Marine transportation for freight shipments
Marine transportation for freight shipments
Business Model Description
Private marine transportation for freight shipments
Expected Impact
Investments in maritime transportation will reduce logistics costs and promote trade and connectivity.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Turkey: Aegean Region
- Turkey: Mediterranean Region
- Turkey: Marmara Region
Sector Classification
Transportation
Development need
In 2020, Turkey ranked 47th (out of 160) in the Logistics Performance Index after being ranked 34th in 2016.(1) Connections between industrial facilities, ports and railway systems are not adequately developed. To improve competitiveness, Turkey needs to reduce logistics costs and develop combined transportation modes with higher shares of railway and maritime transportation.(2)
"Policy priority
The government has an objective to improve an integrated transportation infrastructure covering all modes of transportation. The infrastructure is planned to ensure maximum traffic safety and serve all segments of society with a sustainable and uninterrupted transportation system. (3)"
Gender inequalities and marginalization issues
Transport is a male-dominated sector, female participation in the transport sector is around 10% in Turkey. Additionally, inadequate transport infrastructure impacts women's access to work and education/skills-improvement, especially in rural areas. (25) Investments in transport infrastructure to incorporate new cities in the Turkish supply chain will decrease regional economic disparities
Investment opportunities
The total public investment in transportation is planned as 25 billion TRY (3.7 billion USD) with the largest shares going to railways (43%), highways (27%) and intracity transportation (23%).(4)
Key bottlenecks
Under-investment in transportation infrastructure poses supply-chain constraints for the exchange of products and services. As the population expands, the existing transportation infrastructure may be rendered insufficient. If transportation infrastructure is not developed, this will cause further issues in traffic congestion and reflect negatively on SDG 11.
Marine Transportation
Development need
Emission grams per tonne-km for large container vessels is 3 compared to 80 in trucks and 435 in air freight (5). Moreover, shipping is a real alternative in short distances such as straits where short-sea shipping competes in total transit time (city to city) with airplanes, thus once again reducing GHG emissions (6).
"Policy priority
The Ministry of Transport and Infrastructure 2019-2023 Strategic Plan, and the 11th Development Plan both declare an objective to improve the maritime sector and become a regional and continental transfer hub. "
Gender inequalities and marginalization issues
Women represent only two percent of the world's 1.2 million seafarers. (26) Transport is a male-dominated sector, women only constitute 10% of the total employment share in this sector in Turkey. (25)
"Investment opportunities
Turkey has put in place incentives to bolster the Turkish maritime transport such as tax exemption, exception and rate reduction. (7) Moreover, banks like Eximbank offer ship-building finance and international transport marketing credit programmes (8)"
Key bottlenecks
Inadequate hinterland infrastructure and interconnections in neighboring countries might prevent investments in this area from reaching their full-effects.
Marine Transportation
Pipeline Opportunity
Marine transportation for freight shipments
Private marine transportation for freight shipments
Business Case
Market Size and Environment
> USD 1 billion
Turkish maritime sector is worth $17.5 billion. (14) Maritime is the most common transport mode used for international trade in Turkey. In 2019, almost 63% of exports have been transported via waterways, amounting to 105.5 billion USD. Similarly, maritime transportation accounted for 132.9 billion USD in imports in 2019. (15)
Indicative Return
15% - 20%
"Investors active in the Turkish transportation market estimate an IRR at the 12-20% level for investments in this area. "
Investment Timeframe
Long Term (10+ years)
Investments in marine transportation including the construction of new connection routes and ports are long-term with a minimum of 7-10 years.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - Volatile
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
The need to develop and connect the different modes of transportation/freigh-carriage in Turkey to boost competitiveness
The need to cut-down on carbon emissions from freigh transportation: Emission grams per tonne-km for large container vessels is 3 compared to 80 in trucks and 435 in air freight (16).
