Market Research - Dutch Lloyd · 23. De Koninklijke Marine als maritieme leader firm 24. De...

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Maritime Turkey Market Research Martin Bloem M.A. Sandra van Putten M.A. Assoc. Prof. Dr. Ali Deveci Prof. Dr. Okan Tuna

Transcript of Market Research - Dutch Lloyd · 23. De Koninklijke Marine als maritieme leader firm 24. De...

Page 1: Market Research - Dutch Lloyd · 23. De Koninklijke Marine als maritieme leader firm 24. De Nederlandse maritieme cluster: monitor en dynamiek 25. European Maritime Clusters: global

Maritime Turkey

Market Research

Martin Bloem M.A.

Sandra van Putten M.A.

Assoc. Prof. Dr. Ali Deveci

Prof. Dr. Okan Tuna

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Maritime by Holland series (mostly in Dutch)

1. De Nederlandse Maritieme Cluster: literatuuronderzoek en plan van aanpak

economische impact studies

2. De Maritieme Arbeidsmarkt: vraag en aanbod van zeevaartkennis

3. De Nederlandse Scheepsbouw- en toeleveringsindustrie: economische betekenis en

structuur

4. De Nederlandse Offshoresector: economische betekenis en structuur

5. De Nederlandse Binnenvaartsector: economische betekenis en structuur

6. De Nederlandse Waterbouwsector: economische betekenis en structuur

7. De Koninklijke Marine: economische betekenis en structuur

8. De Nederlandse Visserijsector: economische betekenis en structuur

9. De Nederlandse Watersportindustrie: economische betekenis en structuur

10. De Nederlandse Maritieme Dienstverlening: economische betekenis en structuur

11. De Nederlandse Maritieme Toeleveranciers: economische betekenis en structuur

12. De Nederlandse Zeehavensector: economische betekenis en structuur

13. De Nederlandse Maritieme Cluster: economische betekenis en structuur

14. Het Maritieme Clustermodel: modellering en scenarioanalyse

15. De Nederlandse Maritieme Cluster: beleidsaanbevelingen

16. De Innovativiteit van de Nederlandse Maritieme Cluster

17. Maritieme Websites en E-Business: een verkenning

18. Maritiem Kapitaalforum: onderzoek naar de werking van de kapitaalmarkt in de sector

van maritieme toeleveranciers

19. An International Shipping Company in the Netherlands: the tax perspective

20. E-business in de Maritieme Cluster: visies, strategieën, activiteiten

21. De arbeidsmarkt in de Nederlandse Maritieme Cluster: een overzichtsstudie

22. Leader Firms in de Nederlandse Maritieme Cluster: theorie en praktijk

23. De Koninklijke Marine als maritieme leader firm

24. De Nederlandse maritieme cluster: monitor en dynamiek

25. European Maritime Clusters: global trends, theoretical framework, the cases of Norway

and the Netherlands, policy recommendations

26. a Voorschriften voor Commercial Cruising Vessels / 26. b Rules for Commercial Cruising

Vessels

27. Monitor Maritieme Arbeidsmarkt 2003

28. Dutch Maritime Research, Development and Innovation Expenditure

29. European Maritime Policy Conference: proceedings

30. Dynamic European Maritime Clusters

31. De Nederlandse Maritieme Cluster: economische Monitor 2006

32. Monitor Maritieme Arbeidsmarkt 2006

33. Monitor Maritieme Arbeidsmarkt 2008

34. De Nederlandse Maritieme Cluster: Monitor 2010

35. De Marine en Marinebouwcluster: welvaartscreatie en innovatief vermogen

36. De Nederlandse Maritieme Cluster: Monitor 2011

37. Maritime Hotspots, final report, 2012

38. Maritiem West Afrika, marktstudie, 2012

39. De Nederlandse Maritieme Cluster: Monitor 2012

40. Maritime Turkey: Market Research

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Maritime Turkey

Market Research

Maritime by Holland

The Foundation 'Nederland Maritiem Land' (Maritime by Holland) was established on June

27th, 1997 in order to promote and strengthen the Dutch Maritime Sector. The Board of the

Foundation consists of A. Kraaijeveld (chairman), Mrs. T. Netelenbos (vice-chairman), R. Paul

(secretary/treasurer) and further in alphabetical order, G.G.P.M. van Beers, Vadm. M.J.M.

Borsboom, Dr.ir. B. Buchner, ing. K. Damen, E.M. van Dijk, ir. J.J.C.M. van Dooremalen, G. Edelijn,

S.J. van der Goot, F. Heinis, Vadm b.d. J.W. Kelder, J.P. Klaver, A. Meijer, A.P.H. Vergroesen,

A.A.N. Vink, F.D. Vroon, P. Zoeteman.

The director of the Foundation is A. Uytendaal.

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Published and distributed by Maritime by Holland

Study conducted by

Bloem Doze Nienhuis Panteia

Boompjes 40 Bredewater 27

3011 XB ROTTERDAM / the Netherlands 2715 CA Zoetermeer / the Netherlands

T 0031-10-4007140 T 0031-79-3222000

E [email protected] E [email protected]

I www.bloemdozenienhuis.com I www.panteia.nl

Design/Lay-out

Sirene Ontwerpers

Zeemansstraat 8 / 30000 ROTTERDAM / the Netherlands

T 0031-10-4389282

E [email protected]

I www.sirene-ontwerpers.nl

Print:

Efficiënta Offset B.V.

Burgemeester Aalberslaan 78 / 2922 BE KRIMPEN AAN DEN IJSSEL / the

Netherlands

T 0031-180 - 512522

E [email protected]

I www.efficienta.nl

ISBN 978-90-820165-3-6

NUR 784

Copyright © December 2013 Stichting Nederland Maritiem Land

All rights reserved. No part of the material protected by this copyright may be

reproduced or utilized in any form or by any means, electronic or mechanical,

including photocopying, recording or any information storage and retrieval

system without written permission of the owner of this copyright. Permission

may be obtained at the following address: Stichting Nederland Maritiem Land,

Boompjes 40, 3011 XB Rotterdam, the Netherlands; e-mail:

[email protected], website: www.maritimebyholland.com

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Table of Contents

Table of Contents V

List of Figures VII

List of Tables VIII

List of Charts XI

Executive Summary 13

Introduction 15

1 MARITIME TURKEY: OUTSIDE-IN 19

1.1 The growing importance of the Turkish economy 19

1.2 A short historical introduction 20

1.3 A maritime tradition 23

1.4 Dealing with differences in Turkish & Dutch business culture 26

2 PORTS OF TURKEY 29

2.1 General developments 29

2.2 Port sector analysis 33

2.3 Port demand forecast studies 47

2.4 SWOT Analysis of Turkish Ports 52

2.5 Recent major developments in the ports sector 54

2.6 Port administration and legal framework of port investment and operations 63

2.7 Opportunities and Recommendations for the investors to participate in

Port Business in Turkey 70

3 THE TURKISH FLEET 79

3.1 General 79

3.2 Fleet statistics 81

3.3 Main ship owning companies 94

3.4 Turkish Ro-ro companies 107

4 SHIPBUILDING INDUSTRIES 109

4.1 Introduction 109

4.2 The development of Turkish shipbuilding 111

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4.3 Shipbuilding statistics 112

4.4 Overview of commercial shipyards 126

4.5 Super yacht industries 131

4.6 Other technology related sectors 138

5 MARITIME EDUCATION & RESEARCH 147

5.1 Institutions 147

5.2 Maritime faculties in Turkey 149

6 GOVERNMENT POLICIES AND MARITIME ORGANISATIONS 159

6.1 National level 159

6.2 Port strategy and policy of Turkey 167

6.3 Industrial policy 176

6.4 Maritime related organisations 178

7 TURKEY AND THE EUROPEAN UNION 189

7.1 Turkey and EU relations 189

7.2 The progress of the negation process on the transport chapter 191

7.3 Instrument for Pre-Accession Assistance (IPA) and Multi-Annual Indicative Planning Document

(MIPD) for Turkey 192

7.4 Main sectors for EU support for 2011-2013 195

7.5 Turkey’s priorities in the transport sector 196

8 SWOT-ANALYSIS 199

8.1 Strengths 199

8.2 Weaknesses 200

8.3 Opportunities 201

8.4 Threats 202

9 CONCLUSIONS & RECOMMENDATIONS 205

Annex 1: REFERENCES 209

Annex 2: OVERVIEW OF CONTACT DETAILS OF MOST RELEVANT TURKISH PORTS 211

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VII

List of Figures

Figure 1: Conceptual frame 16

Figure 2: Locations of major Turkish ports and terminals 34

Figure 3: Location of Turkish Main Container Ports 36

Figure 4: Regional distribution of container port traffic 38

Figure 5: Logistics Centres in Turkey 58

Figure 6: Locations of Hub Port Projects in Turkey 61

Figure 7: Current international ro-ro services from Turkey 92

Figure 8: Feederlines Arkas 103

Figure 9: location of 71 shipyards in Turkey 109

Figure 10: location yacht shipyards 131

Figure 11: Organisation of Ministry of Transport Maritime Affairs and Communication 161

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List of Tables

Table 1: doing business in Turkey 27

Table 2: Handling Capacity of Turkish Ports According To the Cargo Types 34

Table 3: Dry Bulk and General Cargo Handling at Turkish Ports Ports (Top 10 Ports

and Total Cargo Handling) (M ton) 41

Table 4: Liquid Bulk Cargo Handling at Turkish Ports (M tonnes) 42

Table 5: Crude Oil Import of Turkey According to the Countries and Transportation Modes in 2010 42

Table 6: Crude Oil Import and Export Cargo Handling at Turkish Ports (2005-2011) 43

Table 7: Petrolum Products Handling at Turkish ports (M tonnes) 44

Table 8: Top 10 Liquid Chemical Cargo Handling at Turkish Ports (M Ton) 44

Table 9: Automobile Handling at the Member Ports of POAT- (Units) 45

Table 10: International Ro-Ro Lines To/From Turkey and Their Truck/Trailer Carriages 45

Table 11: Development of Cruise Shipping At Turkish Ports (2005-2012) 46

Table 12: Cruise Ship and Passenger Traffic at Turkish Ports 47

Table 13: Regional Port Demand Forecast Based on Cargo Types (M ton) 49

Table 14: Port Capacity Need Towards the 2023 Considering the

Turkish Government’s Foreign Trade Targets 51

Table 15: Privatized of Ports Under the Turkish Maritime Association (TMO) 55

Table 16: Privatisation Process of Container Ports in Turkey under TSR 56

Table 17: Container Port Capacity Expansion and New Container Port Projects in Turkey 59

Table 18: Bulk and General Cargo Port Capacity Expansion Projects and

New Port Projects in Turkey 60

Table 19: Operation Licences of Turkish Ports 69

Table 20: Turkish owned fleet >100 GT 82

Table 21: main owners chemical and products fleet 91

Table 22: current fleet of Geden Lines ordered from China, Japan and South Korea (2004-2013) 117

Table 23: Shipbuilding Labour Productivity 125

Table 24: Turkish super yacht order book May 2013 131

Table 25: Types of Maritime Education Institutions and Their Student Capacities in Turkey (2011) 147

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Table 26: Higher Education Institutions Offering Education on Deck

and Engine Officers in Turkey in 2011 147

Table 27: The two year Vocational Schools of Higher Education (Junior College)

HND Education MET Institutions Leading to Unlimited Licenses Deck/Engine

Departments’ Annual Recruitment Capacity 148

Table 28: Logistics Education under the Faculties/Schools in Turkey 149

Table 29: The Names and Contact Details of Most Important Persons in MoTMAC 166

Table 30: Strategies and Policies of Turkey for the Ports within the Last 25 Years 172

Table 31: Board members of POAT 180

Table 32: The Planned Financial Allocation per Sector (million €) 195

Table 33: The Financial Assistance through IPA Components in (million €) 196

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XI

List of Charts

Chart 1: Cargo Handling in Turkish Ports (M tonnes) 35

Chart 2: Types of Cargoes Handled at Turkish Ports (M Ton) 35

Chart 3: Container Handling at Turkish Ports (thousand TEU) 37

Chart 4: Container Transhipment Traffic at Turkish Ports (M TEU) and

corresponding share of total (%) 38

Chart 5: Container Traffic at private ports of Port Operators Association of Turkey (M TEUs) 39

Chart 6: Container Traffic at Private and State Ports (M TEUs) 40

Chart 7: Container Traffic at Individual Turkish Ports in 2012 40

Chart 8: Total Cargo Traffic Forecast at Turkish Ports for 2030 (M ton) 48

Chart 9: Container Traffic Forecast at Turkish Ports (M TEU) 49

Chart 10: 2023 Total Cargo Forecast in Turkey by POAT in 2012 (M tonne) 50

Chart 11: 2023 Cargo Traffic Forecast of Turkey by POAT Based on Cargo Types in 2012 (million) 51

Chart 12: Cargo volume Turkey 79

Chart 13: Turkish owned fleet > 100 GT (M dwt) 81

Chart 14: Turkish fleet > 1.000 dwt, Turkish national versus international

registry; dwt and number 83

Chart 15: Turkish owned fleet, segmentation of ships 30+ years 84

Chart 16: year of build dry cargo fleet 85

Chart 17: dry cargo dwt categories, age and number 86

Chart 18: Turkish owned bulk carriers, year of build 87

Chart 19: Container Volume Turkey (TEUs 88

Chart 20: composition of the Turkish owned tanker fleet 90

Chart 21: ro-ro transported vehicles 92

Chart 22: ro-ro lines transported by region 93

Chart 23: Fleet of the top 20 Turkish ship owners (incl. average age of the fleet) 94

Chart 24: Number of ships and ship types delivered by Turkish shipyards 2000-2013 112

Chart 25: Ships delivered by Turkish shipyards, by DWT 113

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Chart 26: deliveries Turkey (1.000 dwt - number of vessels & (in red) number of

shipyards that actually delivered that year) 114

Chart 27: Order book versus production capacity 115

Chart 28: Employment at Turkish shipyards 116

Chart 29: Turkish fleet, built in China, Japan and South Korea in the last decade (2004-2013) 116

Chart 30: Turkish fleet, built in Turkey in the last decade (2004-2013) 118

Chart 31: Chemical tankers delivered by Turkish shipyards 119

Chart 32: General cargo vessels delivered by Turkish shipyards 120

Chart 33: Order book at Turkish shipyards, cargo vessels vs. special vessels (million CGT) 120

Chart 34: Turkish fleet, cargo vessels vs. special vessels (million CGT) 121

Chart 35: Order book at Turkish shipyards, 2005 to 2013 (M dwt and number of vessels) 122

Chart 36: Order book at Turkish shipyards by vessel type 123

Chart 37: Type of vessels, currently owned by the top five countries; Denmark,

Italy, Netherlands, Germany, Norway (1990 – 2013) 123

Chart 38: Shipbuilding versus hourly manufacturing costs in W. Europe 124

Chart 39: Shipbuilding versus hourly manufacturing costs, E. Europe 125

Chart 40: top 10 worldwide yacht building order book 132

Chart 41: order intake Turkish super yacht builders 132

Chart 42: Yacht building export Turkey 133

Chart 43: Yacht export Turkey to the corresponding countries 134

Chart 44: Number of floating docks in Turkey 139

Chart 45: number of dry docks in Turkey 140

Chart 46: Offshore units delivered by Turkish shipyards 141

Chart 47: Employment of maritime equipment suppliers in Turkey 143

Chart 48: Scrapped vessels in Turkey 146

Chart 49: Employment in the ship-recycling sector 146

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Executive Summary

The Turkish maritime sector is a complex, but very important asset to the

national economy and the development of foreign trade. In this study some the

main drivers of the Turkish maritime economy are being described.

The report starts with a general introduction into Turkish maritime business. It

includes a description of the historical setting, which is essential when trying to

understand the modern times structures of ports and industry. It also gives a

first introduction into the planning and growth management that appeared in

modern history. As this study is meant to increase understanding and trade

between The Netherlands and Turkey, also some information is given on

cultural aspects of bilateral business.

Chapter 2 gives a practical insight into the development of the ports sector in

Turkey.The cargo handled in Turkish ports increased from 184 million tonnes in

2004 to 388 million tonnes in 2012. Container traffic fourfolded in the same

period, and is expected to fourfold again to 30 M TEU in 2023.These

developments call for urgent new investments, multimodal solutions,

privatisation and specialisation of ports. It is a task, that can only be done in

co-operation with international knowledge partners, thus leading to new

opportunities for Dutch investors and partners.

Where the ports provide the necessary infrastructure, the ship owners have the

task to actually ship the goods to and from Turkey. In chapter 3 the

development of the Turkish fleet is described. In 2005, the merchant fleet over

100 GT consisted of 1.596 vessels. This fleet increased 40% to 2.237 vessels by

January 2013. The capacity was 10.7 M dwt in 2005 and almost tripled to 30 M

dwt in eight years’ time. The different ramifications of the fleet are described,

including the large numbers of older general cargo ships, to the large and

modern bulk carrier and tanker fleet. Twenty shipowners are shortly described,

including their ownership structure and fleet renewals.

This brings us to the third pillar of the Turkish maritime sector: the maritime

manufacturing industries. These industries range from small equipment

suppliers to large shipyards. In a period of ten years the number of Turkish

shipyards grew from 37 in 2002 to 71 in 2012. Total capacity almost six folded.

After 2008, the capacity more or less stabilised at around 3.5 M dwt (3.67 M

dwt in 2012). As shipowners order their large ships in the Far East, the new

capacity is however strongly under utilised. This report describes how shipyards

adapt and seek new markets in offshore, ship repair, military projects, or

merely by scaling down. Employment remains relatively stable. The superyacht

industry and on the extreme other hand the rapidly expanding scrapping

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industry, are both performing well. New opportunities may appear in offshore

exploration and production in Turkish coastal waters.

