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Big movements needed at Turkish ports

Turkey is a sizeable albeit volatile hub for vehicle trade, with exports a particular strength. Last year, Turkish-based manufacturers exported nearly 460,000 passenger cars (up 20%) and more than 357,600 light commercial vehicles (up 6%). Large bus and truck exports also rose 2% to 6,875. There were also some 517,500 passenger cars and 90,000 LCVs imported for the domestic market.

While some vehicles move by land, Turkey has become an important centre for ro-ro shipping services. Indeed, at just over 1.5m vehicles moved in our survey for 2013 – the first we have ever done for Turkey –the country’s major seaports rank 5th in Europe, after Germany, the UK, Benelux and Spain, for total volume of imports, exports and transhipment.

However, Turkey suffers from a limited number of ports and terminals that offer vehicle handling and specialised services. Space is at a premium, while many manual and inefficient processes are dominant across terminals. Following legal disputes, the country’s only dedicated vehicle-handling port ceased operations in September last year.

This may be due in part to the market's volatility. Domestic sales are very uneven, including dropping 25% so far this year amid political unrest. Problems in the euro zone have also impacted exports, although growth has been strong recently.

The good news is that, with demand for exports generally rising again, some ports are improving their vehicle handling capabilities, including a number of investments in IT development and automation, such as the use of scanners and tablet PCs. Turkey is also planning to privatise operations at Derince, the largest port, which could usher in new investment. Whether the latest developments will narrow the gap with the long-term needs of volume growth is not yet evident.

Changes among limited options

Most of Turkey’s vehicle-handling ports are located on the Marmara Sea, which divides the country’s smaller European area from its Asian mainland. Turkey’s main vehicle handling ports are Derince and Yenikoy on the Marmara Sea’s northeast coast near Istanbul, and Gemport and Borusan on the southeast coast. This region is also home to Turkey’s primary passenger and commercial vehicle manufacturers. One of the more recent developments occurred at the port of Efesan, on the eastern Marmara Sea, which last year opened a terminal for Volkswagen imports, and also handles Fiat imports.

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Although Daimler shifted a significant amount of vehicle volume last year to Autoport, located just east of Ford Otosan in Kocaeli in Yenikoy, import operations at Autoport ceased in September 2013 following a decision by local authorities to suspend the operating license of the terminal for an undefined period. The fate of Autoport remains mired in a battle between Turkish government authorities. As a result, Daimler and other have had to reroute vehicles to other ports, which has had some impacts on the rest of the network.

Other than those in the Marmara Sea, the ports of Iskenderun and Mercin are located on the eastern Mediterranean Sea. Samsun, which handles transhipments to the port of Ilychevsk, Ukraine, is located on the Black Sea, and Izmir is located on the Aegean Sea.

Derince handled nearly twice the number of vehicles as the next largest port. Its major customers include Toyota, Honda, Hyundai, and others. Turkish State Railways owns Derince, making it along with Izmir among the last remaining state-owned ports. According to Gino Companer, general manager of Turkey for Wallenius Wilhelmsen Logistics (WWL), although Derince is government-operated, it rents storage space to ro-ro carriers and other service providers, which in turn manage their own terminals inside the port. “That helps keep the port operating efficiently,” he says.

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However, there have been various efforts by the Turkish government to privatise Derince in recent years. Turkish courts eventually blocked a tender bid in 2007 after union protests. Last year, the government again issued a concession bid for 36 years; the tender was withdrawn in January, but reissued it in April with a closing date in late May.

Toyota exports vehicles from Derince and Borusan. The Japanese carmaker imports vehicles to Turkey from the UK, Japan, Thailand, France, and South Africa. According to Erdogan Sahin, head of production parts logistics and vehicle logistics at Toyota Motor Europe, Toyota has recently been able to make use of greater vessel frequency for Turkey, which has reduced lead times. Yet, he says, even as Turkey’s finished vehicle exports continue to increase, its ports still tend to focus on containers rather than on ro-ro cargo.

Ford Otosan’s logistics manager, Recai Isiktas, says that its company owned port, which connects to its main plant in Gölcük near Kocaeli, handles 95-98% of its vehicle exports. The port handled more than 261,000 units last year, making it Turkey’s second largest for vehicles. Ford Otosan also uses the ports of Derince and Gemport for exports.

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In January, Borusan Logistics assumed the operation of Ford Otosan port from UECC. It picks up the vehicles at the end of the assembly lines and drives them 400 metres to the compound. Last year, Ford Otosan expanded its compound to 320,000sq.m.

