100 Billion Dollar Turkish Logistics Sector Enters 2021 With Hope
In Turkey, where approximately 450 thousand trucks of FTL (Full Truck Load) are transported every day, the number of trucks on the roads is around 856 thousand. 1.2 Million SRC Certified truck drivers eat their bread directly from their truck. In our country, where 90% of the goods are transported by road, the freight charge returned in one day in the transportation sector is over one billion TL.
According to the 2020 year-end data of TIRPORT, which has become Turkey’s largest logistics digital platform; Only 1/3 of the approximately 450 Thousand FTL shipments realized in one day in Turkey consists of contracted shipments. Daily transportation of nearly 300 thousand trucks takes place entirely in the spot market. Since there is no contracted logistics, logistics companies cannot get a share of this cake. The majority of these transports are carried out in closed loops within certain regions: short lines such as Aliağa-İzmir, Gebze-Derince, Sakarya-Derince, İnegöl-Bursa, Merzifon-Samsun, Tarsus-Mersin. The Payers are mostly SME category producers. Half of the cargo coming out of the spot comes from 326 Organized Industrial Zone, ports and warehouses.
Highlights of road freight transport in Turkey in 2020:
TIRPORT is launching TIRPORT Insights ( https://insights.tirport.com ), a unique data service that people from all sectors can apply 24/7, as of January 01, 2021. For the first time in Turkey, live traffic information of Turkey’s load exit points is being shared. The density data of cargo (goods) transportation on Turkey’s roads will be published on a weekly basis as of January 01, 2021.
When we take a closer look at the TIRPORT Insights data, the following observations stand out:
- TIRPORT is still working with more than 300 logistics companies and freight owner SMEs. By the end of 2020, the number of active truckers registered in the company reached 60 thousand.
- 61% of SRC Certified truck drivers who are members of TIRPORT are from the Marmara Region. 67% of the shipments in 2020 were made from the Marmara Region.
- As of the end of 2020, nearly 3,000 FTL transports per day began to be managed end-to-end with TIRPORT technologies. The heaviest transport traffic in Turkey takes place on the first days of the week. Freight traffic gradually decreases towards the end of the week and decreases to 30% of the total volume on Sunday.
- In 2020, nearly 700 thousand FTL transports were made via TIRPORT. The rate of use of self-owned and leased fleets in logistics companies that use TIRPORT as an ERP in logistics operation management was 18%. Logistics companies in Turkey made 82% of their transportation with trucks they found on the spot. There are non-self-owned logistics companies among the top 10 logistics companies in Turkey.
- When we look at the TIRPORT data of 2020; we see that the average waiting time for trucks to unload is about 11 hours. The average waiting time for load pickup is 13 hours. Unfortunately, these waiting times are still too high. It cannot be solved with the use of one-sided technology. 64% of the calls made by truckers to TIRPORT’s smart call center are related to waits in the unloading and unloading processes. With the widespread use of smart loading-unloading appointment systems developed by TIRPORT, these times are expected to be reduced significantly in the coming days.
- The monthly average number of trips of a TIRPORT user truck was 7.7. They traveled an average of 344 km with a load per voyage. While the rate of returning empty trucks in Turkey was 37%, this rate remained at the level of 24% for TIRPORT truckers.
- While a truck waits 2.5 days to find a new load in Turkey, this rate was maximum 1.5 days for TIRPORT users.
- 11.2% of contracted shipments in Turkey were carried out by Motor Carriers Cooperatives, many of which were subcontractors to logistics companies. There are a total of 586 Motor Carriers Cooperatives of various sizes spread across the country in Turkey, where there are 76 thousand trucks. The biggest problem for cooperatives that do not have problems in creating the output load is the return load.
- The average age of the trucks transporting via TIRPORT was 12, and the average age of Turkey was 16. Compared to Turkey in general, it is seen that a younger truck fleet prefers to travel with TIRPORT.
- The heaviest road freight traffic between provinces in Turkey was between Kocaeli and Istanbul. Istanbul-Ankara, Bursa-Kocaeli, Ankara-Adana, Bursa-Istanbul, Istanbul-Izmir, Mersin-Adana, Antalya-Mersin, Antalya-Istanbul, Canakkale-Balikesir, Konya-Ankara, Konya-Adana, Samsun-Trabzon, Corum -Samsun, Adana-Gaziantep axis followed. The heaviest truck traffic in Turkey is between Gebze and Kocaeli. Gebze-Istanbul, Adana-Mersin, Tarsus-Adana, Ankara-Polatlı, Nilüfer-Gemlik, Bursa-Balıkesir, Çorlu-İstanbul, Çumra-Konya lines follow this line.
