TOUGH AND knowledgeable

After Leipzig, DHL has plans for Turkey to be a major sub-hub in the region, which is why it is investing EUR135 million in a new 42,000-sqm building using the latest green technology at the new airport.

How will the opening of the new Istanbul Airport impact your operations?

The new airport is key for us, logistics-wise. From an investment point of view, for DHL the airport will start the largest project we have ever had in the country. It has the right location for our business as a hub and is a way for us to grow new trade links. 60 countries and 120 destinations can be reached within a three-hour flight from the airport. DHL has been present in Turkey since 1981, and we are a market leader—with more than 53% of the market—and first mover in many areas. For the DHL group, Turkey is an emerging market. It has a clear road map whereby it wants to increase its revenue share from 22 to 30% over the years. We are one of the 11 countries within the DHL group nominated as an investment area. As a result of this, and because of the new airport, we are going to invest in a 42,000sqm building located at the new airport. It will be a EUR135-million investment with a green build set up using the latest technologies. While DHL’s main hub in Europe is Leipzig, we see Turkey as being a major sub-hub in the future.

How do you see the transition from Atatürk to the new Istanbul Airport?

As a transition, going from Atatürk to the new airport is a big step; however, this is not new to us. DHL has transitioned many times before. For Turkey, it is new. But those working with us are a global team that know what to do from an experience point of view.

Which regions are using DHL Express Turkey the most?

Most of our shipments go to Europe. We follow the patterns of the Turkish economy as we are facilitators of trade. Whatever happens in Turkey is reflected in our capabilities. With DHL present in 220 countries and territories, our trade is spread out, but we are centralized in Europe. That is why our Turkish operations are key. Germany is one of our biggest destinations inside Europe. Outside of it, we see tremendous growth in the US and in new areas as a result of e-commerce.

E-commerce has significantly changed our operations. We are traditionally a B2B company, picking up and delivering shipments during work hours. For the last five years, when e-commerce began booming, we have seen our e-commerce volumes in Turkey grow by 63% YoY. The global e-commerce market will likely have gone from USD300 billion in 2015 to USD1 trillion by 2020. Our operations have to adapt to changing customer needs, which are much more immediate nowadays. To accommodate, we had to invest heavily in our capabilities. Hubs and gateways can ensure demand can be met, and new technology here is key to meeting customer demands for flexibility and choices. Choice is essential to this industry, and data is essential to knowing our customers, providing options, and having availability, all so that you can get to the right destination as soon as possible. We are also finding that e-commerce is making us focus more on speed than capacity.

From the simplest perspective, Istanbul is massive; therefore, logistically it is difficult. Our couriers are tough and knowledgeable. They have the technology to route deliveries effectively. That being said, Istanbul’s size gives us plenty of opportunities. ✖

Two years ago, MNG Kargo’s acquisition by outside investors was completed. What was the reason behind the acquisition?

This is an industry mostly established by Turkish companies and entrepreneurs with classic methods and cargo logic. However, in the last decade a number of foreign investors have entered the market through acquisitions. This showcases the foreign interest in this strategic industry and appetite for investment into a high potential business. Seeing this potential, Turkven and Sancak Group acquired 100% of MNG Kargo and decided to invest and transform the industry. As someone involved in these processes, these investments have made a major contribution to the industry and contribute to establishing the corporate infrastructure of the industry.

How has MNG Kargo benefited from the e-commerce boom within Turkey, and how has e-commerce affected your operations?

The growth of e-commerce positively influences not only MNG Kargo, but also the entire industry in terms of volume. However, since industry business model was not designed to meet the requirements of B2C in a cost-efficient way from the beginning, the industry cannot fulfill this in terms of costs, performance, and customer satisfaction at the moment. Especially on the last-mile side, there is a culture of the consumer in Turkey of delivering everything to homes coming from cargo, namely the B2C end. Since this culture creates a similar expectation on e-commerce side, our costs and operation infrastructure cannot keep up. The costs of operations are rising, as the mail and B2B side shrinks and the small parcel side of the industry expands. Here, we seek to differentiate the pricing mechanism between customer pick-ups and home deliveries. We are also working with e-commerce companies to change this in order to reduce their costs and facilitate our costs and operations.

Outside of pricing mechanisms, what solutions is MNG Kargo working on to meet the challenges presented by e-commerce?

There are two dimensions to our solution. First, we strive to make the last-mile side more technological and accessible for customers; second, we seek to improve sorting systems suited for e-commerce. With last mile, we are investing in pick-up and drop-off points to better reach customer preferences. For sorting and separation systems, there will be full automation, and we will move toward a structure where the cargo will go to distribution points directly and where we can reduce the number of handling and dispatch the last mile directly from the hubs. We also have plans to invest in some locations in 2019 and 2020. We will not eliminate branches; they will serve as a customer contact point, a pick-up point, and so on.

How have MNG Kargo’s international operations changed with the growth of e-commerce?

Our first priority is using the right technologies and ensuring customer satisfaction. The world is turning into an integrated market with the development of e-commerce. The key transformation made by our international business, INTER, has been to integrate our processes with large international e-commerce companies such as Amazon and AliExpress, which ship products to Turkey. Therefore, as much as we can manage this effectively within Turkey, we can become a right and established partner in international trade. A healthy formation of this integration will also lead to Turkish products and market transforming to e-export on the e-commerce side and will make us reverse logistics provider in that sense. We will collect the cargo from within Turkey and transfer it abroad, reaching out to the world with our network there.

We are doing an in-depth study of all our 25 existing hubs, calculating where they will experience bottlenecks when we grow at a projected rate every year. In relation to this, we have projected a 15% physical growth necessary in the next three to four years and have shaped our investments accordingly. Our second project is to review our vehicle fleet. We are renewing around 300 vehicles in 2019 and will renew our vehicles every year. ✖

“The costs of operations are rising, as the mail and B2B side shrinks and the small parcel side of the industry expands.”