Logistics Will Offer Opportunity in 2021
The Turkish logistics industry is entering the new year with hope. With the pandemic, Turkey’s prominence in supply will create new opportunities in the sector, and investments will accelerate. TTT Global Chairman of the Board Dr. Akın Arslan says, “If support is provided, Turkey can become one of the most important logistics bases in the world.”
The logistics industry, which has assumed a vital role in 2020, marked by the pandemic, and whose importance has been understood once again, is entering the new year with hope. Turkey’s prominence in supply will create new opportunities in the sector and investments will accelerate. Emphasizing that Turkey can become one of the most important logistics bases in the world if the necessary support is provided, TTT Global Chairman of the Board Dr. Akın Arslan evaluated the opportunities and priority needs of the sector to the WORLD:
The world was caught unprepared for COVID-19. The coronavirus epidemic showed everyone how vital the logistics industry is in the world. It was seen that it was inevitable for someone to continue producing and trucks to be on the road so that life could fit in the house. In 2020, it was unquestionably accepted by everyone how vital the logistics industry is for a country to survive, to continue its life, to meet the needs of the people of the country, and to sustain international trade, both domestically and internationally.
According to the World Trade Organization (WTO) data, the production of goods in 2019 decreased by 2.8 percent to around $ 18.9 trillion. In 2020, we see this figure around 18 trillion dollars. The world economy is expected to rise again in 2021 and grow by 5 percent. The country with the largest production volume in the world is China. In 2021, production in China is expected to increase by 8.6 percent according to JP Morgan Research analysis. The issue, which is also the source of China’s “One Belt One Road Project”, is to send the manufactured goods to qualified markets, especially Europe, in the fastest way with the most favorable conditions.
In the world, a product is transported an average of 6,500-7 thousand kilometers in international trade. Access to qualified markets will become much more important. World trade is expected to grow at least twice in 30 years. Therefore, the logistics industry will continue to increase its vital importance in the coming period. We can say that with the pandemic, the indispensability of the logistics industry has once again been riveted. Even the vaccine alone has created a great stir in the industry. It paved the way for a new movement of up to a trillion dollars a year.
The pandemic has also mobilized the Turkish logistics industry. Turkey, which is an important production base right next to Europe, has started to increase its logistics performance again with the increasing demand, especially in food and hygiene. The development of domestic and foreign demand, the growth of e-commerce in total retail, more than 2 times in the last year in Turkey, as well as in the rest of the world, and reaching 15%, have greatly stimulated the logistics industry in terms of both FTL and cargo. Retail chains with thousands of branches have focused on virtual stores and home service. Consumption was triggered as houses turned into office-home. E-commerce channels in Turkey grew by 150 percent compared to last year, and virtual market shopping grew by over 250 percent. The growth in the e-commerce market, which was expected in 5 years, took place in just 11 months.
Proximity to Europe is a big advantage
So, what awaits Turkey in 2021? The way to make high-volume mass production and deliver the products to Europe in the shortest way and with the cheapest logistics costs passes through Turkey. While it is 4 weeks at the earliest for a container from China to reach Europe, it is possible to deliver it from Turkey to England in 1 week. At this point, it is important for the Turkish logistics industry to increase its profitability. The return on investment of a truck purchased for approximately 1 million TL with high truck costs can exceed 10 years. This must be at the level of 5-6 years. 850 thousand trucks on the roads are getting old. The average age of trucks in Turkey is around 17. Environmental sensitivities and pressures are increasing, especially in the EU. The renewal of the fleet in Turkey will accelerate. In order to make the transformation attractive, the state must pay taxes, etc. will need to consider regulations and some incentives. The unsustainability of profitability in transportation has rapidly deprived logistics companies of their own property for the last 10 years. 95 percent of the trucks on the roads are now privately owned. There is also the problem of return load. Trucker shopkeepers are really fighting to stay afloat. Some logistics companies can accelerate their investment in self-property by relying on the technological support they will receive behind them.
