Maritime Turkey
Market Research
Martin Bloem M.A. Sandra van Putten M.A. Assoc. Prof. Dr. Ali Deveci Prof. Dr. Okan Tuna
Maritime by Holland series (mostly in Dutch) 1. De Nederlandse Maritieme Cluster: literatuuronderzoek en plan van aanpak economische impact studies 2. De Maritieme Arbeidsmarkt: vraag en aanbod van zeevaartkennis 3. De Nederlandse Scheepsbouw- en toeleveringsindustrie: economische betekenis en structuur 4. De Nederlandse Offshoresector: economische betekenis en structuur 5. De Nederlandse Binnenvaartsector: economische betekenis en structuur 6. De Nederlandse Waterbouwsector: economische betekenis en structuur 7. De Koninklijke Marine: economische betekenis en structuur 8. De Nederlandse Visserijsector: economische betekenis en structuur 9. De Nederlandse Watersportindustrie: economische betekenis en structuur 10. De Nederlandse Maritieme Dienstverlening: economische betekenis en structuur 11. De Nederlandse Maritieme Toeleveranciers: economische betekenis en structuur 12. De Nederlandse Zeehavensector: economische betekenis en structuur 13. De Nederlandse Maritieme Cluster: economische betekenis en structuur 14. Het Maritieme Clustermodel: modellering en scenarioanalyse 15. De Nederlandse Maritieme Cluster: beleidsaanbevelingen 16. De Innovativiteit van de Nederlandse Maritieme Cluster 17. Maritieme Websites en E-Business: een verkenning 18. Maritiem Kapitaalforum: onderzoek naar de werking van de kapitaalmarkt in de sector van maritieme toeleveranciers 19. An International Shipping Company in the Netherlands: the tax perspective 20. E-business in de Maritieme Cluster: visies, strategieën, activiteiten 21. De arbeidsmarkt in de Nederlandse Maritieme Cluster: een overzichtsstudie 22. Leader Firms in de Nederlandse Maritieme Cluster: theorie en praktijk 23. De Koninklijke Marine als maritieme leader firm 24. De Nederlandse maritieme cluster: monitor en dynamiek 25. European Maritime Clusters: global trends, theoretical framework, the cases of Norway and the Netherlands, policy recommendations 26. a Voorschriften voor Commercial Cruising Vessels / 26. b Rules for Commercial Cruising Vessels 27. Monitor Maritieme Arbeidsmarkt 2003 28. Dutch Maritime Research, Development and Innovation Expenditure 29. European Maritime Policy Conference: proceedings 30. Dynamic European Maritime Clusters 31. De Nederlandse Maritieme Cluster: economische Monitor 2006 32. Monitor Maritieme Arbeidsmarkt 2006 33. Monitor Maritieme Arbeidsmarkt 2008 34. De Nederlandse Maritieme Cluster: Monitor 2010 35. De Marine en Marinebouwcluster: welvaartscreatie en innovatief vermogen 36. De Nederlandse Maritieme Cluster: Monitor 2011 37. Maritime Hotspots, final report, 2012 38. Maritiem West Afrika, marktstudie, 2012 39. De Nederlandse Maritieme Cluster: Monitor 2012 40. Maritime Turkey: Market Research
Maritime Turkey
Market Research
Maritime by Holland The Foundation 'Nederland Maritiem Land' (Maritime by Holland) was established on June 27th, 1997 in order to promote and strengthen the Dutch Maritime Sector. The Board of the Foundation consists of A. Kraaijeveld (chairman), Mrs. T. Netelenbos (vice-chairman), R. Paul (secretary/treasurer) and further in alphabetical order, G.G.P.M. van Beers, Vadm. M.J.M. Borsboom, Dr.ir. B. Buchner, ing. K. Damen, E.M. van Dijk, ir. J.J.C.M. van Dooremalen, G. Edelijn, S.J. van der Goot, F. Heinis, Vadm b.d. J.W. Kelder, J.P. Klaver, A. Meijer, A.P.H. Vergroesen, A.A.N. Vink, F.D. Vroon, P. Zoeteman. The director of the Foundation is A. Uytendaal.
Published and distributed by Maritime by Holland
Study conducted by Bloem Doze Nienhuis Panteia Boompjes 40 Bredewater 27 3011 XB ROTTERDAM / the Netherlands 2715 CA Zoetermeer / the Netherlands T 0031-10-4007140 T 0031-79-3222000 E [email protected] E [email protected] I www.bloemdozenienhuis.com I www.panteia.nl
Design/Lay-out Sirene Ontwerpers Zeemansstraat 8 / 30000 ROTTERDAM / the Netherlands T 0031-10-4389282 E [email protected] I www.sirene-ontwerpers.nl
Print: Efficiënta Offset B.V. Burgemeester Aalberslaan 78 / 2922 BE KRIMPEN AAN DEN IJSSEL / the Netherlands T 0031-180 - 512522 E [email protected] I www.efficienta.nl
ISBN 978-90-820165-3-6 NUR 784
Copyright © December 2013 Stichting Nederland Maritiem Land All rights reserved. No part of the material protected by this copyright may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system without written permission of the owner of this copyright. Permission may be obtained at the following address: Stichting Nederland Maritiem Land, Boompjes 40, 3011 XB Rotterdam, the Netherlands; e-mail: [email protected], website: www.maritimebyholland.com
Table of Contents
Table of Contents V
List of Figures VII
List of Tables VIII
List of Charts XI
Executive Summary 13
Introduction 15
1 MARITIME TURKEY: OUTSIDE-IN 19
1.1 The growing importance of the Turkish economy 19
1.2 A short historical introduction 20
1.3 A maritime tradition 23
1.4 Dealing with differences in Turkish & Dutch business culture 26
2 PORTS OF TURKEY 29
2.1 General developments 29
2.2 Port sector analysis 33
2.3 Port demand forecast studies 47
2.4 SWOT Analysis of Turkish Ports 52
2.5 Recent major developments in the ports sector 54
2.6 Port administration and legal framework of port investment and operations 63
2.7 Opportunities and Recommendations for the investors to participate in Port Business in Turkey 70
3 THE TURKISH FLEET 79
3.1 General 79
3.2 Fleet statistics 81
3.3 Main ship owning companies 94
3.4 Turkish Ro-ro companies 107
4 SHIPBUILDING INDUSTRIES 109
4.1 Introduction 109
4.2 The development of Turkish shipbuilding 111
V Maritime Hotspots
4.3 Shipbuilding statistics 112
4.4 Overview of commercial shipyards 126
4.5 Super yacht industries 131
4.6 Other technology related sectors 138
5 MARITIME EDUCATION & RESEARCH 147
5.1 Institutions 147
5.2 Maritime faculties in Turkey 149
6 GOVERNMENT POLICIES AND MARITIME ORGANISATIONS 159
6.1 National level 159
6.2 Port strategy and policy of Turkey 167
6.3 Industrial policy 176
6.4 Maritime related organisations 178
7 TURKEY AND THE EUROPEAN UNION 189
7.1 Turkey and EU relations 189
7.2 The progress of the negation process on the transport chapter 191
7.3 Instrument for Pre-Accession Assistance (IPA) and Multi-Annual Indicative Planning Document (MIPD) for Turkey 192
7.4 Main sectors for EU support for 2011-2013 195
7.5 Turkey’s priorities in the transport sector 196
8 SWOT-ANALYSIS 199
8.1 Strengths 199
8.2 Weaknesses 200
8.3 Opportunities 201
8.4 Threats 202
9 CONCLUSIONS & RECOMMENDATIONS 205
Annex 1: REFERENCES 209
Annex 2: OVERVIEW OF CONTACT DETAILS OF MOST RELEVANT TURKISH PORTS 211
VI
List of Figures
Figure 1: Conceptual frame 16
Figure 2: Locations of major Turkish ports and terminals 34
Figure 3: Location of Turkish Main Container Ports 36
Figure 4: Regional distribution of container port traffic 38
Figure 5: Logistics Centres in Turkey 58
Figure 6: Locations of Hub Port Projects in Turkey 61
Figure 7: Current international ro-ro services from Turkey 92
Figure 8: Feederlines Arkas 103
Figure 9: location of 71 shipyards in Turkey 109
Figure 10: location yacht shipyards 131
Figure 11: Organisation of Ministry of Transport Maritime Affairs and Communication 161
VII Maritime Hotspots
List of Tables
Table 1: doing business in Turkey 27 Table 2: Handling Capacity of Turkish Ports According To the Cargo Types 34
Table 3: Dry Bulk and General Cargo Handling at Turkish Ports Ports (Top 10 Ports and Total Cargo Handling) (M ton) 41 Table 4: Liquid Bulk Cargo Handling at Turkish Ports (M tonnes) 42 Table 5: Crude Oil Import of Turkey According to the Countries and Transportation Modes in 2010 42 Table 6: Crude Oil Import and Export Cargo Handling at Turkish Ports (2005-2011) 43 Table 7: Petrolum Products Handling at Turkish ports (M tonnes) 44 Table 8: Top 10 Liquid Chemical Cargo Handling at Turkish Ports (M Ton) 44 Table 9: Automobile Handling at the Member Ports of POAT- (Units) 45 Table 10: International Ro-Ro Lines To/From Turkey and Their Truck/Trailer Carriages 45 Table 11: Development of Cruise Shipping At Turkish Ports (2005-2012) 46 Table 12: Cruise Ship and Passenger Traffic at Turkish Ports 47 Table 13: Regional Port Demand Forecast Based on Cargo Types (M ton) 49
Table 14: Port Capacity Need Towards the 2023 Considering the Turkish Government’s Foreign Trade Targets 51 Table 15: Privatized of Ports Under the Turkish Maritime Association (TMO) 55 Table 16: Privatisation Process of Container Ports in Turkey under TSR 56 Table 17: Container Port Capacity Expansion and New Container Port Projects in Turkey 59
Table 18: Bulk and General Cargo Port Capacity Expansion Projects and New Port Projects in Turkey 60 Table 19: Operation Licences of Turkish Ports 69 Table 20: Turkish owned fleet >100 GT 82 Table 21: main owners chemical and products fleet 91 Table 22: current fleet of Geden Lines ordered from China, Japan and South Korea (2004-2013) 117 Table 23: Shipbuilding Labour Productivity 125 Table 24: Turkish super yacht order book May 2013 131 Table 25: Types of Maritime Education Institutions and Their Student Capacities in Turkey (2011) 147
VIII Table 26: Higher Education Institutions Offering Education on Deck and Engine Officers in Turkey in 2011 147
Table 27: The two year Vocational Schools of Higher Education (Junior College) HND Education MET Institutions Leading to Unlimited Licenses Deck/Engine Departments’ Annual Recruitment Capacity 148 Table 28: Logistics Education under the Faculties/Schools in Turkey 149 Table 29: The Names and Contact Details of Most Important Persons in MoTMAC 166 Table 30: Strategies and Policies of Turkey for the Ports within the Last 25 Years 172 Table 31: Board members of POAT 180 Table 32: The Planned Financial Allocation per Sector (million €) 195 Table 33: The Financial Assistance through IPA Components in (million €) 196
IX Maritime Hotspots
X List of Charts
Chart 1: Cargo Handling in Turkish Ports (M tonnes) 35 Chart 2: Types of Cargoes Handled at Turkish Ports (M Ton) 35 Chart 3: Container Handling at Turkish Ports (thousand TEU) 37
Chart 4: Container Transhipment Traffic at Turkish Ports (M TEU) and corresponding share of total (%) 38 Chart 5: Container Traffic at private ports of Port Operators Association of Turkey (M TEUs) 39 Chart 6: Container Traffic at Private and State Ports (M TEUs) 40 Chart 7: Container Traffic at Individual Turkish Ports in 2012 40 Chart 8: Total Cargo Traffic Forecast at Turkish Ports for 2030 (M ton) 48 Chart 9: Container Traffic Forecast at Turkish Ports (M TEU) 49 Chart 10: 2023 Total Cargo Forecast in Turkey by POAT in 2012 (M tonne) 50 Chart 11: 2023 Cargo Traffic Forecast of Turkey by POAT Based on Cargo Types in 2012 (million) 51 Chart 12: Cargo volume Turkey 79 Chart 13: Turkish owned fleet > 100 GT (M dwt) 81
Chart 14: Turkish fleet > 1.000 dwt, Turkish national versus international registry; dwt and number 83 Chart 15: Turkish owned fleet, segmentation of ships 30+ years 84 Chart 16: year of build dry cargo fleet 85 Chart 17: dry cargo dwt categories, age and number 86 Chart 18: Turkish owned bulk carriers, year of build 87 Chart 19: Container Volume Turkey (TEUs 88 Chart 20: composition of the Turkish owned tanker fleet 90 Chart 21: ro-ro transported vehicles 92 Chart 22: ro-ro lines transported by region 93 Chart 23: Fleet of the top 20 Turkish ship owners (incl. average age of the fleet) 94 Chart 24: Number of ships and ship types delivered by Turkish shipyards 2000-2013 112 Chart 25: Ships delivered by Turkish shipyards, by DWT 113
XI Maritime Hotspots
Chart 26: deliveries Turkey (1.000 dwt - number of vessels & (in red) number of shipyards that actually delivered that year) 114 Chart 27: Order book versus production capacity 115 Chart 28: Employment at Turkish shipyards 116 Chart 29: Turkish fleet, built in China, Japan and South Korea in the last decade (2004-2013) 116 Chart 30: Turkish fleet, built in Turkey in the last decade (2004-2013) 118 Chart 31: Chemical tankers delivered by Turkish shipyards 119 Chart 32: General cargo vessels delivered by Turkish shipyards 120 Chart 33: Order book at Turkish shipyards, cargo vessels vs. special vessels (million CGT) 120 Chart 34: Turkish fleet, cargo vessels vs. special vessels (million CGT) 121 Chart 35: Order book at Turkish shipyards, 2005 to 2013 (M dwt and number of vessels) 122 Chart 36: Order book at Turkish shipyards by vessel type 123
Chart 37: Type of vessels, currently owned by the top five countries; Denmark, Italy, Netherlands, Germany, Norway (1990 – 2013) 123 Chart 38: Shipbuilding versus hourly manufacturing costs in W. Europe 124 Chart 39: Shipbuilding versus hourly manufacturing costs, E. Europe 125 Chart 40: top 10 worldwide yacht building order book 132 Chart 41: order intake Turkish super yacht builders 132 Chart 42: Yacht building export Turkey 133 Chart 43: Yacht export Turkey to the corresponding countries 134 Chart 44: Number of floating docks in Turkey 139 Chart 45: number of dry docks in Turkey 140 Chart 46: Offshore units delivered by Turkish shipyards 141 Chart 47: Employment of maritime equipment suppliers in Turkey 143 Chart 48: Scrapped vessels in Turkey 146 Chart 49: Employment in the ship-recycling sector 146
XII Executive Summary
The Turkish maritime sector is a complex, but very important asset to the national economy and the development of foreign trade. In this study some the main drivers of the Turkish maritime economy are being described.
The report starts with a general introduction into Turkish maritime business. It includes a description of the historical setting, which is essential when trying to understand the modern times structures of ports and industry. It also gives a first introduction into the planning and growth management that appeared in modern history. As this study is meant to increase understanding and trade between The Netherlands and Turkey, also some information is given on cultural aspects of bilateral business.
Chapter 2 gives a practical insight into the development of the ports sector in Turkey.The cargo handled in Turkish ports increased from 184 million tonnes in 2004 to 388 million tonnes in 2012. Container traffic fourfolded in the same period, and is expected to fourfold again to 30 M TEU in 2023.These developments call for urgent new investments, multimodal solutions, privatisation and specialisation of ports. It is a task, that can only be done in co-operation with international knowledge partners, thus leading to new opportunities for Dutch investors and partners.
Where the ports provide the necessary infrastructure, the ship owners have the task to actually ship the goods to and from Turkey. In chapter 3 the development of the Turkish fleet is described. In 2005, the merchant fleet over 100 GT consisted of 1.596 vessels. This fleet increased 40% to 2.237 vessels by January 2013. The capacity was 10.7 M dwt in 2005 and almost tripled to 30 M dwt in eight years’ time. The different ramifications of the fleet are described, including the large numbers of older general cargo ships, to the large and modern bulk carrier and tanker fleet. Twenty shipowners are shortly described, including their ownership structure and fleet renewals.
This brings us to the third pillar of the Turkish maritime sector: the maritime manufacturing industries. These industries range from small equipment suppliers to large shipyards. In a period of ten years the number of Turkish shipyards grew from 37 in 2002 to 71 in 2012. Total capacity almost six folded. After 2008, the capacity more or less stabilised at around 3.5 M dwt (3.67 M dwt in 2012). As shipowners order their large ships in the Far East, the new capacity is however strongly under utilised. This report describes how shipyards adapt and seek new markets in offshore, ship repair, military projects, or merely by scaling down. Employment remains relatively stable. The superyacht industry and on the extreme other hand the rapidly expanding scrapping
13 Maritime Hotspots
industry, are both performing well. New opportunities may appear in offshore exploration and production in Turkish coastal waters.
