Today sees the opening of the first phase of Istanbul New Airport. When completed, this infrastructure colossus – which replaces the aging Atatürk International Airport – will become the largest airport in the world.

Covering over 76,5 million square meters, Istanbul New Airport will feature six runways, an annual passenger capacity of 200 million, an air cargo capacity of 2.5 million tons a year in the first phase, capable of increasing to 5.5 million tons a year in the second and third phases, and 100 airlines flying to around 300 destinations. The resulting strengthening of regional connectivity, is expected to be a boon for Turkish exporters, increasing their reach to global markets and contributing an estimated 5 percent to GDP.

What's more, Hüseyin Keskin, former CEO of İGA Airport Operation, believes that Istanbul New Airport will create an “aerial” Silk Road, enabling countries such as India and China to connect more easily with Istanbul. “Collaborating with global actors whose joint trade activities date back to centuries ago, we will generate new opportunities and bring fresh breath to competition not only in Turkey but across the world,” he said. Because Istanbul is aiming to become a center for global air freight, DHL Express is planning to open a 42,000 square-meter facility at the airport, complete with support units, at the end of 2019 or early 2020.

ECONOMIC TURBULENCE

Unfortunately, Turkey hasn't only been making headlines with its new airport recently. Since January, the Turkish lira has lost 40 percent of its value against the dollar. In In early August, shockwaves were felt when the U.S. administration announced the doubling of tariffs on Turkish steel and aluminum; and later that same month, the credit ratings agencies Moody's and S&P Global Ratings downgraded Turkey.

By September, the rate of inflation in the country had reached almost 25 per cent; although, in October, Suma Chakrabarti, President of the European Bank for Reconstruction and Development (EBRD), called Turkey's troubles “a slowdown” rather than a crisis, predicting 3.9 per cent growth in 2018 and around 1 per cent in 2019. “The authorities are taking action to address the issues facing the economy and investors will scrutinize the commitment to the implementation carefully,” he said. “With the right policy response, the economy will recover more quickly.” Despite this turbulence, there is cause for optimism in Turkey – and Istanbul New Airport is a potent symbol of it.

TURKEY'S LOGISTICS SITUATION

Turkey's geography is unique – and, possibly, uniquely beneficial. It's located at the crossroads of Europe and the Middle East, close to the markets of the Balkans, Russia and Central Asia and acting as a strategic stopover point between Africa and Europe. Its enviable global position should make it a major hub almost by default; but this hasn't happened – yet – largely because parts of the country's transport infrastructure have been historically limited.

Turkey's road network is robust enough, and responsible for delivering 85 percent of domestic freight. Yet the country's rail network has suffered from years of under-investment – largely because the European Union is Turkey's main export market, and easily served by road – so that just 5 percent of domestic freight is transported by train. Around 90 percent of the country's foreign trade is transported by sea, while just 1 percent of export freight goes by air.

Those statistics may be about to change, however.  In 2015, Turkey's first trans-shipment container terminal opened at Asyaport, the country's largest container port with a capacity of 2.5 million twenty-foot equivalent units (TEU). In 2016, work finished on the $3 billion Yavuz Sultan Selim Bridge – said to be the world's widest suspension bridge – spanning the Bosporus Strait and creating an important link between Asia and Europe. Railways are another major investment component of the country’s new 2023 vision. “In the next five years, Turkey will allocate over $46 billion (€39 billion) to railway transport, either conventional or high speed,” said Ahmet Arslan, Turkish Minister of Transport, earlier this year. “Turkey is the second-largest country after China in railway constructions. Our target is to complete 11,700 kilometers (7,270 miles) of high-speed railway lines (by) 2023 and to link 41 cities to each other.”

BELT AND ROAD INITIATIVE

China's long-awaited Belt and Road Initiative could also be a growth game-changer for Turkey. Beijing wants to re-establish trade corridors along many of the historic Silk Road's original routes, passing overland from China through Central Asia to continental Europe (the “belt”) and via a sea route (the “road”) from China to Europe and South-East Asia by way of ports in India and Africa. As a key player in the project, Turkey would be better connected to other countries along the route, offering increased opportunities for Turkish businesses to export abroad. Its infrastructure has also been designed to integrate with Turkey's Middle Corridor initiative – a multi-transportation route that runs through Georgia and Azerbaijan over the Caspian Sea, Turkmenistan, Kazakhstan, Uzbekistan and ends in China. Indeed, last November, Abdulkadir Emin Önen, Turkey's Ambassador to China, told The Daily Sabah that developing Belt and Road infrastructure was a priority for the Turkish government.

“Turkey has been realizing tremendous infrastructure projects, which will connect China and Europe together,” he said. “For instance, the construction of the third Bosporus bridge which has a railroad and the renewal of various railroads. The most important step in this field is the Baku-Tbilisi-Kars railroad, which was opened on October 30. With the realization of this project, a product produced in China will reach London through Turkey within 14 days. This will contribute to the increase of the trade volume between countries.”

OPPORTUNITIES IN TURKEY

For countries wanting to tap into Turkey, opportunities are plentiful says Claus Lassen, CEO, DHL Express, Turkey. The domestic market is huge, for example, and the talent pool is deep. “The population is young and dynamic and the labor force is qualified and hardworking,” he notes. “It's also a business-friendly environment. It's easy to set up a company here – on average it takes five days – and corporate income taxes are relatively low. And, since the mid-1990s, Turkey has been in a customs union with the EU, that helped lower barriers to trade between the two parties by eliminating tariffs on bilateral trade in most industrial goods. There are a lot of simplification initiatives, too, such a getting rid of paper customs procedures documents and moving towards digitalization.”

As this year has shown, no one would be wise to downplay the economic challenges Turkey faces. But Teoman Beyazit, CEO, DHL Global Forwarding, Turkey, is optimistic about its long-term fortunes. “Ease of doing business will continue, as will the immense scope of its infrastructure investments,” he says. “Make no mistake: there is a strategic target behind these plans and investments. Turkey aims – and wants – to become a regional logistics hub.” Tony Greenway

The full article will be available in Delivered., both in print and online, on 22 November.

Published: October 2018

 

Images: ThinkstockPhoto/IG Airport