According to TIRPORT Insights’ end-of-2020 data, a truck travels an average of 344 km per day in Turkey. making way. The average freight charge is 2 thousand 620 TL. Trucks on the roads wait for at least 2.5 days at the shipping sites, factory and port entrances to find suitable cargo, and 37 percent of them have to return to the exit point somehow empty. In Turkey, where a domestic truck makes an average of 7.2 trips per month, the truck needs to increase the number of these trips to more than 10 in order to earn money. In European countries, this rate is around 25 percent. With its enhanced intelligence-supported digital solutions, TIRPORT creates significant value for its member logistics companies and truckers in creating intelligent return loads whenever and wherever they need it.
A significant increase is also expected in foreign investment in logistics. An increase is also expected in road transport in Turkey in 2021. The exponential growth of e-commerce compared to the previous year triggers this increase. Now, manufacturers want to monitor the entire transportation journey of the goods they send to their customers, to have real-time, location-based control in the unloading-unloading processes, and to receive live reports. They are waiting to confirm the reliability of the truckers they deliver the loads to. Turkey can become one of the most important logistics bases in the world. It can literally act as a logistics bridge between the east and the west for Turkey, which is located right next to the qualified European markets and has the opportunity to make mass production in many areas. With the pandemic, the world is looking for its new normal. The most important metaphor of the new normal is digitalization. If Turkey evaluates the next 5 years well; It can take important initiatives with criteria such as regional superiority, production power, and qualified workforce. It can increase its production and logistics power exponentially. Political stability will direct its direction towards Turkey in investments in good relations to be developed in the international category. Turkey may be the country that capital seeks for investment in the world. 2021 is a year of opportunity to make a good start to all opportunities.
Adaptation to technology is important!
The impact of COVID-19 on global trade and the entire workforce has come to the fore as an important factor increasing the pressure of digital transformation in logistics. E-commerce continues to grow at a faster pace than anticipated. The pandemic has not only accelerated growth in e-commerce, but also accelerated supply chain innovation agendas, which emphasize visibility and operational transparency among companies on the B2B side. As always, those who adapt and disseminate new technologies in the fastest way and develop their workforce to adapt to this technology will have a competitive advantage in the sector. It can be said that the current innovation in the field of logistics, end-to-end operation management, real-time location-based transportation reporting, etc., enabled the transformations to take place faster and carried the digitalization efforts in the sector forward a few years. It is obvious that the dynamic growth observed in live traceability of cargo with trucks, performance of drivers, data analytics, increased intelligence applications in freight truck matching, partial load optimization, robotics, IoT, Cloud and APIs point to a new normal for the logistics industry. Logisticians will quickly evolve into tech companies. On the other hand, environmental sensitivities will increase and electric trucks will become widespread. It can be foreseen that the European Union will further increase the pressure on this issue. Standards for reducing carbon dioxide emissions and waste generation are expected to rise even higher.
Storage capacity can triple in 10 years
It is estimated that the total leasable warehouse capacity in Turkey is around 15 million square meters. Approximately 70 percent of Turkey’s total stock is located on the Istanbul-Kocaeli axis. As of the third quarter of 2020, the primary warehouse rental price in the logistics market is around $4.50 per square meter per month on average. In countries such as Germany and England, this figure rises to 9 dollars. If we compare the leasable commercial warehouse areas to the population, the Turkey index is around 0.18 percent. If Turkey can use its position well, it can triple its current storage capacity as a country in the next 10 years. Even at a capacity utilization level of 85 percent, there can be more than $3 billion in revenue from storage alone. This situation will increase Turkey’s international transportation capacity at least 5-6 times.
Load output will be broadcast live
Logistics platform TIRPORT Insights is sharing live traffic information of Turkey’s freight exit points for the first time in Turkey. The daily density view of freight transport on Turkey’s roads will also be published weekly from TIRPORT Insights as of January 01, 2021. TIRPORT still works with more than 300 logistics companies and freight owner SMEs. As of 2020, the number of truckers who are part of the system and actively use TIRPORT has reached 60 thousand.