The Turkish maritime industry is supported by an impressive number of universities, vocational schools, training institutes, and to a lesser extent research facilities. They are responsible for the education of seafarers, technicians, and the training of personnel according to IMO and ILO standards. Chapter 5 sums up all relevant institutions and their particularities.
The next two chapters give more insight into the public side of the maritime business. The central role of the Ministry of Transport and in particular the department of Maritime Affairs is being described, including the internal organisation, policy priorities and contact points. The port strategy and policy developments plans all stem from this ministry. It is here where the central planning comes from. This means that Dutch investors or other stakeholders also will have to deal with this part of central government. And Dutch shipowners or offshore contractors ordering their ships in Turkey can be aided by Turkish export finance and shipbuilding incentives, although these facilities are generally below European or Asian standards.
This brings us to the relations between Turkey and the European Union. Part of the accession protocols is the harmonisation of safety and environmental standards. These efforts are aided by Euro Assistance under IPA components I, III, IV and V. Other forms for the delivery of assistance such as sector wide programmes or pooled financing with other donors may be piloted in the 2011- 2013 in agreement between the Commission and the Turkish authorities if found appropriate for a more effective delivery of assistance. In addition, IPA funds will continue to be provided to Turkey to support participation in Union Programmes. In 2013 alone, 935 Million Euro’s are being reserved for cross border co-operation. Especially in infrastructure projects, these programs can give good incentives to Dutch companies doing business in Turkey.
The report ends with a SWOT analysis, conclusions and recommendations. Main conclusion is that a shared maritime vision can benefit both Turkish and Dutch maritime communities. Specific actions are recommended in the fields of Port development, fleet renewal, offshore development, lean technology, efficient transport technologies, shipyard production efficiency, yachbuilding and the forming of consortia in infrastructure, the latter possibly aided by the EU.
14 Introduction
The successful co-operation programme ‘Focus on Turkey’ intends to contribute to the competitive development of Turkish ports, coastal shipping and shipbuilding industries. Its ambition is to aim for increased synergies between the maritime and logistics industries of Turkey and the Netherlands. The program is supported by both governments and is now in its finishing stadium.
Parallel to the execution of the Focus on Turkey programme, cluster organisation Dutch Maritime Network and the Dutch Top Sector Water published a conceptual study1 on bilateral co-operation between The Netherlands and other maritime regions in the world. The report introduces the concept ‘Maritime Hotspots’2. The study focused on four international maritime regions: St. Petersburg, Rio de Janeiro, Shanghai and Singapore. However, when the findings of the study were presented at a conference in Rotterdam, the Dutch representatives of maritime industry indicated that Istanbul should be included as well.
Both the Maritime Hotspots project and Focus on Turkey have expressed the wish for more insight into the dynamics of the Turkish maritime sector. The consultancies Panteia (Freight Transport and Infrastructure Division, supported by Dokuz Eylul University/Izmir) and Bloem Doze Nienhuis (shipping, shipbuilding and related industries) were asked to conduct this research. In this report, the findings of both studies are combined, resulting in an encompassing investigation of maritime activities in Turkey. The ports and government research was funded by the Dutch government under the co-operation programme ‘2g@there’, the other maritime sectors research by Dutch Maritime Network. The preliminary results of the report were discussed at a bilateral conference on June 20th, 2013 in Zoetermeer, Holland. With the input of the conference the study was finalized in the autumn of 2013.
Aim of the study The objective of this study is to give an overall impression of the state of and interrelations within the Turkish maritime sector. It should be presented in such a way, that it helps companies, institutions and governments to do business with the Turkish maritime sector and to be an inspiration for new bilateral ambitions.
......
1 Dutch Maritime Network, ‘Maritime Hotspots, final report’, Rotterdam, December 2012. 2 Definition Maritime Hotspot: ‘A geographical region that combines a major seaport function with the presence of maritime world players in several sectors. They operate within a radius of 200 to 300 kilometres, and have an international influence on trade and technology.’
15 Maritime Hotspots
Conceptual framework The underlying assumption of this research is that the maritime network closely works together in one coherent cluster of activities. The following sub-sectors are a part of this maritime family: ports and terminals, ship owners, inland shipping, shipbuilding, marine equipment, yacht building industry, offshore operations, navy, maritime research and education, maritime services, fisheries and dredging. Additionally in Turkey also the ship recycling sector is active. These 13 sectors interrelate in three ranges of activity: shipping, manufacturing and supporting infrastructure. Based on insights from Dutch Maritime Network3, this can be viewed in figure 1.
Figure 1: Conceptual frame
Source: Bloem Doze Nienhuis
In the specific Turkish situation, the following parties play a dominant role within the cluster: • Turkish Ports • Turkish Merchant Shipping (ship owners and their fleet) • Turkish Shipbuilding (shipyards, including ship repair and supporting industries and Yacht building)
In this study, special emphasis will be placed on those three subsectors and the surrounding institutional framework of authorities and supporting industries. One remark should be made. This is not a bottom up economic analysis of the sector, and not an elaborate input-output model. If there is a need for deeper economic insights within the cluster relations, this should be investigated separately.
......
3 Dutch Maritime Network, De Nederlandse Maritieme Cluster, a.o. Monitor 2012
16 Research methodology This study is conducted by Bloem Doze Nienhuis and Panteia with the input of external knowledge from Turkey and The Netherlands. The following research methods were used: • Statistical analysis • Desk research • Field research and interviews • Expert opinions • Presentations and input from the Maritime Hotspot Istanbul conference All fleet and shipbuilding statistics are based on data from Clarkson Research Services Ltd, unless otherwise specified.
17 Maritime Hotspots
18 1 MARITIME TURKEY: OUTSIDE-IN
1.1 The growing importance of the Turkish economy
The Republic of Turkey is located at the crossroads of Asia and Europe. The country is encircled by the Black Sea, the Marmara Sea, the Aegean Sea and the Mediterranean Sea. It has borders with Georgia, Armenia, Azerbaijan (Nakhichvan) and Iran to the East, Bulgaria and Greece to the West, Syria and Iraq to the South and Russia, Ukraine and Romania to the North. The area of the country is 814.578 km2. The population is estimated to be over 80.7 million, of which 13.5 million people live in its largest city, Istanbul.
19 Maritime Hotspots
With a coastline of 8.435 km, it does not come as a surprise that the maritime sector of Turkey is of outmost importance and that shipping is the most used mode of transport in Turkey (export 46 %, import 59.1 %)4 . Turkey belongs to the top twenty of world’s largest economies. The economy has shown a robust growth in early 2011, driven by private consumption and investment. GDP is USD 1.125 trillion (2011), and is expected to grow with 3 % in 2012.5 It is the Government’s intention that Turkey becomes one of the world’s 10 largest economies by 2023, the 100th anniversary of the founding of the Turkish Republic. With a labour force of 27 million, a GDP per capita of USD 15.000 and natural resources like coal, iron ore and marble and an important manufacturing industry (clothing and textiles, motor vehicles and machinery) this intention does not seem surreal. The increasing waterborne traffic flows of Turkey offer great challenges for safe and efficient waterborne transport, and create new opportunities for the maritime sector.
1.2 A short historical introduction
Today's Turkey was once the centre of the Ottoman Empire, which spanned over three continents and covered most of South Eastern Europe, the Middle East and North Africa. With Constantinople -now known as Istanbul- as the
......
4 Transportation in Turkey, country report October 2011, Ministry of Transport and Communications 5 http://www.oecd.org/document/34/0,3746,en_33873108_33873854_45270434_1_1_1_1,00.html
20 Maritime Hotspots
Chart 2: Types of Cargoes Handled at Turkish Ports (M Ton)
Data source: MOMAC-DG of Merchant Marinbe (2013) Shipping Statistics 2012, DTGM/05, Ankara, p.22
2.2.2 Container handling Figure 3 shows the location of main container ports in Turkey. Most of them are located in the western part of the country mainly around Istanbul.
Figure 3: Location of Turkish Main Container Ports
Source: Port Operators Association of Turkey-POAT- (2011). Turkish Port Sector Report. İstanbul: Atölye.
36 More than 7 M Teu was handled in Turkey including export, import and transhipment in 2012 (see Chart 3).
Chart 3: Container Handling at Turkish Ports (thousand TEU)
Data source: MOMAC-DG of Merchant Marine (2013) Shipping Statistics 2012, DTGM/05, Ankara: 23 * Loading cabotage includes: loading, export loading and transit loading ** Discharging cabotage includes: discharging, import discharging and transit discharging
The share of total container handling at Turkish ports according to the types of traffic is as follows according to MotMAC: • Export loading 40 % • Cabotage loading 3 % • Transit loading 7 % • Import discharging 41 % • Cabotage discharging 3 % • Transit discharging 6 %
37 Maritime Hotspots
The share of the regional distribution in container handling are (POAT, 2012:60): • Marmara Region (around Istanbul) 63.4 % (4.2 M TEU) • Mediterranean Region (around Mersin) 19.6 % (1.3 M TEU) • Aegean (around İzmir) 16.5 % (1.1 M TEU) and • Black Sea 0.5 % (0.4 M TEU).
Figure 4: Regional distribution of container port traffic
Source: POAT, (2012):60
Figure 3 shows the development of container transhipment and transit traffic at Turkish ports.
The number of container transhipment and transit at Turkish ports is also increasing. Total transit and transhipment containers handled at Turkish ports are 1,5 M TEU (around 22 % of the total container traffic). Most of the transhipment containers are handled in Marport (Istanbul). These are transit containers coming from the Far East and transhipped to the Black Sea Ports. Considering the strategic location of Turkey between the East and the West, the share of transhipment container traffic at Turkish ports is low. However, it is increasing from 15 % in 2007 to 22 % in 2011 due to the investments in the port capacities in Turkey. There is still room for further growth for Turkish ports in terms of transhipment traffic.
38 Chart 4: Container Transhipment Traffic at Turkish Ports (M TEU) and corresponding share of total (%)
Source: POAT, (2012):58
Chart 5 shows the distribution of container traffic at the individual ports. The share of private container ports in total container handling has rapidly increased from 67 % in 2007 to 85 % in 2011, mainly due to the privatisation of the TSR ports since 2007 and the new entries into the port sector by the private industry. Among the private ports, Marport is the market leader in container handling and it is followed by MIP (Mersin) with the 1.129.609 TEU handling in 2011.
Chart 5: Container Traffic at private ports of Port Operators Association of Turkey (M TEUs)
Data source: POAT (2012): 58
39 Maritime Hotspots
Chart 6 shows the container traffic at the individual Turkish ports operated by both the state and private industry in 2012. Marport maintains the leadership in 2012 both in handling export/import containers and transshipment containers. Almost 50 % of containers handled by Marport are transhipment containers. Marport is followed by MIP (Mersin) and İzmir Port.
Chart 6: Container Traffic at Private and State Ports (M TEUs)
Source: POAT (2012): 58
Chart 7: Container Traffic at Individual Turkish Ports in 2012
Source: MoTMC, (2012); Türklim, (2012), MIP, (2013) * Transit and reshipment container volumes are averages
40 Mersin Container Port will comprise an important component of the international intermodal transportation system and due to railway connection; it will present a gateway position not only between Euro-Med and Black Sea countries but also Caucasian, landlocked Asian and CIS countries.
Figure 6: Locations of Hub Port Projects in Turkey
Filyos Port
Çandarlı Port Mersin Port
Çandarlı Port Project is planned as an alternative new hub port of the Western Anatolian hinterland and as a transhipment centre for traffic between Europe, the Middle East and the Black Sea countries. Çandarlı is located about 80 kms north of İzmir in Aegean Region of Turkey. The region is the 2nd largest economy in Turkey. Çandarlı Port will serve both as a gateway and transhipment port especially for Black Sea. Total capacity 4 million TEUs, in two equal phases. Capacity can be increased according to the future demand. It will be operated as a container terminal with other terminal facilities. Çandarlı Port Project is an important component of the international intermodal transport system thanks to its railway connection to be provided. Çandarlı Port, which will serve to container transportation as Hub port, is in a more advantageous position according to Piraeous Port from the aspect of Mediterranean-Asia connection. The capacity will be gradually increased by revisions to be accomplished in various phases. Phase 1 planned to be operational by 2017, Phase 2 by 2025 at the latest. Breakwater of 1135 m is under construction by public funds (about 130 million Euros). Almost 90 % of construction of port infrastructure (breakwater) has completed. Quays with a total length of 2000 m, port area of 193.2 ha of which 33 ha to be reclaimed from the sea are to be provided. Depth of 18 m is sufficient to take the largest container vessels expected for Çandarlı. The rest of the infrastructure and superstructure will be realized by BOT (2 phases about 750 million Euros). BOT tender expected to be completed on November 5, 2013.
61 Maritime Hotspots
The Mersin Container Port Project is planned to act as a gateway facility between Mediterranean container shipping lines and Central Asian landlocked countries. This port is planned as a hub port and provides a sufficient number of berths to accommodate postpanamax container vessels of 16 meter depth. Mersin Container Port will comprise an important component of the international intermodal transportation system and due to railway connection; it will present a gateway position not only between Euro-Med and Black Sea countries but also Caucasian, landlocked Asian and CIS countries. Within the Mersin Container Port Project it is planned to construct a main breakwater (900 metres in length) and an additional breakwater (1.200 m in length), in two packs, under BOT Model (First Pack: Phases 1, 2 and 3; Second Pack: Phases 4 and 5). Total capacity 11 million TEUs (in 2035), in almost equal 5 phases. Phase 1 needs to be realized by 2018 (1.9 mio TEUs), Phase 2 by 2025 at the latest (3.4 mio TEUs total). Total investment costs are 2.9 billion Euros (construction works 1.95 bio Euros (270 mio Euro breakwater and quay by government, rest by BOT, Equipment 940 mio Euros)
Filyos Port Project is as a gateway for cargo originating from and destined for Central Anatolia, including the Ankara Metropolitan Area (AMA). It is intended to decrease the number of vessel passages through the Turkish Straits and to provide access for potential cargo between the Black Sea countries, where high cargo traffic is expected. Connected to the railway, the facility will accommodate bulk and container vessels, provide deep berths, and serve the free trade industrial area that will be established behind the port facility. Filyos port, with a capacity of 25 million ton/year, is evaluated as a regional development project, which will ease the traffic congestion in the Territorial Straits, minimize the risks, and serve for transportation of various types of cargo such as ore, container, fuel etc. The construction of the port, with the capacity given above, will be realized in 3 phases by BOT Model. Phase 1 is to be realised by 2018 (0.2 mio TEUs plus 7 million tonnes).
Petkim Port Project also called Petkim or The Aegean Gateway Terminal will be constructed within the Petkim petrochemical complex in Nemrut Bay, near the Port of Izmir on the Aegean Region of Turkey. It is expected to be one of the largest port complexes in the Aegean Region with 1.5 million TEU capacities. When completed, Petkim Container Port will be the only port within the Marmara, Aegean and Mediterranean Regions where 11.000 TEU container vessels can berth easily, enabling customers to achieve faster transits and lower costs compared to ports in Piraeus and Alexandria. It is ideally located; the site will serve Aliağa and The Bay of Nemrut as an important logistics centre (APM Terminals, 2013).
62 Toros Tarim, Ceyhan
2.6 Port administration and legal framework of port investment and operations
The coastline of Turkey is legally public property owned by the state, and its use has to be such that it contributes to the public interest. The construction of port facilities such as wharves, piers, breakwaters, etc. can only be constructed with the permission obtained from central government authorities.
2.6.1 Port related governmental organisations There is a complex system of involvement in the investment, operation and administration processes of the ports in Turkey. Lack of coordination and conflicts of state authorities may happen from time to time among these port related bodies. For example, dredging the ports has always been a matter of conflict and some infrastructure investments have also experienced similar problems.
A single issue might be a concern of at least two or three bodies affiliated with different ministries. This situation causes chaos in the decision-making process and coordination. Needless to say, inefficiency may arise in the port governance process in Turkey from time to time.
63 Maritime Hotspots
The main port-related governmental organisations in Turkey are: • Ministry of Transport, Maritime Affairs and Communication (MoTMAC) (was: Ministry of Transport and the Under secretariat of Maritime Affairs) • Ministry of Development (undertook the function of State Planning Organisation) • Ministry of Health • Ministry of Public Finance • Ministry of Interior (MoI) • Ministry of Science, Technology and Industry (was: Ministry of Industry) • Ministry of Food, Agriculture and Livestock (was Ministry of Agriculture and Livestock) • Ministry of Environment and Urban Planning (was Ministry of Environment) • State Economic Enterprises such as Turkish State Railways (TSR) and Turkish Maritime Organisation (TMO), • Municipalities, • Customs, immigration police, sanitary etc.
The MoTMAC coordinates and regulates all the development and operation of ports. On 1 November 2011, the Ministry of Transport was restructured as the Ministry of Transport, Maritime Affairs and Communications. With this restructuring, several new general directorates, in particular the Directorate General of Railway Regulation, Directorate General of Road Regulation and the Directorate General of Dangerous Goods and Combined Transport were established. The Under secretariat of Maritime Affairs was abolished and incorporated in the Ministry, and various permanent and temporary boards were established such as the Accident Research and Investigation Board and Railway Coordination Board, to which the European Union attach importance.
