PUBLIC

DHL Global Forwarding TURKEY

/// , 2018, ///

Zafer Engin Head of Value Added Services, DHL Global Forwarding Greater

DHL Global Forwarding China – VAS Overview | January 2017 1 PUBLIC DHL RAIL WHY

COST RAIL? LEAD TIME ADVANTAGE

TRANSIT TIME

Speed Cost Environmental Advantage Advantage Advantage Rail Freight can reach much Rail Freight is considerably Rail Freight Emissions are similar to faster door-door transit times cheaper compared to Air Ocean Freight Emissions and have a than Ocean Freight and Freight. significant ecological advantage increase speed to market. compared to Air Freight.

2 PUBLIC WHAT IS BELT AND ROAD INITIATIVE (BRI)?

“Belt and Road” is an initiative by the Chinese government aimed at reviving and extending the historic Silk Road between China, Europe and the Middle East.

“Belt” refers to the Silk Road Economic Belt, which passes overland Russia from China through Central Asia to Central Asia Continental Europe. Europe Europe Persian Gulf China South Asia Silk Road Economic Belt Mediterranean Sea West Asia South Maritime Silk Road Southeast China Sea Indian Ocean Asia South Pacific “Road” refers to the Maritime Silk Road, an oceanic route connecting China to Europe and South-East Asia by way of ports in India and Africa.

DHL Global Forwarding | April 2018 3 PUBLIC WHY DOES IT MATTER

A strong facilitator to enhance Multidimensional economy and culture communication infrastructure network between Asia, Africa and Western Over $3 136 regions trillion billion trade USD1 volume Additional (2014-2016) Development investment 4.4 billion of the global population by China

21 trillion of the World output Cooperation with 10,000 Connectivity over 40 50 countries Scholarships yearly countries & organizations

DHL Global Forwarding | April 2018 4

1. http://opinion.jrj.com.cn/2017/06/16070522617202.shtml PUBLIC DHL EXISITNG SERVICE ALONG SILK ROAD ECONOMIC BELT

HONG KONG

HONG KONG

DHL Global Forwarding | April 2018 5 PUBLIC CHINA PLAN - CONSEQUENT IMPLEMENTATION

Top 10 China Hubs 2397 with largest volume in 2017

1182 Yingkou Yiwu 3% 3% 4% 545 4%

Changsha 4% 2015 2016 2017 22%

Westbound number of blocktrains DHL market share* 5% 10% 1276 11% 18% *Laden containers 540 247 Other cities 13% 13%

2015 2016 2017

Eastbound number of blocktrains Block train = 44 to 50 FEU

DHL Global Forwarding China – China, AP, CIS trip | April 2018 6 PUBLIC CN – EU RAIL MARKET : CORRIDOR & BORDER UTILIZATION

CN Border Westbound

Alashankou 52.5%

Manzhouli 32.6%

Erenhot 13.8%

Khorgos 1.1%

CN Border Eastbound

Alashankou 57.6% In 2017 80% of WB traffic and 90% of EB traffic was handled by /Alashankou border pass. Due to increasing volume 25.8% presurre, other corridors were explored in 2017 to avoid Erenhot 16.5% congestions and delays. Khorgos 0.2%

DHL Global Forwarding China – China, AP, CIS trip | April 2018 7 PUBLIC CHINA PLAN 2020

5,000 cargo trains* Running from China to Europe annually by 2020** via three passageways: North, Middle & South

43 transport hubs There are over 30 hubs now, 10 more will be opened by 2020 At least one connection with Europe per hub

6 Hours – target for border crossing stop For customs & inspection on Chinese side by 2020

>13 Train departures per day In westbound direction * Source: National Development and Reform Commission, http://www.ndrc.gov.cn/zcfb/zcfbghwb/201610/P020161017547345656182.pdf ** There is no target for Eastbound traffic DHL Global Forwarding | April 2018 8 PUBLIC Trans-Caspian Corridor

Tariff Lead Time

Flexibility Reliability

Customs Coverage CIS, Caucasus, Turkey, Europe Definition: Status Via Western China and to Not ready Caspian Sea; via Caucasus to Black Sea, and to Eastern Europe Under construction Servicing place Or via Turkey to Southern & Central Europe

DHL Global Forwarding | April 2018 9 PUBLIC Southern Corridor

Tariff Lead Time

Flexibility Reliability

Customs Coverage CIS, Iran, Turkey, Europe Definition: Status Via Western China to Kazakhstan, Not ready Uzbekistan & Trukmenistan to Iran Under construction From Iran via Caucasus to Turkey, and to Servicing place Southern & Central Europe

DHL Global Forwarding | April 2018 10 PUBLIC COMPARISON

PROS CONS

• Alternative to Russian corridors • • No regular operation • Irregular Wagon Trans- Lesser low termperature impact during ferry operation on Caspian Sea • Bad Caspian winter (for electronic goods, for example) weather impact on Caspian Sea crossing Corridor • Access to Caspain Sea, Caucasus, and (delays) Black Sea area • Customs issues

• Alternative to Russian corridors • • No regular operational structure • Trial Lesser low termperature impact during trains on this lane finished in Iran only • Southern winter (for electronic goods, for example) Political status impact • Non unify Corridor • Access to Caspain Sea, Caucasus, Customs issues Black Sea area, and Iran with Persian Bay • No dependency for Caspian Ferry crossing

