Transport & Logistics. Turkish Lessons for Moldova

As the world sees the global trade center making a gradual shift from the Atlantic to the Pacific, the countries in the Mediterranean Basin, in Particular Turkey, are looking to grasp this opportunity and even started toying with the idea of rejuvenating some sort of a Silk Road. How can the Republic of Moldova profit alongside these countries? “First of all, [Moldova has to develop a mentality of trade] and, of course, to develop its infrastructure”, thinks Kürşad Tüzmen, Turkey’s Minister of State for Foreign Trade. At the same time, the Turkish official considers that the Giurgiulesti terminal could integrate Moldova into the international cargo transportation system, on condition that it doesn’t limit itself to ensuring internal consumption only, but develops to become a logistic center. “[Giurgiulesti is a unique place], which could help Moldova, including our Gagauz brothers, export more. And I think we must push port authorities to transform into logistics centers”. Logistics, a sector which accounts for 10 percent of Turkey’s $650b economy, is a solution the Turkish authorities intend to employ in order to gain a more important role in the international trade. [Ambitious plans] The formula is simple – if there is no logistics, there is no room for investment, Kürşad Tüzmen explained to the participants of the international conference Foreign Trade Logistics, which took place recently in the seaport city of Mersin, located on the Mediterranean coast of southern Turkey, and for which the Turkish authorities have ambitious plans. Meanwhile, however, they are doing the completely opposite thing – huge investments are now being pumped into the logistics sector of the region, including the Mersin International Port, which currently covers an area of 1 million square meters, plus the adjacent Free Zone, with its 800,000 square meters. Everybody there seems entirely engaged in realizing the master plan, architected by Tüzmen, of Making Mersin [the largest port of the Mediterranean Sea]. [Gateway opening to the world] In only two decades or so, Mersin – the capital of the namesake province – has grown from a relatively small town with a population of 100,000 to a large and busy city with a population of 1 million. Neither in the city nor on its outskirts will you be able to find one square inch of beach, because everyone here has apparently better things to do than go for a swim. (It’s hard to imagine that a Moldovan would resist the temptation…) Yet here, it looks that everybody knows where he’s going and he’s doing that with determination. “Our geographical position makes us the perfect candidate for becoming a major logistics base”, the local authorities assert, while Kürşad Tüzmen goes even further to label Mersin city “a gateway opening to the world”, because its stands at the intersection point of the trade routes to the Middle East, North Africa, Europe and the CIS countries, but also because it opens the huge consumer market of Turkey to the foreign producers. Acknowledging the superiority of the intermodal freight transportation over one particular transport mode, no matter how advanced it is, besides Mersin’s port and railways, the Turkish authorities plan to build an airport and develop the road network, which has seen investments of at least $50m lately. Mersin is also supposed to host an innovational project in the solar energy sector, based on photovoltaic batteries, which would supply with electrical power the potentially “largest port of the Mediterranean Sea”. But until that happens, there is [still a lot to do]. The officials themselves admit that not all the roads meet the standards. The container capacity of 800,000 TEUs (1 TEU ≈ 38.5 m³) handled in 2007 by the Mersin International Port is 10 times less than the figures for the Antwerp Port, for instance. In addition, for a city which strives to become “the largest”, the figure of 7,000 beds in hotels is insignificant, while the variety is not great either, that is, of course, if you don’t mind getting a room for your drivers or crewmen at Hilton, with full sea view. [Why the Mediterranean?] There has been much talk about the revitalization of the Silk Road lately, for the purpose of diversifying markets. And in his respect, other Turkish ports deserve as much attention as Mersin does, or perhaps even more. Take for instance Izmir, which is the country's second largest port after Istanbul, or Trabzon, which is placed on the coast of the Black Sea and, in the context of building some sort of a Silk Road, would present more interest for the Republic of Moldova than any location on the Mediterranean, which is quite remote, judging at “Moldovan scale”. But, at present, the Mediterranean accounts for 25 percent of the world container traffic and the volume of the containerized cargo crossing this zone is expected to rise eightfold by 2030. It would be regretful to ignore such an opportunity, even if you don’t intend to become a major maritime power. Experts argue