015 work began on mounting the deck.

Part of the planned Northern Marmara Motorway that will bypass Istanbul’s urban areas, the $3bn bridge is being built by Rome-based builder Astaldi, Turkey’s IC İçtaş and Hyundai of Korea. The crossing aims to ease congestion in a city with 3m cars, with that number expected to reach 4.4m in a decade. That said, the ring road and the bridge are primarily expected to serve freight-carrying vehicles, which make up just 3% of Istanbul traffic, experts say.

Environmental Concerns

Environmentalists have raised red flags over developing Istanbul’s northern forests, which provide the city of nearly 15m people with much of its freshwater supply. The woodlands also contain natural preserves, sand dunes, endemic plants, animals and historical ruins. Construction of the bridge alone will fell almost 400,000 trees, according to the Forestry Ministry. “The northern forests provide Istanbul with its air and its drinking water,” said filmmaker İmre Azem, whose acclaimed 2012 documentary Ekumenopolis tracks the relentless expansion of Europe’s largest city. “The importance of the forests was always clear, which is why until now all city plans have ruled out building north. The existing plan still calls for Istanbul’s growth along the Sea of Marmara, along an east-west axis, and not to the north.” Historians are also alarmed. Although the government has exempted the bridge from an environmental impact report, the companies building the bridge still need such an assessment to secure financing, and so in May 2014 they dispatched archaeologists along the site who discovered a treasure trove of sarcophagi, pottery, coins and Byzantine and Paleolithic ruins in a two-day survey.

Social Strains

So much construction has also created social upheaval, and Turkey’s biggest anti-government protests in decades that erupted in 2013 centred around plans to destroy the historic Gezi Park in Taksim Square to build a shopping mall. The government managed to build a tunnel for road traffic to bypass the square before a court ordered it to halt the development. “More roads will not ease congestion as cars continue to fill them,” said Azem. “When you build roads, their environs fill, creating even more traffic,” he said, adding that some 8m people dwell along the Trans-European Motorway in Istanbul. “The same will happen with the third bridge, regardless of what is being said now about it serving as a transit for freight.”

Road to Izmir

Another link set to open by the end of 2015 is the Izmit Bay Bridge at the eastern end of the Sea of Marmara. Rome-based Astaldi is part of the consortium behind the $1bn BOT project, which foresees traffic of 35,000 vehicles per week. The bridge, which will be the world’s fourth-longest suspension bridge, is part of an TL11bn (€3.87bn) road project spanning 433 km between the Istanbul suburb of Gebze and Izmir, Turkey’s third-biggest city, reducing travel time to 3.5 hours from the current 8.5-hour drive. By March 2014, a third of the project was finished, the General Directorate of Highways said, with the bridge expected to be open by the end of 2015.

Turkey certainly has been on a road-building mission in the last decade. Total highway mileage today is 65,382 km, of which 12,573 km are part of the international highway network, according to government figures. Dual carriageways span a total 21,277 kilometres, compared with 6101 km in 2003, the MTMAC has said, estimating that has led to a fuel savings of $9.3bn. The ministry targets 37,000 km by 2023. Even as air and rail travel has risen sharply, roads are the main means of transport between Turkish cities. In the first two months of 2015, bridges and toll roads earned TL151m (€53.2m) from 68.79m vehicles, according to the General Directorate of Highways. In all of 2014, revenue was TL1.04bn (€366.2m) and 399.49m cars and trucks paid tolls. At Istanbul’s two extant bridges, which see traffic of 1m vehicles a day, revenue was TL296.37m (€104.4m) in 2014 and $4.88bn in the last decade.

Turkey is now looking to privatise some of those roads. In February 2014 parliament passed legislation to create a company and initial public offering (IPO) for Istanbul’s two bridges, along with certain highways. This followed the cancellation of a 2012 tender by the Privatisation Administration for operating rights for 25 years, won by Koç Holding, Turkey’s biggest company, with a top bid of $5.72bn.

