Delivering SUCCESS

Though the growth of e-commerce has positively boosted the sector, MNG Kargo is working on innovative systems and technologies to deal with the overwhelming requirements.

Lars Hoffmann

VP AND HEAD OF MEDITERRANEAN BUSINESS UNIT, DFDS

Can you outline the key competencies between DB Schenker and Arkas and how the joint venture fits the needs of the economy?

DB Schenker has a long history in Turkey, with its first activities dating back to 1889, not long after the company was founded in Vienna in 1872. Turkey was one of the first countries into which the DB Schenker organization expanded. At the time, DB Schenker worked with different partners primarily in Istanbul, Izmir, and Ankara. The cooperation in Izmir with Arkas turned out to be the most successful and best matched DB Schenker’s competencies. Arkas is an operator that physically moves cargo, and its core businesses are shipping, running a steam ship line, and moving containers within Turkey. DB Schenker is a global network provider that designs, implements, and runs supply chains. As a result of the synergies between Arkas and DB Schenker, we formed a joint venture with Arkas in 1995. The resulting DB Schenker Arkas company became a full network member of the DB Schenker organization. Combined, we are capable of providing the entire portfolio of a logistics company. From a capital perspective, DB Schenker controls 55% of the company and Arkas the remaining 45%. From a management perspective, we are a fully network compliant DB Schenker organization. One of the strengths of a global network company is that we do business in the same manner all around the world. We are able to provide local companies as well as multinationals global logistics solutions.

Can you break down DB Schenker Arkas’ revenue by its three primary services and identify where you expect to see growth?

Around 35% of our annual revenue can be attributed to ocean freight. Ocean freight is a turnover business that does not have high margins, though it is Turkey’s most important contribution to the multi-modal import export model with Europe. Around 30% of our revenue comes from land traffic, 15% comes from air freight and contract logistics, and 5% from our work doing projects, fairs, and exhibitions. For future growth, we are no longer looking at particular freight services. Rather, we are looking at solutions. Customers increasingly want integrated services from us, and we consider ourselves an integrated logistics service provider with two-fold integration. In the first fold, we integrate all traffic modes required by a supply chain under a tailor-made solution for our customers. The second part of the integration is the value-added services found within the contract logistics environment and in logistics centers. We create value for our customers by providing services like pick and pack, repacking, labeling, light maintenance, and quality control. These value-added services are especially well suited for the rise of e-commerce.

How have falling imports into Turkey impacted DB Schenker Arkas’ services?

Our land traffic from Europe has been the most impacted by declining imports into Turkey. Ocean and air freight are doing well, though their performance has mainly been supported by exports. With contract logistics, we do not see growth, though revenues there are stable.

What is DB Schenker Arkas’ strategy for capturing e-commerce growth?

E-commerce has three aspects for us. First, we have value-added e-fulfillment services in our logistics centers with pick and pack, repacking, labeling, light maintenance, and quality control. We see excellent growth potential in this area. Second is delivery, where DB Schenker Arkas is domestically active mainly in B2B. Third is digitalization, an area where DB Schenker offers a platform to its e-commerce customers called Netlivery, a one-stop shop platform that allows our customers to communicate more intimately with us and connect with their own customers more easily. In the past, we looked at the point of production to the point of sales, whereas today we look from the point of production to the point of consumption, which makes a huge difference. There is a fairly advanced logistics infrastructure in and around the big cities, though rural areas remain a challenge that we are working to solve through our focus on e-fulfillment centers and providing advanced, digital solutions. ✖

“One of the strengths of a global network company is that we do business in the same manner all around the world. We are able to provide local companies as well as multinationals global logistics solutions.”

Infrastructure and energy investments in Turkey require serious logistic organization and capability. We contribute to this process with our ports and shipping fleet. The TurkStream natural gas project signed between Turkey and Russia will be one of the largest energy projects in the region. Samsunport shouldered Turkey’s part of the pipeline that will be built under the Black Sea. The pipeline building process is a challenging one and needs strong logistic support. The unloading, transportation, storage, and reloading of approximately 30,000 gas pipes, each weighing 12 tons, was completed successfully in thanks to the technical and professional competence of our port. The company conducting the TurkStream gas line project and the company that built the pipeline both thanked us for the successful logistical support we provided. They had previously