While import shipments are decreasing, vehicles are entering the country empty. Shippers are meeting this week to reflect currency-induced cost increases in prices.
Due to the decrease in imported shipments, approximately 70 thousand Turkish-plated TIRs carrying out international transportation return home empty every month. The number of vehicles with foreign license plates that entered the country with empty plates reached 10 thousand. While the rise in foreign exchange increases costs in many sectors, price increases come into play every day. The International Transporters Association (UND) will also discuss this issue at the board meeting to be held this week and put the raise on its agenda.
UND Chief Executive Officer Recai Şen stated that the country should come out of a state of panic and said that they are concerned about the change in the payment system in the sector. We talked to Recai Şen about the problems of the transporters and the latest economic developments.
Prices are rising
– Currency has peaked, oil prices are increasing, 2018 is not going well for many sectors, what is the situation with you?
Everything seemed normal until July. We could get tax-free fuel at the border gates. But in July, with the effect of the exchange rate, some of our stakeholders created unexpected reactions. There have been unexpected increases since July and August, especially in the fuel we buy from Kapukule, Hamzabeyli and Ipsala border gates. As of 31.7.2018, the exchange rate was around 4.89 TL, while the price of fuel, which was 3.59 per liter, reached 4.80 with a drastic increase. There is no infrastructure for these hikes. There is an air of panic. There was a thought in the economy that we should immediately reflect the costs on our own sales. This has happened to our partners as well. We do not see transparency in pricing at stations. At the gas station at the border, the system is: There is an acquisition price. The exit price from the refinery, which is also required by the acquisition price law, plus the freight to the gas station and an 8 percent dividend on it. It is shaped by it. We do not accept anything other than that.
As of last Friday, the sales price of the tax-free fuel sold at the Pendik Port Border Gate is 4.676 TL. Western land border gates average sales price difference for the first 8 months is 0.24 TL. The additional cost paid by 324,819 vehicles, which only exited through the Western land border gates in the first 8 months of 2018, is 100 million Turkish Liras, just for the difference in fuel sales. This additional cost is not only the cost incurred by the transporters, but on the contrary, it is an unfair practice that makes our exports more expensive and victimizes our exporters.
These stations were established entirely to support exports. We have to make sure that the fuel we buy from the border is cheaper than the fuel we buy from inside. But we made calculations, if we buy from a station inside, if we get taxed, if we apply for refund after leaving the country with the burden of export, if we take the VAT and SCT we paid, it will cost us 5-6 cents less.
Transparency is essential
Did the stations go beyond the law and set prices on their own?
They do not have any serious control so far. We wrote a letter to the Ministries of Finance and Customs before the holiday to check this. We said that the process should be transparent. We believe that they are gaining unfair advantage. We need to see how the price adjustment is made and whether it is in line with the spirit of the business.
We can also exchange
-Has the panic dissipated, all the data announced point to a negative?
Some indicators may not go well. If one place falls, the others fall too. It creates a domino effect. When the exchange rates skyrocketed, our main partner Ro-Ro company immediately made a payment method change. He said, in the past, when I cut out the invoice in foreign currency for your transportation, I was converting TL and I was collecting it over a term. But they said, within the framework of these exchange rate risks, I do not know what the exchange rate will be from the date I invoice to the date I collect it, so if the exchange rate rises, I will invoice you separately. It was a state of panic. And we said, don’t do that. We must support each other in times of crisis. Then Ro-Ro took a step back and issued a circular: They said that we postponed it until an indefinite period, we will meet again.
-Is there a risk that the Ro-Ro company will change the payment system again?
There is. There is no guarantee that after 10 days you will not say that you will pass on to this. I wish that whatever they are going to do, they do it in consultation with us. But if the payment system changes, the number of transports will also decrease. But if the system changes, our transporter says, I will go out according to how much return load I have. Let’s not touch, let the system continue.
-Isn’t there a raise pressure in the sector, even numbers up to 40 percent are wasted, what do you say?
Our carriers can make arrangements among themselves. But 40 percent of them have a domino effect. I wouldn’t prefer that to happen. We need to disperse the panic. Yes, rates are rising, our costs are rising. This week, we will hold a management meeting with our transporters and discuss this issue. But at the moment, things like we can’t stand it, I’m making a very high raise, etc., did not come to us. What is reflected to us is the change in payment systems. We want to continue with the old standard method. Let’s cut the invoice and pay whatever it is in TL in due time. Each side should do so. If one party overturns this payment method, we can move on to the following: I cut the bill in foreign currency, I collect foreign currency at the end of the maturity. I can switch to this, I can give up TL. We don’t want that either.
-Do the conditions force it now?
We’ll see. I think that we are better both financially and psychologically than the situation 20 days ago.
-How many members does UND have, how are they financially?
We have 1000 members. The total fleet is around 55 thousand with self-owned and leased assets. Separation in the industry can be recommendations.
-What is the level of profitability in the sector?
Very little. If there is 600-700 Euros left at a time, we say okay, we are profitable. As before, 3 thousand Euros remained at a time, 4 thousand Euros remained and they left.
-What percent of the shipments are made by domestic companies?
There has been an increase in favor of foreigners in the last 2 years. In the past, 70 percent of export shipments were made by locals, now there is an increase in shipments of more than 10 percent by foreigners. For example, domestic companies used to transport 80 percent of the cargo to Iran, now Iranians carry 40 percent.
Documentation issue should be resolved
-The number of trucks returning empty to the country is increasing, what is the reason for this?
Empty returns increased as imported shipments decreased. Turkish transporters in the first seven months of the year; While 5 thousand vehicles per month from Europe, 50 thousand vehicles from Iraq and Syria, 10 thousand vehicles from Azerbaijan and Georgia, 2 thousand 500 vehicles from Iran, 2 thousand vehicles from Russia and 70,000 vehicles per month return to their countries empty-handed. . Foreign vehicles, on the other hand, make 10 thousand empty entries per month. We think that this trend will not go like this. We have proposed some changes to the documentation system. When we take the load, we pay a penalty when we find and pick up a load in another country. The Ministry of Transport needs to solve the document problem. During this period, document penalty should not be taken.
Exchange rate stability should be ensured
What kind of risks do you see in the sector in the short term?
The economic situation should improve. This currency volatility is a great danger for us. We believe this will be okay. Our government needs to bring some support packages to the table by considering how long this work will take and the risks. Now, whichever side shouts the most, gets the support, we do not shout. If exports are increasing today, it is thanks to us, we carry them. It is necessary to gradually prepare some special funding to ensure exchange rate stability. The effects of what will happen in the economy today may appear in 2 months. It is said that there may be some difficulties in payments, especially in November. You have to be prepared.