Gender & Marginalisation
Women represent only two percent of the world's 1.2 million seafarers. (26) Transport is a male-dominated sector, only 10% of the total employment share in this sector is female in Turkey. (25)
Expected Development Outcome
"Reduce emissions from freight transportation by improving maritime infrastructure"
"Reduce logistics costs and provide a cost-effective way to move en masse goods and raw materials by improving maritime transport as it is essential to the world’s economy with over 90% of the world’s trade carried by sea (17)"
"Increase maritime employment, which provides an important source of income for many developing countries, such as the supply of seagoing personnel and ship recycling, shipowning and operating, shipbuilding and repair and port services, among others. (17)"
Gender & Marginalisation
New investments and employment opportunities in this area can increase female employment in the maritime transportation sector if complemented with the right policies
Primary SDGs addressed
8.4.1 Material footprint, material footprint per capita, and material footprint per GDP
16 tonnes per capita (18)
9.1.2 Passenger and freight volumes, by mode of transport
9.4.1 CO2 emission per unit of value added
"Only available for train and air transport. Railway passengers carried: 4.39 billion passenger-km (19)"
0.26 kilograms per $ of GDP (19)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
This sector is highly exposed to the instability of fuel prices. Volatile external markets might affect its performance
Impact Risks
"Efficiency Risk Executiion Risk"
Impact Classification
What
Reduced transportation emissions and extreme poverty
Who
Increased maritime activity directly benefits employees in the maritime industry in developing countries as well as exporting and importing SMEs.
Risk
Low Risk (Maritime transport is responsible for 2-3% of global GHG emissions. The sector is also highly exposed to instability in fuel prices.) (20)
Impact Thesis
Investments in maritime transportation will reduce logistics costs and promote trade and connectivity.
Enabling Environment
Policy Environment
(Ministry of Transport and Infrastructure 2019-2023 Strategic Plan): The Ministry of Transport and Infrastructure 2019-2023 Strategic Plan declares an objective to improve the maritime sector and become a regional and continental transfer hub.
(11th Development Plan): The 11th Development Plan calls for the improvement of maritime transportation infrastructure in Turkey and the objective to transform Turkey into a regional and continental transfer hub
(2020 Presidential Program): The 2020 Presidential Program highlights Turkey's dependence on foreign firms for the maritime logistics of its exports and imports. It provides a set of policy recommendations to rejuvenate this sector.
Financial Environment
Financial incentives: Eximbank offers a "Ship-Building Fİnance and Guarantee Program" and an "International Transport Marketing Credit Program"
Other incentives: Turkey has put in place incentives to bolster the Turkish maritime transport such as tax exemptions and rate reduction, social security premium and interest support (22)(23)
Regulatory Environment
"(Regulation): Maritime services are overseen by the Ministry of Transport and Infrastructure's General Directorate of Maritime Affairs. "
(Regulation): The Turkish Commercial Code includes the Maritime Law which has regulations related to loading, discharging, the transportation of goods and the accidents that may happen on the sea. (21)
(Regulation): Law No. 4490 on "Turkish International Ship Registry" facilitates the procurement and operation of commercial yachts registered in the inventories of tourism companies and the ships registered in the Turkish International Ship Registry.
Marketplace Participants
Private Sector
Maritime transportation companies such as Ekol Lojistik, Omsan Lojistik, Arkas, Maersk. Domestic and international banks
Government
Ministry of Transport and Infrastructure General Directorate of Maritime Affair
Multilaterals
EBRD, IFC
Non-Profit
Association of International Forwarding and Logistics Service Providers (UTIKAD), International Transporters' Assocation (UND), International Maritime Organization
Target Locations
Turkey: Aegean Region
Turkey: Mediterranean Region
Turkey: Marmara Region
References
- (1) World Bank, 2019, https://lpi.worldbank.org/international/scorecard/radar/56/C/TUR/2018/C/DEU/2018
- (2) Presidency of Strategy and Budget, 11th Development Plan, http://www.sbb.gov.tr/wp-content/uploads/2020/03/On_BirinciPLan_ingilizce_SonBaski.pdf
- (3) State Railways of Rep. of Turkey 2019-2023 Strategic Plan. http://www.sp.gov.tr/upload/xSPStratejikPlan/files/wyMtM+20192023sp.pdf
- (4) Presidency of Strategy and Budget, 2020 Investment Program. http://www.sbb.gov.tr/wp-content/uploads/2020/03/2020_Yatirim_Programi.pdf
- (5) World Shipping Council. http://www.worldshipping.org/industry-issues/environment/air-emissions/carbon-emissions#:~:text=Carbon%20Emissions,carbon%20footprint%20of%20its%20vessels.