Alliance Logistics Europe, the logistics purchasing and operations division for Renault Nissan across the continent, uses the ports of Gemport, Derince, Izmir, and Borusan; the latter is the main port for exports from the carmaker’s Oyak Renault joint venture in Bursa, southeast from the Marmara. Exports are destined to Europe, North Africa, and the Middle East. Nissan imports arrive at Derince.

Laurent Kerloch, general manager for outbound logistics engineering, says that the port of Borusan has demonstrated more adaptability towards the Alliance. In April, it entered into a multi-year agreement with the port and increased its percentage of vehicles shipped through Borusan, which is part of a wider insourcing of logistics contracting and planning at Renault Nissan.

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“Our challenge is to manage the use of Turkish ports through direct relationships as opposed to working through third party logistics providers in order to secure capacity, quality, and cost efficiency on a long-term basis,” says Kerloch. “Our main issue is the inability to consolidate all volumes at one port due to the lack of capacity available. However, we have taken a step in right direction with Borusan.”

Sea connections

Turkey benefits from a relatively developed set of ocean services, particularly for short-sea connections with Europe, Mediterranean and the Middle East. With its weekly calls, United European Car Carriers (UECC) handles both exports and imports at the port of Derince, and exports at the ports of Borusan and Yenikoy.

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UECC handles high-and-heavy cargo at Derince, whereas passenger cars, light commercial vehicles, and trucks are more prominent at Borusan, according to Ozgur Guneri, head of Turkey business generation and performance. From Turkey, UECC has a bi-weekly service with the port of Gioia Tauro, Italy, from which point it tranships to North Africa. It also has a weekly service to the port of Vigo, Spain weekly.

Short-sea carrier Euro Marine Logistics (EML) serves the ports of Derince, Borusan, and Yenikoy weekly for exports, and Derince and Borusan for imports. EML’s parent company, Japan’s Mitsui OSK Lines (MOL), has developed a new 20,000sq.m compound at Derince to add to an existing 30,500sq.m facility.

Among the deep-sea carriers serving Turkey is WWL, which calls the port of Derince two or three times monthly, and the port of Izmir once per month. It moves vehicles to Turkey mainly from the Far East and carries exports destined for Europe, South Africa and Australia. Within the past year, WWL began calling the ports of Mercin and Iskenderun on transhipment routes to Iraq and Syria as a routing necessity, partly because of space shortages – although these southern ports also have capacity issues, says Companer. “We experience port congestion only at Mercin and Iskenderun, which place an even greater emphasis on containers than do some of the others,” he says.

"Our challenge is to manage the use of Turkish ports through direct relationships as opposed to working through third party logistics providers in order to secure capacity" - Laurent Kerloch, Renault Nissan

Companer adds that WWL has seen improvement at Derince within the past two to three years, including stevedore shift reorganisation, which has led to fewer delays. “Since Derince’s main cargo is cars, it is also very conscious about reducing damage,” he notes.

Click to enlarge…All data have been collected from port and shipping sources. Figures include passenger vehicles, trucks and buses. Transhipment is normally counted as one import and export, unless movement was not by sea. This survey is not intended to be comprehensive as not all ports have reported figures.

Gani Fetnaci, EML’s head of business and marketing, says that the ports of Derince and Borusan, which handled more than 200,000 units last year, have been proactive in expanding their infrastructure to accommodate Turkey’s growing vehicle exports. However, following congestion and a lack of infrastructure to handle growing exports, EML temporarily stopped calling Borusan in the first quarter, but resumed again in April.

A disappointing turn of events

While Autoport, owned by logistics provider Arkas, had never come anywhere near its annual 400,000 vehicle per year capacity, its closure was a disappointment for Daimler, which had consolidated its short-sea shipping at the port for Mercedes-Benz cars and vans early last year. Jan Maes, manager of vehicle distribution for passenger cars and commercial vehicles in Europe, says that Autoport had been the only dedicated terminal with sufficient storage space available and the potential to install adequate PDI activities. Previously, the carmaker had shipped its vehicles by short-sea and by barge and truck combination. Since operations ended at Autoport, Daimler shifted its imports to the port of Derince.

There are two Mercedes-Benz production facilities in Turkey, including one for buses in Hosdere, near Istanbul and one for heavy trucks in Aksaray, in central Turkey

“We regret this development, since Derince port is not fully meeting our expectations in terms of quality and standards,” says Maes.