The Ministry of Development considers the total balance of investment in Turkey.
The Ministry of Public Finance funds port investments and collects taxes.
The Ministry of Health is responsible for the control of, and measures related to public health (quarantine, patent, etc.).
The Ministry of Food, Agriculture and Livestock is responsible mainly for fisheries.
Ministry of Environment and Urban Planning approves environmental impact assessment studies of ports.
64 The Ministry of the Interior is responsible for the police, immigration, etc.
The Turkish Competition Authority, The MoTMAC, The Ministry of Finance and The Privatization Administration of Turkey are among the related bodies for the privatization of ports. However, there has never been a single supreme organisation in Turkey to coordinate port investments, port development and port competition, especially for the port privatization period.
Turkish State Railways (TSR) operate (the port which are not privatised yet, such as the Ports of Izmir, Derince and Haydarpaşa), develop and maintain owned ports. The TSR also undertakes miscellaneous transportation by providing connections between railways and ships and establishing and operating the required superstructure, such as warehouses, silos, fuel facilities, etc.
Municipalities are concerned with city–port relations and environmental impacts and they provide some services to ports such as fresh-water, garbage collection, etc.
2.6.2 Classification of ports From the operational point of view the ports of Turkey are classified into four groups: • public ports • municipal ports • affiliate ports • privately operated ports
The main public ports are operated and/or coordinated by TSR and the TMO: The TSR manages ports connected to the railway system. The TMO was privatized as TMO Inc. Co. as a state enterprise in 1995. TSR ports are managed by the Directorate of Ports under TSR from its headquarters in Ankara. Directorate of Ports under TSR is responsible for the management, the overall planning and functioning of the ports, and their coordination.
Municipalities manage municipal ports. These public ports are comparatively small and limited to relatively small volumes of coastal traffic serving the local needs of provincial towns. Some municipalities manage ports with their own port management division, but this does not involve large-scale development.
Affiliated ports are special industrial ports and industrial enterprises, which are state-owned or private companies. These ports are mostly confined in purpose to the particular needs of industrial concerns.
65 Maritime Hotspots
Privately operated ports are constructed and managed by the private sector after obtaining the permission to operate the port. Small-scale private sector port developments have taken place in the region around the Marmara Sea. These small-scale port developments are based on private capitals. Some of privately operated ports were privatized in the last 15 years, having previously belonged to the TMO or TSR.
The ports operated by the TSR, namely Mersin, Bandirma, Samsun and Iskenderun were privatized. However, privatization carried out by a method that does not involve the transfer of the title of the ports. With the amendment made to the Privatization Law by Law 5189, foreign entities (through a Turkish subsidiary) can also acquire the operational rights of a port. For example, in 2005, PSA gained the operational rights to one of the major ports in Turkey. Pursuant to Law 815 (on Domestic Shipping), pilotage services can only be carried out by Turkish citizens.
While some private ports adopt customer relationship management techniques in their relations with port users, this does not seem to be a practice of public ports. The main concerns of public ports are social and economic issues. Their principal aims are to increase the economic benefits of the port for the nation or region and to cooperate with labour unions in seeking to achieve this. While private multipurpose and container ports are much more focused on value- added services and a non-union labour force to maximize their profits, the public port enterprises have operated ports by involving strong labour unions in the issues. After privatization, the labour unions are rather weakened or have been eliminated.
Autonomous port administration policy is not exercised in Turkey at all. Flexible port management policies are exercised by the private sector. Since public ports cannot be flexible, do not have financial independence, and are not focused on clear goals on delivering services, they have become inefficient. Inefficiency has also been caused by political interference in employment issues and the high turnover rate in top managerial positions.
2.6.3 Port Investment and Operation Processes in Turkey Legislation regarding port investments and operations requires bureaucratic procedures with a complex nature. But there has been an effort to simplify and ease these procedures. The following summarizes and reveals the process step by step.
Ports are regulated in the Coastal Law no. 362. As this law requires a zoning plan, the zoning legislation, environmental legislation and as these facilities are government property, the legislation regarding the issue of preliminary
66 permission, certificate of occupancy, and the constitution of easement forms the basis of this subject. In operation and management phase of the ports, in addition to the above mentioned matters, The MoTMAC operating permission, international port’s security legislation, pilotage and tug boat services, and cabotage law are also considered. If oil and oil products related services are also provided in a port, regarding the storage and transmission license, Energy Market Regulatory Authority Legislation also comes into consideration. Main legislation regarding port operations can be listed as (MoTMAC, 2013); 1. Port Law no.618 2. Cabotage Law no.815 3. Law regarding Privatization Applications no. 4046 4. Law regarding the Incentivisation of Investments and Employment no.5084 5. Law regarding the Regulation of Privatization Applications no.5398 6. Decree regarding the Ministry of Transport, Maritime Affairs and Communications’ Organisation and duties no. 655 7. Security regulations at Civil Airports, seaports and border gates 8. ISPS Code 9. Ports regulations 10. Regulations regarding the treasury real estate management 11. Pilotage and Towage services, port services tariff, port security, environment, labour health and security, and tourism related regulations.
2.6.4 Zoning Plan and Construction Process of the Ports Ports to be constructed are subject to the Coastal Law no.362 and its by-laws and should provide 1/1000 scaled tentative plan. After its approval the construction process can continue in the frame of the above mentioned law. Ports law no.618 dated 14/4/1925, Law of Safety of Life And Commodity At Sea no.4922 dated 10/6/1946 and By-law regarding the Granting of Operation Permission to Coastal Facilities dated 18/2/2007 published in the Official Gazette no.26438; are implemented. The aim of this by-law, according to the 6th clause-sub clause 4 of the Coastal Law, is to regulate the process of granting operation permission to port, cruise port, marina, passenger terminal, pier, dock, shelter, petrol/LPG pipelines and similar coastal facilities and other infrastructure and superstructure facilities regarding maritime transport. Regarding the implementation of Coastal legislation, in 1996, the procedure to be applied had been published by the Ministry of Public Works and Settlement (the name has been changed now) and investors, then in 2006 in order to smoothen some bottlenecks in the practice, by the Ministry of Public Works and Settlement, the Ministry of Transport, Under secretariat of Maritime Affairs (now merged with ministry of transport under the name of Ministry of Transport, Maritime Affairs and Communications) and the Ministry of Finance started a
67 Maritime Hotspots
study and replaced the 1996 dated notice with the new Ministry of Public Works and Settlement Notice no.2007/2 and it came into force with its publish in Official Gazette no.27986, dated 6/7/2011. It has been called “Notice of Planning and Application Process in Coastal Facilities” and allowed the renting process and plan proposal process start simultaneously. In the current application, port investor, in the first phase, presents a map, with a scale of 1/1000 or 1/5000, if both are unavailable 1/25000 and on this map, shows the land will be acquired by land filling and/or exsiccation, the place of investment with coordinates, land size and specifications, and present it to the relevant governorate. The Governorate informs the Provincial Treasury with the investment request showing the place of investment, and then passed on to the Ministry of Finance - General Directorate of National Estate (GDNE). Preliminary permission process regarding the area to be invested on is carried out by GDNE according to the relevant legislation. The investor should apply to governorate with Shore edge line approved application zoning plan proposal, along with the investment proposal file. The governorate, after reviewing the request, with its reasoned opinion, passes the investment proposal file on to the Ministry of Environment and Urban Planning - General Directorate for Spatial Planning. After the Ministry reviews the investment proposal, and sees it fit, they send the file to relevant organisations for consideration. These organisations present their views and ideas on the subject to the Ministry. After the evaluation of the views regarding the proposal, if the Ministry finds the proposal acceptable, they approve the proposal according to the 7th clause of Coastal Law no.3621. The approved zoning plan then will be send to the relevant governorate, municipality, General Directorate of Provincial Bank, The Ministry of Transport, Maritime Affairs and Communications, General Directorate of Infrastructure Investments (GDII), General Directorate of Shipyards and Coastal Structures, The Ministry of Culture and Tourism, The Ministry of Finance, other organisations that had been asked for their views and the relevant investor.
2.6.5 Operating Permission Process of Ports Types of operation licenses of Turkish ports are shown in Table 19. Granting operating permission to coastal facilities except for ship yards and military facilities are done by the MoTMAC - General Directorate of Marine and Inland Waters. According to the by-law regulating to the granting permission; 1. 1/1000 scaled, approved zoning plan, together with the GDII approved application projects, by GDNE, to the coastal facilities in which the process of constitute of servitude and/or utilization permit had been finalized, 2. To the coastal facilities demanding the handling of flammable, explosive, combustive, and other dangerous goods, while acting in compliance with the plan, Project and legislation, shall apply to, The Ministry of Transport, Maritime Affairs and Communications with documents showing compliance
68 with the Annex-1 of the Coastal Facilities Operation Permit Application form depending on the activities Annex-2 (above mentioned dangerous goods) Annex-3 (2. Grade dangerous liquid bulk and other liquid bulk cargo) Annex- 4 (Packaged dangerous goods) and Annex-5 (General cargo, containers, ro- ro, marina, passenger ports) and if found fit, will acquire operation permit up to 5 years.
Table 19: Operation Licences of Turkish Ports Type of Operation License Number Coastal facility with permanet op. license 112 Coasatl facilities with temporary op. license 106 Total coastal facility with operation license 218 Source: MoTMAC, 2013
Temporary Operation Permits are given under following conditions, 1. In facilities established before the Coastal Law and had been operated buy a public organisation and then become a subject to privatization, in order to proceed with the handling of goods, On demand; in the framework of Privatization Applications Law no.4046 by the High Board of Privatization, making it possible for 1/1000 scaled zoning plans to be approved by GDII. 2. In order to approve (by GDII) the application projects of ports that were being operated by public organisations but had been privatized, and did not have an approved tentative plan and application Project, 3. Provides the opportunity to the construction of the port, which is cleared for 1/1000 scaled tentative plan and application Project, the constitute of servitude granted by GDNE and/or permitted to operate and cleared for ship berthing and cargo handling by Administration (Ministry of Transport, Maritime Affairs and Communications) to be completed in compliance with the approved zoning plan. 4. In addition to the current cargoes being loaded/discharged; in coastal facilities which are operational with the required permissions, if the safety measures laid out by the legislations in force are met, dangerous goods can be handled in a separated area in the port facility. 5. In order to keep the operations running for already operating facilities with operation or temporary operation permit, which are changing hands, from one legal entity to other.
Temporary Operation permits can be made out to be valid for 6 months to a year. Facilities operating under temporary permits, except for the factors making the permit temporary are asked to comply with the criteria in the Annex-1 of the by-law. For facilities operating with dangerous goods, Annex-2-3 and 4 criteria must also be met.
69 Maritime Hotspots
2.7 Opportunities and Recommendations for the investors to participate in Port Business in Turkey
Turkey has tripled its GDP with a stable economic growth reaching USD 786 billion in 2012, up from USD 231 billion in 2002. Needless to say, such a remarkable economic growth has increased the need for the logistics and transport activities. As a result of those economic developments, logistics and transport related activities have increased. The share of the logistics sector in Turkey’s GDP is estimated between 8-12 % (Export Promotion Centre, 2009). Considering the USD 786 billion GDP of Turkey in 2012, it can be concluded that size of the logistics industry is between $ 68 billion and $ 94 billion. On the other hand, it is clear that outsourcing of logistics activities to logistics companies in Turkey is very low. It is estimated that 40 % according to various studies. In addition to those statistics, according to forecasts about the sector, outsourcing is expected to continue. Turkey has set high objectives in terms of export and import volumes in 2023 ($ 500 billion export and $ 700 billion import). It can be said that, the growth of logistics industry will be a key issue in next 10 years.
As far as the logistics indices are considered, Turkey’s rankings have been increasing in a positive trend. According to Agility Emerging Markets Logistics Index 2013, Turkey moved up one place in the 2013 rankings to 10th position. Turkey’s proximity to Europe makes it attractive as a low-cost manufacturing location. On the other hand, according to the Logistics Performance Index (“LPI”) issued by the World Bank, rank of Turkey has increased to 27 in 2012 from the rank of 39 in 2010.
In order to manage such a growth in 10 years, The Turkish government has been planning to increase infrastructure investments with an estimated budget of at least $ 400 billion. In Turkey, privatization in the transportation & maritime industry is a key trend. On the other hand, private sector investments are also expected to increase. Turkey basically aims at minimizing state involvement in industrial and commercial activities and maximizing private sector participation. The privatization process encompasses enormous market opportunities for strategic investors in transport infrastructure or for transport operators.
Turkish logistics and maritime transport industry has been developing since 1980 as a result of export oriented strategy of Turkey. However, it is still fragmented and lacks financial and managerial capabilities in order to compete in global markets. Although, tremendous growth in Turkish companies is observed recently, the market is still fragmented and volatile. As a result of those facts, mergers and acquisitions in the market such as acquisition of Balnak Logistics Company by Borusan Logistics Company, acquisition of Mars
70 Logistics by Hitachi Group, private equity investment in Ekol Logistics are witnessed. It is expected to observe horizontal and vertical integrations and cooperation more and more in the coming years.
Although 95% of passengers and 90% of goods are carried by road transport within the country, Turkey has well developed / low-cost sea facilities and plans to increase the railway transportation. As a result of the liberalization of railway in Turkey and projects (such as Marmaray Project and Kars-Tbilisi-Baku railway etc.), it is expected to observe increase in transit logistics activities in Turkey acting as a logistics centre between West and East of the world. It is expected that the investments in rail industry in Turkey will increase cargo traffic of Turkish ports due to the improvements in the rail connections of the ports to the national and international transport corridors.
The country’s strategic geographic location ensures a prominent role within future transit networks. As an emerging market with a young and educated population, Turkey is ready to provide value added services in different business areas as well as in logistics (PWC, Transportation & Logistics 2030). Since Transportation and Logistics is one of the main pillars of both national and international trade, the Turkish government is making ongoing investments to create a new infrastructure. Turkey aims to be a logistic hub in its region. Ports are the gateways for Turkish foreign trade and transit freight. Ports form the most important component of logistics infrastructure of Turkey. Container is a strategic preference for Turkey. Turkey is still in containerization process and adapting the intermodalism process. There will be a considerable gap for 2023 targets of Turkey unless existing ports are improved and new ones are constructed. Private sector has many expansion and new construction port plans and projects.
The government is implementing a series of policies in order to make the country's transportation infrastructure safer, more efficient and more integrated. These policies include shifting freight transportation to railways and transforming major ports into logistic centres. A corridor approach will encourage the utilization of maritime and railway transportation networks, and priority will be given to the implementation of PPP models in the construction and operation of large transportation projects. Due to the country’s strategic location, continuous growth of the Turkish economy, the rise in import and export volumes and an increased number of larger container vessels calling Turkish ports has experienced a considerable development and growth in Turkish port industry during the last 10 years.
Among these developments are the privatisation of state-owned ports, large foreign investments in port expansion and more joint ventures between private Turkish ports and foreign port operators from Europe and Asia. Regarding the
71 Maritime Hotspots
privatisation process, TSRA ports has sold since 2000. In addition to these developments global terminals such as APM Terminals (APMT) is continuing its emerging Europe expansion strategy and is breaking into Turkey. It is believed to be a wise move by the global port operator, as emerging markets are the area of interest to the container shipping community and Turkey, with its young population, offers medium- to long-term consumer demand growth. Turkey has many ports that can be among the most important in the Mediterranean, if they are improved. Among these, the port of Mersin will have a significant place because of the Baku-Tbilisi-Ceyhan oil pipeline that is being constructed.
Currently, a prominent strategy of the ports in Turkey is the specialization on certain cargo traffic. Most of the ports in Turkey are conventional ports which serve to various cargo types. However, specialized ports such as container terminals in Ambarlı region and Nemrut Bay, Ro-Ro terminals and car terminals in Marmara region are increasing in number. Equipment and information technologies are important concerns for specialized ports especially. While modern cargo-handling equipments are necessary for the operational efficiency of the ports, investments on port information systems are also increasing to speed up cargo and information flows.
Although some major ports developed their own IT systems, the data transfer between these systems are not possible between these systems are not possible. Due to such kind of problems experienced in Turkish port industry, development of a port management information system is a major policy concern for Turkish port business. Major steps have been taken to establish a port community information system including the parties such as public institutions, agencies, customs, port and terminal operators, etc.
This system would enable minimization of transport costs by the acceleration of transactions electronically and coordination among parties. Development of a port community information system will put forward the importance of cooperation and coordination between different ports and terminals. Besides the usage of common IT systems; ports can implement cooperation strategies like the joint supply and usage of equipments, common marketing and promotion activities, and cooperation regarding vessel traffic systems, pilotage and towage facilities, port security, safety and environmental protection practices.
As a result of the investment in transportation and port sector in Turkey with priority projects, PPP projects will gain more importance in the future. PPP models will be widely implemented for transportation and port infrastructure investments in Turkey. In freight transport, priority will be given to rail and maritime transport and ports are being transformed to the logistics centres that facilitate intermodal transport to/from Turkey.