that many Mediterranean ports are now excessively busy, yet the Mersin authorities suggest that “starters” are welcome there. [No pasaran] “They are trying to restore the Silk Road, but that’s not going to happen”, says Hayat, the manager of a large transport firm from, smiling ironically; “... this is at least because it (the Road) crosses my country”, his explanation comes. And, indeed, many important routes of the Silk Road, in its ancient version, was crossing what we know today as Afghanistan and, furthermore, Iraq, with the whole set of problems arousing from this, from bad roads to armed men a carrier may encounter on those roads. Besides the air traffic, this is an extra argument in favor of the Mediterranean. [Global crisis to advantages] The current turmoil on the global markets has revealed certain cracks in the global transportation system. In addition to price instability on stock exchanges, it has been calculated that a day of delay in the shipment cuts at least 1 percent from the value of the transported good. It’s almost a tragedy for a company when the transported good reaches its destination in 15 days, for example. And the capacity of the ports and logistic centers plays a crucial role in the shipping times. The participants in the Foreign Logistics Trade Conference agreed that, while the crisis has shown that port capacity is still a shortage, [emerging economies surrounding Turkey could contribute significantly]. At the same time, Turkish Exporters Assembly President Mehmet Büyükekeşi considers that the effects of the global financial crisis may be compensated with the help of the countries which experience less market diversity, and exporters could use the current state of global markets to their advantage, if they focused on entering new markets rather than the EU and the US. What if, for the sake of diversity, Moldovan producers and exporters try North Africa, for example? [Road to Mersin and back] At first glance, the road to Mersin seems terribly hard from the perspective of a Moldovan carrier (who, from what we will see below, cautiously prefers the safety of an intergovernmental agreement rather than individual enterprise). Acknowledging those fears, we will compare a Moldovan cargo, shipped either by road or sea, with a portion of ice cream which melts little by little as it advances and blends more and more into the hot and tumultuous flow of international cargo moving in the same direction. Yes, the competition is fierce out there. But it is important to keep pace in the global competition and make rapid decisions when the global trade is so volatile. Back in Moldova, it is also important to build good roads, warehouses, terminals, filling stations, to teach your personnel speak English at least, in order to one day be able to create a cluster of logistic bases across the country. Those who think that 300 meters of coastline is insufficient for Moldova to become an important trade hub in the region might be amazed to find the success story of PLAZA – at almost 1,300 hectares, Zaragoza Logistics Platform (PLAZA) is the largest logistics area in the European Union, though it doesn’t have direct access to the sea. The key to success is to have an advantageous geographical position, and, after all, this asset is advertised in every single brochure about Moldova. [P.S. Moldovan feedback] Invited to learn from Turkey’s experience, Sofia Sugac, top manager at the Chisinau-based transport firm “Iacon-Trans”, says that the opportunity of cooperating with the seaport city of Mersin is of great interest to our country and it must be considered by Moldovan authorities responsible for the field. Speaking about the potential difficulties of this collaboration, Sofia Sugac thinks that, without an agreement signed between governmental bodies, the companies from Moldova will not just encounter problems, but Mersin will remain virtually inaccessible to them. “What can we learn from the Turks? We can learn not only how to develop but also how to build the trade sector, how to upgrade the efficiency of the Moldovan economy, in order to rehabilitate the existing industries and create new ones. Only then will we be attractive. “The greatest problem of the transportation business in Moldova is that the country has a certain amount of vehicles which do not have authorization to go abroad, and I mean the ecological requirements Euro-4 and Euro-5. Second, we do not have an organization that would professionally coordinate the activities of the transport companies: for example, to mediate the redirection when a company has the cargo but doesn’t have available transport. But this is partly a problem of mentality of the transport firm managers, who follow the principle “I’ll do it myself”. “What can I say about our roads? I’ll leave that without any comment… That is the reason why nobody wants to come here. We pay considerable amounts into the road fund, purchase certificates of all colors of the rainbow, but the situation remains unchanged…” [Ion Vasilica, Info-Prim Neo]