The Turkish maritime industry is supported by an impressive number of

universities, vocational schools, training institutes, and to a lesser extent

research facilities. They are responsible for the education of seafarers,

technicians, and the training of personnel according to IMO and ILO standards.

Chapter 5 sums up all relevant institutions and their particularities.

The next two chapters give more insight into the public side of the maritime

business. The central role of the Ministry of Transport and in particular the

department of Maritime Affairs is being described, including the internal

organisation, policy priorities and contact points. The port strategy and policy

developments plans all stem from this ministry. It is here where the central

planning comes from. This means that Dutch investors or other stakeholders

also will have to deal with this part of central government. And Dutch

shipowners or offshore contractors ordering their ships in Turkey can be aided

by Turkish export finance and shipbuilding incentives, although these facilities

are generally below European or Asian standards.

This brings us to the relations between Turkey and the European Union. Part of

the accession protocols is the harmonisation of safety and environmental

standards. These efforts are aided by Euro Assistance under IPA components I,

III, IV and V. Other forms for the delivery of assistance such as sector wide

programmes or pooled financing with other donors may be piloted in the 2011-

2013 in agreement between the Commission and the Turkish authorities if

found appropriate for a more effective delivery of assistance. In addition, IPA

funds will continue to be provided to Turkey to support participation in Union

Programmes. In 2013 alone, 935 Million Euro’s are being reserved for cross

border co-operation. Especially in infrastructure projects, these programs can

give good incentives to Dutch companies doing business in Turkey.

The report ends with a SWOT analysis, conclusions and recommendations. Main

conclusion is that a shared maritime vision can benefit both Turkish and Dutch

maritime communities. Specific actions are recommended in the fields of Port

development, fleet renewal, offshore development, lean technology, efficient

transport technologies, shipyard production efficiency, yachbuilding and the

forming of consortia in infrastructure, the latter possibly aided by the EU.

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Introduction

The successful co-operation programme ‘Focus on Turkey’ intends to contribute

to the competitive development of Turkish ports, coastal shipping and

shipbuilding industries. Its ambition is to aim for increased synergies between

the maritime and logistics industries of Turkey and the Netherlands. The

program is supported by both governments and is now in its finishing stadium.

Parallel to the execution of the Focus on Turkey programme, cluster

organisation Dutch Maritime Network and the Dutch Top Sector Water published

a conceptual study1 on bilateral co-operation between The Netherlands and

other maritime regions in the world. The report introduces the concept

‘Maritime Hotspots’2. The study focused on four international maritime regions:

St. Petersburg, Rio de Janeiro, Shanghai and Singapore. However, when the

findings of the study were presented at a conference in Rotterdam, the Dutch

representatives of maritime industry indicated that Istanbul should be included

as well.

Both the Maritime Hotspots project and Focus on Turkey have expressed the

wish for more insight into the dynamics of the Turkish maritime sector. The

consultancies Panteia (Freight Transport and Infrastructure Division, supported

by Dokuz Eylul University/Izmir) and Bloem Doze Nienhuis (shipping,

shipbuilding and related industries) were asked to conduct this research. In this

report, the findings of both studies are combined, resulting in an encompassing

investigation of maritime activities in Turkey. The ports and government

research was funded by the Dutch government under the co-operation

programme ‘2g@there’, the other maritime sectors research by Dutch Maritime

Network.

The preliminary results of the report were discussed at a bilateral conference on

June 20th, 2013 in Zoetermeer, Holland. With the input of the conference the

study was finalized in the autumn of 2013.

Aim of the study

The objective of this study is to give an overall impression of the state of and

interrelations within the Turkish maritime sector. It should be presented in such

a way, that it helps companies, institutions and governments to do business

with the Turkish maritime sector and to be an inspiration for new bilateral

ambitions.

....................................................................................................................................................

1 Dutch Maritime Network, ‘Maritime Hotspots, final report’, Rotterdam, December 2012. 2 Definition Maritime Hotspot: ‘A geographical region that combines a major seaport function with the

presence of maritime world players in several sectors. They operate within a radius of 200 to 300 kilometres, and have an international influence on trade and technology.’

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Conceptual framework

The underlying assumption of this research is that the maritime network closely

works together in one coherent cluster of activities. The following sub-sectors

are a part of this maritime family: ports and terminals, ship owners, inland

shipping, shipbuilding, marine equipment, yacht building industry, offshore

operations, navy, maritime research and education, maritime services, fisheries

and dredging. Additionally in Turkey also the ship recycling sector is active.

These 13 sectors interrelate in three ranges of activity: shipping, manufacturing

and supporting infrastructure. Based on insights from Dutch Maritime Network3,

this can be viewed in figure 1.

Figure 1: Conceptual frame

Source: Bloem Doze Nienhuis

In the specific Turkish situation, the following parties play a dominant role

within the cluster:

• Turkish Ports

• Turkish Merchant Shipping (ship owners and their fleet)

• Turkish Shipbuilding (shipyards, including ship repair and supporting

industries and Yacht building)

In this study, special emphasis will be placed on those three subsectors and the

surrounding institutional framework of authorities and supporting industries.

One remark should be made. This is not a bottom up economic analysis of the

sector, and not an elaborate input-output model. If there is a need for deeper

economic insights within the cluster relations, this should be investigated

separately.

....................................................................................................................................................

3 Dutch Maritime Network, De Nederlandse Maritieme Cluster, a.o. Monitor 2012

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Research methodology

This study is conducted by Bloem Doze Nienhuis and Panteia with the input of

external knowledge from Turkey and The Netherlands. The following research

methods were used:

• Statistical analysis

• Desk research

• Field research and interviews

• Expert opinions

• Presentations and input from the Maritime Hotspot Istanbul conference

All fleet and shipbuilding statistics are based on data from Clarkson Research

Services Ltd, unless otherwise specified.

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1 MARITIME TURKEY: OUTSIDE-IN

1.1 The growing importance of the Turkish economy

The Republic of Turkey is located at the crossroads of Asia and Europe. The

country is encircled by the Black Sea, the Marmara Sea, the Aegean Sea and

the Mediterranean Sea. It has borders with Georgia, Armenia, Azerbaijan

(Nakhichvan) and Iran to the East, Bulgaria and Greece to the West, Syria and

Iraq to the South and Russia, Ukraine and Romania to the North. The area of

the country is 814.578 km2. The population is estimated to be over 80.7 million,

of which 13.5 million people live in its largest city, Istanbul.

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With a coastline of 8.435 km, it does not come as a surprise that the maritime

sector of Turkey is of outmost importance and that shipping is the most used

mode of transport in Turkey (export 46 %, import 59.1 %)4 .

Turkey belongs to the top twenty of world’s largest economies. The economy

has shown a robust growth in early 2011, driven by private consumption and

investment. GDP is USD 1.125 trillion (2011), and is expected to grow with 3 %

in 2012.5 It is the Government’s intention that Turkey becomes one of the

world’s 10 largest economies by 2023, the 100th anniversary of the founding of

the Turkish Republic. With a labour force of 27 million, a GDP per capita of USD

15.000 and natural resources like coal, iron ore and marble and an important

manufacturing industry (clothing and textiles, motor vehicles and machinery)

this intention does not seem surreal.

The increasing waterborne traffic flows of Turkey offer great challenges for safe

and efficient waterborne transport, and create new opportunities for the

maritime sector.

1.2 A short historical introduction

Today's Turkey was once the centre of the Ottoman Empire, which spanned

over three continents and covered most of South Eastern Europe, the Middle

East and North Africa. With Constantinople -now known as Istanbul- as the

....................................................................................................................................................

4 Transportation in Turkey, country report October 2011, Ministry of Transport and Communications 5 http://www.oecd.org/document/34/0,3746,en_33873108_33873854_45270434_1_1_1_1,00.html

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Chart 2: Types of Cargoes Handled at Turkish Ports (M Ton)

Data source: MOMAC-DG of Merchant Marinbe (2013) Shipping Statistics 2012, DTGM/05, Ankara, p.22

2.2.2 Container handling

Figure 3 shows the location of main container ports in Turkey. Most of them are

located in the western part of the country mainly around Istanbul.

Figure 3: Location of Turkish Main Container Ports

Source: Port Operators Association of Turkey-POAT- (2011). Turkish Port Sector Report. İstanbul: Atölye.

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More than 7 M Teu was handled in Turkey including export, import and

transhipment in 2012 (see Chart 3).

Chart 3: Container Handling at Turkish Ports (thousand TEU)

Data source: MOMAC-DG of Merchant Marine (2013) Shipping Statistics 2012, DTGM/05, Ankara: 23

* Loading cabotage includes: loading, export loading and transit loading

** Discharging cabotage includes: discharging, import discharging and transit discharging

The share of total container handling at Turkish ports according to the types of

traffic is as follows according to MotMAC:

• Export loading 40 %

• Cabotage loading 3 %

• Transit loading 7 %

• Import discharging 41 %

• Cabotage discharging 3 %

• Transit discharging 6 %

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The share of the regional distribution in container handling are (POAT,

2012:60):

• Marmara Region (around Istanbul) 63.4 % (4.2 M TEU)

• Mediterranean Region (around Mersin) 19.6 % (1.3 M TEU)

• Aegean (around İzmir) 16.5 % (1.1 M TEU) and

• Black Sea 0.5 % (0.4 M TEU).

Figure 4: Regional distribution of container port traffic

Source: POAT, (2012):60

Figure 3 shows the development of container transhipment and transit traffic at

Turkish ports.

The number of container transhipment and transit at Turkish ports is also

increasing. Total transit and transhipment containers handled at Turkish ports

are 1,5 M TEU (around 22 % of the total container traffic).

Most of the transhipment containers are handled in Marport (Istanbul). These

are transit containers coming from the Far East and transhipped to the Black

Sea Ports. Considering the strategic location of Turkey between the East and

the West, the share of transhipment container traffic at Turkish ports is low.

However, it is increasing from 15 % in 2007 to 22 % in 2011 due to the

investments in the port capacities in Turkey. There is still room for further

growth for Turkish ports in terms of transhipment traffic.

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Chart 4: Container Transhipment Traffic at Turkish Ports (M TEU) and corresponding share of total (%)

Source: POAT, (2012):58

Chart 5 shows the distribution of container traffic at the individual ports. The

share of private container ports in total container handling has rapidly increased

from 67 % in 2007 to 85 % in 2011, mainly due to the privatisation of the TSR

ports since 2007 and the new entries into the port sector by the private industry.

Among the private ports, Marport is the market leader in container handling and

it is followed by MIP (Mersin) with the 1.129.609 TEU handling in 2011.

Chart 5: Container Traffic at private ports of Port Operators Association of Turkey (M TEUs)

Data source: POAT (2012): 58

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Chart 6 shows the container traffic at the individual Turkish ports operated by

both the state and private industry in 2012. Marport maintains the leadership in

2012 both in handling export/import containers and transshipment containers.

Almost 50 % of containers handled by Marport are transhipment containers.

Marport is followed by MIP (Mersin) and İzmir Port.

Chart 6: Container Traffic at Private and State Ports (M TEUs)

Source: POAT (2012): 58

Chart 7: Container Traffic at Individual Turkish Ports in 2012

Source: MoTMC, (2012); Türklim, (2012), MIP, (2013)

* Transit and reshipment container volumes are averages

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Filyos Port

Çandarlı Port Mersin

Port

Mersin Container Port will comprise an important component of the international

intermodal transportation system and due to railway connection; it will present

a gateway position not only between Euro-Med and Black Sea countries but also

Caucasian, landlocked Asian and CIS countries.

Figure 6: Locations of Hub Port Projects in Turkey

Çandarlı Port Project is planned as an alternative new hub port of the Western

Anatolian hinterland and as a transhipment centre for traffic between Europe,

the Middle East and the Black Sea countries. Çandarlı is located about 80 kms

north of İzmir in Aegean Region of Turkey. The region is the 2nd largest

economy in Turkey. Çandarlı Port will serve both as a gateway and

transhipment port especially for Black Sea. Total capacity 4 million TEUs, in two

equal phases. Capacity can be increased according to the future demand. It will

be operated as a container terminal with other terminal facilities. Çandarlı Port

Project is an important component of the international intermodal transport

system thanks to its railway connection to be provided. Çandarlı Port, which will

serve to container transportation as Hub port, is in a more advantageous

position according to Piraeous Port from the aspect of Mediterranean-Asia

connection. The capacity will be gradually increased by revisions to be

accomplished in various phases. Phase 1 planned to be operational by 2017,

Phase 2 by 2025 at the latest. Breakwater of 1135 m is under construction by

public funds (about 130 million Euros). Almost 90 % of construction of port

infrastructure (breakwater) has completed. Quays with a total length of 2000 m,

port area of 193.2 ha of which 33 ha to be reclaimed from the sea are to be

provided. Depth of 18 m is sufficient to take the largest container vessels

expected for Çandarlı. The rest of the infrastructure and superstructure will be

realized by BOT (2 phases about 750 million Euros). BOT tender expected to be

completed on November 5, 2013.

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The Mersin Container Port Project is planned to act as a gateway facility

between Mediterranean container shipping lines and Central Asian landlocked

countries. This port is planned as a hub port and provides a sufficient number of

berths to accommodate postpanamax container vessels of 16 meter depth.

Mersin Container Port will comprise an important component of the international

intermodal transportation system and due to railway connection; it will present

a gateway position not only between Euro-Med and Black Sea countries but also

Caucasian, landlocked Asian and CIS countries. Within the Mersin Container Port

Project it is planned to construct a main breakwater (900 metres in length) and

an additional breakwater (1.200 m in length), in two packs, under BOT Model

(First Pack: Phases 1, 2 and 3; Second Pack: Phases 4 and 5). Total capacity 11

million TEUs (in 2035), in almost equal 5 phases. Phase 1 needs to be realized

by 2018 (1.9 mio TEUs), Phase 2 by 2025 at the latest (3.4 mio TEUs total).

Total investment costs are 2.9 billion Euros (construction works 1.95 bio Euros

(270 mio Euro breakwater and quay by government, rest by BOT, Equipment

940 mio Euros)

Filyos Port Project is as a gateway for cargo originating from and destined for

Central Anatolia, including the Ankara Metropolitan Area (AMA). It is intended to

decrease the number of vessel passages through the Turkish Straits and to

provide access for potential cargo between the Black Sea countries, where high

cargo traffic is expected. Connected to the railway, the facility will

accommodate bulk and container vessels, provide deep berths, and serve the

free trade industrial area that will be established behind the port facility. Filyos

port, with a capacity of 25 million ton/year, is evaluated as a regional

development project, which will ease the traffic congestion in the Territorial

Straits, minimize the risks, and serve for transportation of various types of

cargo such as ore, container, fuel etc. The construction of the port, with the

capacity given above, will be realized in 3 phases by BOT Model. Phase 1 is to

be realised by 2018 (0.2 mio TEUs plus 7 million tonnes).

Petkim Port Project also called Petkim or The Aegean Gateway Terminal will be

constructed within the Petkim petrochemical complex in Nemrut Bay, near the

Port of Izmir on the Aegean Region of Turkey. It is expected to be one of the

largest port complexes in the Aegean Region with 1.5 million TEU capacities.

When completed, Petkim Container Port will be the only port within the

Marmara, Aegean and Mediterranean Regions where 11.000 TEU container

vessels can berth easily, enabling customers to achieve faster transits and lower

costs compared to ports in Piraeus and Alexandria. It is ideally located; the site

will serve Aliağa and The Bay of Nemrut as an important logistics centre (APM

Terminals, 2013).

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Toros Tarim, Ceyhan

2.6 Port administration and legal framework of port investment and operations

The coastline of Turkey is legally public property owned by the state, and its use

has to be such that it contributes to the public interest. The construction of port

facilities such as wharves, piers, breakwaters, etc. can only be constructed with

the permission obtained from central government authorities.

2.6.1 Port related governmental organisations

There is a complex system of involvement in the investment, operation and

administration processes of the ports in Turkey. Lack of coordination and

conflicts of state authorities may happen from time to time among these port

related bodies. For example, dredging the ports has always been a matter of

conflict and some infrastructure investments have also experienced similar

problems.

A single issue might be a concern of at least two or three bodies affiliated with

different ministries. This situation causes chaos in the decision-making process

and coordination. Needless to say, inefficiency may arise in the port governance

process in Turkey from time to time.

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The main port-related governmental organisations in Turkey are:

• Ministry of Transport, Maritime Affairs and Communication (MoTMAC)

(was: Ministry of Transport and the Under secretariat of Maritime Affairs)

• Ministry of Development (undertook the function of State Planning

Organisation)

• Ministry of Health

• Ministry of Public Finance

• Ministry of Interior (MoI)

• Ministry of Science, Technology and Industry (was: Ministry of Industry)

• Ministry of Food, Agriculture and Livestock (was Ministry of Agriculture

and Livestock)

• Ministry of Environment and Urban Planning (was Ministry of

Environment)

• State Economic Enterprises such as Turkish State Railways (TSR)

and Turkish Maritime Organisation (TMO),

• Municipalities,

• Customs, immigration police, sanitary etc.

The MoTMAC coordinates and regulates all the development and operation of

ports. On 1 November 2011, the Ministry of Transport was restructured as the

Ministry of Transport, Maritime Affairs and Communications. With this

restructuring, several new general directorates, in particular the Directorate

General of Railway Regulation, Directorate General of Road Regulation and the

Directorate General of Dangerous Goods and Combined Transport were

established. The Under secretariat of Maritime Affairs was abolished and

incorporated in the Ministry, and various permanent and temporary boards were

established such as the Accident Research and Investigation Board and Railway

Coordination Board, to which the European Union attach importance.