72 Competition between ports is developing with the entry of new ports as well as continuous capacity expanding projects: New port projects are Asyaport in Western Marmara Region and DP World in Eastern Marmara Region. In Aegean Region new port projects are Petkim Port Project (also called Petlim by APM and Petkim) and Port of Çandarlı Project (by Turkish government). In Black Sea there is a Filyos Port Project (by Turkish government) and in south part of Turkey there is new Mersin Port Project (by Turkish government). Expansion Projects include port expansion and terminal equipment acquisition by the ports such as Evyapport, Yılport, Limaş, and Gemport in Eastern Marmara Region, Port of İzmir in Aegean Region and Port of İskenderun and Mersin in Mediterranean Region. Petkim Port located near Izmir has recently (February 2012) signed an agreement with APM Terminals from the Netherlands and SOCAR, the State Oil Company of the Republic of Azerbaijan, for the expansion of the container terminal. Total investments are between USD 350 – 400 million dollars (APMT, 2013).
Considering the developments and opportunities such as increase in demand for port services port investments and capacity expansion projects, infrastructure and transport connection investments, adoption of the modern equipment and information technologies, favourable state policies for the development of ports, privatization practices and procedures, cheap port labour costs Turkish port sector seems to be very attractive for the investors. The growing port industry attracts attention from both domestic and international investors. Foreign investments in Turkish ports currently are made mainly by new investments into the port industry and privatization of existing ports. It is accepted that Turkey is an attractive place for trans-shipment terminal investments if it is desired to be competitive in Black Sea Container Traffic. Advantages of Turkish partners for foreign investors in investing port business in Turkey can be summarized as follows: • The influence of a strong local partner may facilitate relations with co- existing state authorities such as Customs and the Port related authorities (State bodies which accord berthing authorities to arriving vessels and are responsible for the safety of the port areas and vessels sailing within their jurisdiction), as well as political and bureaucratic procedures (such as authorisations needed for operational licences or port expansion) • The existence of a domestic partner in the ownership and governance can create favourable views on the local public opinion. Advantage of foreign partners to Turkish Ports are operational know how, leading to operational efficiency and effectiveness, business know how, leading to leaner management and maximized profits and, globalization of the ports, increase in port competition and port service quality, capacity to make global deals with large traders and liner shipping companies.
73 Maritime Hotspots
There are different ways of involving in port business in Turkey by the private enterprises. Business opportunities for Dutch-Turkish co-operations exist in the following areas.
• Built Operate Transfer Port Projects such as Çandarlı Port Project (for 45 years; 4 years for the construction and 41 years for the operation), Mersin New Port Project and Filyos Port Project will be realized by BOT. • Partnership and Terminal Management Contract - Group TCB has the terminal management contract for the operation of TCEGE Port, container terminal within the Ege Gübre Port, with Ege Gübre (local Fertilizer Company) (90 % TCB Group, 10 % Kınay Group-local logistics company). Petkim signed an agreement with APM Terminals in 2012. Petkim, a subsidiary of SOCAR Turkey Enerji A.S., the State Oil Company of Azerbaijan, is the owner of the port, and through its port subsidiary, Petlim, is APM Terminals’ direct partner in the 1.5 million TEU annual capacity deep-water terminal project, scheduled to open in 2015 (APM Terminals, 2013). • Port Privatisation – such as Port of Mersin operated by TSRA previously is transferred to the PSA and Akfen Joint Venture, Port of Iskenderun operated by TSRA transferred to the Limak Investment for operating the port during a time period of 36 years. Limak paid USD 327 million to TCDD to run the port for 36 years. Limak will also invest USD 250 million in the next five years in expanding and upgrading Iskenderun Port. Limak Investments is part of the Turkish Limak Group. Bandırma Port previously operated by TSRA is transfered to the Çelebi JV Group, Samsun Port is operated by Ceynak. Port of Derince will be prizatized in a very near future. Later Port of Tekirdağ and Port of Izmir is expected to be privatised. • Consolidation and Acqusition – Consolidation and acquisition in port operations are inevitable in Turkey, especially for container terminals. It is still a “buyer’s market” at the moment, given the dramatic changes in today’s economic circumstances. Ports such as such as Gemport, Rotaport and Gemlik Fertilizer Berth were bought by the Yıldırımlar Group (a local company in the style of a global port operator). Nemtaş, 100% subsidiary of Türkiye İş Bankası A.Ş., executed a share purchase agreement with Yılport Holding for the sale of 54 % of the share capital of Gemport, the first privately owned port of Turkey. Another deal relating to ports is the acquisition of 20 % of Iskenderun Port by Inframed Infrastructure from Limak. Inframed Infrastructure unifies corporate investors such as Cassa Depositie Prestiti from Italy, Caisse des Dépôts et Consignations of France, Caisse de Dépôt et de Gestion from Morocco, EFG Hermes from Egypt and the European Investment Bank.
74 • Infrastructure construction - Limak undertaken the Çandarlı Port Project breakwater construction, together with Kolin İnşaat. • Entering market as terminal operator and stevedor – Stevedoring activities are increasing as a result of the privatisation applications and new port investments. • Entering market with greenfield port investment projects-MSC enters the market with greenfield port project called Asyaport and Dubai Port enters the market another greenfield port called DP World Port. Despite global financial crisis, major global operators keep their eyes on Turkish container market. • Infrastructure Fund to invest in ports such as İskenderun Port- Looking for stable revenue streams in a newly privatised sector, infrastructure fund InfraMed has partnered with Turkish industrial conglomerate Limak in an attempt to develop the Port of İskenderun.
Apart from entering the port industry in Turkey as an investor there are also other business opportunities for the companies who want to enter Turkish port industry such as: • Opportunity for port dredging business - such as Port of İzmir needs dredging and TSRA Directorate of Ports is planning to dredge the port (approach channel and terminal) apart from the expansion of the existing port. In addition to this, there is need for dredging other ports. • Cargo handling equipment sales opportunity. Due to the increase in port privatisation and port competition there is a heavy investment by the Turkish ports in both shore and terminal cargo handling equipment. • Port Information and Communication Technology sales opportunity. Due to the requirements of port customers and users, and the need for efficiency in operations of terminals Turkish ports are adopting themselves to the new information and communication technologies used by modern ports. • Opportunity of port consultancy. Due to the numerous port projects there is a need for the feasibility study of both the new port projects and port expansion projects. • Port education and training opportunity. Due to the increasing need by the port industry and the new regulations there is need for training and education of lower, middle and upper level port personnels on port operations and management.
Business opportunities in Turkish port sector for Dutch companies can be summarized as joint port ownership and management, technical advice for local ports, support of local ports through the external know-how on port investment and business (planning, development, expansion, and operation of terminals), financial participation in local port enterprises, project financing, cooperations on education and training of port personnel, participation in privatisation of ports.
75 Maritime Hotspots
The current Privatization Law (4046) ratified in 1994 forms the institutional basis for privatization ports in Turkey. Furthermore, the Constitutional Amendment in 1999 (Articles 47 and 125), included the concept of privatization in the Constitution, and has allowed for international arbitration assuming equal footing in international competition and stimulating direct foreign investments and formation of alliances with foreign partners. The privatization decisions are taken by the Privatization Higher Council headed by the Prime Minister and composed of five ministers, and implementations are carried out by the Privatization Administration (PA). Within the framework of the Constitution and Privatization Law and considering the nature of the business, the monopolistic condition of the sector, and the concept of public goods, the privatization of the ports can be implemented by transfer of ownership, lease or similar privatization strategies, restricting the transfer of the port asset ownership to the private sector (Günaydın, 2006). As per Article 15/a and b of the said Law; ports are assumed as public service organisations, therefore, it is required that ports "... shall be privatized under the provisions of this Law through the transfer of operations rights, leases or similar methods.
Therefore, the privatization of ports in Turkey is a partial privatization where the operation right is transferred to the private sector, or methods like BOT and leasing are utilized, while the ownership and regulation is kept by the state as also stipulated by the Constitution (Günaydın, 2006). A bidding process takes place for selecting the private enterprise to overtake the operation rights, the result of which is submitted to the Privatization Higher Council for approval. The decision is announced at the Official Gazette regarding the accountability principle. Then, a contract for transfer of operational rights is signed among the PA and the selected enterprise. The operation period for the private company could be at most 49 years regarding the conditions of the port.
The main competitive concern about the ports is the risk of abuse of dominant position via refusal to deal, excessive pricing, tying etc. However, in order to determine whether there is a violation of the Competition Act (No. 4054 on the Protection of Competition) it is vitally important to determine the relevant product and the geographic market. In the context of ports, relevant product market is defined by taking into consideration the type of freight which is handled in the port and the type of vessel which anchor in the port. While determining the geographic market, the Competition Board takes two factors into consideration. The first factor is the hinterland of the port (the geographic regions which are served by the port) which is also called as the “static element” whereas the second factor is the catchment areas known as the “dynamic element”. In Turkey, it is generally accepted that a market share equivalent to or above 50 % is a significant indicator of dominance. (OECD, 2011) This presumption is also valid for maritime and port services. However, the characteristics of the services, which are provided by the port, might
76 change the market power analysis because different services require different investments, water depth and back space size.
Key issues for port investment in Turkey are summarized as follows: (Yıldırım, 2010) • Investment Terms: Up to 5 years Construction period and more than 10 years ROI period) • High capital cost • Limited extent of cost recovery: Road / rail Access, breakwater • Intensive bureaucracy and paper works
Investors generally encounters problems in getting the permission for port construction and operations in Turkey. Due to the complex nature of port investments and operations in Turkey making use of local port consultants and lawyers specialised in port investment laws and regulations is highly recommended before entering the market.
An overview of the contact details of the most relevant Turkish ports is given in Annex 2.
77 Maritime Hotspots
78 3 THE TURKISH FLEET
3.1 General
In the preceding chapter an elaborate analysis was given of the Turkish ports, including future prospects and opportunities for investors. Although themain Turkish ports have an international character, the main category of users of the ports are the Turkish shipowners. This chapter will first analyze the Turkish owned and the Turkish registered fleet. The second part of this chapter contains compact descriptions of the twenty main players in the Turkish ship-owners landscape.
3.1.1 Seagoing traffic Because of its geographical advantage, Turkey does not have any maritime boundary and enjoys all benefits of maritime accessibility. More than 85% of Turkey’s foreign trade is realized by seagoing transportation. With a trade balance of $380 billion in 2012, this is good for $300 billion. Additionally, the relatively low labor costs create a further advantage to the seagoing shipping. Taken together, a versatile shipping sector has emerged in Turkey, which plays a substantial role in the European and regional transport systems.
Chart 12: Cargo volume Turkey
Source: Ministry of Transport, Maritime Affairs & Communication
79 Maritime Hotspots
The strong economic growth in Turkey helped the Turkish ship owning community to expand their activities. Over the last decade a rapidly rising cargo turnover has occurred. In 2004, the import and export was 178 M ton and this increased to 284 M ton in 2012.
Imports are twice as high as exports. The main imported goods were: • machinery • chemicals • semi-finished goods • fuels (diesel and oil) • transport equipment
These goods are mainly imported from Russia, Ukraine, U.S., Egypt and EU countries. The majority of the exported seaborne trade is partaken by Egypt, Italy, Russia and Spain. Egypt is an increasingly important trading partner over the last few years. The Netherlands accounts for 1.1% of Turkey's seaborne exports and 1.8% of the imports.
The total sea transport between Turkey and foreign countries in 2012 was 34% liquid bulk, 28% dry bulk and 20% containers. The remaining transport was General Cargo (16%) and ro-ro vehicles (2%).
3.1.2 Shipping challenges Turkey has witnessed the fastest growth in energy demand in the OECD. Apart from the home demand, Turkey is also a central hub for the transit of oil and gas from Iran (44% of imports in 2012), Iraq (15%), Saudi Arabia (14%), Russia (10%) and Kazakhstan (7%). The imports are mainly done by pipeline, but exports and passing trades of crude oil, liquefied gases and distillates play a major role in the seagoing traffic flows around the coasts of Turkey. Although the growth is encouraging, there is also a downside called safety. The following text is derived from the Turkish Ministry of Foreign Affairs9. “From the energy security perspective, the Turkish Straits are of particular importance as around 3.7% of the world’s daily oil consumption is shipped through the Turkish Straits. The amount of oil and oil products transported through the Strait of Istanbul has increased dramatically from 60 million tonnes in 1996 to around 150 million tonnes in 2008. This figure is expected to reach around 190-200 million tonnes in the coming years due to the expected throughput from the Caspian region reaching the Black Sea in addition to the large amounts of Russian oil.
......
9 Republic of Turkey, Ministry of Foregn Affairs: Turkey’s Energy Strategy, www.mfa.gov.tr 2013
80 In view of the heavy tanker traffic, as well as the physical characteristics and peculiarities of the Turkish Straits, a maritime disaster caused by a tanker carrying hazardous cargo seems inevitable sooner or later. In addition to the humanitarian and environmental perils, such a disaster would interrupt the regular flow of oil to world markets. Consequently, the solution lies at the use of alternative oil export options that by-pass the Straits.” Neither safety issues nor environmental impact of shipping can be ignored. It can reasonably be expected that safety and environment will play an increasing role in the Turkish maritime debate, and in term lead to increased investmets in safe shipping operations.
3.2 Fleet statistics
3.2.1 Size of the fleet The overall picture of the Turkish shipping sector is quite diverse. On the one hand there are large players with ramifications in other sectors of the economy, operating a professional and young fleet of relatively large merchant ships. On the other side of the spectrum a fragmented and old fleet of general cargo ships, tugs and small ferries exists, often run by one-ship companies.
The Turkish growth in seaborne trade goes hand in hand with investments in the Turkish owned merchant fleet. In 2005, the merchant fleet over 100 GT consisted of 1.596 vessels. This fleet increased 40% to 2.237 vessels by January 2013. The capacity was 10.7 M dwt in 2005 and almost tripled to 30 M dwt in eight years’ time.
Chart 13: Turkish owned fleet > 100 GT (M dwt)
According to the worldwide capacity (1.625 M dwt), Turkey takes the 13th position (6.6% of the world fleet). The Netherlands holds the 17th place (15 M dwt).
81 Maritime Hotspots
3.2.2 General composition of the fleet In terms of cargo carrying capacity, the Turkish owned fleet consisted in 2013 dominantly of bulk carriers (16.1 M dwt, average ship size 52,000 dwt) and tankers (4.9 M dwt, average ship size 126.000 dwt). In terms of number of ships the general cargo sector dominates (2.2 M dwt, 719 ships).
Table 20: Turkish owned fleet >100 GT Vessel type # 1.000 dwt General Cargo 719 2.243 Bulk Carrier 310 16.129 Tug 175 8 Passenger Vessel 166 10 Multi-Purpose 156 1.080 Chemical & Oil Carrier 134 1.175 Product Carrier 104 820 Fully Cellular Container 87 1.236 Ro-Ro 80 421 Passenger /Car Ferry 50 32 Chemical Parcel Tanker 40 270 Tanker 39 4.925 Product / Chemical Carrier 39 1.047 Other Dredger 26 21 LPG Carrier 14 129 Other 98 426 2.237 29.978
3.2.3 Turkish registry Turkey offers two modes of registration: a national and an international ship register. The total deadweight of the Turkish registered fleet (measured over 1,000 dwt) is 10.0 M dwt. This roughly is one third of the total fleet owned by Turkish ship owners. The remaining two thirds are either smaller than 1.000 dwt or registered abroad.
82 Chart 14: Turkish fleet > 1.000 dwt, Turkish national versus international registry; dwt and number
Source: Turkish Chamber of Shipping, 2012
The Turkish national registry mainly contains relatively small ships, with an average capacity of 8.500 dwt. The ships in the Turkish international register measure on average 15.400 dwt. The Turkish registered fleet is dominated by bulk carriers and to a lesser extent of dry cargo, oil tankers, chemical tankers and containerships. Almost half the Turkish international registry consists of bulk carriers (47%). According to UNCTAD10, the largest foreign register of Turkish owned ships is Malta. In 2012 a number of 234 ships representing 7.6 M dwt were registered in this country. Second largest foreign register is Marshall Islands (77 ships, 4.2 M dwt).
3.2.4 Fleet of vessels of 30+ years In total 792 ships with a capacity of 2.2 M dwt are older than 30 years. 60% of this fleet is registered under Turkish flag. Under normal conditions these ships are at the end of their economic life. These ships are mainly (427 units) small dry cargo vessels, see Chart 15.
......
10 UNCTAD, Review of Maritime Transport 2012
83 Maritime Hotspots
Also the categories of tugs (in this graph including oceangoing salvage tugs, oceangoing tugs and AHTS) have a relatively high replacement need of 72 vessels. 25% (18 units) of these 30+ tugs are centrally owned by Turkish government and are on average 42 years old. The combined fleet of 30+ passenger vessels and 30+ RoPax vessels totals 72 units with an average age of 46 years old, of which approximately 70% is in the hands of central and decentralised government services.
