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Game changers in Aliağa

Soner Esmer

Aliağa Hinterland Analysis:  Potential Trade and Investment Opportunities

Aliağa, while by itself has made the 11 % (42 million tonne) of the total handling of Turkey in 2014, it was 6 % (540K TEU) percent at container handling. It would not be true to say that just Aegean Region is the hinterland of Aliağa. We can say that the hinterland of Aliağa extends towards the Middle Anatolia. On the other hand, the best definition to describe geographical borders of the hinterland would be: Everywhere with the potential to send cargo to your port; is your hinterland.

When we look at the news about Aliağa in the press, it can be seen at first glance that Aliağa is a region that attracts significant investments. The region has been an important development area of the Aegean Region from seventies till today. Albeit, there are characteristic features as; poor handling of final products, frequent handling of raw materials and semi-finished goods, limited value added services to the handled goods, similarities of the prices among ports in the region, there are still a lot to do in the region. In this context, entrepreneurs who realize the potential in the Aliağa and analyse the commercial dynamics successfully have remarkable opportunities in front.

Game Changers in Aliağa

The term “Game Changer” is a popular concept lately. Who are the “Game Changers” in Aliağa? Namely, who are the major players that will affect the commercial development in Aliağa and what are the developments?

Game Changer 1 : China

China with its global development and trade strategy “One belt – One road” not just affects Aliağa and Turkey it affects the whole world. According to the Shanghai International Transportation Institute, 6 billion tons of cargo and 505 million TEU container are expected to be handled in 2030 in China.  According to the forecast of IHS Maritime and Trade, it is expected that the 15 million container flow between Far East – Europe will be doubled.

Game Changer 2 : Expanding Ship Sizes

Today, while the cargo increase in the world is at nearly 1.5 – 2 % levels the increase at ship capacity is nearly 7 %. Therefore there is a “ship capacity surplus”.  The raise is not just in mother ships it is also subject to feeder ships. In parallel to these developments, the super post panamax gantry crane numbers at ports which is 1,160 now is expecting to reach 2000 in 2020ies. Mega ships provide economies of scale but also they bring additional investment burdens to the ports and the hinterland. It is required to empower the logistics infrastructure in the hinterland.

Game Changer 3 : Global Terminal Operators in Turkey

We are witnessing intense interest of global terminal operators on Turkey, which were as hotel chains last 10 years. Arrival of a global terminal operator also means the arrival of its network and know how. First, the establishment of Spanish Global Terminal Operator Grup Maritim in the Ege Gübre Port with the name of TCEEGE and then the arrival of Global Giant APM to Aliağa shows the solid potential of the region. The purchase of Grup Maritim by APM make the situation a bit interesting.

Game Changer 4 : Port Investments in Aliağa

Nemrut Bay is witnessing crucial developments. Before handling just their own cargoes factory piers, then starts to handle also 3. party cargoes and now it is seen that the 3. party cargo handling exceed the factory handlings. As a facility of factories, berths now turned into strategic business units for Nemrut Bay factories. Even, while the business was growing some factories separated the activities of the berths and established or formed new companies to handle their management. In recent years, we are witnessing to the activities of global terminal operators in the area.

APM who was selected for the second time as “the best terminal operator in the world” in past four years, establishes a port which has a capacity of 1.3M TEU in Aliağa. IDC is extending its berth 100 metre more, they finished the pile driving, half of the concretisation was completed, later then they are planning equipment and additional warehouse investment. At Batıçim, 2-3 numbered berths will be extended 88 metres and they will be widened for 18 meters, they started to pile driving, necessary permissions for the handling of dangerous and chemical goods were gathered and they are planning to establish a tank far. Ege Gübre is planning to extend both of its berths for 100 metres. In the region there are plans of investments for 750 million dollar worth LNG terminals, furthermore the investment cost of Star Refinery is exceeding 5 billion dollars. All these important investments will substantially affect the commercial structure of the region.

Game Changer 5 : Warehouse Investments

Customers in the region seek to make profit from the freight rates and they front to the economies of scale therefore the region needs warehouses. Type A General Bonded Warehouses has time and tax advantages. There are cost differences between the transport to the in-port and out-port warehouses. Batıçim who handles this demand, is building 20 more warehouses additional to the 21 existing warehouses that in the 67k square metre land. There are additional warehouse investments in the targets of IDC. The other ports that have warehouses in the region are Ege Gubre and Nemport. Ceynak which focuses on this sector and which is doing this job professionally has a respectable capacity in the area. Also Abalioğlu has warehouse services in the region. On the other hand, ports offer package services which includes port and warehouse services connected and these offers help them to achieve competitive advantage.

Game Changer 6 : Railway Logistics

Gunaydin Group, Medlog, Mos Logistics and Öznak are operators in the railway logistics and the share of railway transport in cargo transportation raises day by day. It is an undisputed fact that railway transport has many advantages such as cost, service frequency, adequate transit time and value added services.  

Game Changer 7 – 8 : Port of Izmir and  Çandarlı

In the region, there is a habit and tradition to prefer Port of Izmir especially among shippers. After the privatization process, the potential of Port of Izmir cannot be ignored with the right investments (approach channel, berth, and equipment). Although I don’t see Port of Çandarlı as a solid competitor for Port of Izmir, it has a potential to be a game changer in the region with the help of raising transhipment traffic.

Game Changer 9: Logistics Hubs

Kemalpaşa Logistics Hub issue is on the agenda for a long time. But recently Aliağa Logistics Hub project is more popular. Both logistics hubs are very essential for the structure of the hinterland and with the values that they will add.

In that case what should ports and logistics companies do?

  • Competition is not in the local levels it is in the international levels,
  • There must be cooperation between terminals to develop the hinterland especially on the issues which can relieve the customers as, development and restoration of transportation infrastructure, establishment of specialized customs and Aliağa Agricultural Quarantine Office,
  • Customers are very important but employers are also important, there should be investments for internal environment ( Professional burnout should be prevented),
  • The prices are very similar so importance should be given to the quality,
  • Establishment of quality management systems, total quality management applications and especially sustainable service standards, are very important in the mean of competitive advantage. Harmonization with the growing legal requirements ( ISG Law, Environmental Legislation, Professional Qualifications etc.) is very important,
  • Dialogue with customers and colleagues is essential,
  • Customer oriented approach (tailor approach) should be adopted,
  • There should be package services for customers,
  • The main business should be focused and added value should be created,
  • Interim transport should be minimized,
  • Logistics should be left to the professionals, but the cooperation should maintained (Outsourcing and Win – win concept),
  • Investment through customer demand or first investment then gathering demand? questions should be analyzed and answered,
  • Additional costs of the customers should be analyzed and related projects should firmed,
  • Think as project basis not work basis (transportation cost will increase but storage cost will decrease, there will be saving of time etc..),

There are important developments in Aliağa. Aliağa is breaking its chain.  Today I realized this as the all other participants of the summit.

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