The Ministry of Development considers the total balance of investment in

Turkey.

The Ministry of Public Finance funds port investments and collects taxes.

The Ministry of Health is responsible for the control of, and measures related

to public health (quarantine, patent, etc.).

The Ministry of Food, Agriculture and Livestock is responsible mainly for

fisheries.

Ministry of Environment and Urban Planning approves environmental

impact assessment studies of ports.

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The Ministry of the Interior is responsible for the police, immigration, etc.

The Turkish Competition Authority, The MoTMAC, The Ministry of

Finance and The Privatization Administration of Turkey are among the

related bodies for the privatization of ports. However, there has never been a

single supreme organisation in Turkey to coordinate port investments, port

development and port competition, especially for the port privatization period.

Turkish State Railways (TSR) operate (the port which are not privatised yet,

such as the Ports of Izmir, Derince and Haydarpaşa), develop and maintain

owned ports. The TSR also undertakes miscellaneous transportation by

providing connections between railways and ships and establishing and

operating the required superstructure, such as warehouses, silos, fuel facilities,

etc.

Municipalities are concerned with city–port relations and environmental

impacts and they provide some services to ports such as fresh-water, garbage

collection, etc.

2.6.2 Classification of ports

From the operational point of view the ports of Turkey are classified into four

groups:

• public ports

• municipal ports

• affiliate ports

• privately operated ports

The main public ports are operated and/or coordinated by TSR and the TMO:

The TSR manages ports connected to the railway system. The TMO was

privatized as TMO Inc. Co. as a state enterprise in 1995. TSR ports are

managed by the Directorate of Ports under TSR from its headquarters in Ankara.

Directorate of Ports under TSR is responsible for the management, the overall

planning and functioning of the ports, and their coordination.

Municipalities manage municipal ports. These public ports are comparatively

small and limited to relatively small volumes of coastal traffic serving the local

needs of provincial towns. Some municipalities manage ports with their own

port management division, but this does not involve large-scale development.

Affiliated ports are special industrial ports and industrial enterprises, which

are state-owned or private companies. These ports are mostly confined in

purpose to the particular needs of industrial concerns.

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Privately operated ports are constructed and managed by the private sector

after obtaining the permission to operate the port. Small-scale private sector

port developments have taken place in the region around the Marmara Sea.

These small-scale port developments are based on private capitals. Some of

privately operated ports were privatized in the last 15 years, having previously

belonged to the TMO or TSR.

The ports operated by the TSR, namely Mersin, Bandirma, Samsun and

Iskenderun were privatized. However, privatization carried out by a method that

does not involve the transfer of the title of the ports. With the amendment

made to the Privatization Law by Law 5189, foreign entities (through a Turkish

subsidiary) can also acquire the operational rights of a port. For example, in

2005, PSA gained the operational rights to one of the major ports in Turkey.

Pursuant to Law 815 (on Domestic Shipping), pilotage services can only be

carried out by Turkish citizens.

While some private ports adopt customer relationship management techniques

in their relations with port users, this does not seem to be a practice of public

ports. The main concerns of public ports are social and economic issues. Their

principal aims are to increase the economic benefits of the port for the nation or

region and to cooperate with labour unions in seeking to achieve this. While

private multipurpose and container ports are much more focused on value-

added services and a non-union labour force to maximize their profits, the

public port enterprises have operated ports by involving strong labour unions in

the issues. After privatization, the labour unions are rather weakened or have

been eliminated.

Autonomous port administration policy is not exercised in Turkey at all. Flexible

port management policies are exercised by the private sector. Since public ports

cannot be flexible, do not have financial independence, and are not focused on

clear goals on delivering services, they have become inefficient. Inefficiency has

also been caused by political interference in employment issues and the high

turnover rate in top managerial positions.

2.6.3 Port Investment and Operation Processes in Turkey

Legislation regarding port investments and operations requires bureaucratic

procedures with a complex nature. But there has been an effort to simplify and

ease these procedures. The following summarizes and reveals the process step

by step.

Ports are regulated in the Coastal Law no. 362. As this law requires a zoning

plan, the zoning legislation, environmental legislation and as these facilities are

government property, the legislation regarding the issue of preliminary

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permission, certificate of occupancy, and the constitution of easement forms the

basis of this subject. In operation and management phase of the ports, in

addition to the above mentioned matters, The MoTMAC operating permission,

international port’s security legislation, pilotage and tug boat services, and

cabotage law are also considered. If oil and oil products related services are

also provided in a port, regarding the storage and transmission license, Energy

Market Regulatory Authority Legislation also comes into consideration. Main

legislation regarding port operations can be listed as (MoTMAC, 2013);

1. Port Law no.618

2. Cabotage Law no.815

3. Law regarding Privatization Applications no. 4046

4. Law regarding the Incentivisation of Investments and Employment

no.5084

5. Law regarding the Regulation of Privatization Applications no.5398

6. Decree regarding the Ministry of Transport, Maritime Affairs and

Communications’ Organisation and duties no. 655

7. Security regulations at Civil Airports, seaports and border gates

8. ISPS Code

9. Ports regulations

10. Regulations regarding the treasury real estate management

11. Pilotage and Towage services, port services tariff, port security,

environment, labour health and security, and tourism related regulations.

2.6.4 Zoning Plan and Construction Process of the Ports

Ports to be constructed are subject to the Coastal Law no.362 and its by-laws

and should provide 1/1000 scaled tentative plan. After its approval the

construction process can continue in the frame of the above mentioned law.

Ports law no.618 dated 14/4/1925, Law of Safety of Life And Commodity At Sea

no.4922 dated 10/6/1946 and By-law regarding the Granting of Operation

Permission to Coastal Facilities dated 18/2/2007 published in the Official

Gazette no.26438; are implemented.

The aim of this by-law, according to the 6th clause-sub clause 4 of the Coastal

Law, is to regulate the process of granting operation permission to port, cruise

port, marina, passenger terminal, pier, dock, shelter, petrol/LPG pipelines and

similar coastal facilities and other infrastructure and superstructure facilities

regarding maritime transport.

Regarding the implementation of Coastal legislation, in 1996, the procedure to

be applied had been published by the Ministry of Public Works and Settlement

(the name has been changed now) and investors, then in 2006 in order to

smoothen some bottlenecks in the practice, by the Ministry of Public Works and

Settlement, the Ministry of Transport, Under secretariat of Maritime Affairs (now

merged with ministry of transport under the name of Ministry of Transport,

Maritime Affairs and Communications) and the Ministry of Finance started a

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study and replaced the 1996 dated notice with the new Ministry of Public Works

and Settlement Notice no.2007/2 and it came into force with its publish in

Official Gazette no.27986, dated 6/7/2011. It has been called “Notice of

Planning and Application Process in Coastal Facilities” and allowed the renting

process and plan proposal process start simultaneously.

In the current application, port investor, in the first phase, presents a map, with

a scale of 1/1000 or 1/5000, if both are unavailable 1/25000 and on this map,

shows the land will be acquired by land filling and/or exsiccation, the place of

investment with coordinates, land size and specifications, and present it to the

relevant governorate. The Governorate informs the Provincial Treasury with the

investment request showing the place of investment, and then passed on to the

Ministry of Finance - General Directorate of National Estate (GDNE). Preliminary

permission process regarding the area to be invested on is carried out by GDNE

according to the relevant legislation.

The investor should apply to governorate with Shore edge line approved

application zoning plan proposal, along with the investment proposal file. The

governorate, after reviewing the request, with its reasoned opinion, passes the

investment proposal file on to the Ministry of Environment and Urban Planning -

General Directorate for Spatial Planning.

After the Ministry reviews the investment proposal, and sees it fit, they send the

file to relevant organisations for consideration. These organisations present

their views and ideas on the subject to the Ministry. After the evaluation of the

views regarding the proposal, if the Ministry finds the proposal acceptable, they

approve the proposal according to the 7th clause of Coastal Law no.3621.

The approved zoning plan then will be send to the relevant governorate,

municipality, General Directorate of Provincial Bank, The Ministry of Transport,

Maritime Affairs and Communications, General Directorate of Infrastructure

Investments (GDII), General Directorate of Shipyards and Coastal Structures,

The Ministry of Culture and Tourism, The Ministry of Finance, other

organisations that had been asked for their views and the relevant investor.

2.6.5 Operating Permission Process of Ports

Types of operation licenses of Turkish ports are shown in Table 19. Granting

operating permission to coastal facilities except for ship yards and military

facilities are done by the MoTMAC - General Directorate of Marine and Inland

Waters. According to the by-law regulating to the granting permission;

1. 1/1000 scaled, approved zoning plan, together with the GDII approved

application projects, by GDNE, to the coastal facilities in which the process

of constitute of servitude and/or utilization permit had been finalized,

2. To the coastal facilities demanding the handling of flammable, explosive,

combustive, and other dangerous goods, while acting in compliance with the

plan, Project and legislation, shall apply to, The Ministry of Transport,

Maritime Affairs and Communications with documents showing compliance

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with the Annex-1 of the Coastal Facilities Operation Permit Application form

depending on the activities Annex-2 (above mentioned dangerous goods)

Annex-3 (2. Grade dangerous liquid bulk and other liquid bulk cargo) Annex-

4 (Packaged dangerous goods) and Annex-5 (General cargo, containers, ro-

ro, marina, passenger ports) and if found fit, will acquire operation permit

up to 5 years.

Table 19: Operation Licences of Turkish Ports

Type of Operation License Number

Coastal facility with permanet op. license 112

Coasatl facilities with temporary op. license 106

Total coastal facility with operation license 218

Source: MoTMAC, 2013

Temporary Operation Permits are given under following conditions,

1. In facilities established before the Coastal Law and had been operated buy a

public organisation and then become a subject to privatization, in order to

proceed with the handling of goods, On demand; in the framework of

Privatization Applications Law no.4046 by the High Board of Privatization,

making it possible for 1/1000 scaled zoning plans to be approved by GDII.

2. In order to approve (by GDII) the application projects of ports that were

being operated by public organisations but had been privatized, and did not

have an approved tentative plan and application Project,

3. Provides the opportunity to the construction of the port, which is cleared for

1/1000 scaled tentative plan and application Project, the constitute of

servitude granted by GDNE and/or permitted to operate and cleared for ship

berthing and cargo handling by Administration (Ministry of Transport,

Maritime Affairs and Communications) to be completed in compliance with

the approved zoning plan.

4. In addition to the current cargoes being loaded/discharged; in coastal

facilities which are operational with the required permissions, if the safety

measures laid out by the legislations in force are met, dangerous goods can

be handled in a separated area in the port facility.

5. In order to keep the operations running for already operating facilities with

operation or temporary operation permit, which are changing hands, from

one legal entity to other.

Temporary Operation permits can be made out to be valid for 6 months to

a year. Facilities operating under temporary permits, except for the factors

making the permit temporary are asked to comply with the criteria in the

Annex-1 of the by-law. For facilities operating with dangerous goods, Annex-2-3

and 4 criteria must also be met.

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2.7 Opportunities and Recommendations for the investors to participate in Port Business in Turkey

Turkey has tripled its GDP with a stable economic growth reaching USD 786

billion in 2012, up from USD 231 billion in 2002. Needless to say, such a

remarkable economic growth has increased the need for the logistics and

transport activities. As a result of those economic developments, logistics and

transport related activities have increased. The share of the logistics sector in

Turkey’s GDP is estimated between 8-12 % (Export Promotion Centre, 2009).

Considering the USD 786 billion GDP of Turkey in 2012, it can be concluded that

size of the logistics industry is between $ 68 billion and $ 94 billion. On the

other hand, it is clear that outsourcing of logistics activities to logistics

companies in Turkey is very low. It is estimated that 40 % according to various

studies. In addition to those statistics, according to forecasts about the sector,

outsourcing is expected to continue. Turkey has set high objectives in terms of

export and import volumes in 2023 ($ 500 billion export and $ 700 billion

import). It can be said that, the growth of logistics industry will be a key issue

in next 10 years.

As far as the logistics indices are considered, Turkey’s rankings have been

increasing in a positive trend. According to Agility Emerging Markets Logistics

Index 2013, Turkey moved up one place in the 2013 rankings to 10th position.

Turkey’s proximity to Europe makes it attractive as a low-cost manufacturing

location. On the other hand, according to the Logistics Performance Index

(“LPI”) issued by the World Bank, rank of Turkey has increased to 27 in 2012

from the rank of 39 in 2010.

In order to manage such a growth in 10 years, The Turkish government has

been planning to increase infrastructure investments with an estimated budget

of at least $ 400 billion. In Turkey, privatization in the transportation &

maritime industry is a key trend. On the other hand, private sector investments

are also expected to increase. Turkey basically aims at minimizing state

involvement in industrial and commercial activities and maximizing private

sector participation. The privatization process encompasses enormous market

opportunities for strategic investors in transport infrastructure or for transport

operators.

Turkish logistics and maritime transport industry has been developing since

1980 as a result of export oriented strategy of Turkey. However, it is still

fragmented and lacks financial and managerial capabilities in order to compete

in global markets. Although, tremendous growth in Turkish companies is

observed recently, the market is still fragmented and volatile. As a result of

those facts, mergers and acquisitions in the market such as acquisition of

Balnak Logistics Company by Borusan Logistics Company, acquisition of Mars

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Logistics by Hitachi Group, private equity investment in Ekol Logistics are

witnessed. It is expected to observe horizontal and vertical integrations and

cooperation more and more in the coming years.

Although 95% of passengers and 90% of goods are carried by road transport

within the country, Turkey has well developed / low-cost sea facilities and plans

to increase the railway transportation. As a result of the liberalization of railway

in Turkey and projects (such as Marmaray Project and Kars-Tbilisi-Baku railway

etc.), it is expected to observe increase in transit logistics activities in Turkey

acting as a logistics centre between West and East of the world. It is expected

that the investments in rail industry in Turkey will increase cargo traffic of

Turkish ports due to the improvements in the rail connections of the ports to

the national and international transport corridors.

The country’s strategic geographic location ensures a prominent role within

future transit networks. As an emerging market with a young and educated

population, Turkey is ready to provide value added services in different business

areas as well as in logistics (PWC, Transportation & Logistics 2030). Since

Transportation and Logistics is one of the main pillars of both national and

international trade, the Turkish government is making ongoing investments to

create a new infrastructure. Turkey aims to be a logistic hub in its region. Ports

are the gateways for Turkish foreign trade and transit freight. Ports form the

most important component of logistics infrastructure of Turkey. Container is a

strategic preference for Turkey. Turkey is still in containerization process and

adapting the intermodalism process. There will be a considerable gap for 2023

targets of Turkey unless existing ports are improved and new ones are

constructed. Private sector has many expansion and new construction port

plans and projects.

The government is implementing a series of policies in order to make the

country's transportation infrastructure safer, more efficient and more integrated.

These policies include shifting freight transportation to railways and

transforming major ports into logistic centres. A corridor approach will

encourage the utilization of maritime and railway transportation networks, and

priority will be given to the implementation of PPP models in the construction

and operation of large transportation projects. Due to the country’s strategic

location, continuous growth of the Turkish economy, the rise in import and

export volumes and an increased number of larger container vessels calling

Turkish ports has experienced a considerable development and growth in

Turkish port industry during the last 10 years.

Among these developments are the privatisation of state-owned ports, large

foreign investments in port expansion and more joint ventures between private

Turkish ports and foreign port operators from Europe and Asia. Regarding the

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privatisation process, TSRA ports has sold since 2000. In addition to these

developments global terminals such as APM Terminals (APMT) is continuing its

emerging Europe expansion strategy and is breaking into Turkey. It is believed

to be a wise move by the global port operator, as emerging markets are the

area of interest to the container shipping community and Turkey, with its young

population, offers medium- to long-term consumer demand growth. Turkey has

many ports that can be among the most important in the Mediterranean, if they

are improved. Among these, the port of Mersin will have a significant place

because of the Baku-Tbilisi-Ceyhan oil pipeline that is being constructed.

Currently, a prominent strategy of the ports in Turkey is the specialization on

certain cargo traffic. Most of the ports in Turkey are conventional ports which

serve to various cargo types. However, specialized ports such as container

terminals in Ambarlı region and Nemrut Bay, Ro-Ro terminals and car terminals

in Marmara region are increasing in number. Equipment and information

technologies are important concerns for specialized ports especially. While

modern cargo-handling equipments are necessary for the operational efficiency

of the ports, investments on port information systems are also increasing to

speed up cargo and information flows.

Although some major ports developed their own IT systems, the data transfer

between these systems are not possible between these systems are not

possible. Due to such kind of problems experienced in Turkish port industry,

development of a port management information system is a major policy

concern for Turkish port business. Major steps have been taken to establish a

port community information system including the parties such as public

institutions, agencies, customs, port and terminal operators, etc.

This system would enable minimization of transport costs by the acceleration of

transactions electronically and coordination among parties. Development of a

port community information system will put forward the importance of

cooperation and coordination between different ports and terminals. Besides the

usage of common IT systems; ports can implement cooperation strategies like

the joint supply and usage of equipments, common marketing and promotion

activities, and cooperation regarding vessel traffic systems, pilotage and towage

facilities, port security, safety and environmental protection practices.

As a result of the investment in transportation and port sector in Turkey

with priority projects, PPP projects will gain more importance in the future.

PPP models will be widely implemented for transportation and port

infrastructure investments in Turkey. In freight transport, priority will be

given to rail and maritime transport and ports are being transformed to

the logistics centres that facilitate intermodal transport to/from Turkey.