Chart 15: Turkish owned fleet, segmentation of ships 30+ years
3.2.5 Dry cargo fleet Per June 2013, the dry cargo shipping sector consisted of 737 ships with a total capacity of 2.3 M dwt. The average age of these ships is 32 years and the average ship size is 3.124 dwt. The ship owners from this market segment are active in the Mediterranean area, Black Sea, North- West Africa, Middle East, East European and Russian waterways. The ships in this segment have a maximum tonnage of 11.000 dwt. The structure of this industry is rather fragmented. The only three players owning more than ten vessels are Russian flagged Sailtrade Shipping (23 ships of average 30 old, total 96.000 dwt), Albros Shipping (21 dry cargo ships of average 16 years old besides its tanker fleet, largely Russian flagged, 71.400
84 dwt in dry cargo segment) and Kent Shipping and Chartering (13 Turkish owned sea-river ships, 62.194 dwt, also active on the Russian waters). The typical cargo these vessels move are grains, steel, scrap, coal, paper rolls, timber, fertilizers and special project cargo. The ships have low drafts, so they can penetrate deep into the inland waters of Russia.
Chart 16: year of build dry cargo fleet
Over the past 25 years annually only some 9 ships per year were added to the fleet, just 1.2% of the fleet. In terms of tonnage this was 1.6%. From 1995 to 2005 the number of additions to the fleet was very low. In 2002 there was no ship added at all. In 2013 a rise is expected in terms of tonnage, caused by an expected and partly realized delivery of seven relatively large ships for this cargo type, totaling 67.000 dwt (average 9500 dwt per ship). The number of new ships entering the market however is still very low compared to the other subsectors and still shows a negative trend. Normally as a rule of thumb every year approximately 3.3% of the fleet (24 ships) has to be replaced by new tonnage in order to stay balanced. This obviously is not the case in Turkey in this market segment. It could mean that in Turkey either ships are getting older year by year, or the dry cargo fleet is shrinking. It is the question how long it will take before this market will pick up again, possibly forced by environmental and safety legislation.
85 Maritime Hotspots
Chart 17: dry cargo dwt categories, age and number
When we take a closer look at the capacity categories (see chart 16), we can see that: 1. There is an almost linear relation between size and age. The smaller the vessel, the higher the age. The average age of the 181 ships under 1.500 dwt is 44 years. 2. The majority of the ships are smaller than 4.500 dwt. The 4.500 dwt mark is also the maximum size that can operate on the Russian Unified Deepwater System.
The Turkish registered dry cargo fleet of 1.000 dwt and more consists of 254 ships. From this total almost three quarters (185 ships) can be found in the range from 1.500 to 6.000 dwt. Total tonnage in this category amounts to 1.4 M dwt. 20% is younger than 10 years, 10% is between 10 and 20 years, 30% between 20 and 30 years, and 40% is 30 years or older. 30% of the Turkish registered dry cargo fleet is ships older than 30 years in the range of 1.500 to 6.000 dwt.
86
3.2.6 BulkBulk carrier carrier fleet fleet In 2012, cargo turnover of dry bulk was 107 M tonnes, of which 75.7 M tonnes was for import and only 15.7 M tonnes was export. The remaining 15.7 M tonnes was cabotage. When the total import and export is further elaborated (91 M ton), only 10 % is imported and exported with a Turkish flagged vessel, 4% domestic flagged and 86% other country flagged. Additionally, the general cargo turnover was 23 M tonnes for export and 29 M tonnes import. The total Turkish owned B/C fleet of 100 GT and more consists of 309 ships with a total of 16.3 M dwt. The average age of the ships is 11.2 years old, and the average size is 53,000 dwt. The largest owners are Geden Lines (23 ships with 2.0 M dwt), Yasa Shipping Industry (21 ships with a capacity of 1.5 M dwt), Densa Shipping (15 ships with 1.1 M dwt) and Active Shipping (8 ships with 1.0 milion dwt). Geden Lines, Densa Shipping and Ciner Denizcilik are still expanding their fleets in 2013. The ships built since 2010 were ordered in China (50 ships), South Korea (51), Japan (12) and Vietnam (11). Only two handy sizes and one handy max were built in Turkey.
Chart 18:1: Turkish Turkish owned owned bulk bulk carriers, carriers, year year of of build build
4 3,5 3 2,5 2 M dwt 1,5 1 0,5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (est)
87 87 Maritime Hotspots
The Turkish registered bulk carrier fleet of 1,000 dwt and more consist of 113 ships. Measured in dwt, one third of the B/C fleet consists of Panamaxes younger than 10 years of age. Total tonnage in the category of bulk carriers amounts to 5.1 M dwt. Eight ships with a total of 853,000 dwt are in the 2category capesize or larger. The latter are all under ten years of age.
3.2.7 Container fleet Over the last decade the container volume of Turkey increased considerably faster (+57%) than global average (+20%). At the beginning of 2012, container throughput was more than 7 M TEUs.
Chart 19: Container Volume Turkey (TEUs
Source: Ministry of Transport, Maritime Affairs & Communication
In 2012, both Turkish import and export are approximately three M TEUs. The remaining one M TEU is transit and cabotage. The main export countries are Egypt, Belgium and Spain (total 1.08 M TEU). Imports come from Egypt, Greece and Belgium (1.1 M TEU). The container volume is strongly concentrated at Ambarli Port in Istanbul (42% of Turkish container trade). Mersin comes second (17%), followed by Izmir and Gemlik (both 10%). The total Turkish owned full container fleet of 100 GT and more consist of 86 ships and 1.2 M dwt. Total container carrying capacity is 93.800 TEU. The largest operator in this field is Arkas Group/Arkas Line with 31 ships and 585.000 dwt. The fleet is mostly built in Germany and has a capacity of 43.300
88 TEU. The second player is Kasif Kalkavan Group with a fleet of 20 ships representing 335.000 dwt/26.800 TEU, built at Sedef Shipyard in the period from 2001 to 2012.
The Turkish registered container fleet consists of 54 ships measuring 828.100 dwt (average size 15.300 dwt). This fleet is relatively young at an average age of 11 years. Together with the renewal of the fleet, a scale increase took place. The average size of the vessels under ten years is 18.700 dwt, whereas the average age of the rest of the Turkish registered container fleet is 11,200 dwt.
3.2.8 Oil tanker fleet Liquid bulk transport was good for 54 M tonnes import and 15 M tonnes export. Of this, more than 53 M tonnes cargo were transported with vessels that were other country flagged, 10 M cargo was transported with Turkish flagged vessels and 6 M tonnes with domestic flagged vessels. Oil is transported from the Caspian and Middle East hinterland to the terminals at the South-Turkish city of Ceyhan, from which place it is shipped in tankers of up to 300.000 dwt to international destinations.
89 Maritime Hotspots
Chart 20:1: composition composition of of the the Turkish Turkish owned owned tanker tanker fleet fleet
1 1
0 , 9 0 , 9
0 , 8 0 , 8
0 , 7 0 , 7
0 , 6 0 , 6
0 , 5 0 , 5
0 , 4 0 , 4
0 , 3 0 , 3
0 , 2 0 , 2
0 , 1 0 , 1
0 #VERW! #VERW! 0 The total oil0 tanker fleet of0 100 GT and0 more owned 0by Turkish companies,0 consists of 39 ships with a total cargo carrying capacity of 4.9 M dwt. The sector is dominated by Geden Lines, a company owning 16 tankers totalling 2.2 M dwt. SecondThe total player oil tanker is Yasa fleet Shipping of 100 IndustryGT and more with owned8 tankers by Turkishand a capacity companies, 1.1 M dwt.consists Third of comes39 ships Gungen with a Shippingtotal cargo (4 carryingtankers, capacity0.6 M dwt). of 4.9 The M 28 dwt. ships The of sector theseis dominated three Turkish by Geden owners Lines, are a allcompany Aframaxes owning and 16 Suezmaxes tankers totalling in the range 2.2 M of dwt. 110.000-160.000Second player is Yasa dwt. Shipping Industry with 8 tankers and a capacity 1.1 M dwt. Third comes Gungen Shipping (4 tankers, 0.6 M dwt). The 28 ships of these three Turkish owners are all AframaxesThe Turkishand Suezmaxes registered in fleetthe rangeyounger of 110.000-160.000 dwt. than 10 years of age consists of 13 product and oil tankers totalling 1.000.000The Turkish dwt. registered The average fleet younger size of thethan ships 10 years under of 10 age years consists old is of 77.700 13 dwt.product The and fleet oil over tankers ten yearstotalling has a capacity1.000.000 of dwt.20.500 The dwt average per ship. size Itof can bethe concluded ships under that 10 –even years moreold is than77.700 in containerdwt. The fleetshipping- over tena remarkable years has a scalecapacity increase of 20.500 took dwt place per overship. theIt can past decade. This effect was entirely causedbe concludedby the addition that –evenof 6 Suezmaxes more than in (0.9 M dwt) in the past decade. container shipping- a remarkable scale increase took place over the past decade. This effect was entirely caused by the addition of 6 Suezmaxes (0.9 M dwt) in the past decade.
90 90 4.2 The development of Turkish shipbuilding
The Turkish shipbuilding industry has a history of over 600 years. In 1390, the first shipbuilding activity commenced, and in the 16th century the largest shipyards in the world were Turkish. In the Ottoman Empire, large naval vessels were produced. The development of industrial shipbuilding however, took place relatively recently. Until the 1970’s the Turkish shipyards were relatively small compared to the industry in Europe and Asia. The shipyards were mainly located at the Golden Horn and the Bosporus in European Istanbul. In 1969 the Turkish government took a decision that would change the industry dramatically. Politics decided to scale up the industry, and move the shipyards to the other side of the Bosporus. The place for the relocation and expansion plan was the bay of Tuzla.
1970 - 2000 In the 1980’s most of the shipyards had effectively moved here. The development of the Tuzla area was stimulated by a government programme called GISAT. Under this scheme, Turkish ship owners received support for building ships domestically. The GISAT programme was active from 1980 until 1989. However, the real development of the shipyards came later; GISAT mainly laid the foundations and shaped the company structures.
2000 - now The liberal conservative regime of the AK Party (2002-2012) introduced measures that brought new investment capital to the shipyards. It coincided with a world-wide boom in shipbuilding orders and an unprecedented optimism in the maritime world. In this period large shipbuilding sites were built in several upcoming shipbuilding countries across the globe, existing sites were modernised and expanded. The same happened in Turkey. Where Tuzla could no longer accommodate the ambitious activities of the shipbuilding industries, new locations in Yalova and İzmit were developed. The start of the Yalova shipbuilding region in 2004-2007 took place in the absolute peak of worldwide shipbuilding. 21 shipyards were constructed here, together representing an impressive 1.2 M dwt of new building capacity, and theoretically another 29 were planned here. The Yalova Shipyard Region is formally funded by private equity capital, without the use of public sector funds. As a result, in a period of ten years the number of Turkish shipyards almost doubled: from 37 in 2002 to 71 in 2012. Total capacity almost six folded within in six years. After 2008, no more new projects were set up, and the capacity stabilised at around 3.5 M dwt (3.67 M dwt in 2012). The actual steel processing capacity amounts to 700,000 tonnes.
111 Maritime Hotspots
4.3 Shipbuilding statistics
The Turkish shipyards usually combine new building activity with repair and conversion works. In this section the new building side is highlighted. The new building of the shipyards traditionally concentrates on coastal ships. Product and chemical carriers of up to 10.000 dwt have been and are core business, although Turkey has the capacity to build Panamax sizes. Actually, Turkey is the number one builder of small sized chemical tankers in the world. The type of vessels built in Turkey are: • Oil tankers • Chemical tankers • Bulk carriers • Container ships • Heavy lift vessels • Multi-purpose vessels • Platform supply vessels • Navy and coast guard vessels • Tugs and workboats • Mega yachts and yachts • Fishing boats
4.3.1 Ship deliveries, number Chart 24 covers the breakdown of Turkish Shipyards' deliveries over the past decade, including all yachts, vessels, offshore platforms, naval vessels or other craft considered "ship" by definition. The data is based on actual registry records and place of build. Since the beginning of the 2000's, Turkish Shipyard delivered 1.093 units. Chart 24: Number of ships and ship types delivered by Turkish shipyards 2000-2013
Turkish Shipbuilding - By Type (2000 - 2013) 180
160 Yacht / Mega Yacht 140 Ro-Ro / Vehicle Naval 120 Container Vessel Fishing 100 Pass. / Ferry 80 Research Gas Tankers General / Dry Cargo
Number of Vessels 60 Others 40 Tanker Offshore / Tug 20
0
00 01 02 04 05 06 07 11 ry 0 0 0 0 0 0 0 0 ua 2 2 2 2003 2 2 2 2 2008 2009 2010 2 2012 Build Jan n 13 20 Order / I Source: Lloyds List Intelligence
112 Between the years 2007-2010, Turkish shipyards delivered 543 units.
Observation: Although during and after 2010 the number of deliveries slackened, due to the crisis order slippage has been effective. In 2012 only 60 vessels, less than 40% of 2008, were delivered.
4.3.2 Ship deliveries, dwt
Chart 25: Ships delivered by Turkish shipyards, by DWT
Turkish Shipbuilding - By Type (2000 - 2013) 1200000
Yacht / Mega Yacht 1000000 Ro-Ro / Vehicle Container Vessel 800000 Fishing Pass. / Ferry Research 600000 Gas Tankers DWT General / Dry Cargo Others 400000 Tanker Offshore / Tug 200000
0
0 1 4 5 9 0 2 d 0 0 0 0 0 1 ary il 20 20 2002 2003 20 20 2006 2007 2008 20 20 2011 201 u Bu an J In 3 / 201 der Or Source: Lloyds List Intelligence
Observation: deliveries in terms of cargo carrying capacity peaked in 2008 and dropped in 2010, mainly caused by tanker deliveries, and to a lesser extent by containerships.
4.3.3 Ship deliveries (dwt & number) and actual shipyards In the next chart, an integrated overview is given of the deliveries from Turkey shipyards in number of vessels delivered, in cargo carrying capacity and in number of shipyards that were actually delivering the ships.
113 Maritime Hotspots
Chart 26: deliveries Turkey (1.000 dwt - number of vessels & (in red) number of shipyards that actually delivered that year)
Source: Clarksons, analysed by Bloem Doze Nienhuis
Observation: In terms of delivered tonnage, delivered number of ships and number of active shipyards, the same trend is witnessed. The bubble in 2008 was caused by a massive order intake around 2007. Soon after 2008 all indicators dropped as fast as they rose.
The number of ships delivered dropped less quick than the tonnage delivered. It indicates that larger tonnages slipped away faster than smaller vessels. In terms of actually active shipyards, the number decreased by almost 50%. It means that many shipyards either seized new building activity, delayed their works, or specialised in repair and maintenance works. The curve is worrysome, although it may be said that not all ship types are represented in the Clarkson statistics. Some special vessels qualify as ship in the international statistics and they do not have a carrying capacity. Military ships, inland ships and super yachts are excluded, as well as some maritime structures that do not have propulsion like pontoons or certain crane ships. However, the measurement has been constant over the years, and does not influence the recent downward trend.
In the period from 2002 to 2009, order book and production capacity showed exactly the same rising trend. Roughly speaking, the capacity was enough to build one year ahead. After 2009 however, the order book quickly diminished due to lack of new orders on the one hand and continuing deliveries on enlarged shipyards on the other. The result is that in 2012 the capacity was four times the order book, and will probably reach seven times by 2013, if the trend
114 continues. This unbalanced situation can only be solved by massive new orders, which probably will lead to a call for government interventions.
Chart 27: Order book versus production capacity
Sources: Clarkson, Ministry of Transport, Maritime Affairs and Communication, Clarkson and Bloem Doze Nienhuis
At the same time, the number of employees in Turkish shipyards stabilise11. Logically it could be expected that the downward trend will also appear in these graphs, but so far there is no indication for structural layoffs. In a recent article12 however, a representative of Besiktas Shipyard mentioned the number of 16.000 employees in 2012, which would be more in line with market developments.
......
11 The figures for temporary workers are not available. 12 Tradewinds, June 21st 2013
115 Maritime Hotspots
Mengi-Yay The Mengi-Yay yard builds super yachts up to a length of 42 metres. The yard supplies sailing yachts as well as motor yachts. Mengi-Yay is based in Pendik Istanbul. It was founded in 1976 by Ramazan Mengi. In 2006 aluminium and steel production was started up in a new construction hall.
Oruçoğlu shipyards Oruçoğlu Shipyard was established in 1978 and is based in Yalova. The shipyard started at the very beginning as producer of with wooden gullets. From the year 2000 onwards, it produced mega-yachts in the range of 42 - 72m. Their brand ‘Miss Tor Yacht’ is strongly marketed for its survivability in extreme conditions. According to the public information given by the yard, at the moment nine yachts are under construction, including two sailing yachts and one 72 m yacht. Oruçoğlu Shipyard is one of the companies of Oruçoğlu Group, a corporate group with more than 10 companies existing in various sectors.
Proteksan Turquoise The Proteksan Turqoise Yard was established in Pendik, Istanbul in 2007. Originally a producer of hulls and super structures, it now operates on 35.000 square metre facility with a 120m dock. The maximum length of vessels produced here is 120m. In February 2012 the yard came in the news when her super yacht Yogi sank off the coast of Skyros in Greece, after having small warranty works in the yard. Currently 50 to 70m hulls for both aluminium and steel construction are being prepared. Once complete the vessels are transferred to the Proteksan Turquoise Shipyard where the outfitting and commissioning will be completed. In total three steel/aluminium motor yachts are under construction, measuring 50m, 62 and 72 metres.