- (6) EU https://www.onthemosway.eu/how-shipping-including-short-sea-shipping-compares-favourably-to-other-modes-of-transport-on-co2-emissions/?cn-reloaded=1
- (7) Ministry of Transport and Infrastructure, Expert Thesis, 2018. https://www.uab.gov.tr/uploads/pages/kutuphane/0dbb88c441e78e6.pdf
- (8) Eximbank. Ship-Building Finance and Guarantee Program. https://www.eximbank.gov.tr/en/product-and-services/credits/medium-and-long-term-export-credits/ship-building-finance-and-guarantee-program
- (9) Bertelsmann Stiftung & SDSN, 2020. Sustainable Development Report Dashboards 2020. https://dashboards.sdgindex.org/#/TUR
- (10) Turkey's SDGs 2nd VNR 2019. https://sustainabledevelopment.un.org/content/documents/23862Turkey_VNR_110719.pdf
- (11) Presidency of Strategy and Budget, 11th Development Plan, http://www.sbb.gov.tr/wp-content/uploads/2020/03/On_BirinciPLan_ingilizce_SonBaski.pdf
- (12) Presidency of Strategy and Budget, 2020 Presidency Annual Program, http://www.sbb.gov.tr/wp-content/uploads/2019/11/2020_Yili_Cumhurbaskanligi_Yillik_Programi.pdf
- (13) Presidency of Strategy and Budget, 2020 Investment Program. http://www.sbb.gov.tr/wp-content/uploads/2020/03/2020_Yatirim_Programi.pdf
- (14) Statement by the Minister of Transport and Infrastructure, 2019. https://www.hurriyetdailynews.com/turkish-maritime-industry-size-exceeds-17-5-billion-141427
- (15) Anadolu Agency, 05.02.2020. Share of railways rising in trade. https://www.aa.com.tr/tr/ekonomi/ticarette-demir-yolunun-payi-yukseliyor/1724737
- (16) World Shipping Council. http://www.worldshipping.org/industry-issues/environment/air-emissions/carbon-emissions#:~:text=Carbon%20Emissions,carbon%20footprint%20of%20its%20vessels.
- (17) International Maritime Organization. https://business.un.org/en/entities/13
- (18) Footprint Network, 2015, https://www.footprintnetwork.org/content/images/uploads/Turkey_Ecological_Footprint_Report_Executive_Summary-Conclusion.pdf
- (19) SDG Tracker, 2020, https://sdg-tracker.org/
- (20) EC, 2019, https://ec.europa.eu/clima/news/commission-publishes-information-co2-emissions-maritime-transport_en
- (21) Laws Turkey. https://www.lawsturkey.com/article/maritime-law-in-turkey
- (22) Ministry of Transport and Infrastructure, Expert Thesis, 2018. https://www.uab.gov.tr/uploads/pages/kutuphane/0dbb88c441e78e6.pdf
- (23) Statement by the Ministry of Industry and Technology, 2019. https://www.marinedealnews.com/denizcilik-sektoru-devlet-tesviklerini-yeterli-ve-yerinde-bulmadi/
- (24) 2023 Turkey Export Strategy and Action Plan. http://geka.gov.tr/Dosyalar/o_1adq0ifbp1ic11m4nlc81rpsr178.pdf
- (25) European Bank of Reconstruction and Development, Transportation Strategy 2019-2024, https://www.ebrd.com/documents/transport/strategy-for-transport.pdf
- (26) International Maritime Organization, https://www.imo.org/en/OurWork/TechnicalCooperation/Pages/WomenInMaritime.aspx
- (27) Ministry of Economics, 2019. http://geka.gov.tr/Dosyalar/o_1adq0ifbp1ic11m4nlc81rpsr178.pdf.