- In 2020, the highest rate of empty return in our trucks carrying out export from Turkey to abroad was from Iraq with 90%.
Depending on the economic conditions, the self-owned ratios of logistics companies are decreasing rapidly. Currently, 95% of the 850 thousand trucks on the roads in Turkey belong to individuals. This is a very serious rate, no country in the world has such a high rate of truck ownership by individuals. There are large-volume logistics companies that do not have a single self-owned truck, despite the fact that they carry over 2,000 FTL per day. In Turkey, where there are around 8 thousand large and small logistics and transportation companies, the total market share of the 5 largest companies in the market is not 2%.
There is no logistics company in Turkey that has reached a carrying capacity of more than 4 thousand FTL per day. It does not seem technically possible to exceed these figures with conventional organizational structures.
In 2020, the Pandemic has greatly 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 domestic and foreign demand, especially for food and hygiene. Within the total retail market, e-commerce, as it is all over the world, has made a big leap in Turkey, growing more than twice and reaching 15% in the last year. 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% compared to last year, and virtual market shopping grew by over 250%. The growth in the e-commerce market, which was expected in 5 years, took place in just 11 months.
Highlights in the world for 2020 in the shadow of the pandemic
The world was caught unprepared for Covid-19. The global virus 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.
According to the World Trade Organization (WTO) data; Global goods production fell 2.8% in 2019 to around $18.9 trillion. In 2020, this figure decreased slightly to around $18 trillion. The world economy is expected to rise again in 2021 and grow by 5%.
The country with the largest production volume in the world is China. Production in China is projected to increase by 8.6% in 2021, according to JP Morgan Research analysis. The origin of China’s “One Belt One Road Project” was the fastest delivery of products manufactured in China to qualified markets, especially in Europe, under the most favorable conditions.
Goods produced in one part of the world can reach their customers by traveling an average of 6,500-7,000 kilometers under international trade conditions. Access to qualified markets will become much more important in the coming years. It is expected that world trade will grow at least twice in 30 years and the production of goods will reach the threshold of 40 trillion dollars. 1/3 of the trade that takes place in the world is related to logistics in some way. If you cannot deliver the goods you produce to the customer in a timely manner in accordance with the expectations, there is no point in producing them. The basis of the supply system is the continuity and sustainability of the supply. Although it may seem like an exaggeration, 99% of trade is logistics. Logistics costs (including shipping and storage) in international trade can sometimes reach up to 60% of the product cost. It is at the level of 20-25% in many products. Therefore, the logistics sector will increase its vital importance in the coming period.
The distribution of even the Covid-19 vaccines to the world alone has created a great excitement in the sector. Covis-19 vaccines paved the way for a new commercial activity of up to 1 trillion dollars, in which cold chain storage and transportation costs will be close to 40%.
What awaits Turkey in 2021
One of the ways to carry out mass production in high volumes and to deliver the products to Europe in the shortest way and with the cheapest logistics costs is through Turkey. While it is 4 weeks at the earliest for a container from China to reach Europe, it is possible to deliver products from Turkey to England in 1 week by road. Increasing the profitability of the Turkish logistics sector gains importance here. Truck costs in Turkey are quite high due to the high tax burden, and the return on investment of a truck purchased for approximately 1 million TL 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 16. Environmental sensitivities and pressures are increasing, especially in the EU. The renewal of fleets 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% 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. In the coming years, some logistics companies that will strengthen their capital with foreign investors may accelerate their investments in self-owned fleets with the technological operation management infrastructures they will strengthen.
According to the end of 2020 data of TIRPORT Insights, a truck travels an average of 344 km per day in Turkey. making way. The average actual freight fee is 2,620 TL. Trucks on the roads wait for at least 2.5 days at the shipping sites, factory and port entrances to find suitable cargo, while 37% of them have to return to the exit point empty despite waiting. In Turkey, where a self-employed truck makes an average of 6.8 trips per month, it has to increase the number of trips to more than 10 in order to earn money, and travel at least 8,500 km per month with a load on its back.
EU-plated trucks have an AB hollow rotation rate of 25%. Almost 80% of the trucks going from Turkey to Europe have to return empty. With its enhanced intelligence supported digital solutions, TIRPORT aims to create significant value for its member logistics companies and truckers by creating an intelligent return load whenever and wherever they need it. In the second half of 2021, it is preparing to act as an intermediary with the digital brokers that it will cooperate with in Europe, to find the freight of trucks going to Europe to return to Turkey.
