A better connection from Turkey to the USA: the new TNE service

Danny, why this new service? And which customers is it designed for?

We at Hapag-Lloyd already introduced our Atlantic Loop 7 (AL7) service in 2017, offering direct connections from Aliağa and Mersin to the US East Coast. The only weakness we have with the AL7 is a lack of direct connections from the Sea of Marmara ports of Istanbul, Izmit and Gemlik. We connected these ports to the AL7 using feeders to Piraeus, which obviously resulted in longer transit times. However, we also had to deal with additional costs – and often missed connections – especially from Izmit and Gemlik, where we have limited feeder connectivity. Due to the increasing volume from Turkey to the United States as well as our Strategy 2023 goal of tapping attractive markets, we were looking for opportunities for new services and direct connectivity from specific ports. Thanks to a unique cooperation between Area Turkey, Network and Cooperations and Trade Management Atlantic, we were able to join the existing Turkon Line service, which has a very good reputation in Turkey and the United States. It is one of the most reliable services in the market in terms of transit times. The service mainly attracts BCOs and transit-time-sensitive cargo. But any customer who prefers a direct service from the Sea of Marmara to the US East Coast can take advantage of our TNE service.

What are the specific strengths that Hapag-Lloyd brings to this market?

Hapag-Lloyd is a very well-known carrier in the Turkey-to-USA market and has a strong reputation, especially in door-to-door deliveries. Our door-to-door delivery network, abilities and capacities are our strengths in this service. Moreover, in today’s environment, equipment availability is just as important as pricing and allocation. So another advantage we have is that our equipment steering keeps us a few steps ahead of our competitors.

Yet another strength in Turkey is our Special Cargo department, which is dedicated to Special Equipment. These combined strengths already make us pretty strong in the market. What’s more, with our new TNE service, we will also be able to target new Special Equipment opportunities from Izmit and Gemlik to the US East Coast.

I should also add that our customers have very eagerly embraced Quick Quotes, and that a good share of our business is being booked via Quick Quotes, including for trans-Atlantic shipments and for the TNE service.

What is the economic situation like in Turkey? And how important is container shipping for Turkish exports?

The Turkish economy is quite unpredictable and still fragile, primarily due to geopolitical tensions and uncertainties. The economy has not balanced out yet since the economic turbulence in the summer of 2018, which was mainly triggered by an exchange-rate shock. There have been some positive signs, as inflation is mostly under control now, industrial production has recovered somewhat, and the current account deficit is lower. But there are still major uncertainties in the short term, such as the refinancing of external debt, sanctions on Iranian oil, and tension in relations with the United States – especially over the purchase of the Russian “S400” missile system. The official interest rate of Turkey’s central bank is 24 percent, and it isn’t expected to be go down during the first half of this year.

What do you think the future holds in terms of Hapag-Lloyd’s opportunities in Turkey?

Under the prevailing economic conditions and given the country’s high current account deficit, it goes without saying that exports and container shipping are extremely important to the Turkish economy. Though a weaker Turkish lira could be viewed as a good booster for exports, it should be noted that they are heavily dependent on imported raw materials. What’s more, export prices in terms of US dollars have been under visible pressure due to both domestic and regional competition. However, it is a fact that Turkish exports have been increasing, and there is no reason that this tread won’t continue. This has also been clearly recognised by Hapag-Lloyd, as Turkey has been categorised as an attractive market in our Strategy 2023.