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Competition between ports is developing with the entry of new ports as

well as continuous capacity expanding projects: New port projects are

Asyaport in Western Marmara Region and DP World in Eastern Marmara

Region. In Aegean Region new port projects are Petkim Port Project (also

called Petlim by APM and Petkim) and Port of Çandarlı Project (by Turkish

government). In Black Sea there is a Filyos Port Project (by Turkish

government) and in south part of Turkey there is new Mersin Port Project

(by Turkish government).

Expansion Projects include port expansion and terminal equipment

acquisition by the ports such as Evyapport, Yılport, Limaş, and Gemport in

Eastern Marmara Region, Port of İzmir in Aegean Region and Port of

İskenderun and Mersin in Mediterranean Region. Petkim Port located near

Izmir has recently (February 2012) signed an agreement with APM

Terminals from the Netherlands and SOCAR, the State Oil Company of the

Republic of Azerbaijan, for the expansion of the container terminal. Total

investments are between USD 350 – 400 million dollars (APMT, 2013).

Considering the developments and opportunities such as increase in demand for

port services port investments and capacity expansion projects, infrastructure

and transport connection investments, adoption of the modern equipment and

information technologies, favourable state policies for the development of ports,

privatization practices and procedures, cheap port labour costs Turkish port

sector seems to be very attractive for the investors. The growing port industry

attracts attention from both domestic and international investors. Foreign

investments in Turkish ports currently are made mainly by new investments

into the port industry and privatization of existing ports. It is accepted that

Turkey is an attractive place for trans-shipment terminal investments if it is

desired to be competitive in Black Sea Container Traffic.

Advantages of Turkish partners for foreign investors in investing port business

in Turkey can be summarized as follows:

• The influence of a strong local partner may facilitate relations with co-

existing state authorities such as Customs and the Port related

authorities (State bodies which accord berthing authorities to arriving

vessels and are responsible for the safety of the port areas and vessels

sailing within their jurisdiction), as well as political and bureaucratic

procedures (such as authorisations needed for operational licences or

port expansion)

• The existence of a domestic partner in the ownership and governance

can create favourable views on the local public opinion. Advantage of

foreign partners to Turkish Ports are operational know how, leading to

operational efficiency and effectiveness, business know how, leading to

leaner management and maximized profits and, globalization of the ports,

increase in port competition and port service quality, capacity to make

global deals with large traders and liner shipping companies.

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There are different ways of involving in port business in Turkey by the private

enterprises. Business opportunities for Dutch-Turkish co-operations exist in

the following areas.

• Built Operate Transfer Port Projects such as Çandarlı Port Project

(for 45 years; 4 years for the construction and 41 years for the

operation), Mersin New Port Project and Filyos Port Project will be

realized by BOT.

• Partnership and Terminal Management Contract - Group TCB has

the terminal management contract for the operation of TCEGE Port,

container terminal within the Ege Gübre Port, with Ege Gübre (local

Fertilizer Company) (90 % TCB Group, 10 % Kınay Group-local logistics

company). Petkim signed an agreement with APM Terminals in 2012.

Petkim, a subsidiary of SOCAR Turkey Enerji A.S., the State Oil Company

of Azerbaijan, is the owner of the port, and through its port subsidiary,

Petlim, is APM Terminals’ direct partner in the 1.5 million TEU annual

capacity deep-water terminal project, scheduled to open in 2015 (APM

Terminals, 2013).

• Port Privatisation – such as Port of Mersin operated by TSRA

previously is transferred to the PSA and Akfen Joint Venture, Port of

Iskenderun operated by TSRA transferred to the Limak Investment for

operating the port during a time period of 36 years. Limak paid USD 327

million to TCDD to run the port for 36 years. Limak will also invest USD

250 million in the next five years in expanding and upgrading Iskenderun

Port. Limak Investments is part of the Turkish Limak Group. Bandırma

Port previously operated by TSRA is transfered to the Çelebi JV Group,

Samsun Port is operated by Ceynak. Port of Derince will be prizatized in

a very near future. Later Port of Tekirdağ and Port of Izmir is expected to

be privatised.

• Consolidation and Acqusition – Consolidation and acquisition in port

operations are inevitable in Turkey, especially for container terminals. It

is still a “buyer’s market” at the moment, given the dramatic changes in

today’s economic circumstances. Ports such as such as Gemport,

Rotaport and Gemlik Fertilizer Berth were bought by the Yıldırımlar

Group (a local company in the style of a global port operator). Nemtaş,

100% subsidiary of Türkiye İş Bankası A.Ş., executed a share purchase

agreement with Yılport Holding for the sale of 54 % of the share capital

of Gemport, the first privately owned port of Turkey. Another deal

relating to ports is the acquisition of 20 % of Iskenderun Port by

Inframed Infrastructure from Limak. Inframed Infrastructure unifies

corporate investors such as Cassa Depositie Prestiti from Italy, Caisse

des Dépôts et Consignations of France, Caisse de Dépôt et de Gestion

from Morocco, EFG Hermes from Egypt and the European Investment

Bank.

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• Infrastructure construction - Limak undertaken the Çandarlı Port

Project breakwater construction, together with Kolin İnşaat.

• Entering market as terminal operator and stevedor – Stevedoring

activities are increasing as a result of the privatisation applications and

new port investments.

• Entering market with greenfield port investment projects-MSC

enters the market with greenfield port project called Asyaport and Dubai

Port enters the market another greenfield port called DP World Port.

Despite global financial crisis, major global operators keep their eyes on

Turkish container market.

• Infrastructure Fund to invest in ports such as İskenderun Port-

Looking for stable revenue streams in a newly privatised sector,

infrastructure fund InfraMed has partnered with Turkish industrial

conglomerate Limak in an attempt to develop the Port of İskenderun.

Apart from entering the port industry in Turkey as an investor there are also

other business opportunities for the companies who want to enter Turkish port

industry such as:

• Opportunity for port dredging business - such as Port of İzmir needs

dredging and TSRA Directorate of Ports is planning to dredge the port

(approach channel and terminal) apart from the expansion of the

existing port. In addition to this, there is need for dredging other ports.

• Cargo handling equipment sales opportunity. Due to the increase in

port privatisation and port competition there is a heavy investment by

the Turkish ports in both shore and terminal cargo handling equipment.

• Port Information and Communication Technology sales

opportunity. Due to the requirements of port customers and users, and

the need for efficiency in operations of terminals Turkish ports are

adopting themselves to the new information and communication

technologies used by modern ports.

• Opportunity of port consultancy. Due to the numerous port projects

there is a need for the feasibility study of both the new port projects and

port expansion projects. • Port education and training opportunity. Due to the increasing need by

the port industry and the new regulations there is need for training and education of lower, middle and upper level port personnels on port operations and management.

Business opportunities in Turkish port sector for Dutch companies can be

summarized as joint port ownership and management, technical advice for local

ports, support of local ports through the external know-how on port investment

and business (planning, development, expansion, and operation of terminals),

financial participation in local port enterprises, project financing, cooperations

on education and training of port personnel, participation in privatisation of

ports.

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The current Privatization Law (4046) ratified in 1994 forms the institutional

basis for privatization ports in Turkey. Furthermore, the Constitutional

Amendment in 1999 (Articles 47 and 125), included the concept of privatization

in the Constitution, and has allowed for international arbitration assuming equal

footing in international competition and stimulating direct foreign investments

and formation of alliances with foreign partners. The privatization decisions are

taken by the Privatization Higher Council headed by the Prime Minister and

composed of five ministers, and implementations are carried out by the

Privatization Administration (PA). Within the framework of the Constitution and

Privatization Law and considering the nature of the business, the monopolistic

condition of the sector, and the concept of public goods, the privatization of the

ports can be implemented by transfer of ownership, lease or similar

privatization strategies, restricting the transfer of the port asset ownership to

the private sector (Günaydın, 2006). As per Article 15/a and b of the said Law;

ports are assumed as public service organisations, therefore, it is required that

ports "... shall be privatized under the provisions of this Law through the

transfer of operations rights, leases or similar methods.

Therefore, the privatization of ports in Turkey is a partial privatization where

the operation right is transferred to the private sector, or methods like BOT and

leasing are utilized, while the ownership and regulation is kept by the state as

also stipulated by the Constitution (Günaydın, 2006). A bidding process takes

place for selecting the private enterprise to overtake the operation rights, the

result of which is submitted to the Privatization Higher Council for approval. The

decision is announced at the Official Gazette regarding the accountability

principle. Then, a contract for transfer of operational rights is signed among the

PA and the selected enterprise. The operation period for the private company

could be at most 49 years regarding the conditions of the port.

The main competitive concern about the ports is the risk of abuse of dominant

position via refusal to deal, excessive pricing, tying etc. However, in order to

determine whether there is a violation of the Competition Act (No. 4054 on the

Protection of Competition) it is vitally important to determine the relevant

product and the geographic market. In the context of ports, relevant product

market is defined by taking into consideration the type of freight which is

handled in the port and the type of vessel which anchor in the port. While

determining the geographic market, the Competition Board takes two factors

into consideration. The first factor is the hinterland of the port (the geographic

regions which are served by the port) which is also called as the “static

element” whereas the second factor is the catchment areas known as the

“dynamic element”. In Turkey, it is generally accepted that a market share

equivalent to or above 50 % is a significant indicator of dominance. (OECD,

2011) This presumption is also valid for maritime and port services. However,

the characteristics of the services, which are provided by the port, might

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change the market power analysis because different services require different

investments, water depth and back space size.

Key issues for port investment in Turkey are summarized as follows: (Yıldırım,

2010)

• Investment Terms: Up to 5 years Construction period and more than 10

years ROI period)

• High capital cost

• Limited extent of cost recovery: Road / rail Access, breakwater

• Intensive bureaucracy and paper works

Investors generally encounters problems in getting the permission for port

construction and operations in Turkey. Due to the complex nature of port

investments and operations in Turkey making use of local port consultants and

lawyers specialised in port investment laws and regulations is highly

recommended before entering the market.

An overview of the contact details of the most relevant Turkish ports is given in

Annex 2.

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3 THE TURKISH FLEET

3.1 General

In the preceding chapter an elaborate analysis was given of the Turkish ports,

including future prospects and opportunities for investors. Although themain

Turkish ports have an international character, the main category of users of the

ports are the Turkish shipowners. This chapter will first analyze the Turkish

owned and the Turkish registered fleet. The second part of this chapter contains

compact descriptions of the twenty main players in the Turkish ship-owners

landscape.

3.1.1 Seagoing traffic

Because of its geographical advantage, Turkey does not have any maritime

boundary and enjoys all benefits of maritime accessibility. More than 85% of

Turkey’s foreign trade is realized by seagoing transportation. With a trade

balance of $380 billion in 2012, this is good for $300 billion. Additionally, the

relatively low labor costs create a further advantage to the seagoing shipping.

Taken together, a versatile shipping sector has emerged in Turkey, which plays

a substantial role in the European and regional transport systems.

Chart 12: Cargo volume Turkey

Source: Ministry of Transport, Maritime Affairs & Communication

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The strong economic growth in Turkey helped the Turkish ship owning

community to expand their activities. Over the last decade a rapidly rising cargo

turnover has occurred. In 2004, the import and export was 178 M ton and this

increased to 284 M ton in 2012.

Imports are twice as high as exports. The main imported goods were:

• machinery

• chemicals

• semi-finished goods

• fuels (diesel and oil)

• transport equipment

These goods are mainly imported from Russia, Ukraine, U.S., Egypt and EU

countries.

The majority of the exported seaborne trade is partaken by Egypt, Italy, Russia

and Spain. Egypt is an increasingly important trading partner over the last few

years. The Netherlands accounts for 1.1% of Turkey's seaborne exports and

1.8% of the imports.

The total sea transport between Turkey and foreign countries in 2012 was 34%

liquid bulk, 28% dry bulk and 20% containers. The remaining transport was

General Cargo (16%) and ro-ro vehicles (2%).

3.1.2 Shipping challenges

Turkey has witnessed the fastest growth in energy demand in the OECD. Apart

from the home demand, Turkey is also a central hub for the transit of oil and

gas from Iran (44% of imports in 2012), Iraq (15%), Saudi Arabia (14%),

Russia (10%) and Kazakhstan (7%). The imports are mainly done by pipeline,

but exports and passing trades of crude oil, liquefied gases and distillates play a

major role in the seagoing traffic flows around the coasts of Turkey. Although

the growth is encouraging, there is also a downside called safety. The following

text is derived from the Turkish Ministry of Foreign Affairs9.

“From the energy security perspective, the Turkish Straits are of particular

importance as around 3.7% of the world’s daily oil consumption is shipped

through the Turkish Straits. The amount of oil and oil products transported

through the Strait of Istanbul has increased dramatically from 60 million tonnes

in 1996 to around 150 million tonnes in 2008. This figure is expected to reach

around 190-200 million tonnes in the coming years due to the expected

throughput from the Caspian region reaching the Black Sea in addition to the

large amounts of Russian oil.

....................................................................................................................................................

9 Republic of Turkey, Ministry of Foregn Affairs: Turkey’s Energy Strategy, www.mfa.gov.tr 2013

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In view of the heavy tanker traffic, as well as the physical characteristics and

peculiarities of the Turkish Straits, a maritime disaster caused by a tanker

carrying hazardous cargo seems inevitable sooner or later. In addition to the

humanitarian and environmental perils, such a disaster would interrupt the

regular flow of oil to world markets. Consequently, the solution lies at the use of

alternative oil export options that by-pass the Straits.”

Neither safety issues nor environmental impact of shipping can be ignored. It

can reasonably be expected that safety and environment will play an increasing

role in the Turkish maritime debate, and in term lead to increased investmets in

safe shipping operations.

3.2 Fleet statistics

3.2.1 Size of the fleet

The overall picture of the Turkish shipping sector is quite diverse. On the one

hand there are large players with ramifications in other sectors of the economy,

operating a professional and young fleet of relatively large merchant ships. On

the other side of the spectrum a fragmented and old fleet of general cargo ships,

tugs and small ferries exists, often run by one-ship companies.

The Turkish growth in seaborne trade goes hand in hand with investments in

the Turkish owned merchant fleet. In 2005, the merchant fleet over 100 GT

consisted of 1.596 vessels. This fleet increased 40% to 2.237 vessels by

January 2013. The capacity was 10.7 M dwt in 2005 and almost tripled to 30 M

dwt in eight years’ time.

Chart 13: Turkish owned fleet > 100 GT (M dwt)

According to the worldwide capacity (1.625 M dwt), Turkey takes the 13th position (6.6% of the world

fleet). The Netherlands holds the 17th place (15 M dwt).

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3.2.2 General composition of the fleet

In terms of cargo carrying capacity, the Turkish owned fleet consisted in 2013

dominantly of bulk carriers (16.1 M dwt, average ship size 52,000 dwt) and

tankers (4.9 M dwt, average ship size 126.000 dwt). In terms of number of

ships the general cargo sector dominates (2.2 M dwt, 719 ships).

Table 20: Turkish owned fleet >100 GT

Vessel type # 1.000 dwt

General Cargo 719 2.243

Bulk Carrier 310 16.129

Tug 175 8

Passenger Vessel 166 10

Multi-Purpose 156 1.080

Chemical & Oil Carrier 134 1.175

Product Carrier 104 820

Fully Cellular Container 87 1.236

Ro-Ro 80 421

Passenger /Car Ferry 50 32

Chemical Parcel Tanker 40 270

Tanker 39 4.925

Product / Chemical Carrier 39 1.047

Other Dredger 26 21

LPG Carrier 14 129

Other 98 426

2.237 29.978

3.2.3 Turkish registry

Turkey offers two modes of registration: a national and an international ship

register. The total deadweight of the Turkish registered fleet (measured over

1,000 dwt) is 10.0 M dwt. This roughly is one third of the total fleet owned by

Turkish ship owners. The remaining two thirds are either smaller than 1.000

dwt or registered abroad.

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Chart 14: Turkish fleet > 1.000 dwt, Turkish national versus international registry; dwt and number

Source: Turkish Chamber of Shipping, 2012

The Turkish national registry mainly contains relatively small ships, with an

average capacity of 8.500 dwt. The ships in the Turkish international register

measure on average 15.400 dwt.

The Turkish registered fleet is dominated by bulk carriers and to a lesser extent

of dry cargo, oil tankers, chemical tankers and containerships. Almost half the

Turkish international registry consists of bulk carriers (47%).

According to UNCTAD10, the largest foreign register of Turkish owned ships is

Malta. In 2012 a number of 234 ships representing 7.6 M dwt were registered in

this country. Second largest foreign register is Marshall Islands (77 ships,

4.2 M dwt).

3.2.4 Fleet of vessels of 30+ years

In total 792 ships with a capacity of 2.2 M dwt are older than 30 years. 60% of

this fleet is registered under Turkish flag. Under normal conditions these ships

are at the end of their economic life.

These ships are mainly (427 units) small dry cargo vessels, see Chart 15.

....................................................................................................................................................

10 UNCTAD, Review of Maritime Transport 2012

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Also the categories of tugs (in this graph including oceangoing salvage tugs,

oceangoing tugs and AHTS) have a relatively high replacement need of 72

vessels. 25% (18 units) of these 30+ tugs are centrally owned by Turkish

government and are on average 42 years old.

The combined fleet of 30+ passenger vessels and 30+ RoPax vessels totals 72

units with an average age of 46 years old, of which approximately 70% is in the

hands of central and decentralised government services.

Chart 15: Turkish owned fleet, segmentation of ships 30+ years

3.2.5 Dry cargo fleet

Per June 2013, the dry cargo shipping

sector consisted of 737 ships with a

total capacity of 2.3 M dwt. The

average age of these ships is 32 years

and the average ship size is 3.124 dwt.