Erdo ğ an later said the rights were worth at least $7bn, and the tender result was subsequently rescinded. By November 2014 the government was preparing to revive plans for the tender, with a new process expected to start in the first half of 2015. Reuters reported that banking sources said a designated adviser will determine the method of privatisation, with IPOs, transfer of operating rights, and regrouping and selling of roads and bridges all options.

Cars & Buses

Some 200m passengers each year take buses operated by more than 500 licensed bus companies; another 140 firms carry passengers internationally, according to the MTMAC. In 2013 there were almost 220,000 buses on Turkish roads, according to the Turkish Statistical Institute. “While bus passenger numbers in Turkey have declined as more and more people are able to afford air travel, around 85% of travel in the country is still via busses and trains,” said Imran Okumu ş , general manager of Ulusoy and Varan Bus Group.

Turkey has the lowest car-density in Europe and the average vehicle age is 12 years old, according to the Global Fuel Economy Initiative (GFEI). Some of the world’s highest fuel prices and stiff taxes have curbed demand for automobiles, keeping ownership at 110 vehicles per 1000 people, the World Bank said. But the low rate of ownership means Turkey has Europe’s biggest growth potential after Russia, GFEI noted, and estimated that ownership would double by 2020.

GlobalSource Partners analyst Atilla Ye ş ilada said that Istanbul’s traffic problem cannot be solved by building more roads. “We need to incentivise businesses to move to the Asian side. We need to focus on creating communities where people commute less, and we need to develop our public transport systems,” he said. “Building more roads simply increases the incentive for everyone to buy a car.”

Public Transport

Everyday 7m passengers use Istanbul’s buses, metrobuses, railways and ferryboats, according to the city’s bus authority, IETT. A major success story is the metrobus, a 50-km bus rapid transit route spanning Istanbul’s ring road from western districts across the Bosphorus Bridge to Asia that opened in 2007. It has a daily ridership of 800,000, according to IETT. “Based on its passenger numbers, the metrobus is the world’s most successful bus-based mass transit system,” said METU’s Babalık-Sutcliffe.

Although officials and citizens alike tend to prefer rail systems, these are large investments that make little sense for areas with low demand. “What the metrobus showed us was that with a far smaller investment and in a short time, you can have a system that is on par with an underground metro in terms of quality and capacity. The operational speed of Istanbul’s metrobus is faster than the underground metro and created a public transport service in that corridor,” Babalık-Sutcliffe said. Problems still persist like overcrowding in peak hours, inadequate capacity at stations and a lack of other routes on a network, she added.

Take to the Skies

Air travel has increased to 166.2m flyers in 2014, according to the MTMAC’s General Directorate of State Airport’s Authority (GDSAA). In that year alone, commercial traffic grew 9.5%. Domestic flights carried 85.4m people, a 12.17% increase in the last decade, according to the GDSAA. International flights rose 9.5% to 80.3m. Further, the GDSAA estimated that passenger numbers would increase by 12.6% in 2015 to reach 187.13m by the end of the year. By end-2017 the authority said this figure would grow by 35% to 223.7m, largely due to an increase in domestic travellers. “The growth of the Turkish airline industry over the past few years has been very impressive. As tickets become more affordable, more and more Turkish people are getting used to traveling abroad, which is good for the economy as a whole,” said Varan’s Okumu Turkey’s proximity to Europe, the Middle East and Africa has made it a natural transit hub and helped flag carrier Turkish Airlines become one of the world’s fastest-growing airlines. “Turkey is directly between the production and consumption centres of the world and is especially well-placed for trade between the Far East and Africa,” said Sedat Özkazanç, managing director at Istanbul-based cargo carrier MNG Airlines. “In fact, a considerable number of the world’s high-growth economies are within a six-hour flight of the country.”