136 Sirena Marine Sirena Marine is a producer of smaller yachts. Founded in November 2006, this company was a joint setup of Kıraça Holding and the leading producer of yachts Azimut-Benetti Group. In 2008 the cooperation was transformed into an official partnership. In fact, Turkey became the first country where the Azimut - Benetti Group carried out its manufacturing outside Italy. Between 2008 and 2011, Sirena Marine produced 119 boats of Azimut’s models. The maximum size of these ships is 17 metres.
Besides manufacturing Azimut standard models, Sirena Marine is the sole distributor of the Azimut - Benetti Group in Turkey. This company has a production facility in Bursa Organized Industrial Zone, south of Yalova. Aside from motor yacht manufacturing, Sirena Marine produces sailing boats under the brand name Azuree. The yachts up to 14 metres in length, are being produced in the Bursa Orhangazi Factory, a 103.000 m2-wide facility, including a 35.000 m2-wide indoor area. As part of another project it undertook with the Azimut-Benetti Group, Sirena Marine initiated production of the self-designed Azimut 38 and Azimut 40S models. Today, 60 boats a year are produced in and exported from Orhangazi.
Sirena Marine also produces marine equipment, such as stainless-steel parts, furniture, flooring, glass reinforced plastics, teak, and electrical systems.
Sunrise yachts Sunrise Yachts has created an 11,000 m2 facility in the Free Zone of Antalya in South Turkey. It was co-founded by current CEO Guillaume Roché. The shipyard has two halls that can accommodate new construction and refit projects up to 65 metres in length and 1.200 tonnes displacement. The halls are fully acclimatized. Along each side of the yacht-building facility, space is available for long-term sub-contractors with the latest equipment and logistics capabilities, along with air-conditioned storage, ventilation and extraction plants. The shipyard is organized as an "assembler," based loosely on the car industry's model, with a small, yet powerful project management team charged with running all the in- house long-term sub-contractors. The current employment is 150 people.
137 Maritime Hotspots
Yildiz - Perini Navi Istanbul The Yildiz Shipyard started its production in 1975 and is located in Tuzla. In 1987 it was taken over by Fabio Perini, and is since that moment part of the Italian Perini Navi group. This group of companies from Viareggio operates in the super yacht sector under the brand names: Perini Navi (sailing yachts) and Picchiotti (motor yachts).
At the 42.000 sqm water bound area, hulls and superstructures for the group’s motor and sailing yachts are being constructed. Recent investments in have made it capable of producing entire ships. Yildiz has 5.450 sq mt of covered sheds for the construction of Perini Navi and Picchiotti hulls and yachts, 1.600 sqm of specialised workshops, 1.944 sqm of sheds dedicated to aluminium working, a 100 m long slipway, and 1.300 sqm of offices. Currently a series of 60 m aluminum hulls is being produced at Yildiz, to be outfitted as sailing yachts in Viareggio.
Probably the most special project has been the sailing yacht The Maltese Falcon (picture). The ship has three times five sails stored inside rotating, the carbon fiber masts. Dutch company Gerard Dijkstra & Partners designed this innovative project. The ship was built in 2006 at a price of € 135 M.
4.6 Other technology related sectors
4.6.1 Construction of naval and coast guard vessels Until 2000, military shipbuilding was conducted by state owned shipyards. After the privatisation and/or closure of the facilities, the private shipyards took over military production. Pendik Shipyard (now: Istanbul Naval Shipyard) functions mainly as a repair and maintenance facility, although the first two prototype ships under the MILGEM programme were launched here. The MILGEM programme is a building programme for the Turkish navy. By developing MILGEM, Turkey aims to build warships using local resources to the maximum. It is intended that the
138 programme improves national military shipbuilding and skills. The objectives of this programme are to enhance the littoral (close to shore) warfare capabilities and to meet the operational requirements of the Turkish Navy. Under this programme, in total twelve navy ships will be built: eight corvettes and four larger F100 class frigates (picture) with anti-submarine warfare and high-seas patrol capabilities. Together this total project represents a value of USD 3 bn. After screening by the government, five shipyards were selected as possible candidates for this prestigious order. On January 3rd 2013, the Turkish Undersecretary for Defense Industry awarded the order of six corvettes to RMK shipyard. RMK has a technical co-operation with Italian shipbuilding giant Fincantieri.
The following shipyards have military references: 1. RMK Marine – coast guard search and rescue ships, corvettes 2. Dearsan Shipbuilding and repair corporation – new type patrol boats 3. Yonka-Onuk JV – small coast guard vessels, ultra fast boats, under water attack support 4. Anadolu Shipyard – amphibious assault ships for landing tanks on beach heads 5. Istanbul Naval shipyard – Submarine rescue mother ship, rescue and towing ship, (semi/non-military) seismic research ship 6. Sedef /RMK /Desan shipyards – landing platform/dock (LPD) In August 2012 Tuzla based Anadolu Shipyard (ADIK) delivered a Landing Craft Vessels to the Turkish Naval Forces. This shipyard is now proceeding with this project, which covers in total 8 amphibious vessels.
4.6.2 Repair and maintenance According to Gisbir, the total repair and maintenance capacity in Turkey is 15 M dwt. The number of floating docks expanded from eleven in 2003 to eighteen in 2011.
Chart 44: Number of floating docks in Turkey
20 18 15 15 11 10
5
0 2003 2007 2011
Source: Gisbir
139 Maritime Hotspots
The number of dry docks showed a remarkable development. Between 2011 and 2013 it more than tripled. Probably this has to do with the overcapacity in the newbuilding facilities of the Turkish yards. Dry-docks built for new building purposes now are being used as repair and maintenance yards.
Chart 45: number of dry docks in Turkey
40 31 30
20 7 9 10 4 0 2002 2008 2011 2013
Source: Gisbir
4.6.3 Offshore technology The construction of offshore support vessels (consisting of tugs, anchor handlers, seismic research ships, multipurpose, platform supply vessels, utility and rescue vessels) was not a large part of the Turkish order book until 2008. After the crisis struck the shipyards and the traditional markets for merchant marine vessels tankers disappeared, the Turkish shipyards quickly had to adjust. The medium end of offshore technology was chosen to be a new focus area, therewith following many other shipyards in the world. New building offshore vessels peaked at 2009 with 50 units delivered. From 2008 till the end of 2012 Turkish shipyards delivered 160 vessels. However, due to fierce international competition, the number of deliveries dropped to 15 in 2011 and the order book currently stands at a modest 10 vessels as of beginning of 2013.
140 Chart 46: Offshore units delivered by Turkish shipyards
Turkish Offshore Vessel Building (2000 - 2013) 60
50
40
30
20 NumberVessels of
10
0
0 2 3 5 6 8 9 1 2 d 00 00 00 01 uary 200 2001 2 200 2004 2 200 2007 2 200 2010 2 201 n Ja In Buil 3 r / 201 de Or
Source: Lloyds List Intelligence
The list of offshore ships owned by Turkish players comprises less than 30 ships. This means that the potential for Turkish shipyards will probably not be found at the home market, but rather in oil and gas areas in the Middle East, Caspian region, North and West Africa, and North West Europe.
Multipurpose offshore construction vessel by Tersan Shipyard
141 Maritime Hotspots
According to Gisbir, the ambition is now to be active in the market of larger offshore structures. This concerns the construction, conversion and repair of offshore platforms. The large repair facilities described above are suitable for these purposes. In fact they have been used for these purposes earlier, for example at Tuzla shipyard.
For the exploration and production in Turkish waters, the developments at Turkey’s national oil company TPAO are relevant. Turkey has proven oil reserves to the value of 270 million barrels in the Hakkari Basin. The vast majority of Turkey's oil production occurs onshore in the Southeast. TPAO has also undertaken a number of oil and natural gas exploration projects, especially in the Black Sea region. In 2004 gas was discovered in the western part of the Black Sea. Gas production was initiated in May 2007.
In 2010 and 2011 ultra-deep water exploration drillings were done at the Black Sea. Besides this, promising projects are being done at the Aegean Sea and the Mediterranean, North of Cyprus. TPAO’s wants to develop the resources situated in the Black Sea on short notice. The Ministry of Energy and Natural Resources aims for commercial production in the Black Sea by 2016.
Significant reserves are expected under the Aegean Sea. However, this has not been confirmed as a result of the ongoing territorial dispute with Greece. TPAO has increased its exploration activities in the Black Sea, which could hold between 7 and 10 billion barrels of oil. The offshore area is being explored by TPAO, which has formed joint ventures with ExxonMobil and Petrobras.
In November 2011, TPAO signed an agreement with Shell for hydrocarbon exploration in the Mediterranean and the southeast area of the country. This agreement covered plans for shale gas exploration in the southeast near the city of Diyarbakir. According to Turkey's Ministry of Energy and Natural Resources, Shell began exploration at the Saribugday 1 field in August 2012. As of January 1, 2013, the Oil & Gas Journal estimates Turkish natural gas reserves at 218 billion cubic feet (Bcf). Turkey produced only 27 Bcf of natural gas in 2011, relying almost exclusively on imports to meet domestic demand. Turkey's energy demand growth has been among the fastest in the world in 2010 and 2011, although slower economic growth in 2012 has dampened the natural gas consumption increase to some extent. Natural gas is accounting for an increasing share of the energy mix in Turkey and it is becoming the most important fuel in terms of volume consumed. EIA data indicate that natural gas
142 consumption in Turkey exceeded oil and coal consumption by about 0.3 quadrillion British thermal units in 2011. The largest of the fourteen Turkish gas fields is Marmara Kuzey. This is an offshore field in the Sea of Marmara in the Thrace-Gallipoli Basin. Gas production is mainly carried out by three companies: Turkiye Petrolery A.O. (TPAO), BP, and Shell. A number of natural gas fields have been brought on- stream in the Black Sea, including the Akcakoca, East Ayazli, Akkaya, and Ayazli fields.
4.6.4 Marine equipment suppliers Equipment suppliers are an important part of the maritime industry. They do not only supply the shipyards, but are also responsible for maintenance works towards ship owners, and are an important driver for innovations. Turkish equipment suppliers are active in the medium tech segments of shipbuilding. They supply anchors, winches, deck machinery, boilers and compressors, isolation equipment and valves and central heating systems. The steel and piping processes are normally seen as an integral part of the shipyards production. Complex machinery, often supplied on demand of the ship owner, is imported from Europe. Due to the international competition and rising quality, the Turkish equipment suppliers made improvements in recent years, but there is still a lack of local contribution. Main Turkish subcontractors are small enterprises, which causes standardizing and efficiency problems, and many shipyards are still dependent on foreign imports. These are mainly relatively high technologies, like telecommunication systems, electronic navigation, automation, main engines and complex system integration solutions.
Chart 47: Employment of maritime equipment suppliers in Turkey
Source: Ministry of Transport, Maritime Affairs and Communication
143 Maritime Hotspots
Trade Association GESAD has been very active in promoting a new industrial zone in the Yalova-Altinova area. In this special zone, international suppliers are invited to participate. Dutch companies that are locally active in the Turkish shipbuilding sector are Royal Imtech (manufactures switchboards and automation systems, through their subsidiary ELKON) and Heinen & Hopman (heating, ventilation and air conditioning systems, through their office in Tuzla).
4.6.5 Ship recycling Ship recycling is a specialised process that is totally different from shipbuilding. It can be a dangerous, polluting industry if the scrapping activities are not conducted in a professional way. Europe does not possess many ship recycling yards, and most of the ships eventually find their way to the beaches of Bangladesh. Ship-owners however are increasingly pressured by public opinion, governments and their clients. They are moving towards a sustainable business approach and take their share of responsibility for social and environmental performance. Since the global crisis the Turkish maritime transport was affected. Freight rates decreased and maritime import decreased. This affected ship owners by their decision to dispose the older vessels. In the period from 2008 to 2012, Turkey four folded its ship recycling activity.
Aliağa is Turkish main ship-recycling region, with 21 scrapping companies located here. It is in the town and a district of Izmir Province in the Aegean Region of West-Asian Turkey. The town is situated at about 50 km North of Izmir and the economic activity is centered around an oil refinery, ship breaking yards, as well as tourism. The shipbreaking activities in this area are licensed by the Ministry of Environment and Urbanization (MoEU). It has the Authority Document from the Directorate General of Shipyards and Coastal Structures, a body of the Ministry of Transport, Maritime Affairs and Communications.
The MoEU set up a Recycling Management Centre in 2004 and received authorization to remove asbestos and manage waste materials. From 2008
144 onwards, the Turkish ship recycling has become a rising industry. International meetings and platforms were supported by the Turkish government. ILO and IMO meetings with the Ministry of Environment and Forestry (Now: Ministry of Environment and Water Works) and the Under secretariat for Maritime Affairs (now: MoTMC) have been the main cause of the rise.
The Turkish ship recycling sector was represented at state level during IMO meetings in 2008 in France and Dubai. They contributed to the preparation of the draft contract of the International ship recycling regulations. The Ministry attended a diplomatic conference held in Hong Kong, China from 11 to 15 May 2009. Here, the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships13 was adopted.
In May 2009, the Secretariat of the Basel Convention received a request for technical capacity building assistance in relation to ship recycling from the Government of Pakistan. In response, the Secretariat developed a concept for a Ship Recycling Technology & Knowledge Transfer Workshop. In collaboration with the Secretariat of the Basel Convention the Ministry of Environment & Forestry and the Under secretariat for Maritime Affairs of the Government of Turkey and the Ship Recyclers’ Association of Turkey hosted the Workshop at June 2009 in Izmir14. Currently, all the countries that have sea coast are looking at relevant sustainable ship recycling possibilities. The improvement of the industry goes parallel with environmental pollution. Therefore, Turkey has plans to oppose against pollution.
Ship recycling statistics Due to the continuing increase in ship recycling, Turkey’s used capacity became 72% in 2011 and 100% in 2012, while the used capacity was only 12% in 2005. In 2012, more than 280 vessels were recycled in the Aliağa region, representing a total capacity of more than 900,000 Light Displacement tonnes (LDT15). In 2011 these figures were 340 vessels, with a capacity of only 650.000 LTD. This
......
13 The Convention is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and to the environment. 14 http://www.basel.int/Portals/4/Basel%20Convention/docs/ships/CB/ ShipRecyclingTechnologyTransferWorkshop-201006-report.English.pdf 15 The weight of water displaced by the ship – the mass of the ship excluding cargo, fuel, ballast, stores, passengers, crew, but with water in boilers to steaming level.
145 equipment and repair services, maritime training companies, sand extractors and fishermen.
The members of TCS have been gathered in 47 Professional Committees, according to their fields of occupation and professions and at present Turkish Chamber of Shipping has over 8000 Members. In accordance with Law No. 5174 every company performing activities in the field of maritime shipping has to become a Member of the Turkish Chamber of Shipping.
The most important aim of the Turkish Chamber of Shipping is to try to develop shipping in accordance with the national transportation and shipping policy and the public interest. Moreover, to promote the interests and provide the common requirements of its members, to arrange the development of the profession, to guide and facilitate the professional activities, to establish common rules and to inform the authorities on shipping matters and to keep the discipline, morals and solidarity of the shipping profession are the other major concerns of the Turkish Chamber of Shipping.
The major activities of TCS are to establish rules and practices as regards shipping, to make researches and collect information on shipping, to ensure that sea trade is developing in accordance with the national policy of transportation, to supply information to foreign organisations on the possibilities and tariffs of the Turkish ports, to become member of and to follow activities of the international organisations concerned with shipping and to perform other functions stated in the law.
Turkish Chamber of Shipping is a member of The Union of Chambers and Commodity Exchanges of Turkey and The International Chamber of Commerce- The Turkish National Committee. Apart from these two national organisations, TCS is also a member of The International Chamber of Shipping (ICS), International Maritime Bureau (IMB), The Federation of National Associations of Ship Brokers and Agents (FONASBA), The Baltic and International Maritime Council (BIMCO), European Community Association of Ship Brokers and Agents (ECASBA), The International Association of Independent Tanker Owners (INTERTANKO) and The Baltic Exchange.
The president of TCS is Mr Metin Kalkavan. As from 2002, he is the Chairman of the Executive Committee of The Turkish Chamber of Shipping. He is a Member of The Council of the Union of Chambers and Commodity Exchanges of Türkiye (TOBB) and the President of the Board of Administrators of the University of Piri Reis. He is also the President of the Council of Arbitrators of TOBB.