According to Maes, Turkey’s port infrastructure is insufficient to develop value-added services for imports and exports to meet Daimler’s standards, and the manufacturer instead uses them as pure transit points. “We would like to see more, and qualitatively better, handling and storage facilities within the ports instead of having to rely too much on inland terminals,” he adds.

There are two Mercedes-Benz production facilities in Turkey, including one for buses in Hosdere, near Istanbul and one for heavy trucks in Aksaray, in central Turkey. The company exports heavy trucks and buses from the port of Pendik, near Istanbul, to Trieste, Italy and heavy trucks from Derince to Zeebrugge, Belgium.

Scanners, iPads and RFID

Among the challenges facing Turkey’s ports is the need for improved IT. “We are not seeing efforts by the ports to improve their information technology. Due to the lack of terminal operating systems and other IT infrastructure, UECC uses its own IT system,” comments Ozgur Guneri.

Sahin adds that Toyota’s challenges include overly complex customs procedures, as well as the cost of port calls and especially inland distribution. “Inland connectivity is good; however, an improvement would be rail connectivity,” he says.

"We would like to see more, and qualitatively better, handling and storage facilities within the ports instead of having to rely too much on inland terminals" - Jan Maes, Daimler

There are some projects and developments that are moving in the right direction. This past February, for example, BLG Automobile Logistics shipped two block trains from Skoda’s plant in Mlada Boleslav, Czech Republic to Turkey. The shipments arrived at the port of Tekirdag and then moved by ferry to Derince, where they were unloaded. Jens Ripenhusen, BLG’s director for Poland, Ukraine and Turkey says that this method was faster than the previous one, which involved trucking and short sea.

Gemport has increased capacity by more than 10%, and also reduced the gate-in and gate-out times of trucks from 50 minutes to just over 20 minute.

At Gemport, Turkey’s third largest vehicle port is Gemport, located just east of Borusan, the terminal operator has also been investing in more sophisticated technology and processes. In 2013, Gemport’s capacity increased by more than 10%, and it reduced the gate-in and gate-out times of trucks from 50 minutes to just over 20 minutes, while also reducing entry wait times, according to Ertan Ocak, business development chief for automotive for Yilport Holding, which owns the port. Gemport integrated handheld scanners with its software. Furthermore, Yilport Holding now manages the entire process from gate-in to the ship and vice-versa, offering customers a single point of contact.

Among its clients, Gemport handles exports for Bursa-based carmaker Tofas, which produces Fiat, Peugeot, Citroën, Opel, and Vauxhall brands. Hyundai is currently gearing up to export through this port as well. For Tofas, a joint venture between Fiat Chrysler and Koc Holding, Gemport handles close to 90% of exports, according to S. Nazlı Bedir, CBU dispatching administrator at Tofas. Its other ports are Borusan, Derince, and Izmir. For imports of Fiat vehicles, which account for 15% of its total sea shipments, Tofas also uses Gemport.

According to Bedir, Gemport’s handheld scanners have helped to reduce processing times. Prior to that, truckers needed to rely on manual records. The challenge is that Tofas’s own shipment information is still manual, she says. “We send the port our number of vehicles for shipment, which is the production schedule for the following two to three days. Our system should be automated by the end of the year.”

Gemport has implemented handheld scanners, while Ford Otosan plans to use RFID at its port in Kocaeli

Another improvement at Gemport has been its extended hours of operation. “Previously, we started loading at the plant at 8:30am and the port would receive 10-12 trucks at 9:30am,” says Bedir. “Since this caused congestion, we collaborated with the port to start at 7am. Now, not more than five of our trucks are at the port at once.”

For its imports, Tofas is considering going even further in automation, including the use of iPads to process damage inspections. The current system requires Tofas to sign documents with the port, which is more time consuming. Bedir says that this change may occur by the end of this year or early next year. Gemport’s next improvement will be Gemlik Terminal, due to launch in August. The facility is planned to nearly double Gemport’s wharfage with an extra 670 metres of berth length, and another 350,000sq.m of yard capacity.

Ford Otosan’s Isiktas says that the port plans to complete installation of an RFID system by the end of June. Before RFID, it was using handheld barcode scanners, which was more time-consuming.

As Turkey’s ports continue to develop, advances in areas such as IT promise to improve throughput efficiency. While volumes may be volatile, the long-term outlook is for continued growth in both exports and the domestic market; carmakers and shipping lines are anxious to get the best use out of all the space available at Turkey’s ports.