EMRE ELDENER

Turkey 2021 | TRANSPORT | VIP INTERVIEW

TBY talks to Emre Eldener, CEO of KITA Logistics and President of UTİKAD, on the impact of the COVID-19 pandemic on logistics networks, the effectiveness of state aid, and KITA's response to the ongoing crisis.

COVID-19 has left logistics companies scrambling to change their operations to react to vast changes in global transportation. In Turkey, how has transportation been impacted by the ongoing crisis?

It is affecting the entire supply chain process significantly. For air freight, with the cancellation of almost all passenger flights, cargo can only be moved on dedicated cargo aircraft rather than in the belly of passenger aircraft. In Turkey, that capacity is limited to Turkish airlines' 24 cargo aircraft and MNG's five. Capacity has fallen substantially, and the cost of moving cargo by cargo aircraft is two to three times more expensive than the cost if the cargo and passenger aircraft are combined. Moving to road transportation, because of drivers being seen as potential carriers of the virus, the Ministry of Health has quarantined any driver that enters Turkey for 14 days. There needs to be another way to control this. We have asked for test kits to be sent to the border so that drivers can be tested. The current situation has made trucking not only expensive but close to impossible right now. Looking at sea freight, the crunches faced by air and road has created an additional demand for containers—there are not enough empty containers. Without empty containers coming from China over the past several months, export prices have gone up 40-50%. Booking space on a container vessel has also been delayed greatly. Finally, looking to rail, the Turkish Railroad Administration has 1,200 cars available. It had 2,200 railcars full of orders that it cannot fulfill. Everyone has to wait to send something by rail because of the lack of available equipment.


How has KITA Logistics used technology to cope with the ongoing COVID-19 impact?

Technology is important right now. If we did not already have the technology installed in our company, then we would not have been able to do our jobs from home. We have cloud-based software so every single person has access to do their jobs. They can realize shipments and invoice clients from home. No one is the office, but our business is still running as usual. We are using technology for our operations and the tracking of cargo from satellite systems on the trucks to full traceability of each and every container and air freight cargo. We follow each shipment in full transparency right now. This helps clients to plan accordingly.

The government has responded to the developing economic crisis with a relief package for the logistics sector, among others. How is it helping you cope with the impact of COVID-19?

It is a good start, but it is not enough. First, any supply chain personnel that has to move, such as flight engineers, pilots, air crew, ship crew or drivers, needs to continue to move. This is important to understand. Another important consideration is that many people will be unable to pay their debts or loans on time because of the cash flow issue. As a result, our request is for companies to not be blacklisted if they do not pay on time. That will affect their credibility when this is a force majeure situation. The banks and financial system have to pardon these companies for a few months. This is the first time our sector has experienced such a collapse. There have been some tax incentives, which we absolutely appreciate. It is a positive step, but these are just not enough. We expect more from the government in terms of measures for relief of the logistics sector and the whole economy.

As a result of falling industrial activity in China, many Middle Eastern importers have shifted to purchasing Turkish exports. Do you see this as a long-term diversification away from Chinese imports?

Some countries, including Turkey, have realized that being dependent on raw materials or by products from China could be a catastrophe when something like this happens. So, purchasing markets will become diversified. Because of lack of service and supply from China, companies have moved to Turkey for their orders because their purchasing teams were unable to go China. Now they are not going anywhere, though. In about a month's time, Chinese orders will pick up as they have almost recovered from COVID-19. I do see import countries diversifying their sources so they are not reliant on a single source in the future.

Outside of the ongoing crisis, how has KITA Logistics shaped its strategy around the evolving nature of globalization?

In the service industry, long-term plans or strategies can be changed in a second depending on the changing client needs, such as is the case for importers for Chinese goods. We are moving cargo mainly across borders—90% of our business is international. We have seen growth recently in the Middle East and Africa, whereas historically we have focused on the European and East Asian markets for exports and imports, respectively. The African market has started buying a fair bit from Turkey, so we are working to grow our market share for Turkish exports to Africa, particularly in Tunisia, West Africa, and South Africa. In those markets, we see potential for air freight and sea freight service.