IN PURSUIT OF THE ONE-STOP SOLUTION

Turkey 2020 | TRANSPORT | INTERVIEW

Though the growth of e-commerce has positively boosted the sector, MNG Kargo is working on innovative systems and technologies to deal with the overwhelming requirements.

Erik Leiss
BIOGRAPHY

Erik Leiss has served as DB Schenker Arkas' CEO since 2007. He began working for Schenker's global operations in 1994 in Vienna, and later worked for the company in Switzerland, Hong Kong, Korea, and again in Vienna.

Two years ago, MNG Kargo's acquisition by outside investors was completed. What was the reason behind the acquisition?
This is an industry mostly established by Turkish companies and entrepreneurs with classic methods and cargo logic. However, in the last decade a number of foreign investors have entered the market through acquisitions. This showcases the foreign interest in this strategic industry and appetite for investment into a high potential business. Seeing this potential, Turkven and Sancak Group acquired 100% of MNG Kargo and decided to invest and transform the industry. As someone involved in these processes, these investments have made a major contribution to the industry and contribute to establishing the corporate infrastructure of the industry.

How has MNG Kargo benefited from the e-commerce boom within Turkey, and how has e-commerce affected your operations?
The growth of e-commerce positively influences not only MNG Kargo, but also the entire industry in terms of volume. However, since industry business model was not designed to meet the requirements of B2C in a cost-efficient way from the beginning, the industry cannot fulfill this in terms of costs, performance, and customer satisfaction at the moment. Especially on the last-mile side, there is a culture of the consumer in Turkey of delivering everything to homes coming from cargo, namely the B2C end. Since this culture creates a similar expectation on e-commerce side, our costs and operation infrastructure cannot keep up. The costs of operations are rising, as the mail and B2B side shrinks and the small parcel side of the industry expands. Here, we seek to differentiate the pricing mechanism between customer pick-ups and home deliveries. We are also working with e-commerce companies to change this in order to reduce their costs and facilitate our costs and operations.

Outside of pricing mechanisms, what solutions is MNG Kargo working on to meet the challenges presented by e-commerce?
There are two dimensions to our solution. First, we strive to make the last-mile side more technological and accessible for customers; second, we seek to improve sorting systems suited for e-commerce. With last mile, we are investing in pick-up and drop-off points to better reach customer preferences. For sorting and separation systems, there will be full automation, and we will move toward a structure where the cargo will go to distribution points directly and where we can reduce the number of handling and dispatch the last mile directly from the hubs. We also have plans to invest in some locations in 2019 and 2020. We will not eliminate branches; they will serve as a customer contact point, a pick-up point, and so on.

How have MNG Kargo's international operations changed with the growth of e-commerce?
Our first priority is using the right technologies and ensuring customer satisfaction. The world is turning into an integrated market with the development of e-commerce. The key transformation made by our international business, INTER, has been to integrate our processes with large international e-commerce companies such as Amazon and AliExpress, which ship products to Turkey. Therefore, as much as we can manage this effectively within Turkey, we can become a right and established partner in international trade. A healthy formation of this integration will also lead to Turkish products and market transforming to e-export on the e-commerce side and will make us reverse logistics provider in that sense. We will collect the cargo from within Turkey and transfer it abroad, reaching out to the world with our network there.

What are your primary objectives over the next year?
We are doing an in-depth study of all our 25 existing hubs, calculating where they will experience bottlenecks when we grow at a projected rate every year. In relation to this, we have projected a 15% physical growth necessary in the next three to four years and have shaped our investments accordingly. Our second project is to review our vehicle fleet. We are renewing around 300 vehicles in 2019 and will renew our vehicles every year.