The government has doubled the number of airports from 26 in 2003 to 52, of which 21 are international and 31 are domestic. On the drafting board is a plan for a third airport for Istanbul that targets 150m passengers a year by 2018. A consortium of Turkish companies – Cengiz, Kolin, Limak, Mapa and Kalyon – won a tender to build the airport in 2013, promising to pay the state €22bn, plus taxes, to operate the facility for 25 years from 2017. It will boast six runways, although experts have said its location to the north of Istanbul makes that difficult. Questions have emerged about financing for the project, but Limak Holding, which controls a 40% stake in Istanbul’s Sabiha Gökçen Airport and 20% of the planned airport, has said the consortium has not faced problems raising funds.

The airport will occupy an area of 7700 ha and will require that almost 700,000 trees be cut down and more than 1.9m trees be moved, according to the government. There is also concern it will have an environmental impact on Istanbul’s drinking water, since it is being built near one of the main reservoirs supplying the city. Non-governmental groups have sued to stop the project, and a court suspended construction, but Erdo broke ground at a ceremony in June 2014, describing the $30bn facility as a “monument to victory”.

Istanbul’s two airports, Atatürk on the European side and Sabiha Gökçen on the Asian side, serve 37m and 13m people per year, respectively. The number of passengers at Ataturk rose 11% to 12.4m people in the first quarter of 2014, making it Europe’s third-busiest airport, surpassing Frankfurt and Amsterdam’s airports. Atatürk now trails only London’s Heathrow and Charles de Gaulle in Paris. By 2034, commercial traffic at Istanbul’s airports is expected to exceed 1m planes, with 118m people passing through the facilities, METU estimates. “While Turkey is expanding its air facilities, the addition of the third airport on its own is not sufficient to meet the country’s long-term transportation needs. More investment is needed,” said Sedat Gümü chief executive of UN Ro-Ro, a Turkish roll-on, roll-off ferry operator owned by US private-equity firm KKR.

Logistical Dream

Turkey has easy and direct access by road, sea and, to a lesser extent, rail to markets with 1.5bn people with a combined GDP of $25trn. In 2012 1.2% of global trade was carried out by Turkey; this is expected to exceed 1.5% by 2025. The country is a regional hub for more than $2trn worth of freight, according to Invest In Turkey, a state trade promotion agency. The current size of Turkey’s logistics sector is estimated at $80bn to $100bn and this could reach $140bn by 2017, the agency said. Investment over the last 10 years in transport and logistics infrastructure is set to continue. “To take advantage of its location, Turkey must invest in infrastructure so goods can be stored here before being forwarded to places like Africa,” said Özkazanç. “Infrastructure investment is essential if Turkey wants to reach its 2023 export target. It will need six times more air capacity to meet this goal, including aircraft, land, warehouses, parking places and people to handle the increased volume.”

Currently, 18 public sector and 19 private logistics centres are being built in Turkey. The hubs offer multiple transportation options and some will participate in the EU’s Intraregio logistical integration project. The state railway authority TCDD has set aside TL514.9m (€181.3m) of which it has spent TL111.4m (€39.2m) since 2006. By 2023 estimated total freight throughput value in these centres will reach $500bn. The hubs offer benefits like consolidated warehousing and distribution of products to domestic and international markets through connections with industrial areas. Additional services include on-site packaging, savings on storage and easy transportation throughout Turkey.

The Great Anatolian Logistics Organisation Project, known as BALO, is a TL50m (€17.6m) logistics scheme initiated by the Union of Commodity Exchanges, the Association of International Freight Forwarding and Logistics Services Providers and 90 other private enterprises. Bringing goods from the Turkish mainland at the Marmara port of Bandırma, it ships goods to Tekirda across the water and aims to join logistics centres by rail for easy exports access Europe. It has already slashed transport costs by 30% and journey times to four days.

More Competitive

The market is set to become more competitive but may squeeze out smaller players. “There are not many professional logistics companies in Turkey. Most are smaller, family owned firms that cannot compete on the world stage because they lack the necessary resources and infrastructure. It is difficult for all but the largest businesses in the sector to carry out trade with sophisticated European clients,” said Çiçek Boyda ş , joint venture coordinator at Arkas Holding, which operates shipping lines and ports.

