HISTORIC headwinds

Apart from transporting huge amounts of textile goods, machinery, automotive parts, and finished vehicles from Turkey to the rest of Europe, DFDS is also expanding the amount of reefer cargo it brings to Europe.

DFDS entered the Turkish market in 2018 through its acquisition of U.N. Ro-Ro, the second-largest Turkish acquisition of the year. Why did DFDS seek this acquisition?

DFDS sees the Mediterranean and Black Sea regions as having huge potential. We are not doing any business within the Black Sea region for now, though our acquisition of U.N. Ro-Ro makes it possible to enter that area. We felt it was a great acquisition because it linked our network to the Mediterranean and broader MENA region. In addition, we added 12 vessels to our portfolio, all of which fit fairly well into our fleet because they were built in the same shipyard in Flensburg as DFDS’ existing fleet. When one runs a pool of as many vessels as DFDS does, it is beneficial that they are extremely similar so we can easily swap them among routes.

“The slowdown came faster than we had hoped and expected, though it has not changed our mindset. Based on the numbers, Europe is still an important partner for Turkey and vice versa.”

From a management and operational standpoint, what challenges did DFDS face with the integration of U.N. Ro-Ro into the larger DFDS system?

There is certainly the issue of integration. U.N. Ro-Ro was a standalone company in Istanbul that has become a major business unit in our system, and it was a huge task to bring it into our system. We have our core corporate and headquarters functions in Copenhagen, with everything like insurance, procurement, and fleet management located there. Aligning all these things has been a huge task, though my predecessor and the team in Istanbul and Copenhagen have done well, and we are satisfied with the integration. As far as operations go, it is business as usual—we have to treat our customers well. U.N. Ro-Ro is now owned by DFDS, a Danish company. We want to incorporate DFDS’ values onto our operations here while still respecting the difference in cultural and operational styles. The big difference between DFDS and U.N. Ro-Ro’s previous owners is that we are an industrial buyer rather than an investor. We are not here to sell; we are here to develop. We will connect our intermodal system, which is one of the reasons why we acquired this company.

In addition to the 12 vessels, DFDS also acquired two terminals from the transaction. How do those fit into DFDS’ broader intermodal system?

There are certain procurement synergies, and we can optimize the new terminals with our IT and gate systems and other operational efficiency-oriented systems. The terminals are extremely similar to the rest of our system, so they fit in well, and the locations are strategic for us. Trieste Port— one of the two that were acquired—is in Italy and is one of the major entrances to Europe. It is the only free port in Italy in that region, so it has a special status. With its extremely well-connected intermodal system, it is an important strategic point in terms of development.

Can you break down the big categories of Turkish goods that fill your cargo volumes to Europe?

We transport more or less everything produced in Turkey, such as textile goods, machinery, automotive parts, and finished vehicles. The only cargo we partially carry is reefer cargo—fruit and vegetables. There is a fair bit of fresh produce in Turkey that ends up in European supermarkets, so it is an interesting market for our business that we have not truly dived into yet.

How has the current state of global trade and Turkey-Europe trade in particular impacted your Mediterranean operations?

It is no secret that we acquired U.N. RoRo when everything peaked. The slowdown came faster than we had hoped and expected, though it has not changed our mindset. Based on the numbers, Europe is an important partner for Turkey and vice versa. Trade volumes will recover, and we have not been shaken by this. ✖