ICS Member labels country a “business-friendly culture”, with reduced paperwork and little congestion

Specialist North-South operator Hamburg Sud offers a weekly service from Turkey.

Of all the Black Sea countries, Turkey is the easiest with which to do business, according to Istanbulbased ICS member, Poul Hestbaek. However, Mr Hestbaek, also managing director of Hamburg Sud Shipping Agency in Istanbul, does acknowledge that, compared with customs authorities in Western European countries, those in Turkey require substantially more paperwork. Nevertheless, he points out that with the correct documents in place, trade can be undertaken in a completely structured environment.

In fact, since Istanbul’s loss of transhipment traffic generated by the shift of CMA CGM’s “Tiger” service to Constantza two years ago, bureaucracy has improved. Efforts have actively been made to reduce the amount of paperwork required to do business in Turkey. However, the main thrust has not necessarily been one of trying to attract transhipment containers back to Turkey, since few ports in the country specialise in this niche market. The real reason has been to bring Turkish customs procedures in line with those in the European Union, which Turkey one day wishes to join.

“Bureaucracy in Turkey is not a factor in determining whether cargo is sent here by sea or not. This contrasts markedly with other countries in the Black Sea region, where the rules governing paperwork can be applied more randomly,” notes Mr Hestbaek.

Constantza is the exception, where the Romanian authorities have streamlined procedures deliberately to establish their port as the major Black Sea container transhipment hub. However, this was an absolute necessity, given that of all the significant ports in the region, Constantza generates little in the way of import/export volumes.

“Compared to the former Soviet states, corruption is also not a problem in Turkey,” says Mr Hestbaek, although he does concede that anomalous activity of this type is perhaps slightly more of a headache in Turkey than it would be in comparable Western European countries. “If somebody wants to ship a piece of cargo from Europe to Turkey, either on a CIF basis or as a direct delivery to a factory, it is possible to calculate the cost and quantify the risks. Shipping further east into the Black Sea, those two factors are much harder to work out, because procedures are not applied so uniformly,” warns Mr Hestbaek.

Congestion at Turkish ports serving the Black Sea region is also not an issue, says Mr Hestbaek. The only exception is the old container terminal at Haydarpasa, on the outskirts of Istanbul, which is operating at above its design capacity, but is due for closure within the next five to 10 years and will be replaced by another port able to cover the same hinterland. In contrast, Kumport, which is located on the European side of the city, is regarded as being highly efficient.

Transiting the Bosporus Straits is also not as difficult as it once was. While there is little that can be done to prevent traffic being halted for up to 24 hours because of seasonal fog, many of the vital slots allocated to oil tankers have started to become vacant since July. This is due to the opening of a major oil pipeline between Central Asia and the new southern Turkish port of Ceyhan, which reduces the need for such vessels to use terminals within the Black Sea itself.

Interestingly, in recent years, most of the big shipping lines currently active in the region – ZIM, Hapag Lloyd, Norasia, CMA CGM and China Shipping – are now offering direct calls at major ports on services operating out of the Far East. In part, this has come about as the economics of feedering boxes into the Black Sea from hubs further west has become more dubious.

“When direct services started, rates went down dramatically. This is because they are influenced by rates charged on services linking the Far East and Europe, where rates have also come down significantly. Virtually all deep-sea vessels making direct calls at Black Sea ports also call at one or two Turkish ports, which has seen rates reduce between Turkey and the Far East,” comments Mr Hestbaek.

As countries such as China increase export volumes of high-value manufactured goods to the Black Sea, a huge imbalance has built up in the number of empty containers now unable to find a return cargo. Mr Hestbaek estimates that up to half of all available containers are sent back empty, given that regional exports are mostly in the form of raw materials. This situation would be much worse were it not for a significant move towards the increased containerisation of former breakbulk commodities such as paper, steel and forestry products. “Most of this stuff used to be shipped out by smaller breakbulk vessels. However, because a lot of deep-sea container vessels are now passing through this area with spare capacity on board, it makes more sense to get any sort of suitable return cargo at any rate as long as it makes a marginal contribution to the vessel system costs rather than sending a container back empty.”

In Turkey, Hamburg Sud specialises in import/ export trade with Northern Europe, where Mr Hestbaek acknowledges that serious competition comes from a substantial road haulage industry and also from rail. Indeed, half of all traffic goes by road/rail. “There is a large fleet of truck/trailer combinations, so the majority of lighter and highvalue cargo goes by road. In the intra-Black Sea market, a highly comprehensive network of roro ferries comes into its own; if you want to send anything within this region, it is mainly packed into a trailer and then despatched by ferry and road.”

Quizzed as to service levels at ports in the region, Mr Hestbaek says that these are not sufficient to cope with either existing trade or future traffic development. In terms of the burgeoning box market, only Constantza has made the necessary investment in its handling facilities, while both Ukraine and Russia lag seriously behind, causing berthing and operational delays.

“There is a lot of talking about raising capacity. If this took place, then there would be more direct calls to Black Sea ports by Far East services. Indeed, there is even a possibility that Constantza would lose significant amounts of transhipment traffic as a result,” predicts Mr Hestbaek.

Although ports in both Ukraine and Russia should be acting as magnets for private capital, the fact that governments in those countries have shown themselves reluctant to cede control of facilities to private companies speaks volumes. They appear not to want to lose control of key assets, nor surrender increasing revenue streams to private management companies. In the meantime, transhipped box traffic through Constantza increases exponentially.

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