DHL Global Forwarding | April 2018 11 PUBLIC BASIC PROCESS AND TIMELINE FOR TRECECA/SOUTH CORRIDOR Westbound: , China – Istanbul Turkey Indicative Transit Time Simulation

China Kazakhstan / Azerbaijan / Georgia Turkey

Transit Time Sample (Westbound) – A Classical Benchmark Country Location Activity -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 China Cargo booking cut-off Cargo cut-off and export China Lianyungang clearance China Lianyungang Departure

Rail Transit

China Alashankou Customs transit

Kazakhstan Dostyk Gauge change

Rail Transit

Kazakhstan Aktau Ferry loading

Caspian Sea Transit

Azerbaijan Baku Ferry unloading

Rail Transit

Georgia Poti Rail unloading to truck

Truck Transit

Turkey Manisa Truck unloading

12 PUBLIC CHINA TO TURKEY – TRAIN OVERVIEW Train ATD ATA LT Origin Destination Discrepancies

LYG1 11/29/2015 12/17/2015 19 Lianyungang Manisa Total : 6.5 days delay

CTU1 7/30/2016 8/16/2016 17 Chengdu Manisa Total : 4.5 days delay

CTU2 8/20/2016 9/5/2016 16 Chengdu Manisa Total : 2 days delay

LYG2 5/30/2017 6/28/2017 29 Lianyungang Istanbul Total : 11 days delay

LYG3 6/14/2017 7/5/2017 21 Lianyungang Istanbul Total : 3 days delay

LYG4 6/26/2017 7/19/2017 23 Lianyungang Istanbul Total : 5 days delay

LYG5 7/13/2017 8/4/2017 23 Lianyungang Istanbul Total : 5 days delay

LYG6 8/2/2017 8/25/2017 24 Lianyungang Istanbul Total : 5 days delay Total : 7 days delay LYG7 8/18/2017 9/12/2017 26 Lianyungang Istanbul

DHL Global Forwarding | April 2018 13 PUBLIC IRREGULARITIES - SUMMARY

Trains Irregularity % Days Avg (days) Root cause Next steps affected China slow traffic 1 of 9 11% 2 2 Heavy traffic, peak season in China -- (slow steam) Khorgos border 6 of 9 66% 1 to 4 2.3 Slow border operation Dialogue with Khorgos GTWY KZ railway slow traffic 3 of 9 33% 1 1 Heavy traffic, peak season Dialogue with KTZE Aktau port operation 1 of 9 11% 2 2 slow operation Dialogue with KTZE Caspian Sea weather 2 of 9 22% 2 to 4 3 Sea storm not controlable Caspian Sea ferry 3 of 9 33% 1 1 Ferry delay due to slow speed ferry fleet upgrade Baku operation 2 of 9 22% 1 to 2 1.5 slow operation Dialogue with AZY Poti truck arrangment 2 of 9 22% 1.5 to 9 5.25 Truck arrangement delay Avoid Poti, use railway to connect to TR Sarp border queue 1 of 9 11% 0.5 0.5 Border queue Dialogue with customs

Average T/T 22 days Average Delay 5.4 days Minimum T/T 16 days Minimum delay 2 days Maximum T/T 29 days Maximum delay 11 days

DHL Global Forwarding | April 2018 15 PUBLIC CRITICAL ELEMETS FOR DEVELOPING TRANS CASPIAN ROUTE

Efficiency of clearance process Transport related subjects ▪ Improve border facilities ▪ Standardize Tbilisi – Kars Rail Operation ▪ Simplify and shorten border crossing procedure ▪ Min 800km to 1200 km / daily rail performance guarantee ▪ Improve Trade Security ▪ Upgrade existing transport link ▪ Computerized and automated clearance system ▪ Small size block train support – (20X40HC level) ▪ Develop Logistic Hubs & hinterland connections Quality of Logistics Services ▪ Establish dry ports and inland clearance facilities ▪ Encourage integration of logistics services for trade and ▪ Introduce online system for real time clearance monitoring distribution ▪ Decrease operational handling times at terminals ▪ Allow new technology implementation for tracing and security ▪ Decrease waiting times in border crossing ▪ Introduce modern supply chain management techniques ▪ Create schedule service structure between point to point ▪ Create incentives to upgrade transport fleet

DHL Global Forwarding | April 2018 16 PUBLIC BENEFITS FOR SOCIETY

▪ New tradelane development ▪ Better connection between the nations. ▪ Faster and/or cheaper delivery of goods in demand ▪ Logistics sector development in new areas ▪ New hub creation opportunities along the routes ( Khorghos / Turkmenbasi , Baku, Istanbul ) ▪ Increase political interest in cross-nation multilateral cooperation

More prosperity Better life for people

DHL Global Forwarding | April 2018 17 PUBLIC

THANK YOU

DHL Global Forwarding China – VAS Overview | January 2017 18 PUBLIC MAJOR BENEFITS FOR TURKIYE Support Turkey Critical Projects

▪ 3rd Bosporus Bridge ▪ Marmaray Project ▪ TCDD Inland Logistic terminals

Other Benefits ▪ Increase Import Logistic Time Cycle which bring more productivity to Turkish Export bcz china import goods are mainly using export production in Turkey

▪ Support Central Asia Development

▪ Increase Export from TR to CIS ▪ Silk Road Initiative supported by China, Kazak, Azerbaijan, Georgia which brings these area more wealth and prosperity

DHL Global Forwarding | April 2018 19