A significant increase is 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. They expect to be able to be informed and preemptive in the transportation process without any problems.
The digital transformation of the $8 trillion global logistics industry is being shaped by logistics technology startups
The logistics industry is one of the industries where the digital revolution is most intense. Logistics is digitizing and transforming faster than expected. US logistics technology companies Coyote, Convoy, Project44, Next Trucking, CloudTrucks, Flexport, Fourkites, Uber Freight, Chinese Manbang, Indian Delhivery, Blackback and Rivigo, Brazilian CargoX, Unicorn stand out as digital platforms that continue to grow rapidly. China’s Manbang has surpassed a $12 billion valuation with a new investment of $1.9 billion last month. It directs nearly 10 million trucks within its structure. In Europe, German-based logistics technology Senner, which has surprisingly incorporated Uber Freight Europe and French Everoad this year, draws attention. Drawing attention with his aggressive growth, Senner is playing for leadership in Europe. It looks like it will continue to grow by creating regional business partnerships.
It is observed that many classical logistics and cargo companies such as DHL, JH Robinson, Maersk, UPS, FedEx have invested billions of dollars in logistics technologies. Many of them have established venture capital companies for this purpose. In fact, we see leading global retailers such as WalMart and Ikea, as well as energy giants such as Shell, BP, Saudi Aramco, as “startup hunters” in this league. They research and invest in startups as a source of innovation. With the VC funds they have established, they make significant investments in businesses that will create value for them and carry their business into the future.
Turkish logistics Technology Startup TIRPORT, operating in 5 countries including Turkey and growing rapidly, continues to expand the market together with its European rivals Senner, OnTruck, Forto, Shippeo and InstaFreight. TIRPORT is considered one of the 3 most important logistics technologies in Europe with its digital assets and business volume.
The growth in e-commerce accelerated the digital transformation in the logistics industry
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 highlighted visibility and operational transparency among companies on the B2B side, causing supply chain innovation agendas to gain momentum and take priority.
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 end-to-end live traceability of the cargo with the truck, the performance of the drivers, data analytics, increased intelligence applications in load-truck matching, partial load optimization, robotics, IoT, Cloud and APIs point to a new normal for the logistics industry.
Logistics companies will quickly evolve into technology companies. On the other hand, environmental sensitivities will increase and electric trucks will become widespread. It can be predicted that the European Union will make the pressures on this issue even more evident. Standards on reducing carbon dioxide emissions and waste generation are also expected to become tougher.
According to the estimates of IDC FutureScape for Worldwide Digital Transformation; Over $6.8 trillion will be invested globally in digital transformation from 2020 to 2023. Research on Turkey also shows that digital investments will not slow down. According to PwC’s Covid-19 CFO Pulse survey, 94% of Turkey CFOs plan to continue their digital transformation investments even though they are considering delaying their overall investment spending.
With the pandemic, the e-commerce volume, which made a big attack from 6.5% to 15% in a year, has reached 8 million transactions per day. The cargo market, on the other hand, accounts for approximately 50% of this volume. Cargo companies visit more than 4 million doors a day in Turkey.
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.
According to GYODER Indicator Turkey Real Estate Sector 2020 third quarter report; In the Istanbul-Kocaeli region, there is a logistics supply of 6.64 million square meters. According to the available data, there is a logistics supply of 6.64 million square meters for commercial use in the total warehouse stock of approximately 10.41 million square meters in the Istanbul-Kocaeli region, which is the primary logistics market. As of the third quarter of 2020, there is a gap of 12%. New investments have slowed down considerably, and the volume of projects under construction is around 558 thousand square meters.
It is estimated that the total leasable warehouse capacity in Turkey is around 15 million square meters. Approximately 70% 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, it is seen that this figure rises to 9 dollars in some cities. If we compare the leasable commercial warehouse areas to the population, the Turkey index is around 0.18%. Based on this situation, it is possible to say the following easily. If Turkey can use its position well, it can triple its current storage capacity as a country in the next 10 years. Even at an 85% capacity utilization level, 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.
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 logistics initiatives with criteria such as regional superiority, production power, and qualified workforce. It can increase its production and logistics power exponentially. Political stability, good relations to be developed in the international category may turn the direction of foreign capital back to Turkey, as it was in 2006-2012. Turkey may be one of the safe havens that capital seeks for investment in the world. 2021 can be an important starting point for a good start to all opportunities.
To review and download the detailed report as PDF, visit the page on TIRPORT Insights.