181 Maritime Hotspots
Contact Details of TCS
Address: Meclis-i Mebusan Cad. No: 22 34427 Fı2ndıklı, Beyoğlu İstanbul / Turkey Phone: 90 212 252 01 30 Fax: 90 212 293 79 35 email: [email protected] web page: http://www.chamberofshipping.org.tr/en-en/Pages/ContactEN.aspx
6.4.3 Chamber of Shipping -Mersin- (MCS) Mersin Chamber of Shipping (MCS) was established in 1989 within jurisdiction of Mersin including Mersin International Port, Mersin Free Trade Zone, Mersin- Ataş, Nato Fuel Oil Terminal, Karaduvar GS Fuel Oil Buoy, Kazanlı Opet Fuel Oil Buoy, Kazanlı Tuta Fuel Oil Buoy, Kazanlı Siyam Fuel Oil Buoy, Kazanlı Altınbaş Fuel Oil Buoy, Adanalıoğlu Enerji Fuel Oil Buoy, Taşucu Seka Port and Taşucu Municipality Quay; Mersin Marina and Kumkuyu Marina. Mersin Chamber of Shipping is subject to the provisions of Union of Chambers and Commodity Exchanges of Turkey. In accordance with the legislation's 4th clause, Mersin Chamber of Shipping is a public institute and has established to; • provide Chamber's members common needs and facilitate the occupational activities, • develop maritime sector in accordance with the general interests, • provide occupational dicipline and ethics in accordance with confidence
The members of Mersin Chamber of Shipping include the ship owners, ship operators, shipping agents, ship brokers, forwarders, stivedors and tallying firms, classification societies, marine insurance companies and their agencies, marine surveyors, marine equipment, industrial equipment and marine chandlers, bunkering companies, marine and port operating companies, fishing vessel operating companies, yachting companies, fishing companies, cruise companies, environmental cleanup companies, ship and yacht building and related industry companies, marine tourism and sports companies The mission of Mersin Chamber of Shipping is stated as improving the maritime sector, turning stakeholder’s power into the synergy in order to increase Mersin and also Turkey's margin in the maritime sector, reinforcing the chamber's members with the fast and reliable information against the increasing competitive conditions and make a contribution to solve the occupational issues. Mersin Chamber of Shipping has participations in some corporations in Mersin including Merdaş Mersin Denizcilik İşleri Taşımacılık Hizmet Turizm Tic.ve San.Inc. (Shipping and Tourism industry), Çukurova Fuarcılık Inc.(Fair and Exhibition industry), Mesbaş Mersin Serbest Bölge İşleticisi Inc. (Free Zone Operator), Akter Akdeniz Taşucu Gemi Sanayi Inc. (Ship Construction industry),
182 Mersin Ro-Ro Taşımacılığı Inc. (Ro-Ro Shipping), Merlat Denizcilik Inc (Shipping Services.
Committees and Commissions of Mersin Chamber of Shipping include Professional Committees, Assembly, Board of Directors and Disciplinary Board. Mr. M. Cihat Lokmanoğlu is the board president of Mersin Chamber of Shipping currently.
Contact Details of MCS
Address: Pirireis Mah. İsmet İnönü Bulvarı No:45 P.K. 33110 Mersin / Turkey Phone: + 90 324 327 70 00 (PBX) Fax: + 90 324 329 52 30 E-mail: [email protected] Web page: http://www.mdto.org/
6.4.4 Association of Ship owners and Ship Agents –VDGAD Maritime Association of Ship owners and Ship Agents -VDGAD- as the oldest maritime association of Turkey, was founded in 1902 in İstanbul. It has more than 144 members only in İstanbul who are ship agents and ship owners.
The association follows the maritime legislation and tariffs and informs the members about them, helps solving the problems of their members, creates modern work environment and encourages improving quality of shipping and ship agency services. Some of the objectives of the Maritime Association of Ship owners and Ship Agents are stated as; • Developing awareness on maritime busines especially ship agency business, • Organizing conferences and seminars related to the sea and maritime business, and arranging professional publications on related subjects, • Assist in growing skilled manpower in ship and cargo handling, • Heping turkish merchant fleet to compete with other countries’ fleet • Developing measures to be taken to prevent pollution of seas, • Recording statistics related to their field of activities
183 Maritime Hotspots
Contact Details of VDGAD Address: Kılıç Ali Paşa Mahallesi İlyas Çelebi Sokak No.23 34433 Cihangir - Beyoğlu / İstanbul Phone: 0 212 244 32 94 -0 212 293 78 80 Fax: 0 212 243 28 65 - 0 212 243 23 31 E-mail: [email protected] Web page: http://www.vda.org.tr/
6.4.5 Turkish Shipbrokers’ Association (TSA) Shipbrokers’ Association was founded on 05th May 2010 with 60 founding members who represent a commitment to maintain and promote higher standards across the shipping industry in Turkey. It is the first recognized professional body representing shipbrokers throughout Turkey.
The purpose and goals of the association are:
• to protect, develop and promote shipbrokers' profession as well as to maintain and develop the standards; • to develop, investigate and promote the business in national and international area such as ship broking and chartering, tanker chartering, dry cargo chartering, sale and purchase, port agency, etc. • to participate in international activities, to enhance partners relationship with national and international bodies in the shipping business, to develop projects together with its partners • to provide economical and cultural synergy, to make strength relationship between members as well as to share experiences and knowledge by making case studies • to endeavor and support Turkish shipping industry by relying to the shipping consuetudes • to collect and provide most comprehensive sources of practical shipping information and to explain ethics of the association by national and international mean • to support for the development and promotion of the ship broking profession and to organize seminars and conferences for the purpose • to provide advisory and consulting services to its members.
The organisations of the association consist of the board of directors, auditing commission and disciplinary board. The president of the shipbrokers’ association is Mrs. Z. Pınar Kalkavan Sesl currently.
184 Contact Details: Shipbrokers' Association Katip Salih Sok. No: 36 P.K. 34718 Koşuyolu, Kadıköy İstanbul / Turkey Phone : +90 216 339 33 32 Fax : +90 216 339 33 23 E-mail : [email protected] Web page : www.gbd.org.tr
6.4.6 Association of International Forwarding and Logistics Service Providers- UTİKAD- Association of International Forwarding and Logistics Service Providers (UTİKAD) was founded in 1986. It has more than 400 members who are competent in forwarding and logistics industry. Amongst the member forwarders, the companies are specialized putting emphasis in certain modes of transportation, namely road, air, ocean freight, railway and increasingly the multimodal transportation. To portray a broad picture of what UTIKAD reflects, it’s member companies have stakes of 95% in air & rail, 65% in ocean & road forwarding activities supported with a work force of nearly 30.000. The activities include warehousing, customs operations, packaging, distribution, supply chain facilities with emphasis on goods assembly which are inseparable functions as a whole of the modern day world logistics concept. The global trend is increasingly stipulatating the forwarders to get involved in more then one transportation mode. One of UTIKAD’s major functions include the use of the initiatives on behalf of the industry through governmental organisations and at international platforms to pave ways for seamless, swift, safe and efficient transportation processes to meet the ever increasing demands for multi-modal transportation
As an association with the backing of the forwarding industry behind which it represents, it is at the same time of course is an accepted non-governmental organisation and is always ready to represent the forwarding industry toward government authorities, other non-governmental organisations and international organisations and platforms alike. UTIKAD is also representing Turkish freight forwarding and logistics industry on international level. It is an active member of International Federation of Freight Forwarders Association (FIATA) which is the largest non-governmental organisation in the field of transportation in the world. Moreover UTIKAD is also a member of European Union Forwarding and Logistics Organisation (CLECAT) which is the largest and oldest institution of its kind. Lately UTIKAD also took initiative and is an active partner of ECOLPAF which is the forwarder association’s cooperation leg of Economic Cooperation Organisation formed by Turkey, Irani Azerbaijan, Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan, Turkmenistan and Uzbekistan. At the same time UTIKAD is also taking active
185 Maritime Hotspots
part in a regional platform made up of 8 countries of the South East European Freight Forwarders and Logistics Operators.
UTIKAD’s objectives could be enumerated as (Utikad; 2013): • To represent, promote and protect the interests of the industry, • To promote a high standard of professional conduct amongst its members, • Make efforts to achieve standardization in the industry • Help improve the quality of human resources in the industry by arranging vocational training programmes and publications. • Give a helping hand in planning, development and maintenance of the international freight services industry in Turkey. • Support the expansion of the Turkish trade worldwide.
UTIKAD’s main mission is stated as; “by creating optimum standards for the services offered and sticking firmly to the free market principles, help provide a better quality working atmosphere for the industry as a whole” (Utikad, 2013).
The president of UTİKAD is Mr. Turgut Erkeskin and board of directors consist of 11 members. UTİKAD has 4 representatives including Ankara, İzmir, Mersin and Atatürk Airport.
Contact Details of UTİKAD:
Address: Şenlikköy Mahallesi Saçı Sokak, No: 4 / F Florya 34153 Bakırköy İSTANBUL Phone: +90 212 663 62 61 Fax: +90 212 663 62 72 Email: [email protected] web page: http://www.utikad.org.tr/eng/default.asp
6.4.7 International Road Transporters’ Association of Turkey- UND Turkish international road transporters are embodied in the association of international road transporters’ association. The association was founded as a Professional organisation in 1974 through the initiative of seven entrepreneurs working in the Turkish road transport industry in order to solve the international road transporters problems both at local and international levels. The association’s aim is that of co-ordinating and uniting the interests of hauliers working in the field of international road transport. The association with 940 members currently has developed considerably from the time it was founded and today it represents 90 % of the Turkish road transport sector The mission of UND at the national level is
186 • to inform the members on every subjects including global developments, risks and opportunities that may arise • to encourage the turkish road hauliers to form partnership and strategic alliances both at the local and international scale • to get the members have modern, efficient and environmental friendly road transport companies The mission of the UND at the international level is to • to strive to eliminate the barriers infront of the turkish internationl road transportation industry in order to provide efficient and sustainable road transportation services to the society • to cooperate with the IRU and other related organisations for above mentioned purpose • to work together with the other countries’ association and if it is possible, to form strategic alliances and cooperations in every related subject.
UND has adopted decentralized management approach. Therefore it has been organized in 12 regional offices. The organisation of the association consist of board of directors, auditing committee, high court of honour, advisory board, executive committee and regional representatives Mr. Ömer Çetin Nuhoğlu is the president of the association currently.
Contact Details:
Address: Nispetiye Cad. Seher Yıldızı Sok. No:10 34337 Etiler İstanbul / Turkey Phone: +90 212 359 26 00 (pbx) Fax: +90 212 359 26 26 Web page: http://www.und.org.tr/
6.4.8 Ro-Ro Vessel Operators & Combined Transporters’ Association- Roder RODER was established on 28 November 2001. RODER is a recently founded NGO, committed for the purpose of development of road transport sector nationally and internationally, through the enhancement of Combined Transport activities, thereby pioneering the establishment of an efficient and modern transport understanding in the world. The First General Congress of RODER was done on 01.06.2002.
The following missions are undertaken by RODER: • to make all kinds of scientific and technical research in relation to Ro-Ro Transport and other Combined Transport activities and to inform its
187 Maritime Hotspots
members about the outcomes of such researches, • to render its members all kinds of educational services concerning transport sector by focusing on the advantages of Combined Transport and its importance, • to encourage its members to form strategic co-operationships in order to create a competitive sector; especially by using wholesale purchase methods, decreasing the variable and fixed costs of the members, • to study the possibilities and methods of cooperating with other associations active in the same sector, • to co-operate with other domestic or international Associations operating in the Transport sector; to share all kinds of information and enlighten them about the importance and advantages of Ro-Ro and Combined Transport activities. • to take an active part at all the regional conventions and try to widespread Ro-Ro and Combined Transport activities by emphasizing their importance and advantages. • to follow and study the applications and implementations in the European Union regarding the Road Transport and Combined Transport activities; and maintain liaison with the Turkish public sector in order to realize arrangements during the process of integration of Turkey with EU.
Board of Directors of RODER consist of 19 members. RODER’s Founder- Chairman, Mr. Saffet Ulusoy is also the present Chairman of RODER.
Contact Details Address: Kemankeş Mah. Maliye Cad. Demirciler Sokak No: 8 34425 Karaköy-Beyoğlu İstanbul / Turkey Phone: +90-212 ?377 13 77 (ISDN) Fax: +90-212 ?377 13 50 (ISDN) E-mail: [email protected] Web Page: http://www.roder.org.tr/
188 7 TURKEY AND THE EUROPEAN UNION
In this chapter an overview is given of the development of the relation between Turkey and the EU and the possibilities it can offer for cooperation.
7.1 Turkey and EU relations
Despite the negative impacts of the economic and financial crisis, Turkey is the 6th largest economy of Europe and occupies the first place in terms of growth rate (8.5 % in 2011). Turkey has intensive commercial and economic relations with the European Union and the EU is Turkey’s biggest trade and investment partner. Currently, approximately 37 % of Turkey’s total foreign trade is realised with the EU Member States and 70 % of the foreign direct investment in Turkey comes from EU countries.
As a part of the European family, Turkey not only had an influence on the political, economic and socio-economic cultural developments of Europe but has also been influenced by Europe. Therefore, relations with the EU are a fundamental aspect of the Turkish foreign policy and in this context Turkey’s goal to become an EU member is a strategic choice. The development of the negation process between Turkey and the EU are given chronologically as followed: (Ministry of Foreign Affairs, 2013): • Turkey-EU relations were initiated in the framework of the association regime based on Ankara Agreement which was signed with the European Economic Community on 12 September 1963 and took effect on 1 December 1964. • With the finalisation of the preparatory stage as foreseen in the Agreement, provisions of the transitional stage and the obligations of the Parties were determined in the Additional Protocol signed on 13 November 1970 and put into effect in 1973. • With the completion of the transitional stage, the Customs Union, which constitutes an important stage for Turkey’s integration with the EU, entered into force on 1 January 1996. • A new period began in the relations between Turkey and the EU after Turkey assumed “candidate status” during the Helsinki Summit on 10-11 December 1999. At the Brussels Summit on 16-17 December 2004, the decisions taken in the 1999 Helsinki Summit were reaffirmed, as the Council took note that Turkey sufficiently fulfilled the political criteria and decided to open accession negotiations with Turkey on 3 October 2005. Accession negotiations were launched on the abovementioned date, as planned.
189 Maritime Hotspots
• On 29 July 2005, the Additional Protocol extending the Ankara Agreement to the new member states that acceded to the EU in 2004 was concluded by exchange of letters among Turkey, the EU Presidency and the Commission. An official declaration to legally constitute an integral part of the letter and signature was also made. In the declaration, it was explicitly stated that Turkey, by signing the Additional Protocol, did not recognize the “Republic of Cyprus” by any means. • In the accession process, 13 chapters (4-Free Movement of Capital, 6- Company Law, 7-Intellectual Property Law, 10-Information Society and Media, 12-Food Safety, Veterinary and Phytosanitary Policy, 16-Taxation, 18-Statistics, 20-Enterprise and Industrial Policy, 21-Trans-European Networks, 25-Science and Research, 27-Environment, 28-Consumer and Health Protection, 32-Financial Control) have been opened to negotiations so far and 1 of them (25-Science and Research) has been provisionally closed. The negotiations on 8 chapters cannot be opened at present (1-Free Movement of Goods, 3-Right of Establishment and Freedom to Provide Services, 9-Financial Services, 11-Agriculture and Rural Development, 13-Fisheries, “14-Transport Policy”, 29-Customs Union and 30-External Relations) in accordance with the EU Council decision of December 2006 and no chapters can be provisionally closed on the grounds that Turkey does not undertake its obligations stemming from the Additional Protocol to Ankara Agreement in its entirety. • In 2007 France has declared that it will not allow the opening of negotiations on 5 chapters (11-Agriculture and Rural Development (one of the 8 chapters blocked due to Additional Protocol), 17-Economic and Monetary Policy, 22-Regional Policy and Coordination of Structural Instruments, 33-Financial and Budgetary Provisions, 34-Institutions) as they are directly related with membership. • Following the EU Council meeting of December 2009, Greek Cypriot Administration unilaterally stated that it would block the opening of 6 chapters (2-Freedom of Movement for Workers, 15-Energy, 23-Judiciary and Fundamental Rights, 24-Justice, Freedom and Security, 26- Education and Culture, 31-Foreign, Security and Defence Policy).
It is a commitment of the EU to carry out the negotiations on chapters only on the basis of the relevant acquis. Both during institutional contacts with the EU and meetings with the representatives of the EU member states, Turkey emphasizes that the technical negotiation process should not be slowed down for political reasons. At present, efforts are underway to revive the negotiation process with a new impetus.
190 7.2 The progress of the negation process on the transport chapter
The chapter on “Transport Policy” was one of the chapters to be suspended as a result of Turkey not having fully implemented the Additional Protocol to the Association Agreement. Accordingly, the EU Council Decision of 11 December 2006 stipulated that negotiations will not be opened on eight relevant chapters and no chapter will be provisionally closed until Turkey has fulfilled its commitment.
