Wednesday, July 31, 2019

UK - Turkish Trade Demands Care to Ensure Multimodal Trade Flourishes

Currency Fluctuation Always a Challenge for Import/Export Balance
Shipping News Feature
UK – TURKEY – As the pound continues to fall against many currencies, another frequently fluctuating rate is that of the Turkish Lira. Although sterling has dropped off against it in recent days the current position equates to roughly where it was a year ago. And considering the current rate of around 6.7 lira to the pound eclipses the 3.5 or so the pound would have bought you five years past, things probably aren't as bad for UK exporters at the moment as they might be.

This point is emphasised by UK independent freight forwarding group Davies Turner which relies on the country for much of its daily trade. The company says that Turkish trade fluctuations have been a challenge to operations on its largest overland and multimodal routes, but careful management of traffic flows has enabled it to maintain regular services and even to increase revenues in very challenging market conditions.

Davies Turner also points to the importance of its long-standing partnership with EKOL, one of Turkey’s largest freight and logistics operators, in helping to overcome the current difficulties of the region. The Kent headquartered firm operates daily two-way overland and trailer, ferry and rail services between the UK and Turkey with EKOL Logistics, typically moving around 70-110 trailers a week between the two countries, mainly groupage, plus air cargo and sea freight containers.

The forwarder says that through this partnership it is able to deliver value-added services including offshore end-to-end logistics operations, accepted quality levels and quality checks, as well as pick and pack operations, on location in Turkey, all of which are managed by Davies Turner's own representation in Istanbul, which helps differentiate its service from many of its competitors.

The company reports that southbound business has fallen since the onset of Turkey’s currency volatility leading to an imbalance in north-south trade that was heightened by European importers seizing the opportunity for increased purchases from Turkey. Main commodities moved from Turkey to the UK are clothing and textiles, car parts and raw materials and southbound from the UK to Turkey, goods moved include fabrics, chemicals and machinery, with volumes out of the UK topped up in neighbouring EU countries if necessary.

Shortage of suitable equipment can be a problem for a 3PL but good management and established business links can, as with similar markets, minimise dead running in a service where, as Chairman Philip Stephenson explains, export-import imbalances have been a long-standing feature of the UK-Turkish trade lane. He continues:

“The business model has to be very flexible both inbound and outbound and there has to be clear and constant management of the volumes moving, particularly northbound loads, in order not to worsen the imbalance. Equipment availability northbound had become an issue, but with careful planning and control, we’ve been able to contain it.

“Volumes carried by ourselves and by our partner EKOL, both in the past and present, show that we’ve handled any weakness in southbound volumes well, thanks to some large contracts we share with our Turkish partners and this provides excellent coverage to collect shipments from not just the UK but also the rest of the EU to maximise our southbound traffic.

“You can get various and many analyses from different authorities on the way ahead and there will be conflicting views. We didn’t anticipate the improvement we witnessed in the first quarter of 2019, but the political uncertainty (not just within Turkey but also over Brexit) remains problematic, making it difficult to forecast long-term.

“Despite high levels of inflation and interest rates affecting investment and hindering sustainable economic growth, Turkey continues to be a strong and pivotal market which, although subject to fluctuations, certainly should never be underestimated as a trading partner.

“As for Davies Turner, we’ve managed to retain both our northbound and southbound business at a high level. Continuing success will depend on the resilience and openness to trade of the UK and EU economies as much as on Turkey in isolation.”

Photo: The Port of Izmir courtesy APM Terminals.