The ship owners from this market

segment are active in the

Mediterranean area, Black Sea, North-

West Africa, Middle East, East

European and Russian waterways. The

ships in this segment have a maximum tonnage of 11.000 dwt.

The structure of this industry is rather fragmented. The only three players

owning more than ten vessels are Russian flagged Sailtrade Shipping (23 ships

of average 30 old, total 96.000 dwt), Albros Shipping (21 dry cargo ships of

average 16 years old besides its tanker fleet, largely Russian flagged, 71.400

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dwt in dry cargo segment) and Kent Shipping and Chartering (13 Turkish owned

sea-river ships, 62.194 dwt, also active on the Russian waters).

The typical cargo these vessels move are grains, steel, scrap, coal, paper rolls,

timber, fertilizers and special project cargo. The ships have low drafts, so they

can penetrate deep into the inland waters of Russia.

Chart 16: year of build dry cargo fleet

Over the past 25 years annually only some 9 ships per year were added to the

fleet, just 1.2% of the fleet. In terms of tonnage this was 1.6%. From 1995 to

2005 the number of additions to the fleet was very low. In 2002 there was no

ship added at all.

In 2013 a rise is expected in terms of tonnage, caused by an expected and

partly realized delivery of seven relatively large ships for this cargo type,

totaling 67.000 dwt (average 9500 dwt per ship). The number of new ships

entering the market however is still very low compared to the other subsectors

and still shows a negative trend. Normally as a rule of thumb every year

approximately 3.3% of the fleet (24 ships) has to be replaced by new tonnage

in order to stay balanced. This obviously is not the case in Turkey in this market

segment. It could mean that in Turkey either ships are getting older year by

year, or the dry cargo fleet is shrinking. It is the question how long it will take

before this market will pick up again, possibly forced by environmental and

safety legislation.

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Chart 17: dry cargo dwt categories, age and number

When we take a closer look at the capacity categories (see chart 16), we can

see that:

1. There is an almost linear relation between size and age. The smaller the

vessel, the higher the age. The average age of the 181 ships under 1.500

dwt is 44 years.

2. The majority of the ships are smaller than 4.500 dwt. The 4.500 dwt mark is

also the maximum size that can operate on the Russian Unified Deepwater

System.

The Turkish registered dry cargo fleet of 1.000 dwt and more consists of 254

ships. From this total almost three quarters (185 ships) can be found in the

range from 1.500 to 6.000 dwt. Total tonnage in this category amounts to 1.4

M dwt. 20% is younger than 10 years, 10% is between 10 and 20 years, 30%

between 20 and 30 years, and 40% is 30 years or older. 30% of the Turkish

registered dry cargo fleet is ships older than 30 years in the range of 1.500 to

6.000 dwt.

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3.2.6 Bulk carrier fleet

In 2012, cargo turnover of dry bulk was 107 M tonnes, of which 75.7 M tonnes was for import and only 15.7 M tonnes was export. The remaining 15.7 M tonnes was cabotage. When the total import and export is further elaborated (91 M ton), only 10 % is

imported and exported with a Turkish flagged vessel, 4% domestic flagged and 86% other country flagged. Additionally, the general cargo turnover was 23 M tonnes for export and 29 M tonnes import. The total Turkish owned B/C fleet of 100 GT and more consists of 309 ships with a total of 16.3 M dwt. The average age of the ships is 11.2 years old, and the average size is 53,000 dwt. The largest owners are Geden Lines (23 ships with 2.0 M dwt), Yasa Shipping Industry (21 ships with a capacity of 1.5 M dwt), Densa Shipping (15 ships with 1.1 M dwt) and Active Shipping (8 ships with 1.0 milion dwt). Geden Lines, Densa Shipping and Ciner Denizcilik are still expanding their fleets in 2013. The ships built since 2010 were ordered in China (50 ships), South Korea (51), Japan (12) and Vietnam (11). Only two handy sizes and one handy max were built in Turkey.

Chart 18: Turkish owned bulk carriers, year of build

0

0,5

1

1,5

2

2,5

3

3,5

4

20032004200520062007200820092010201120122013(est)

Mdwt

87

3.2.6 Bulk carrier fleet

In 2012, cargo turnover of dry bulk was 107 M tonnes, of which 75.7 M tonnes was for import and only 15.7 M tonnes was export. The remaining 15.7 M tonnes was cabotage. When the total import and export is further elaborated (91 M ton), only 10 % is

imported and exported with a Turkish flagged vessel, 4% domestic flagged and 86% other country flagged. Additionally, the general cargo turnover was 23 M tonnes for export and 29 M tonnes import. The total Turkish owned B/C fleet of 100 GT and more consists of 309 ships with a total of 16.3 M dwt. The average age of the ships is 11.2 years old, and the average size is 53,000 dwt. The largest owners are Geden Lines (23 ships with 2.0 M dwt), Yasa Shipping Industry (21 ships with a capacity of 1.5 M dwt), Densa Shipping (15 ships with 1.1 M dwt) and Active Shipping (8 ships with 1.0 milion dwt). Geden Lines, Densa Shipping and Ciner Denizcilik are still expanding their fleets in 2013. The ships built since 2010 were ordered in China (50 ships), South Korea (51), Japan (12) and Vietnam (11). Only two handy sizes and one handy max were built in Turkey.

Chart 1: Turkish owned bulk carriers, year of build

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The Turkish registered bulk carrier fleet of 1,000 dwt and more consist of 113

ships. Measured in dwt, one third of the B/C fleet consists of Panamaxes

younger than 10 years of age. Total tonnage in the category of bulk carriers

amounts to 5.1 M dwt. Eight ships with a total of 853,000 dwt are in the

2category capesize or larger. The latter are all under ten years of age.

3.2.7 Container fleet

Over the last decade the container volume of Turkey increased considerably

faster (+57%) than global average (+20%). At the beginning of 2012,

container throughput was more than 7 M TEUs.

Chart 19: Container Volume Turkey (TEUs

Source: Ministry of Transport, Maritime Affairs & Communication

In 2012, both Turkish import and export are approximately three M TEUs. The

remaining one M TEU is transit and cabotage. The main export countries are

Egypt, Belgium and Spain (total 1.08 M TEU). Imports come from Egypt, Greece

and Belgium (1.1 M TEU). The container volume is strongly concentrated at

Ambarli Port in Istanbul (42% of Turkish container trade). Mersin comes second

(17%), followed by Izmir and Gemlik (both 10%).

The total Turkish owned full container fleet of 100 GT and more consist of 86

ships and 1.2 M dwt. Total container carrying capacity is 93.800 TEU. The

largest operator in this field is Arkas Group/Arkas Line with 31 ships and

585.000 dwt. The fleet is mostly built in Germany and has a capacity of 43.300

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TEU. The second player is Kasif Kalkavan Group with a fleet of 20 ships

representing 335.000 dwt/26.800 TEU, built at Sedef Shipyard in the period

from 2001 to 2012.

The Turkish registered container fleet consists of 54 ships measuring 828.100

dwt (average size 15.300 dwt). This fleet is relatively young at an average age

of 11 years. Together with the renewal of the fleet, a scale increase took place.

The average size of the vessels under ten years is 18.700 dwt, whereas the

average age of the rest of the Turkish registered container fleet is 11,200 dwt.

3.2.8 Oil tanker fleet

Liquid bulk transport was good for 54 M tonnes import and 15 M tonnes export.

Of this, more than 53 M tonnes cargo were transported with vessels that were

other country flagged, 10 M cargo was transported with Turkish flagged vessels

and 6 M tonnes with domestic flagged vessels. Oil is transported from the

Caspian and Middle East hinterland to the terminals at the South-Turkish city of

Ceyhan, from which place it is shipped in tankers of up to 300.000 dwt to

international destinations.

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Chart 20: composition of the Turkish owned tanker fleet

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# V E R W ! # V E R W !

The total oil tanker fleet of 100 GT and more owned by Turkish companies, consists of 39 ships with a total cargo carrying capacity of 4.9 M dwt. The sector is dominated by Geden Lines, a company owning 16 tankers totalling 2.2 M dwt. Second player is Yasa Shipping Industry with 8 tankers and a capacity 1.1 M dwt. Third comes Gungen Shipping (4 tankers, 0.6 M dwt). The 28 ships of these three Turkish owners are all Aframaxes and Suezmaxes in the range of 110.000-160.000 dwt.

The Turkish registered fleet younger than 10 years of age consists of 13 product and oil tankers totalling 1.000.000 dwt. The average size of the ships under 10 years old is 77.700 dwt. The fleet over ten years has a capacity of 20.500 dwt per ship. It can be concluded that –even more than in container shipping- a remarkable scale increase took place over the

past decade. This effect was entirely caused by the addition of 6 Suezmaxes (0.9 M dwt) in the past decade.

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Chart 1: composition of the Turkish owned tanker fleet

The total oil tanker fleet of 100 GT and more owned by Turkish companies, consists of 39 ships with a total cargo carrying capacity of 4.9 M dwt. The sector is dominated by Geden Lines, a company owning 16 tankers totalling 2.2 M dwt. Second player is Yasa Shipping Industry with 8 tankers and a capacity 1.1 M dwt. Third comes Gungen Shipping (4 tankers, 0.6 M dwt). The 28 ships of these three Turkish owners are all Aframaxes and Suezmaxes in the range of 110.000-160.000 dwt.

The Turkish registered fleet younger than 10 years of age consists of 13 product and oil tankers totalling 1.000.000 dwt. The average size of the ships under 10 years old is 77.700 dwt. The fleet over ten years has a capacity of 20.500 dwt per ship. It can be concluded that –even more than in container shipping- a remarkable scale increase took place over the

past decade. This effect was entirely caused by the addition of 6 Suezmaxes (0.9 M dwt) in the past decade.

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4.2 The development of Turkish shipbuilding

The Turkish shipbuilding industry has a history of over 600 years. In 1390, the

first shipbuilding activity commenced, and in the 16th century the largest

shipyards in the world were Turkish. In the Ottoman Empire, large naval vessels

were produced. The development of industrial shipbuilding however, took place

relatively recently.

Until the 1970’s the Turkish shipyards were relatively small compared to the

industry in Europe and Asia. The shipyards were mainly located at the Golden

Horn and the Bosporus in European Istanbul. In 1969 the Turkish government

took a decision that would change the industry dramatically. Politics decided to

scale up the industry, and move the shipyards to the other side of the Bosporus.

The place for the relocation and expansion plan was the bay of Tuzla.

1970 - 2000

In the 1980’s most of the shipyards had effectively moved here. The

development of the Tuzla area was stimulated by a government programme

called GISAT. Under this scheme, Turkish ship owners received support for

building ships domestically. The GISAT programme was active from 1980 until

1989. However, the real development of the shipyards came later; GISAT

mainly laid the foundations and shaped the company structures.

2000 - now

The liberal conservative regime of the AK Party (2002-2012) introduced

measures that brought new investment capital to the shipyards. It coincided

with a world-wide boom in shipbuilding orders and an unprecedented optimism

in the maritime world. In this period large shipbuilding sites were built in

several upcoming shipbuilding countries across the globe, existing sites were

modernised and expanded. The same happened in Turkey.

Where Tuzla could no longer accommodate the ambitious activities of the

shipbuilding industries, new locations in Yalova and İzmit were developed. The

start of the Yalova shipbuilding region in 2004-2007 took place in the absolute

peak of worldwide shipbuilding. 21 shipyards were constructed here, together

representing an impressive 1.2 M dwt of new building capacity, and theoretically

another 29 were planned here. The Yalova Shipyard Region is formally funded

by private equity capital, without the use of public sector funds.

As a result, in a period of ten years the number of Turkish shipyards almost

doubled: from 37 in 2002 to 71 in 2012. Total capacity almost six folded within

in six years. After 2008, no more new projects were set up, and the capacity

stabilised at around 3.5 M dwt (3.67 M dwt in 2012). The actual steel

processing capacity amounts to 700,000 tonnes.

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4.3 Shipbuilding statistics

The Turkish shipyards usually combine new building activity with repair and

conversion works. In this section the new building side is highlighted. The new

building of the shipyards traditionally concentrates on coastal ships. Product and

chemical carriers of up to 10.000 dwt have been and are core business,

although Turkey has the capacity to build Panamax sizes. Actually, Turkey is the

number one builder of small sized chemical tankers in the world.

The type of vessels built in Turkey are:

• Oil tankers

• Chemical tankers

• Bulk carriers

• Container ships

• Heavy lift vessels

• Multi-purpose vessels

• Platform supply vessels

• Navy and coast guard vessels

• Tugs and workboats

• Mega yachts and yachts

• Fishing boats

4.3.1 Ship deliveries, number

Chart 24 covers the breakdown of Turkish Shipyards' deliveries over the past

decade, including all yachts, vessels, offshore platforms, naval vessels or other

craft considered "ship" by definition. The data is based on actual registry

records and place of build. Since the beginning of the 2000's, Turkish Shipyard

delivered 1.093 units.

Chart 24: Number of ships and ship types delivered by Turkish shipyards 2000-2013

Turkish Shipbuilding - By Type

(2000 - 2013)

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Naval

Container Vessel

Fishing

Pass. / Ferry

Research

Gas Tankers

General / Dry Cargo

Others

Tanker

Offshore / Tug

Source: Lloyds List Intelligence

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Between the years 2007-2010, Turkish shipyards delivered 543 units.

Observation: Although during and after 2010 the number of deliveries

slackened, due to the crisis order slippage has been effective. In 2012 only 60

vessels, less than 40% of 2008, were delivered.

4.3.2 Ship deliveries, dwt

Chart 25: Ships delivered by Turkish shipyards, by DWT

Turkish Shipbuilding - By Type

(2000 - 2013)

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Fishing

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Research

Gas Tankers

General / Dry Cargo

Others

Tanker

Offshore / Tug

Source: Lloyds List Intelligence

Observation: deliveries in terms of cargo carrying capacity peaked in 2008 and

dropped in 2010, mainly caused by tanker deliveries, and to a lesser extent by

containerships.

4.3.3 Ship deliveries (dwt & number) and actual shipyards

In the next chart, an integrated overview is given of the deliveries from Turkey

shipyards in number of vessels delivered, in cargo carrying capacity and in

number of shipyards that were actually delivering the ships.

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Chart 26: deliveries Turkey (1.000 dwt - number of vessels & (in red) number of shipyards that actually delivered that year)

Source: Clarksons, analysed by Bloem Doze Nienhuis

Observation: In terms of delivered tonnage, delivered number of ships and number of active

shipyards, the same trend is witnessed. The bubble in 2008 was caused by a massive order

intake around 2007. Soon after 2008 all indicators dropped as fast as they rose.

The number of ships delivered dropped less quick than the tonnage delivered. It

indicates that larger tonnages slipped away faster than smaller vessels.

In terms of actually active shipyards, the number decreased by almost 50%. It

means that many shipyards either seized new building activity, delayed their

works, or specialised in repair and maintenance works.

The curve is worrysome, although it may be said that not all ship types are

represented in the Clarkson statistics. Some special vessels qualify as ship in

the international statistics and they do not have a carrying capacity. Military

ships, inland ships and super yachts are excluded, as well as some maritime

structures that do not have propulsion like pontoons or certain crane ships.

However, the measurement has been constant over the years, and does not

influence the recent downward trend.

In the period from 2002 to 2009, order book and production capacity showed

exactly the same rising trend. Roughly speaking, the capacity was enough to

build one year ahead. After 2009 however, the order book quickly diminished

due to lack of new orders on the one hand and continuing deliveries on enlarged

shipyards on the other. The result is that in 2012 the capacity was four times

the order book, and will probably reach seven times by 2013, if the trend

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continues. This unbalanced situation can only be solved by massive new orders,

which probably will lead to a call for government interventions.

Chart 27: Order book versus production capacity

Sources: Clarkson, Ministry of Transport, Maritime Affairs and Communication, Clarkson and Bloem Doze

Nienhuis

At the same time, the number of employees in Turkish shipyards stabilise11.

Logically it could be expected that the downward trend will also appear in these

graphs, but so far there is no indication for structural layoffs. In a recent

article12 however, a representative of Besiktas Shipyard mentioned the number

of 16.000 employees in 2012, which would be more in line with market

developments.

....................................................................................................................................................

11 The figures for temporary workers are not available. 12 Tradewinds, June 21st 2013

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Mengi-Yay

The Mengi-Yay yard builds super

yachts up to a length of 42 metres. The

yard supplies sailing yachts as well as

motor yachts. Mengi-Yay is based in

Pendik Istanbul. It was founded in

1976 by Ramazan Mengi. In 2006

aluminium and steel production was

started up in a new construction hall.

Oruçoğlu shipyards

Oruçoğlu Shipyard was established in

1978 and is based in Yalova. The

shipyard started at the very beginning

as producer of with wooden gullets.

From the year 2000 onwards, it

produced mega-yachts in the range of

42 - 72m.

Their brand ‘Miss Tor Yacht’ is strongly

marketed for its survivability in

extreme conditions. According to the

public information given by the yard, at the moment nine yachts are under

construction, including two sailing yachts and one 72 m yacht.

Oruçoğlu Shipyard is one of the companies of Oruçoğlu Group, a corporate

group with more than 10 companies existing in various sectors.

Proteksan Turquoise

The Proteksan Turqoise Yard was established in Pendik, Istanbul in 2007.

Originally a producer of hulls and super structures, it now operates on 35.000

square metre facility with a 120m dock. The maximum length of vessels

produced here is 120m.

In February 2012 the yard came in the news when her super yacht Yogi sank off

the coast of Skyros in Greece, after having small warranty works in the yard.