Considering the alignment with the EU Acquis the following progress has been reported with regard to the maritime sector (Ministry for EU Affairs, 2013: EC, 2012a)
The Ministry of Transport was restructured in November 2011 to become the Ministry of Transport, Maritime Affairs and Telecommunications (MoTMC). The restructuring strengthens the regulatory character of the Ministry. In the field of maritime transport, good progress has been reported. The Under secretariat for Maritime Affairs issued regulations on protection and insurance of hazardous and noxious substances (HNS). Turkey has become a party to numerous agreements including; • International Convention on Control of the Harmful Anti-Fouling Systems on Ships (AFS 2001), • Convention on Facilitation of International Maritime Traffic (FAL 1965), • Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (Hong Kong SRC 2009), • Annexes III, IV and VI to the International Convention for the Prevention of Pollution from Ships (MARPOL), • International Convention for the Safety of Life at Sea (SOLAS) Protocols of 1978 and 1988, • Protocol on Preparedness, Response and Co-operation to Pollution Incidents by Hazardous and Noxious Substances, 2000 (OPRC-HNS 2000).
Furthermore, investments from the national resources continue in order to set up response centres for the purpose of increasing the urgent response capacity for the oil spill in the seas. Turkey signed the “Protocol of 2010 to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea” (HNS 2010 Protocol) on 25 October 2011. The Training and Authorisation Regulation within the Scope of the International Maritime Dangerous Goods Code (IMDG Code) was revised and published in the official Gazette No. 28201 of 11 February 2012.
191 Maritime Hotspots
Establishment of vessel traffic management systems (VTMS) for the ports of Koala, Mersin, İzmir and İskenderun is still on-going. Emergency response preparedness and handling of dangerous goods are areas that call for increased attention.
It is stated that further efforts are needed in the areas of human resources and technical capacity to apply the acquis, especially in the fields of dangerous goods and emergency response preparedness in maritime transport. Regarding to Administrative Capacity Building in Transportation on 1 November 2011, the Ministry of Transport was restructured as the Ministry of Transport, Maritime Affairs and Communications. With this restructuring, several new general directorates, in particular the Directorate General of Railway Regulation, the Directorate General of Road Regulation and the Directorate General of Dangerous Goods and Combined Transport were established.
The Under secretariat of Maritime Affairs was abolished and incorporated in the Ministry, and various permanent and temporary boards were established such as the Accident Research and Investigation Board and Railway Coordination Board, to which the European Union attach importance.
The accreditation process regarding the take-over of tasks on tendering, contracting, paying and reporting within the scope of the Transport Operational Programme from the Central Finance and Contracts Unit (CFCU) to the Managing Authority established under the Ministry of Transport, Maritime Affairs and Communications was finalized in November 2012.
7.3 Instrument for Pre-Accession Assistance (IPA) and Multi- Annual Indicative Planning Document (MIPD) for Turkey
7.3.1 IPA Strategic Objective for Turkey The overall objective of EU financial assistance to Turkey is to support its efforts for reform and towards compliance with EU law in order that it may become fully prepared to take on the obligations of membership to the European Union (EC, 2012b) The Europe 2020 agenda offers the enlargement countries an important inspiration for reforms. Turkey is invited to consider the priorities of the strategy and adapt main challenges in the national context. Enlargement policy also supports the Europe 2020 strategy by extending the internal market and enhancing cooperation in areas where cross border cooperation is key.
192 7.3.2 National Strategies of Turkey Turkey's 9th Development Plan (DP) 2007-2013 was adopted in 2006 and contains five main objectives: Increasing Competitiveness, Increasing Employment, Strengthening Human Development and Social Solidarity, Ensuring Regional Development and Increasing Quality and Effectiveness in Public Services. The implementation of the DP is monitored by the State Planning Organisation. In addition, a National Rural Development Strategy (NRDS) of which the implementation is also monitored by the SPO was adopted in 2006. IPA assistance will support the implementation of the DP and the NRDS as its priorities are aligned with those of Turkey’s accession preparations. With the help of IPA, Turkey will be able to meet the objectives of the DP and the NRDS faster than it would have been possible otherwise.
Turkey also adopted its National Programme for the Adoption of the acquis (NPAA) in December 2008. The NPAA details Turkey's planned steps in its EU alignment process, thus addressing the short-term and medium-term priorities of the 2008 Accession Partnership. The priorities under the NPAA are the fulfilment of the political criteria in areas such as public administration, judiciary reform, prevention of torture and ill treatment, access to justice, freedom of expression, fundamental rights, women, children and trade union rights, the economic criteria in areas such as economic policy coordination, fiscal policy, regulatory reforms, investment environment, labour market, social security and assistance, education, health, energy and transport and sector specific measures for the adoption of the acquis by negotiation chapter.
7.3.3 EU Financial Assistance to Turkey EU financial assistance is provided through the Instrument for Pre-Accession (IPA), which supports the accession process and helps Turkey to carry out reforms which are important for accession preparations but also for the economic and social modernisation of the country. IPA assistance can often provide Turkey with the necessary expertise to kick start and complete accession-related reforms faster and more efficiently than would have been possible otherwise (EC, 2012b).
Assistance under IPA is implemented through decentralised management. The assistance is managed by the Turkish authorities following the accreditation process carried out by the Commission. Turkey is strengthening its capacity to absorb funds, achieve results and implement in a timely manner. The supervision by the National Authorising Officer needs to address system weaknesses, including monitoring and control, and further improve the quality and efficiency of the project and programme cycles. Turkey receives assistance from IPA under 5 components with a total allocation of EUR 4.87 billion for 2007-2013 (EC, 2012b).
193 Maritime Hotspots
The following priorities for IPA support over the period covered by this MIPD have been identified (EC, 2012b): • The first priority for Turkey is to make progress in the critical areas of rule of law in order to tackle key reforms of the judiciary and fundamental rights. • A second priority is to adopt the acquis in areas where there is complex legislation or costly requirements to adopt EU standards in areas such as transport, agriculture, food safety, environment, climate change and energy. • A third priority is to support Turkey in its economic and social development and to enhance competitiveness. • Horizontal priorities that will be supported as cross-cutting themes are participation of civil society, participation in EU programmes, a high degree of protection of the environment, mainstreaming of climate change considerations, equal opportunities for men and women, support to disadvantaged and vulnerable groups as well as the development of good neighbourly relations. These horizontal priorities may be supported in their own right or as part of programmes and projects in other priority areas.
In line with these priorities, the choice of sectors in the MIPD has therefore been carried out bearing in mind the remaining challenges for Turkey to fully meet the Copenhagen criteria for membership with particular focus on the political criteria. At the same time, not all areas in need of support for Turkey’s accession preparations can be funded under the MIPD in the next three years and priority was given to areas were support will make the most significant impact. Moreover, in some areas funding has been allocated recently under IPA or by other donors or IFIs, or Turkey decided that they will address these needs from national funds. The sectors and priorities chosen have potential to support the catalytic effect and additionally of the EU support. Where linkages between sectors exist, these will be explored in order to ensure that assistance provided is mutually reinforcing. This is especially the case where there is strong ownership and political commitments for the reforms on the Turkish side and comprehensive sector strategies either exist or are under will. EU assistance will provide value added and often kick start important reform processes that will continue in a sustainable manner beyond the duration of the EU programmes.
In line with the Europe 2020 Strategy, Turkey also needs to ensure that the challenges linked to climate change are addressed, in particular by reducing the emission intensity of its economic development. The aim to reduce greenhouse gas emissions shall be taken into account in all relevant sectors of the MIPD, in particular in the sectors of Transport, Energy, Environment and Climate Change, and Agriculture and Rural Development. Furthermore, all financial assistance must comply with the principle of sustainable development and meet the
194 requirements of the relevant EU environment acquis, in particular the EIA as well the Birds and Habitats directives.
7.4 Main sectors for EU support for 2011-2013
To achieve the priorities selected for support in the programming period 2011- 2013, the Commission will focus its assistance primarily on the following sectors: (1) Justice, Home Affairs and Fundamental Rights (2) Private Sector Development (3) Environment and Climate Change (4) Transport (5) Energy (6) Social Development (7) Agriculture and Rural Development
The selected sectors are based on the priorities provided by Turkey which ensures a high degree of ownership. The selection of a limited number of sectors allows for a targeted approach towards EU assistance that aims to deliver the expected results and meet the envisaged objectives in a sustainable manner in line with the lessons learnt described above. Assistance to support these sectors will be provided under IPA component I, III, IV and V. It will be implemented via technical assistance, twinning, works and supply contracts as well as through grants. Other forms for the delivery of assistance such as sector wide programmes or pooled financing with other donors may be piloted in the 2011-2013 in agreement between the Commission and the Turkish authorities if found appropriate for a more effective delivery of assistance. In addition, IPA funds will continue to be provided to Turkey to support participation in Union Programmes according the planned financial allocation per sector given in table 32:
Table 32: The Planned Financial Allocation per Sector (million €) Period 2007- 2011-2013 Period 2011-2013 2010 Justice, Home Affairs and Fundamental Rights 373.46 439.77 17 % Private Sector Development 250.22 311.74 12 % Environment and Climate Change 346.34 465.64 18 % Transport 270.69 336.29 13 % Energy 3.85 129.35 5 % Social Development 546.61 310.42 12 % Agriculture and rural development 405.63 593.69 23 % TOTAL 2196.80 2586.9 100 % Source: EC, 2012b
195 Maritime Hotspots
The financial assistance will be implemented through the relevant IPA components as follows: Table 33: The Financial Assistance through IPA Components in (million €)
IPA Component 2011 2012 2013 Transition Assistance and Institution 228.62 233.90 238.33 Building Cross-border Cooperation* 9.78 9.97 10.17 Regional Development 293.40 367.81 378.00 Human Resources Development 77.60 89.93 96.00 Rural Development 172.50 197.89 213.00 TOTAL 781.90 899.50 935.50 Source: EC, 2012b IPA Component II, Cross-border cooperation, is dealt with in a separate MIPD.
Financial allocations are indicative and may vary according to actual financial needs identified at time of programming. The Commission aims to allocate indicatively around 2-5% of the overall assistance for the three years to civil society support.
7.5 Turkey’s priorities in the transport sector
The National Programme for the Adoption of the acquis (NPAA) describes Turkey’s priorities in the transport area as the gradual liberalization of the railway sector in Turkey by opening Turkish rail transport market to competition and separation of functions regarding infrastructure management and provision of transport services. A priority in this sector is the construction of new high speed lines to increase passenger transportation by rail between major metropolitan cities. Road transport needs considerable upgrading and the main target of road transport policy is to decrease the present idle capacity and eliminate it after a reasonable time. Other priorities include maritime transport and aviation. In addition to the considerable investments required, Turkey needs to complete the adoption of the acquis. Moreover, transport safety and sustainable development are considered as key horizontal priorities (EC, 2012b). In the Transport sector separate pre-accession and reform strategies are in place for land transport, aviation and the maritime and railways, which are focussed and outline priority needs. The strategies, which are in place are suitable for a more programme based support to be provided by the EU and other donors as they identify priority actions, financial needs and the timeframe for the required support.
Financial assistance to Turkey in this area supports the priority “Climate change, energy and transport” of the Europe 2020 strategy by modernising transport infrastructure and coordination with EU core networks. The implementation of the Operational Programme for “Transport” under IPA component III started in
196 late 2009 when the Financing Agreement was signed and the management powers were conferred. Since then several major projects are under preparation for implementation.
Moreover, around EUR 30 million of EU funds have been provided between 2000 to 2009 for institution building and the adoption of the acquis focussing on the maritime, rail and road areas. Among the other donors, UK, Spain and the Netherlands provide bi-lateral support programmes for small scale technical assistance. In addition, development agencies like the AFD, FAD and the international financing institutions like the EIB, the EBRD, and the World Bank provide loans. The main source of external finance provided for transportation sector is the commercial banks. The remaining external sources for funding transportation sector are IFIs, export credit agencies and foreign governments. According to Turkish external borrowing strategy, financial sources of IFIs are preferred for financing public sector projects. In this respect, the share of IFI sources has been increasing since 2005.
The first sector objectives for EU support over next three years is the transposition of the EU’s transport legislation thereby aiming at improving the functioning of the market by promoting safe, efficient, environment sound and user friendly transport services in the area of land transport, aviation and railways and maritime, focusing in particular on achieving proximity with EU neighbours. A second objective is the establishment of new efficient and environmentally friendly transport links with the European Union; relief of national bottlenecks and repair of deficiencies. This objective is shared by the other donors such as the IFIs, including the World Bank which supports the renewal of conventional railway lines and rolling stocks in order to increase line and rolling-stock capacity especially through the provision of loans. Types of indicators to measure developments towards these objectives include, inter alia (EC, 2012b): • Professional competence and policy training completed for institutions and universities in the field of road, maritime, aviation transport and railways. • Provided support to transport safety and environmental sustainability by focusing on road charging, reduction of greenhouse emissions from transport, use of transport information systems, utilisation of intermodal transport and transport of dangerous and hazardous goods, on safety management systems, network planning and optimisation, reduction of greenhouse gas emissions, passenger rights, airports and aviation safety, an integrated approach and measures to ensure cleaner sea and coastal areas, emergency response and accident prevention and investigation. • Improving accessibility of transport and mobility in line with the EU acquis, including the realm of disability. • Institution building carried out to strengthen implementation of the EU
197 Maritime Hotspots
acquis focusing on market regulation (establishment of regulatory body, infrastructure manager, accident investigation body and safety authority). • Efficiency, sustainability, creation of new jobs and facilitation of external and internal trade through improved transport infrastructure. • Increase in user friendly and safer transportation through trans border and national interconnection projects, deriving from the TINA process, and concerning in particular (a) rail connection in the West with EU Member States, (b) interoperability and (c) multi- modality; motorways of the Sea (port facilities where there is a link to economic development) and intelligent transport systems (ITS) as well as studies and support services. Whereas component I finances legislative alignment and capacity building for the management of the acquis under the Operational Programmes of component III, infrastructure investments in these areas are supported. The implementation of results will be delivered through the continuous implementation of the Transport Operational programme covering, in principle, the whole territory but focusing on the trans-European network and infrastructure to promote growth.
198 8 SWOT-ANALYSIS
Based upon preceding analysis, the following SWOT-analysis can be made on the Maritime and Ports sectors of Turkey.
8.1 Strengths
8.1.1 Geographical location of Turkey Turkish ports have a strategic position in the East Mediterranean and Black Sea shipping market as being intersection points between the transportation corridors of North-South and East-West. Istanbul is a shipping centre hosting a complete infrastructure of ship owners, ports, shipyards, marine equipment, fisheries, navy, research facilities and schools. The Turkish shipyards are clustered at central locations near Istanbul. The potential cluster advantages are obvious. Also the climatic conditions in this geographical site are favourable for ports, shipbuilding, maintenance, dismantling and offshore works.
8.1.2 Human resources Turkey has a young and qualified labour force. The ports maintain good relations with the labour unions. Compared to neighbouring Europe, the Turkish workforce is flexible and has good entrepreneurial skills. The labour costs are relatively low because of the abundance of skilled and semi-skilled workers. A complete infrastructure of maritime education delivers well trained professionals to the sector.
8.1.3 Specialisation The specialisation of Turkish industry in the construction and maintenance of dedicated tankers, super yachts, workboats and ship repair services gives the industry an additional strength. Product innovations, research, education and financial services all can be focused towards the particularities of specific niche markets, therewith creating a competitive advantage. Also between the ports an increasing specialisation can be found.
8.1.4 Investments in national infrastructure and connectivity Favorable changes in port policies and strategies of the state, private sector participation in port operation and management, and growing interest in port investments have led to port expansion and port development projects. There
199 Maritime Hotspots
are growing investments into ICT systems and software at the ports, as well as heavy investments in superstructures and equiment. Thanks to recent investments in the shipyards, a large ship building and repair capacity is available.
8.2 Weaknesses
8.2.1 Inefficiencies and lack of production technology Turkey’s public port sector is perceived as highly inefficient. In some ports this is due to an iinadequate infrastructure and superstructures, but most of all it has to do with fragmented facilities and many governmental bodies being involved. Traffic congestion around the ports and port cities, a lack of value added services given by the ports, low automation levels and a weak cooperation between port operators and their stakeholders cause this problem. On top of this the port regulations and administrative issues are complex. The productivity of the Turkish workers stand at half the European average. Therewith the cheap labour costs disappear as an advantage. Outdated supply chain methodologies and working methods create cost inefficiencies at the shipyards. Shared facilities in steel processing, piping, and integration of installations can lead to less failures, speeding up processes, and decrease the workforce at the shipyards – thus making them less vulnerable in economic downturns.
8.2.2 Lack of access to funding sources A clear shipbuilding incentive structure is absent in Turkey. This gives the Turkish shipyards a disadvantage compared to the major competitors from Europe. The support structures of the European Union (guarantee schemes, RD&I programmes, closure aid, export credit guidelines, eco-innovations for ship owners, fiscal depreciation schemes) are hardly being matched in Turkey. Instead of supporting exports, fiscal measures are directed to the promotion of the construction of Turkish flag vessels. Turkish banks are reluctant to provide longer term mortgages or participate in other post delivery finance schemes. Nowadays, ship finance is one of the major factors in sales. European and Asian competitors offering competitive financial arrangements will win orders over the Turkish shipyards. Predelivery finance guarantees do not exist, which causes cash crunches at the shipyards.
8.2.3 Weak marketing and image building skills Especially in the super yacht industry, image is everything. In spite of the quality of the products and the craftsmanship, the Turkish industry still suffers
200