Several international firms have entered the logistics field, mainly centred in Istanbul, the country’s commercial capital, and the large port cities of Izmit and Tekirda ğ . They include DHL, CEVA Logistics, Kühne Nagel and Gergo. The news is not all good for international companies trying to break through, however. Weaknesses exist in sector standards. “The biggest challenge is the lack of standards across the sector, especially for domestic versus global players, including Turkish firms that also operate abroad. The latter must follow very strict regulations, whereas the former do not always comply with the rules, making it difficult for the international players to effectively compete,” said Boyda TWO IF BY SEA: Turkey has almost 90 commercial ports, terminals and piers along more than 8000 km of coastline. The four seas encircling almost the entire country handle more than 6m twenty-foot-equivalent units (TEU) of containers, as well as millions of passengers and vehicles per year. “If Turkey is to reach its 2023 export goals, it must plan and execute improvements to port infrastructure in a more effective and speedy manner,” said UN Ro-Ro’s Gümü ş o ğ lu. “Turkey’s ports can currently handle 7m-8m TEUs but need to be able to handle 30m TEUs in order to meet the targets.”

Boyda ş of Arkas also noted the low capacity of ports. “Around 3.9m TEUs are currently traded in Turkish ports, which is a relatively small amount, given the size of the Turkish population and economy. In more developed countries, the ratio is around 1m TEUs per 10m in population, suggesting that there is still significant room for growth in the Turkish shipping space,” she said.

Around 90% of Turkey’s foreign trade is transported by sea, with 40% of all cargo handled by state-controlled ports, and the flow of goods is mostly outgoing. “The uptick in economic growth since 2012 has positively impacted Turkey’s shipping industry. For every five containers imported, most of which are commodities from China used for manufacturing electronics, Turkey is exporting around 25 containers to other countries, particularly white goods to Europe, which have seen a rebound of late,” said Tom Gronnegaard Knudsen, a Maersk Line managing director for the Black Sea region.

Crazy Canal

One way Turkey hopes to attract more of the international shipping business is with Erdo so-called “crazy project”: a €6.6bn canal stretching from the Black Sea to the Marmara. The 43-km, 400-metre-wide channel would rival the engineering feats at Suez and Panama, slicing through the western, European side of Istanbul in a bid to force dangerous cargo on supertankers of up to 300,000 deadweight tonnes to bypass the overcrowded Bosphorus Strait.

Critics warn the cost to the environment is too high. Scientists have also pointed out major flaws in the plan, claiming that higher salinity of the water from the Black Sea will destroy the ecosystem of the Marmara, which has already been plagued over the decades by industrial pollution and is only just recovering. They also argue that freshwater aquifers underneath what will become the isle of Istanbul will fill with saltwater. The municipality already struggles to supply the 2.65m litres per day of potable water that Istanbul requires.

Turkey’s Mediterranean and Black Sea neighbours may strongly object as their territorial waters could be negatively affected, and the canal may contravene treaties that dictate Turkey cannot control or profit from sea traffic through international waterways. The Montreux Convention of 1936 granted control to Turkey of the Bosphorus and the Dardenelles Strait at the other end of the Sea of Marmara, but bars it from charging fees or hindering free passage during peacetime. The canal may make transit traffic faster, but may find it difficult to compete with the Bosphorus, which is cost-free.

Outlook

Realising so many grand plans will prove costly, and inevitably some will be scaled back or scrapped all together, said GlobalSource Partners’ Ye lada. If 75% of costs are borrowed, as is typical, all of the projects would add $180bn to Turkey’s foreign debt stock. That revenue from the projects would almost entirely be in lira and would also hit Turkey’s balance of payments, he added. Judging by what Turkey has accomplished so far, it looks likely that many of the projects can still be fulfilled. Either way, there is still a lot of money on the table for contractors well into the future.