Overview of doing business in Türkiye’s logistics sector

Doing business in Türkiye presents a unique set of opportunities and challenges, particularly in the logistics sector. Türkiye’s strategic geographical location as a bridge between Europe and Asia makes it an attractive hub for international trade and logistics. However, several factors must be considered to navigate the complexities of Türkiye logistics effectively.

Strategic location and trade partnerships

Türkiye’s position at the crossroads of Europe and Asia significantly boosts its logistics market. In 2024, the value of goods transiting through Türkiye reached USD 200 billion, largely due to the Belt and Road Initiative and increased trade agreements with neighboring countries. This strategic location enhances the country’s role in transcontinental trade, making it a crucial node for global supply chains. However, this also means that logistics providers must be adept at managing complex international shipments and complying with various regulatory requirements.

Increase in e-commerce activities

The e-commerce sector in Türkiye is experiencing rapid growth, with sales surpassing USD 40 billion in 2024. This surge in online shopping has led to a higher demand for efficient logistics and last-mile delivery services. Major retailers and logistics companies are expanding their operations to meet this growing demand, which in turn fuels market growth. However, this increased demand also puts pressure on the logistics infrastructure, highlighting the need for robust transport solutions that can handle the volume and speed required by e-commerce.

Regulatory and compliance issues

One of the significant challenges facing the logistics sector in Türkiye is the complex regulatory framework and compliance requirements. Changes in customs regulations and increased tariffs on imported goods in 2024 have created additional challenges for logistics providers, affecting the efficiency of cross-border transportation. The Customs Modernization Program, initiated in 2024, aims to streamline customs processes and reduce clearance times using advanced technologies like blockchain and AI. This program is expected to enhance trade efficiency and competitiveness by reducing customs clearance time from 48 hours to 24 hours.

Limited skilled workforce

The shortage of skilled labor in the logistics sector poses another significant challenge. In 2024, the logistics industry in Türkiye reported a deficit of 50,000 qualified workers, including drivers, warehouse managers, and logistics coordinators. This shortage can lead to inefficiencies and increased costs, as companies may need to invest in training programs or hire from a limited pool of qualified candidates.

Labor and wages

From a labor perspective, Türkiye faces competition from other regions such as North Africa, Eastern Europe, and ASEAN countries. The country’s well-documented inflation challenges have led to a 49% annual growth in wages in local currency terms over the past few years, although the depreciation of the lira and dollarization of many costs have mitigated some of these effects. Despite these challenges, labor rights remain a critical issue, particularly in sectors like automotive, where workers often face exploitation, long hours, and health and safety violations.

Infrastructure development

The Turkish government has launched several initiatives to address the infrastructure challenges. The National Logistics Master Plan, with a USD 50 billion investment over five years, focuses on developing logistics centers, improving rail connectivity, and modernizing ports. This plan aims to position Türkiye as a global logistics hub by enhancing the overall efficiency of the logistics sector.

Supply chain challenges

Supply chain disruptions are another challenge that logistics providers in Türkiye must contend with. Supplier delivery times have seen mounting delays through 2024, partly due to restrictions through the Red Sea and delays in deliveries from Asia. These delays are expected to continue at least through the rest of 2024, highlighting the need for resilient and adaptable transport solutions.

Automotive supply chain

In the automotive sector, which is significant in Türkiye, supply chain challenges are compounded by labor rights issues. A recent workshop held in Türkiye brought together stakeholders to address systemic challenges in labor rights and develop sustainable, collaborative solutions. The workshop emphasized the importance of transparency, accountability, and social dialogue in ensuring better working conditions and addressing issues like exploitation and health and safety violations.

Recommendations

• Invest in training and development: Addressing the skilled labor shortage requires significant investment in training programs. Companies should collaborate with educational institutions and government agencies to develop programs that equip workers with the necessary skills.
• Adopt advanced technologies: Leveraging technologies like blockchain, AI, and smart logistics solutions can streamline operations, reduce clearance times, and enhance overall efficiency.
• Compliance and regulatory expertise: Given the complex regulatory environment, logistics providers must have a deep understanding of customs regulations and compliance requirements. This may involve hiring experts or partnering with local firms that have this expertise.
• Diversify transport solutions: To mitigate the impact of supply chain disruptions, companies should diversify their transport solutions, including road, rail, maritime, and air transport. This can help in managing risks and ensuring continuous operations.
• Focus on labor rights: Ensuring fair labor practices and addressing labor rights issues is crucial for maintaining a stable and efficient workforce. Companies should work closely with trade unions and other stakeholders to develop and implement responsible purchasing practices and collective bargaining agreements.

Conclusion

Doing business in Türkiye’s logistics sector is fraught with challenges, but it also offers significant opportunities. The country’s strategic location, growing e-commerce sector, and government initiatives to enhance infrastructure make it an attractive location for logistics operations. However, addressing regulatory and compliance issues, labor shortages, and supply chain disruptions is essential for success. By adopting advanced technologies, investing in training and development, and focusing on labor rights, companies can navigate these challenges and capitalize on the opportunities presented by Türkiye’s logistics market. As the Turkish government continues to invest in infrastructure and streamline customs processes, the future looks promising for those who are prepared to adapt and innovate in this dynamic environment.