Currently 50 to 70m hulls for both aluminium and steel construction are being

prepared. Once complete the vessels are transferred to the Proteksan Turquoise

Shipyard where the outfitting and commissioning will be completed. In total

three steel/aluminium motor yachts are under construction, measuring 50m, 62

and 72 metres.

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Sirena Marine

Sirena Marine is a producer of smaller yachts. Founded in November 2006, this

company was a joint setup of Kıraça Holding and the leading producer of yachts

Azimut-Benetti Group. In 2008 the cooperation was transformed into an official

partnership. In fact, Turkey became the first country where the Azimut - Benetti

Group carried out its manufacturing outside Italy. Between 2008 and 2011, Sirena

Marine produced 119 boats of Azimut’s models. The maximum size of these ships is

17 metres.

Besides manufacturing Azimut standard models, Sirena Marine is the sole distributor

of the Azimut - Benetti Group in Turkey. This company has a production facility in

Bursa Organized Industrial Zone, south of Yalova.

Aside from motor yacht manufacturing, Sirena Marine produces sailing boats

under the brand name Azuree. The yachts up to 14 metres in length, are being

produced in the Bursa Orhangazi Factory, a 103.000 m2-wide facility, including

a 35.000 m2-wide indoor area. As part of another project it undertook with the

Azimut-Benetti Group, Sirena Marine initiated production of the self-designed

Azimut 38 and Azimut 40S models. Today, 60 boats a year are produced in and

exported from Orhangazi.

Sirena Marine also produces marine equipment, such as stainless-steel parts,

furniture, flooring, glass reinforced plastics, teak, and electrical systems.

Sunrise yachts

Sunrise Yachts has created an

11,000 m2 facility in the Free Zone

of Antalya in South Turkey. It was

co-founded by current CEO

Guillaume Roché. The shipyard has

two halls that can accommodate new

construction and refit projects up to

65 metres in length and 1.200

tonnes displacement. The halls are

fully acclimatized.

Along each side of the yacht-building facility, space is available for long-term

sub-contractors with the latest equipment and logistics capabilities, along with

air-conditioned storage, ventilation and extraction plants. The shipyard is

organized as an "assembler," based loosely on the car industry's model, with a

small, yet powerful project management team charged with running all the in-

house long-term sub-contractors. The current employment is 150 people.

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Yildiz - Perini Navi Istanbul

The Yildiz Shipyard started its

production in 1975 and is located

in Tuzla. In 1987 it was taken

over by Fabio Perini, and is since

that moment part of the Italian

Perini Navi group. This group of

companies from Viareggio operates

in the super yacht sector under the

brand names: Perini Navi (sailing

yachts) and Picchiotti (motor

yachts).

At the 42.000 sqm water bound area, hulls and superstructures for the group’s

motor and sailing yachts are being constructed. Recent investments in have

made it capable of producing entire ships. Yildiz has 5.450 sq mt of covered

sheds for the construction of Perini Navi and Picchiotti hulls and yachts, 1.600

sqm of specialised workshops, 1.944 sqm of sheds dedicated to aluminium

working, a 100 m long slipway, and 1.300 sqm of offices. Currently a series of

60 m aluminum hulls is being produced at Yildiz, to be outfitted as sailing

yachts in Viareggio.

Probably the most special project has been the sailing yacht The Maltese Falcon

(picture). The ship has three times five sails stored inside rotating, the carbon

fiber masts. Dutch company Gerard Dijkstra & Partners designed this

innovative project. The ship was built in 2006 at a price of € 135 M.

4.6 Other technology related sectors

4.6.1 Construction of naval and coast guard vessels

Until 2000, military shipbuilding was conducted by state owned shipyards. After

the privatisation and/or closure of the facilities, the private shipyards took over

military production. Pendik Shipyard (now: Istanbul Naval Shipyard) functions

mainly as a repair and maintenance

facility, although the first two

prototype ships under the MILGEM

programme were launched here.

The MILGEM programme is a building

programme for the Turkish navy. By

developing MILGEM, Turkey aims to

build warships using local resources to

the maximum. It is intended that the

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programme improves national military shipbuilding and skills. The objectives of

this programme are to enhance the littoral (close to shore) warfare capabilities

and to meet the operational requirements of the Turkish Navy. Under this

programme, in total twelve navy ships will be built: eight corvettes and four

larger F100 class frigates (picture) with anti-submarine warfare and high-seas

patrol capabilities. Together this total project represents a value of USD 3 bn.

After screening by the government, five shipyards were selected as possible

candidates for this prestigious order. On January 3rd 2013, the Turkish

Undersecretary for Defense Industry awarded the order of six corvettes to RMK

shipyard. RMK has a technical co-operation with Italian shipbuilding giant

Fincantieri.

The following shipyards have military references:

1. RMK Marine – coast guard search and rescue ships, corvettes

2. Dearsan Shipbuilding and repair corporation – new type patrol boats

3. Yonka-Onuk JV – small coast guard vessels, ultra fast boats, under water

attack support

4. Anadolu Shipyard – amphibious assault ships for landing tanks on beach

heads

5. Istanbul Naval shipyard – Submarine rescue mother ship, rescue and towing

ship, (semi/non-military) seismic research ship

6. Sedef /RMK /Desan shipyards – landing platform/dock (LPD)

In August 2012 Tuzla based Anadolu Shipyard (ADIK) delivered a Landing Craft

Vessels to the Turkish Naval Forces. This shipyard is now proceeding with this

project, which covers in total 8 amphibious vessels.

4.6.2 Repair and maintenance

According to Gisbir, the total repair and maintenance capacity in Turkey is 15 M

dwt. The number of floating docks expanded from eleven in 2003 to eighteen in

2011.

Chart 44: Number of floating docks in Turkey

11

15

18

0

5

10

15

20

2003 2007 2011

Source: Gisbir

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The number of dry docks showed a remarkable development. Between 2011

and 2013 it more than tripled. Probably this has to do with the overcapacity in

the newbuilding facilities of the Turkish yards. Dry-docks built for new building

purposes now are being used as repair and maintenance yards.

Chart 45: number of dry docks in Turkey

47 9

31

0

10

20

30

40

2002 2008 2011 2013

Source: Gisbir

4.6.3 Offshore technology

The construction of offshore support vessels (consisting of tugs, anchor

handlers, seismic research ships, multipurpose, platform supply vessels, utility

and rescue vessels) was not a large part of the Turkish order book until 2008.

After the crisis struck the shipyards and the traditional markets for merchant

marine vessels tankers disappeared, the Turkish shipyards quickly had to adjust.

The medium end of offshore technology was chosen to be a new focus area,

therewith following many other shipyards in the world.

New building offshore vessels peaked at 2009 with 50 units delivered. From

2008 till the end of 2012 Turkish shipyards delivered 160 vessels. However, due

to fierce international competition, the number of deliveries dropped to 15 in

2011 and the order book currently stands at a modest 10 vessels as of

beginning of 2013.

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Chart 46: Offshore units delivered by Turkish shipyards

Turkish Offshore Vessel Building

(2000 - 2013)

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Source: Lloyds List Intelligence

The list of offshore ships owned by Turkish players comprises less than 30 ships.

This means that the potential for Turkish shipyards will probably not be found at

the home market, but rather in oil and gas areas in the Middle East, Caspian

region, North and West Africa, and North West Europe.

Multipurpose offshore construction vessel by Tersan Shipyard

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According to Gisbir, the ambition is now to be active in the market of larger

offshore structures. This concerns the construction, conversion and repair of

offshore platforms. The large repair facilities described above are suitable for

these purposes. In fact they have been used for these purposes earlier, for

example at Tuzla shipyard.

For the exploration and production in

Turkish waters, the developments at

Turkey’s national oil company TPAO

are relevant. Turkey has proven oil

reserves to the value of 270 million

barrels in the Hakkari Basin. The vast

majority of Turkey's oil production

occurs onshore in the Southeast. TPAO

has also undertaken a number of oil

and natural gas exploration projects,

especially in the Black Sea region. In 2004 gas was discovered in the western

part of the Black Sea. Gas production was initiated in May 2007.

In 2010 and 2011 ultra-deep water exploration drillings were done at the Black

Sea. Besides this, promising projects are being done at the Aegean Sea and

the Mediterranean, North of Cyprus. TPAO’s wants to develop the resources

situated in the Black Sea on short notice. The Ministry of Energy and Natural

Resources aims for commercial production in the Black Sea by 2016.

Significant reserves are expected under the Aegean Sea. However, this has not

been confirmed as a result of the ongoing territorial dispute with Greece. TPAO

has increased its exploration activities in the Black Sea, which could hold

between 7 and 10 billion barrels of oil. The offshore area is being explored by

TPAO, which has formed joint ventures with ExxonMobil and Petrobras.

In November 2011, TPAO signed an agreement with Shell for hydrocarbon

exploration in the Mediterranean and the southeast area of the country. This

agreement covered plans for shale gas exploration in the southeast near the

city of Diyarbakir. According to Turkey's Ministry of Energy and Natural

Resources, Shell began exploration at the Saribugday 1 field in August 2012.

As of January 1, 2013, the Oil & Gas Journal estimates Turkish natural gas

reserves at 218 billion cubic feet (Bcf). Turkey produced only 27 Bcf of natural

gas in 2011, relying almost exclusively on imports to meet domestic demand.

Turkey's energy demand growth has been among the fastest in the world in

2010 and 2011, although slower economic growth in 2012 has dampened the

natural gas consumption increase to some extent. Natural gas is accounting for

an increasing share of the energy mix in Turkey and it is becoming the most

important fuel in terms of volume consumed. EIA data indicate that natural gas

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consumption in Turkey exceeded oil and coal consumption by about 0.3

quadrillion British thermal units in 2011.

The largest of the fourteen Turkish gas fields is Marmara Kuzey. This is an

offshore field in the Sea of Marmara in the Thrace-Gallipoli Basin. Gas

production is mainly carried out by three companies: Turkiye Petrolery A.O.

(TPAO), BP, and Shell. A number of natural gas fields have been brought on-

stream in the Black Sea, including the Akcakoca, East Ayazli, Akkaya, and Ayazli

fields.

4.6.4 Marine equipment suppliers

Equipment suppliers are an important part of the maritime industry. They do

not only supply the shipyards, but are also responsible for maintenance works

towards ship owners, and are an important driver for innovations.

Turkish equipment suppliers are active in the medium tech segments of

shipbuilding. They supply anchors, winches, deck machinery, boilers and

compressors, isolation equipment and valves and central heating systems. The

steel and piping processes are normally seen as an integral part of the

shipyards production. Complex machinery, often supplied on demand of the

ship owner, is imported from Europe.

Due to the international competition and rising quality, the Turkish equipment

suppliers made improvements in recent years, but there is still a lack of local

contribution. Main Turkish subcontractors are small enterprises, which causes

standardizing and efficiency problems, and many shipyards are still dependent

on foreign imports. These are mainly relatively high technologies, like

telecommunication systems, electronic navigation, automation, main engines

and complex system integration solutions.

Chart 47: Employment of maritime equipment suppliers in Turkey

Source: Ministry of Transport, Maritime Affairs and Communication

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Trade Association GESAD has been very active in promoting a new industrial

zone in the Yalova-Altinova area. In this special zone, international suppliers are

invited to participate.

Dutch companies that are locally active in the Turkish shipbuilding sector are

Royal Imtech (manufactures switchboards and automation systems, through

their subsidiary ELKON) and Heinen & Hopman (heating, ventilation and air

conditioning systems, through their office in Tuzla).

4.6.5 Ship recycling

Ship recycling is a specialised process

that is totally different from

shipbuilding. It can be a dangerous,

polluting industry if the scrapping

activities are not conducted in a

professional way.

Europe does not possess many ship

recycling yards, and most of the ships

eventually find their way to the

beaches of Bangladesh. Ship-owners

however are increasingly pressured by public opinion, governments and their

clients. They are moving towards a sustainable business approach and take

their share of responsibility for social and environmental performance. Since the global crisis the Turkish maritime transport was affected. Freight rates

decreased and maritime import decreased. This affected ship owners by their

decision to dispose the older vessels. In the period from 2008 to 2012, Turkey

four folded its ship recycling activity.

Aliağa is Turkish main ship-recycling

region, with 21 scrapping companies

located here. It is in the town and a

district of Izmir Province in the Aegean

Region of West-Asian Turkey. The town

is situated at about 50 km North of

Izmir and the economic activity is

centered around an oil refinery, ship

breaking yards, as well as tourism. The

shipbreaking activities in this area are

licensed by the Ministry of Environment and Urbanization (MoEU). It has the

Authority Document from the Directorate General of Shipyards and Coastal

Structures, a body of the Ministry of Transport, Maritime Affairs and

Communications.

The MoEU set up a Recycling Management Centre in 2004 and received

authorization to remove asbestos and manage waste materials. From 2008

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onwards, the Turkish ship recycling has become a rising industry. International

meetings and platforms were supported by the Turkish government. ILO and

IMO meetings with the Ministry of Environment and Forestry (Now: Ministry of

Environment and Water Works) and the Under secretariat for Maritime Affairs

(now: MoTMC) have been the main cause of the rise.

The Turkish ship recycling sector was represented at state level during IMO

meetings in 2008 in France and Dubai. They contributed to the preparation of

the draft contract of the International ship recycling regulations. The Ministry

attended a diplomatic conference held in Hong Kong, China from 11 to 15 May

2009. Here, the Hong Kong International Convention for the Safe and

Environmentally Sound Recycling of Ships13 was adopted.

In May 2009, the Secretariat of the

Basel Convention received a request for

technical capacity building assistance in

relation to ship recycling from the

Government of Pakistan. In response,

the Secretariat developed a concept for

a Ship Recycling Technology &

Knowledge Transfer Workshop. In

collaboration with the Secretariat of the

Basel Convention the Ministry of

Environment & Forestry and the Under secretariat for Maritime Affairs of the

Government of Turkey and the Ship Recyclers’ Association of Turkey hosted the

Workshop at June 2009 in Izmir14.

Currently, all the countries that have sea coast are looking at relevant

sustainable ship recycling possibilities. The improvement of the industry goes

parallel with environmental pollution. Therefore, Turkey has plans to oppose

against pollution.

Ship recycling statistics

Due to the continuing increase in ship recycling, Turkey’s used capacity became

72% in 2011 and 100% in 2012, while the used capacity was only 12% in 2005.

In 2012, more than 280 vessels were recycled in the Aliağa region, representing

a total capacity of more than 900,000 Light Displacement tonnes (LDT15). In

2011 these figures were 340 vessels, with a capacity of only 650.000 LTD. This

....................................................................................................................................................

13 The Convention is aimed at ensuring that ships, when being recycled after reaching the end of their

operational lives, do not pose any unnecessary risks to human health, safety and to the environment. 14 http://www.basel.int/Portals/4/Basel%20Convention/docs/ships/CB/

ShipRecyclingTechnologyTransferWorkshop-201006-report.English.pdf 15 The weight of water displaced by the ship – the mass of the ship excluding cargo, fuel, ballast, stores,

passengers, crew, but with water in boilers to steaming level.

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equipment and repair services, maritime training companies, sand extractors

and fishermen.

The members of TCS have been gathered in 47 Professional Committees,

according to their fields of occupation and professions and at present Turkish

Chamber of Shipping has over 8000 Members. In accordance with Law No. 5174

every company performing activities in the field of maritime shipping has to

become a Member of the Turkish Chamber of Shipping.

The most important aim of the Turkish Chamber of Shipping is to try to develop

shipping in accordance with the national transportation and shipping policy and

the public interest. Moreover, to promote the interests and provide the common

requirements of its members, to arrange the development of the profession, to

guide and facilitate the professional activities, to establish common rules and to

inform the authorities on shipping matters and to keep the discipline, morals

and solidarity of the shipping profession are the other major concerns of the

Turkish Chamber of Shipping.

The major activities of TCS are to establish rules and practices as regards

shipping, to make researches and collect information on shipping, to ensure

that sea trade is developing in accordance with the national policy of

transportation, to supply information to foreign organisations on the possibilities

and tariffs of the Turkish ports, to become member of and to follow activities of

the international organisations concerned with shipping and to perform other

functions stated in the law.

Turkish Chamber of Shipping is a member of The Union of Chambers and

Commodity Exchanges of Turkey and The International Chamber of Commerce-

The Turkish National Committee. Apart from these two national organisations,

TCS is also a member of The International Chamber of Shipping (ICS),

International Maritime Bureau (IMB), The Federation of National Associations of

Ship Brokers and Agents (FONASBA), The Baltic and International Maritime

Council (BIMCO), European Community Association of Ship Brokers and Agents

(ECASBA), The International Association of Independent Tanker Owners

(INTERTANKO) and The Baltic Exchange.

The president of TCS is Mr Metin Kalkavan. As from 2002, he is the Chairman of

the Executive Committee of The Turkish Chamber of Shipping. He is a Member

of The Council of the Union of Chambers and Commodity Exchanges of Türkiye

(TOBB) and the President of the Board of Administrators of the University of Piri

Reis. He is also the President of the Council of Arbitrators of TOBB.

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Contact Details of TCS

Address:

Meclis-i Mebusan Cad. No: 22

34427 Fı2ndıklı, Beyoğlu

İstanbul / Turkey

Phone: 90 212 252 01 30

Fax: 90 212 293 79 35

email: [email protected]

web page: http://www.chamberofshipping.org.tr/en-en/Pages/ContactEN.aspx

6.4.3 Chamber of Shipping -Mersin- (MCS)

Mersin Chamber of Shipping (MCS) was established in 1989 within jurisdiction

of Mersin including Mersin International Port, Mersin Free Trade Zone, Mersin-

Ataş, Nato Fuel Oil Terminal, Karaduvar GS Fuel Oil Buoy, Kazanlı Opet Fuel Oil

Buoy, Kazanlı Tuta Fuel Oil Buoy, Kazanlı Siyam Fuel Oil Buoy, Kazanlı Altınbaş

Fuel Oil Buoy, Adanalıoğlu Enerji Fuel Oil Buoy, Taşucu Seka Port and Taşucu

Municipality Quay; Mersin Marina and Kumkuyu Marina.

