Turkey has high hopes of becoming a major transit hub for land and sea cargo freighting, linking Central Asia and the Middle East with Europe, though it will need to invest heavily in infrastructure if its hopes are to be fulfilled. The transport grid already has around 11,000 kilometers (km) of rail lines; 430,000km of roads, including 62,000km of motorways and main roads; a network of ports along its Black Sea, Aegean and Mediterranean coasts and at least one airport in each of its 81 provinces. Even so, the results of a joint study conducted by the European Commission and Turkey’s Ministry of Transport and Communications, released in 2008, showed Turkey has a long way to go before its transport network can service the future needs of the economy.
The Transport Infrastructure Need Assessment (TINA) said priority should be given to improving transport in the North-South and East-West axes to better integrate Turkish transport with international transport networks; upgrading intermodal transport facilities and services, and improving the country’s ports and maritime connections. These improvements will be needed if the assessment’s projections are correct. The report said Turkey’s road freight demand would reach at least 305 million tons by 2020, more than 230 percent up on 2004, the base year used for the study. Train hauled cargos are predicted to more than double to 31.5 million tons, while the merchant marine is expected by 2020 to lift its base total by around 60 percent to 25.3 million tons.
Finding the cash
To meet this demand, Turkey will need to invest more than $25 billion by 2020, with $11 billion dedicated to its rail network and $10.75 billion on roads, according to TINA. The key challenge will be to raise this cash at a time when many other calls are being made on the limited national treasury — including upgrading electricity generation and distribution grids, resolving environmental issues such as waste water processing and improving the health and education services. Though some of this funding gap could be filled by assistance from the EU through its trans-European transport network (TEN-T) program, most of the money will have to come from the state or the private sector, both of which are currently finding it hard to raise funds due to the tight credit markets.
Some of these major projects are well advanced, such as the Marmaray rail project which includes a tunnel beneath the Bosphorus that will link Europe to Asia, and a new high-speed train connection between Ankara and Istanbul. However others, such as duplication of many of the country’s main rail lines, remain on the drawing board. While the government is looking to upgrade and extend infrastructure links with limited fiscal means, the transport industry may find itself in less of a position to enjoy the benefits of the improved networks, at least in the short-term. With Turkey’s economy slowing, in line with those of its major export markets, there has been a fall in demand for long haul road, rail and maritime freighting.
The outline of decline
According to figures released by the Turkish Exporters Association (TIM) in March, overseas sales dropped 35 percent year-on-year in February to $6.87 billion. Industrial output is also contracting, down by 17.6 percent in December compared to the same month in 2008, the Turkish Statistical Institute reported. Lower industrial production means fewer raw materials are being freighted to factories, fewer finished products need to be shipped out, while falling export demand sees reduced calls being made on Turkey’s cargo haulage capacity.
The number of long haul trucks being shipped across the Dardanelles Strait is down by more than 20 percent so far this year, according to local ferry officials. Additionally, according to Erol Yücel, assembly chairman of the Turkish Chamber of Shipping, the steep drop in demand for shipping capacity due to low cargo levels has seen rental prices for ships fall by as much as 98 percent. Turkish exports, and therefore production and the transport sector, may get a boost from the sharp drop in the value of the local currency, with the Turkish lira hitting an all-time-low of 1.78 against the US dollar on March 10. With the cost of Turkish goods becoming more attractive, trade could pick up, helping the transport sector onto the road to recovery.
Peter Grimsditch is Executive’s Turkey correspondent