Mersin Chamber of Shipping is subject to the provisions of Union of Chambers

and Commodity Exchanges of Turkey. In accordance with the legislation's 4th

clause, Mersin Chamber of Shipping is a public institute and has established to;

• provide Chamber's members common needs and facilitate the

occupational activities,

• develop maritime sector in accordance with the general interests,

• provide occupational dicipline and ethics in accordance with confidence

The members of Mersin Chamber of Shipping include the ship owners, ship

operators, shipping agents, ship brokers, forwarders, stivedors and tallying

firms, classification societies, marine insurance companies and their agencies,

marine surveyors, marine equipment, industrial equipment and marine

chandlers, bunkering companies, marine and port operating companies, fishing

vessel operating companies, yachting companies, fishing companies, cruise

companies, environmental cleanup companies, ship and yacht building and

related industry companies, marine tourism and sports companies

The mission of Mersin Chamber of Shipping is stated as improving the maritime

sector, turning stakeholder’s power into the synergy in order to increase Mersin

and also Turkey's margin in the maritime sector, reinforcing the chamber's

members with the fast and reliable information against the increasing

competitive conditions and make a contribution to solve the occupational issues.

Mersin Chamber of Shipping has participations in some corporations in Mersin

including Merdaş Mersin Denizcilik İşleri Taşımacılık Hizmet Turizm Tic.ve

San.Inc. (Shipping and Tourism industry), Çukurova Fuarcılık Inc.(Fair and

Exhibition industry), Mesbaş Mersin Serbest Bölge İşleticisi Inc. (Free Zone

Operator), Akter Akdeniz Taşucu Gemi Sanayi Inc. (Ship Construction industry),

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Mersin Ro-Ro Taşımacılığı Inc. (Ro-Ro Shipping), Merlat Denizcilik Inc (Shipping

Services.

Committees and Commissions of Mersin Chamber of Shipping include

Professional Committees, Assembly, Board of Directors and Disciplinary Board.

Mr. M. Cihat Lokmanoğlu is the board president of Mersin Chamber of Shipping

currently.

Contact Details of MCS

Address:

Pirireis Mah. İsmet İnönü Bulvarı No:45 P.K.

33110 Mersin / Turkey

Phone: + 90 324 327 70 00 (PBX)

Fax: + 90 324 329 52 30

E-mail: [email protected]

Web page: http://www.mdto.org/

6.4.4 Association of Ship owners and Ship Agents –VDGAD

Maritime Association of Ship owners and Ship Agents -VDGAD- as the oldest

maritime association of Turkey, was founded in 1902 in İstanbul. It has more

than 144 members only in İstanbul who are ship agents and ship owners.

The association follows the maritime legislation and tariffs and informs the

members about them, helps solving the problems of their members, creates

modern work environment and encourages improving quality of shipping and

ship agency services.

Some of the objectives of the Maritime Association of Ship owners and Ship

Agents are stated as;

• Developing awareness on maritime busines especially ship agency

business,

• Organizing conferences and seminars related to the sea and maritime

business, and arranging professional publications on related subjects,

• Assist in growing skilled manpower in ship and cargo handling,

• Heping turkish merchant fleet to compete with other countries’ fleet

• Developing measures to be taken to prevent pollution of seas,

• Recording statistics related to their field of activities

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Contact Details of VDGAD

Address:

Kılıç Ali Paşa Mahallesi İlyas Çelebi Sokak No.23

34433 Cihangir - Beyoğlu / İstanbul

Phone: 0 212 244 32 94 -0 212 293 78 80

Fax: 0 212 243 28 65 - 0 212 243 23 31

E-mail: [email protected]

Web page: http://www.vda.org.tr/

6.4.5 Turkish Shipbrokers’ Association (TSA)

Shipbrokers’ Association was founded on 05th May 2010 with 60 founding

members who represent a commitment to maintain and promote higher

standards across the shipping industry in Turkey. It is the first recognized

professional body representing shipbrokers throughout Turkey.

The purpose and goals of the association are:

• to protect, develop and promote shipbrokers' profession as well as to

maintain and develop the standards;

• to develop, investigate and promote the business in national and

international area such as ship broking and chartering, tanker chartering,

dry cargo chartering, sale and purchase, port agency, etc.

• to participate in international activities, to enhance partners relationship

with national and international bodies in the shipping business, to

develop projects together with its partners

• to provide economical and cultural synergy, to make strength

relationship between members as well as to share experiences and

knowledge by making case studies

• to endeavor and support Turkish shipping industry by relying to the

shipping consuetudes

• to collect and provide most comprehensive sources of practical shipping

information and to explain ethics of the association by national and

international mean

• to support for the development and promotion of the ship broking

profession and to organize seminars and conferences for the purpose

• to provide advisory and consulting services to its members.

The organisations of the association consist of the board of directors, auditing

commission and disciplinary board. The president of the shipbrokers’ association

is Mrs. Z. Pınar Kalkavan Sesl currently.

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Contact Details:

Shipbrokers' Association

Katip Salih Sok. No: 36 P.K. 34718 Koşuyolu, Kadıköy

İstanbul / Turkey

Phone : +90 216 339 33 32

Fax : +90 216 339 33 23

E-mail : [email protected]

Web page : www.gbd.org.tr

6.4.6 Association of International Forwarding and Logistics Service

Providers- UTİKAD-

Association of International Forwarding and Logistics Service Providers

(UTİKAD) was founded in 1986. It has more than 400 members who are

competent in forwarding and logistics industry. Amongst the member

forwarders, the companies are specialized putting emphasis in certain modes of

transportation, namely road, air, ocean freight, railway and increasingly the

multimodal transportation. To portray a broad picture of what UTIKAD reflects,

it’s member companies have stakes of 95% in air & rail, 65% in ocean & road

forwarding activities supported with a work force of nearly 30.000. The

activities include warehousing, customs operations, packaging, distribution,

supply chain facilities with emphasis on goods assembly which are inseparable

functions as a whole of the modern day world logistics concept. The global trend

is increasingly stipulatating the forwarders to get involved in more then one

transportation mode. One of UTIKAD’s major functions include the use of the

initiatives on behalf of the industry through governmental organisations and at

international platforms to pave ways for seamless, swift, safe and efficient

transportation processes to meet the ever increasing demands for multi-modal

transportation

As an association with the backing of the forwarding industry behind which it

represents, it is at the same time of course is an accepted non-governmental

organisation and is always ready to represent the forwarding industry toward

government authorities, other non-governmental organisations and

international organisations and platforms alike.

UTIKAD is also representing Turkish freight forwarding and logistics industry on

international level. It is an active member of International Federation of Freight

Forwarders Association (FIATA) which is the largest non-governmental

organisation in the field of transportation in the world. Moreover UTIKAD is also

a member of European Union Forwarding and Logistics Organisation (CLECAT)

which is the largest and oldest institution of its kind. Lately UTIKAD also took

initiative and is an active partner of ECOLPAF which is the forwarder

association’s cooperation leg of Economic Cooperation Organisation formed by

Turkey, Irani Azerbaijan, Kazakhstan, Kyrgyz Republic, Pakistan, Tajikistan,

Turkmenistan and Uzbekistan. At the same time UTIKAD is also taking active

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part in a regional platform made up of 8 countries of the South East European

Freight Forwarders and Logistics Operators.

UTIKAD’s objectives could be enumerated as (Utikad; 2013):

• To represent, promote and protect the interests of the industry,

• To promote a high standard of professional conduct amongst its

members,

• Make efforts to achieve standardization in the industry

• Help improve the quality of human resources in the industry by

arranging vocational training programmes and publications.

• Give a helping hand in planning, development and maintenance of the

international freight services industry in Turkey.

• Support the expansion of the Turkish trade worldwide.

UTIKAD’s main mission is stated as; “by creating optimum standards for the

services offered and sticking firmly to the free market principles, help provide a

better quality working atmosphere for the industry as a whole” (Utikad, 2013).

The president of UTİKAD is Mr. Turgut Erkeskin and board of directors consist of

11 members. UTİKAD has 4 representatives including Ankara, İzmir, Mersin and

Atatürk Airport.

Contact Details of UTİKAD:

Address:

Şenlikköy Mahallesi

Saçı Sokak, No: 4 / F

Florya 34153 Bakırköy İSTANBUL

Phone: +90 212 663 62 61

Fax: +90 212 663 62 72

Email: [email protected]

web page: http://www.utikad.org.tr/eng/default.asp

6.4.7 International Road Transporters’ Association of Turkey- UND

Turkish international road transporters are embodied in the association of

international road transporters’ association. The association was founded as a

Professional organisation in 1974 through the initiative of seven entrepreneurs

working in the Turkish road transport industry in order to solve the international

road transporters problems both at local and international levels. The

association’s aim is that of co-ordinating and uniting the interests of hauliers

working in the field of international road transport. The association with 940

members currently has developed considerably from the time it was founded

and today it represents 90 % of the Turkish road transport sector

The mission of UND at the national level is

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• to inform the members on every subjects including global developments,

risks and opportunities that may arise

• to encourage the turkish road hauliers to form partnership and strategic

alliances both at the local and international scale

• to get the members have modern, efficient and environmental friendly

road transport companies

The mission of the UND at the international level is to

• to strive to eliminate the barriers infront of the turkish internationl road

transportation industry in order to provide efficient and sustainable road

transportation services to the society

• to cooperate with the IRU and other related organisations for above

mentioned purpose

• to work together with the other countries’ association and if it is possible,

to form strategic alliances and cooperations in every related subject.

UND has adopted decentralized management approach. Therefore it has been

organized in 12 regional offices. The organisation of the association consist of

board of directors, auditing committee, high court of honour, advisory board,

executive committee and regional representatives Mr. Ömer Çetin Nuhoğlu is

the president of the association currently.

Contact Details:

Address:

Nispetiye Cad. Seher Yıldızı Sok. No:10

34337 Etiler

İstanbul / Turkey

Phone: +90 212 359 26 00 (pbx)

Fax: +90 212 359 26 26

Web page: http://www.und.org.tr/

6.4.8 Ro-Ro Vessel Operators & Combined Transporters’ Association-

Roder

RODER was established on 28 November 2001. RODER is a recently founded

NGO, committed for the purpose of development of road transport sector

nationally and internationally, through the enhancement of Combined Transport

activities, thereby pioneering the establishment of an efficient and modern

transport understanding in the world. The First General Congress of RODER was

done on 01.06.2002.

The following missions are undertaken by RODER:

• to make all kinds of scientific and technical research in relation to Ro-Ro

Transport and other Combined Transport activities and to inform its

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members about the outcomes of such researches,

• to render its members all kinds of educational services concerning

transport sector by focusing on the advantages of Combined Transport

and its importance,

• to encourage its members to form strategic co-operationships in order to

create a competitive sector; especially by using wholesale purchase

methods, decreasing the variable and fixed costs of the members,

• to study the possibilities and methods of cooperating with other

associations active in the same sector,

• to co-operate with other domestic or international Associations operating

in the Transport sector; to share all kinds of information and enlighten

them about the importance and advantages of Ro-Ro and Combined

Transport activities.

• to take an active part at all the regional conventions and try to

widespread Ro-Ro and Combined Transport activities by emphasizing

their importance and advantages.

• to follow and study the applications and implementations in the

European Union regarding the Road Transport and Combined Transport

activities; and maintain liaison with the Turkish public sector in order to

realize arrangements during the process of integration of Turkey with EU.

Board of Directors of RODER consist of 19 members. RODER’s Founder-

Chairman, Mr. Saffet Ulusoy is also the present Chairman of RODER.

Contact Details

Address:

Kemankeş Mah. Maliye Cad. Demirciler Sokak No: 8

34425 Karaköy-Beyoğlu

İstanbul / Turkey

Phone: +90-212 ?377 13 77 (ISDN)

Fax: +90-212 ?377 13 50 (ISDN)

E-mail: [email protected]

Web Page: http://www.roder.org.tr/

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7 TURKEY AND THE EUROPEAN UNION

In this chapter an overview is given of the development of the relation between

Turkey and the EU and the possibilities it can offer for cooperation.

7.1 Turkey and EU relations

Despite the negative impacts of the economic and financial crisis, Turkey is the

6th largest economy of Europe and occupies the first place in terms of growth

rate (8.5 % in 2011). Turkey has intensive commercial and economic relations

with the European Union and the EU is Turkey’s biggest trade and investment

partner. Currently, approximately 37 % of Turkey’s total foreign trade is

realised with the EU Member States and 70 % of the foreign direct investment

in Turkey comes from EU countries.

As a part of the European family, Turkey not only had an influence on the

political, economic and socio-economic cultural developments of Europe but has

also been influenced by Europe. Therefore, relations with the EU are a

fundamental aspect of the Turkish foreign policy and in this context Turkey’s

goal to become an EU member is a strategic choice. The development of the

negation process between Turkey and the EU are given chronologically as

followed: (Ministry of Foreign Affairs, 2013):

• Turkey-EU relations were initiated in the framework of the association

regime based on Ankara Agreement which was signed with the European

Economic Community on 12 September 1963 and took effect on 1

December 1964.

• With the finalisation of the preparatory stage as foreseen in the

Agreement, provisions of the transitional stage and the obligations of the

Parties were determined in the Additional Protocol signed on 13

November 1970 and put into effect in 1973.

• With the completion of the transitional stage, the Customs Union, which

constitutes an important stage for Turkey’s integration with the EU,

entered into force on 1 January 1996.

• A new period began in the relations between Turkey and the EU after

Turkey assumed “candidate status” during the Helsinki Summit on 10-11

December 1999. At the Brussels Summit on 16-17 December 2004, the

decisions taken in the 1999 Helsinki Summit were reaffirmed, as the

Council took note that Turkey sufficiently fulfilled the political criteria and

decided to open accession negotiations with Turkey on 3 October 2005.

Accession negotiations were launched on the abovementioned date, as

planned.

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• On 29 July 2005, the Additional Protocol extending the Ankara

Agreement to the new member states that acceded to the EU in 2004

was concluded by exchange of letters among Turkey, the EU Presidency

and the Commission. An official declaration to legally constitute an

integral part of the letter and signature was also made. In the

declaration, it was explicitly stated that Turkey, by signing the Additional

Protocol, did not recognize the “Republic of Cyprus” by any means.

• In the accession process, 13 chapters (4-Free Movement of Capital, 6-

Company Law, 7-Intellectual Property Law, 10-Information Society and

Media, 12-Food Safety, Veterinary and Phytosanitary Policy, 16-Taxation,

18-Statistics, 20-Enterprise and Industrial Policy, 21-Trans-European

Networks, 25-Science and Research, 27-Environment, 28-Consumer

and Health Protection, 32-Financial Control) have been opened to

negotiations so far and 1 of them (25-Science and Research) has been

provisionally closed. The negotiations on 8 chapters cannot be

opened at present (1-Free Movement of Goods, 3-Right of

Establishment and Freedom to Provide Services, 9-Financial Services,

11-Agriculture and Rural Development, 13-Fisheries, “14-Transport

Policy”, 29-Customs Union and 30-External Relations) in accordance

with the EU Council decision of December 2006 and no chapters

can be provisionally closed on the grounds that Turkey does not

undertake its obligations stemming from the Additional Protocol to

Ankara Agreement in its entirety.

• In 2007 France has declared that it will not allow the opening of

negotiations on 5 chapters (11-Agriculture and Rural Development (one

of the 8 chapters blocked due to Additional Protocol), 17-Economic and

Monetary Policy, 22-Regional Policy and Coordination of Structural

Instruments, 33-Financial and Budgetary Provisions, 34-Institutions) as

they are directly related with membership.

• Following the EU Council meeting of December 2009, Greek Cypriot

Administration unilaterally stated that it would block the opening of 6

chapters (2-Freedom of Movement for Workers, 15-Energy, 23-Judiciary

and Fundamental Rights, 24-Justice, Freedom and Security, 26-

Education and Culture, 31-Foreign, Security and Defence Policy).

It is a commitment of the EU to carry out the negotiations on chapters only on

the basis of the relevant acquis. Both during institutional contacts with the EU

and meetings with the representatives of the EU member states, Turkey

emphasizes that the technical negotiation process should not be slowed down

for political reasons. At present, efforts are underway to revive the negotiation

process with a new impetus.

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7.2 The progress of the negation process on the transport chapter

The chapter on “Transport Policy” was one of the chapters to be suspended as a

result of Turkey not having fully implemented the Additional Protocol to the

Association Agreement. Accordingly, the EU Council Decision of 11 December

2006 stipulated that negotiations will not be opened on eight relevant chapters

and no chapter will be provisionally closed until Turkey has fulfilled its

commitment.

Considering the alignment with the EU Acquis the following progress has been

reported with regard to the maritime sector (Ministry for EU Affairs, 2013: EC,

2012a)

The Ministry of Transport was restructured in November 2011 to become the

Ministry of Transport, Maritime Affairs and Telecommunications (MoTMC). The

restructuring strengthens the regulatory character of the Ministry.

In the field of maritime transport, good progress has been reported. The Under

secretariat for Maritime Affairs issued regulations on protection and insurance of

hazardous and noxious substances (HNS). Turkey has become a party to

numerous agreements including;

• International Convention on Control of the Harmful Anti-Fouling Systems

on Ships (AFS 2001),

• Convention on Facilitation of International Maritime Traffic (FAL 1965),

• Hong Kong International Convention for the Safe and Environmentally

Sound Recycling of Ships (Hong Kong SRC 2009),

• Annexes III, IV and VI to the International Convention for the Prevention

of Pollution from Ships (MARPOL),

• International Convention for the Safety of Life at Sea (SOLAS) Protocols

of 1978 and 1988,

• Protocol on Preparedness, Response and Co-operation to Pollution

Incidents by Hazardous and Noxious Substances, 2000 (OPRC-HNS

2000).

Furthermore, investments from the national resources continue in order to set

up response centres for the purpose of increasing the urgent response capacity

for the oil spill in the seas.

Turkey signed the “Protocol of 2010 to the International Convention on Liability

and Compensation for Damage in Connection with the Carriage of Hazardous

and Noxious Substances by Sea” (HNS 2010 Protocol) on 25 October 2011. The

Training and Authorisation Regulation within the Scope of the International

Maritime Dangerous Goods Code (IMDG Code) was revised and published in the

official Gazette No. 28201 of 11 February 2012.

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Establishment of vessel traffic management systems (VTMS) for the ports of

Koala, Mersin, İzmir and İskenderun is still on-going. Emergency response

preparedness and handling of dangerous goods are areas that call for increased

attention.

It is stated that further efforts are needed in the areas of human resources and

technical capacity to apply the acquis, especially in the fields of dangerous

goods and emergency response preparedness in maritime transport.

Regarding to Administrative Capacity Building in Transportation on 1

November 2011, the Ministry of Transport was restructured as the Ministry of

Transport, Maritime Affairs and Communications. With this restructuring,

several new general directorates, in particular the Directorate General of

Railway Regulation, the Directorate General of Road Regulation and the

Directorate General of Dangerous Goods and Combined Transport were

established.

The Under secretariat of Maritime Affairs was abolished and incorporated in the

Ministry, and various permanent and temporary boards were established such

as the Accident Research and Investigation Board and Railway Coordination

Board, to which the European Union attach importance.

The accreditation process regarding the take-over of tasks on tendering,

contracting, paying and reporting within the scope of the Transport Operational

Programme from the Central Finance and Contracts Unit (CFCU) to the

Managing Authority established under the Ministry of Transport, Maritime Affairs

and Communications was finalized in November 2012.

7.3 Instrument for Pre-Accession Assistance (IPA) and Multi-Annual Indicative Planning Document (MIPD) for Turkey

7.3.1 IPA Strategic Objective for Turkey

The overall objective of EU financial assistance to Turkey is to support its efforts

for reform and towards compliance with EU law in order that it may become

fully prepared to take on the obligations of membership to the European Union

(EC, 2012b)

The Europe 2020 agenda offers the enlargement countries an important

inspiration for reforms. Turkey is invited to consider the priorities of the

strategy and adapt main challenges in the national context. Enlargement policy

also supports the Europe 2020 strategy by extending the internal market and

enhancing cooperation in areas where cross border cooperation is key.

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7.3.2 National Strategies of Turkey

Turkey's 9th Development Plan (DP) 2007-2013 was adopted in 2006 and

contains five main objectives: Increasing Competitiveness, Increasing

Employment, Strengthening Human Development and Social Solidarity,

Ensuring Regional Development and Increasing Quality and Effectiveness in

Public Services. The implementation of the DP is monitored by the State

Planning Organisation. In addition, a National Rural Development Strategy

(NRDS) of which the implementation is also monitored by the SPO was adopted

in 2006. IPA assistance will support the implementation of the DP and the NRDS

as its priorities are aligned with those of Turkey’s accession preparations. With

the help of IPA, Turkey will be able to meet the objectives of the DP and the

NRDS faster than it would have been possible otherwise.

Turkey also adopted its National Programme for the Adoption of the acquis

(NPAA) in December 2008. The NPAA details Turkey's planned steps in its EU

alignment process, thus addressing the short-term and medium-term priorities

of the 2008 Accession Partnership. The priorities under the NPAA are the

fulfilment of the political criteria in areas such as public administration, judiciary

reform, prevention of torture and ill treatment, access to justice, freedom of

expression, fundamental rights, women, children and trade union rights, the

economic criteria in areas such as economic policy coordination, fiscal policy,

regulatory reforms, investment environment, labour market, social security and

assistance, education, health, energy and transport and sector specific

measures for the adoption of the acquis by negotiation chapter.

7.3.3 EU Financial Assistance to Turkey

EU financial assistance is provided through the Instrument for Pre-Accession

(IPA), which supports the accession process and helps Turkey to carry out

reforms which are important for accession preparations but also for the

economic and social modernisation of the country. IPA assistance can often

provide Turkey with the necessary expertise to kick start and complete

accession-related reforms faster and more efficiently than would have been

possible otherwise (EC, 2012b).

Assistance under IPA is implemented through decentralised management. The

assistance is managed by the Turkish authorities following the accreditation

process carried out by the Commission. Turkey is strengthening its capacity to

absorb funds, achieve results and implement in a timely manner. The

supervision by the National Authorising Officer needs to address system

weaknesses, including monitoring and control, and further improve the quality

and efficiency of the project and programme cycles. Turkey receives assistance

from IPA under 5 components with a total allocation of EUR 4.87 billion for

2007-2013 (EC, 2012b).

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The following priorities for IPA support over the period covered by this MIPD

have been identified (EC, 2012b):

• The first priority for Turkey is to make progress in the critical areas of

rule of law in order to tackle key reforms of the judiciary and

fundamental rights.

• A second priority is to adopt the acquis in areas where there is complex

legislation or costly requirements to adopt EU standards in areas such as

transport, agriculture, food safety, environment, climate change and

energy.

• A third priority is to support Turkey in its economic and social

development and to enhance competitiveness.

• Horizontal priorities that will be supported as cross-cutting themes are

participation of civil society, participation in EU programmes, a high

degree of protection of the environment, mainstreaming of climate

change considerations, equal opportunities for men and women, support

to disadvantaged and vulnerable groups as well as the development of

good neighbourly relations. These horizontal priorities may be supported

in their own right or as part of programmes and projects in other priority

areas.

In line with these priorities, the choice of sectors in the MIPD has therefore

been carried out bearing in mind the remaining challenges for Turkey to fully

meet the Copenhagen criteria for membership with particular focus on the

political criteria. At the same time, not all areas in need of support for Turkey’s

accession preparations can be funded under the MIPD in the next three years

and priority was given to areas were support will make the most significant

impact. Moreover, in some areas funding has been allocated recently under IPA

or by other donors or IFIs, or Turkey decided that they will address these needs

from national funds. The sectors and priorities chosen have potential to support

the catalytic effect and additionally of the EU support. Where linkages between

sectors exist, these will be explored in order to ensure that assistance provided

is mutually reinforcing. This is especially the case where there is strong

ownership and political commitments for the reforms on the Turkish side and

comprehensive sector strategies either exist or are under will. EU assistance will

provide value added and often kick start important reform processes that will

continue in a sustainable manner beyond the duration of the EU programmes.

In line with the Europe 2020 Strategy, Turkey also needs to ensure that the

challenges linked to climate change are addressed, in particular by reducing the

emission intensity of its economic development. The aim to reduce greenhouse

gas emissions shall be taken into account in all relevant sectors of the MIPD, in

particular in the sectors of Transport, Energy, Environment and Climate Change,

and Agriculture and Rural Development. Furthermore, all financial assistance

must comply with the principle of sustainable development and meet the

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requirements of the relevant EU environment acquis, in particular the EIA as

well the Birds and Habitats directives.

7.4 Main sectors for EU support for 2011-2013

To achieve the priorities selected for support in the programming period 2011-

2013, the Commission will focus its assistance primarily on the following

sectors:

(1) Justice, Home Affairs and Fundamental Rights

(2) Private Sector Development

(3) Environment and Climate Change

(4) Transport

(5) Energy

(6) Social Development

(7) Agriculture and Rural Development

The selected sectors are based on the priorities provided by Turkey which

ensures a high degree of ownership. The selection of a limited number of

sectors allows for a targeted approach towards EU assistance that aims to

deliver the expected results and meet the envisaged objectives in a sustainable

manner in line with the lessons learnt described above.

Assistance to support these sectors will be provided under IPA component I, III,

IV and V. It will be implemented via technical assistance, twinning, works and

supply contracts as well as through grants. Other forms for the delivery of

assistance such as sector wide programmes or pooled financing with other

donors may be piloted in the 2011-2013 in agreement between the Commission

and the Turkish authorities if found appropriate for a more effective delivery of

assistance. In addition, IPA funds will continue to be provided to Turkey to

support participation in Union Programmes according the planned financial

allocation per sector given in table 32:

Table 32: The Planned Financial Allocation per Sector (million €)

2011-2013 Period 2007-2010

Period 2011-2013

Justice, Home Affairs and Fundamental Rights 373.46 439.77 17 %

Private Sector Development 250.22 311.74 12 %

Environment and Climate Change 346.34 465.64 18 %

Transport 270.69 336.29 13 %

Energy 3.85 129.35 5 %

Social Development 546.61 310.42 12 %

Agriculture and rural development 405.63 593.69 23 %

TOTAL 2196.80 2586.9 100 %

Source: EC, 2012b

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The financial assistance will be implemented through the relevant IPA components as follows:

Table 33: The Financial Assistance through IPA Components in (million €)

IPA Component 2011 2012 2013

Transition Assistance and Institution Building

228.62 233.90 238.33

Cross-border Cooperation* 9.78 9.97 10.17

Regional Development 293.40 367.81 378.00

Human Resources Development 77.60 89.93 96.00

Rural Development 172.50 197.89 213.00

TOTAL 781.90 899.50 935.50

Source: EC, 2012b

IPA Component II, Cross-border cooperation, is dealt with in a separate MIPD.

Financial allocations are indicative and may vary according to actual financial

needs identified at time of programming. The Commission aims to allocate

indicatively around 2-5% of the overall assistance for the three years to civil

society support.

7.5 Turkey’s priorities in the transport sector

The National Programme for the Adoption of the acquis (NPAA) describes

Turkey’s priorities in the transport area as the gradual liberalization of the

railway sector in Turkey by opening Turkish rail transport market to competition

and separation of functions regarding infrastructure management and provision

of transport services. A priority in this sector is the construction of new high

speed lines to increase passenger transportation by rail between major

metropolitan cities. Road transport needs considerable upgrading and the main

target of road transport policy is to decrease the present idle capacity and

eliminate it after a reasonable time. Other priorities include maritime transport

and aviation. In addition to the considerable investments required, Turkey

needs to complete the adoption of the acquis. Moreover, transport safety and

sustainable development are considered as key horizontal priorities (EC, 2012b).

In the Transport sector separate pre-accession and reform strategies are in

place for land transport, aviation and the maritime and railways, which are

focussed and outline priority needs. The strategies, which are in place are

suitable for a more programme based support to be provided by the EU and

other donors as they identify priority actions, financial needs and the timeframe

for the required support.

Financial assistance to Turkey in this area supports the priority “Climate change,

energy and transport” of the Europe 2020 strategy by modernising transport

infrastructure and coordination with EU core networks. The implementation of

the Operational Programme for “Transport” under IPA component III started in

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late 2009 when the Financing Agreement was signed and the management

powers were conferred. Since then several major projects are under preparation

for implementation.

Moreover, around EUR 30 million of EU funds have been provided between 2000

to 2009 for institution building and the adoption of the acquis focussing on the

maritime, rail and road areas. Among the other donors, UK, Spain and the

Netherlands provide bi-lateral support programmes for small scale technical

assistance. In addition, development agencies like the AFD, FAD and the

international financing institutions like the EIB, the EBRD, and the World Bank

provide loans. The main source of external finance provided for transportation

sector is the commercial banks. The remaining external sources for funding

transportation sector are IFIs, export credit agencies and foreign governments.

According to Turkish external borrowing strategy, financial sources of IFIs are

preferred for financing public sector projects. In this respect, the share of IFI

sources has been increasing since 2005.

The first sector objectives for EU support over next three years is the

transposition of the EU’s transport legislation thereby aiming at improving the

functioning of the market by promoting safe, efficient, environment sound and

user friendly transport services in the area of land transport, aviation and

railways and maritime, focusing in particular on achieving proximity with EU

neighbours. A second objective is the establishment of new efficient and

environmentally friendly transport links with the European Union; relief of

national bottlenecks and repair of deficiencies. This objective is shared by the

other donors such as the IFIs, including the World Bank which supports the

renewal of conventional railway lines and rolling stocks in order to increase line

and rolling-stock capacity especially through the provision of loans.

Types of indicators to measure developments towards these objectives include,

inter alia (EC, 2012b):

• Professional competence and policy training completed for institutions

and universities in the field of road, maritime, aviation transport and

railways.

• Provided support to transport safety and environmental sustainability by

focusing on road charging, reduction of greenhouse emissions from

transport, use of transport information systems, utilisation of intermodal

transport and transport of dangerous and hazardous goods, on safety

management systems, network planning and optimisation, reduction of

greenhouse gas emissions, passenger rights, airports and aviation safety,

an integrated approach and measures to ensure cleaner sea and coastal

areas, emergency response and accident prevention and investigation.

• Improving accessibility of transport and mobility in line with the EU

acquis, including the realm of disability.

• Institution building carried out to strengthen implementation of the EU

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acquis focusing on market regulation (establishment of regulatory body,

infrastructure manager, accident investigation body and safety authority).

• Efficiency, sustainability, creation of new jobs and facilitation of external

and internal trade through improved transport infrastructure.

• Increase in user friendly and safer transportation through trans border

and national interconnection projects, deriving from the TINA process,

and concerning in particular (a) rail connection in the West with EU

Member States, (b) interoperability and (c) multi- modality; motorways

of the Sea (port facilities where there is a link to economic development)

and intelligent transport systems (ITS) as well as studies and support

services.

Whereas component I finances legislative alignment and capacity building

for the management of the acquis under the Operational Programmes of

component III, infrastructure investments in these areas are supported.

The implementation of results will be delivered through the continuous

implementation of the Transport Operational programme covering, in

principle, the whole territory but focusing on the trans-European network

and infrastructure to promote growth.

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8 SWOT-ANALYSIS

Based upon preceding analysis, the following SWOT-analysis can be made on

the Maritime and Ports sectors of Turkey.

8.1 Strengths

8.1.1 Geographical location of Turkey

Turkish ports have a strategic position in the East Mediterranean and Black Sea

shipping market as being intersection points between the transportation

corridors of North-South and East-West. Istanbul is a shipping centre hosting a

complete infrastructure of ship owners, ports, shipyards, marine equipment,

fisheries, navy, research facilities and schools. The Turkish shipyards are

clustered at central locations near Istanbul. The potential cluster advantages

are obvious. Also the climatic conditions in this geographical site are favourable

for ports, shipbuilding, maintenance, dismantling and offshore works.

8.1.2 Human resources

Turkey has a young and qualified labour force. The ports maintain good

relations with the labour unions. Compared to neighbouring Europe, the Turkish

workforce is flexible and has good entrepreneurial skills. The labour costs are

relatively low because of the abundance of skilled and semi-skilled workers. A

complete infrastructure of maritime education delivers well trained professionals

to the sector.

8.1.3 Specialisation

The specialisation of Turkish industry in the construction and maintenance of

dedicated tankers, super yachts, workboats and ship repair services gives the

industry an additional strength. Product innovations, research, education and

financial services all can be focused towards the particularities of specific niche

markets, therewith creating a competitive advantage. Also between the ports an

increasing specialisation can be found.

8.1.4 Investments in national infrastructure and connectivity

Favorable changes in port policies and strategies of the state, private sector

participation in port operation and management, and growing interest in port

investments have led to port expansion and port development projects. There

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are growing investments into ICT systems and software at the ports, as well as

heavy investments in superstructures and equiment. Thanks to recent

investments in the shipyards, a large ship building and repair capacity is

available.

8.2 Weaknesses

8.2.1 Inefficiencies and lack of production technology

Turkey’s public port sector is perceived as highly inefficient. In some ports

this is due to an iinadequate infrastructure and superstructures, but most of all

it has to do with fragmented facilities and many governmental bodies being

involved. Traffic congestion around the ports and port cities, a lack of value

added services given by the ports, low automation levels and a weak

cooperation between port operators and their stakeholders cause this problem.

On top of this the port regulations and administrative issues are complex.

The productivity of the Turkish workers stand at half the European average.

Therewith the cheap labour costs disappear as an advantage. Outdated supply

chain methodologies and working methods create cost inefficiencies at the

shipyards. Shared facilities in steel processing, piping, and integration of

installations can lead to less failures, speeding up processes, and decrease the

workforce at the shipyards – thus making them less vulnerable in economic

downturns.

8.2.2 Lack of access to funding sources

A clear shipbuilding incentive structure is absent in Turkey. This gives the

Turkish shipyards a disadvantage compared to the major competitors from

Europe. The support structures of the European Union (guarantee schemes,

RD&I programmes, closure aid, export credit guidelines, eco-innovations for

ship owners, fiscal depreciation schemes) are hardly being matched in Turkey.

Instead of supporting exports, fiscal measures are directed to the promotion of

the construction of Turkish flag vessels.

Turkish banks are reluctant to provide longer term mortgages or participate in

other post delivery finance schemes. Nowadays, ship finance is one of the major

factors in sales. European and Asian competitors offering competitive financial

arrangements will win orders over the Turkish shipyards. Predelivery finance

guarantees do not exist, which causes cash crunches at the shipyards.

8.2.3 Weak marketing and image building skills

Especially in the super yacht industry, image is everything. In spite of the

quality of the products and the craftsmanship, the Turkish industry still suffers