Free Competition Stuck on One Operator on the Railway: Nearly 30 Companies Take Action

free competition on the railway stuck to a single operator Close to a company took action
free competition on the railway stuck to a single operator Close to a company took action

While the capacity problem is growing in rail freight transportation, where demand is increasing, logisticians argue that equal competition conditions are not offered to private companies in the sector. It is stated that TCDD's appointment of a single company as its agency causes unfair competition in the railway.

The container crisis in maritime transportation with the pandemic has increased the demand for rail in freight transportation. Companies that turn to railways in transportation cannot overcome the problems that arise due to infrastructure deficiencies and TCDD's authorization of a single company as an agency-operator. Logistics industry officials argue that TCDD has appointed a single company as its agency, which leads to unfair competition in the industry.

Known for carrying out the first export voyage from Turkey to China by train, Pacific Eurasia is the firm that TCDD has designated as the official operator. Pacific Eurasia, one of the new players in the logistics sector, was established in 2019 under the management of businessman Fatih Erdoğan.

According to industry officials, TCDD gives priority to equipment supply while giving various discounts to this agency, which is its agency.

LOGISTICS: INSTALLED OUT OF TARIFF OBSTACLES

According to the news of Aysel Yücel from Dünya newspaper Authorities claim that this company is supported in transportation to eastern countries and that non-tariff barriers are imposed on other logisticians to offer their services under free competition conditions. Logisticians said, “TCDD did not invite the representatives of the logistics industry while determining an agency. He did not tell us that he would determine the only authorized agency. All of a sudden we came across something like this. When we ask about this, TCDD officials say, 'This company has promised us 1 million tons of freight'. 'If I give the same guarantee, will you give me this service?' we ask. 'No, I'll wait for them to expire,' he says. Therefore, TCDD needs to create an environment where we can do business under equal competitive conditions. The conditions of perfect competition in railways are still not valid. There are professional companies in Turkey that know this business well. The same rights should be given to them. When we ask for a price, TCDD gives a high price. Either they don't give wagons or they often say 'go and get them from our agency'. The sector expects transparency. The industry expects an equal competitive environment to be created,” he claims. TCDD and Pacific Eurasia officials, to whom we conveyed these claims, left the problems of the WORLD unanswered.

COMPANIES SEEKING COOPERATION

According to the information obtained by DÜNYA, nearly 30 companies started a study to join forces.

These companies, almost all of whom are logisticians, have put on their agenda a formation that can guarantee transportation to TCDD and invest in this field.

One of the most important problems in the railway is the failure to pave the way for private sector investments against the increasing capacity problem. The authorities said, “There is liberalization on paper, but the investments of companies are not encouraged, the infrastructure is not developed, the locomotive and rail infrastructure is insufficient. It is possible for Turkey to reach its growth and export targets by removing the obstacles on the railway.”

The share of railways in freight transport in Turkey is approximately 1 percent. According to 2019 statistics in Europe, this rate is 17,6. In some European countries, this rate goes up to 25 percent. Stating that Turkey lags far behind Europe with a rate of 1 percent, sector officials argue that the share of rail freight transportation should be increased to at least 10 percent with new investments and regulations. For this, it is underlined that the relevant state institutions should pave the way for the investors.

FREE COMPETITION NEVER HAPPENED

Liberalization in the railway was first on the agenda in 2012, and not only locals but also foreign companies started to make plans for investment. While the world's giant companies announced their wagon production plans in Turkey, new players entered the sector in Turkey. The law was enacted on April 24, 2013, TCDD was restructured as a railway infrastructure operator with the Law on the Liberalization of Turkish Railway Transportation. The units of TCDD related to train operation were separated and TCDD Taşımacılık AŞ was established. However, sector representatives argue that the liberalization process has not been able to function fully and an equal competitive environment has not been provided for companies due to incomplete legislation and infrastructure failures.

NOT EVEN A WAGON INVESTMENT FOR 7 YEARS!

The failure of the liberalization process to reach the desired point caused the current investment plans to be suspended. According to the authorities, not a single wagon investment has been made in the private sector for about 7 years. However, many Turkish logistics industries announced that they would invest hundreds of wagons when the law was first introduced. In addition to wagon investments, many companies were also planning locomotive investments. However, despite the law, currently only TCDD Tasimacilik AS and Pacific Eurasia, which was introduced as its official operator last year, have the locomotive. Therefore, both logisticians and industrialists can transport their loads only with the locomotives of these two companies.

THE PRIVATE SECTOR WANTS FULL LIBERATION FOR INVESTMENT

DEİK Logistics Business Council Chairman Turgut Erkeskin: Intermodal transportation increases its importance and share in all transportation modes in our country day by day. We observe that many private sector logistics companies are involved in intermodal transportation, which was in the area of ​​interest of a few companies until yesterday, that they made large investments and established terminals. However, almost all of the transports and investments made by our private sector are for Europe. With a special application of TCDD, only one firm has been appointed as authorized for the transports to the countries in the east of Turkey. It is almost impossible for another company to take part in these lines, especially in Iran and China. Unfortunately, the capacities and experiences of many Turkish logistics companies that are successful in the European route cannot be evaluated in this geography. Moreover, we do not see a very stable service in Chinese shipments made with TCDD special agreement. The mechanism that will enable different private sector companies to compete on equal terms on this route, where the demand is very high, should be established by TCDD. This was already targeted with liberalization.

INFRASTRUCTURE IS NOT SUITABLE FOR TRANSPORTATION

Ercan Güleç, President of the Railway Transport Association (DTD): “There is a serious infrastructure problem in the railway, not only in international transportation but also in domestic lines. Today, Turkey cannot export its export goods, especially products with low added value such as mines and clinker, to ports because the capacity is insufficient. Recently, mining activities have increased, but TCDD has no capacity to unload the goods of the domestic industrialists to the ports, let alone the transit loads. There is a serious shortage of locomotives in Turkey. But the private sector does not invest. We always emphasize this. There are two types of companies in this field. The first is those who transport their cargo using TCDD's resources on the railway. They use TCDD's wagons and locomotives. The second also tries to invest, operates its own locomotive. These are called railway train operators. There is one firm operating in railway operations in Turkey. No other comes out. TCDD does not prevent this. The reason is that Turkey's railway infrastructure is not suitable for economical transportation. The slopes are steep, the bends are narrow. This reduces the traction of locomotives a lot. Therefore, investments should be made in the freight infrastructure of railways, as in passenger transportation. For this reason, players who will invest in this field should demand serious prices from their customers. But then they can't be competitive either. In order for the private sector to invest in the railway, the infrastructure must be made more efficient and free market rules must be implemented. Until the necessary corrections are made in the existing infrastructure, the state should support all train operators without making a public/private distinction in accordance with the free market rules for the economic losses arising from the infrastructure. Otherwise, no one will invest. Turkey needs hundreds of locomotive investments. If Turkey is to become an international logistics center, the private sector's entry into the railway should be encouraged.”

PRIVATE SECTOR PARTNERSHIP DEVELOPS TCDD

DTD Board Member/Gaziport Board Chairman İbrahim Öz: “Industrialists' demand for import and export by rail on the Turkey-China line has increased. We, as Gaziport, want to export to the railway by train, but a single company does most of the transportation on this line. That company also fills its loads directly in Istanbul. They also say that reservations are full for this month. Therefore, the number of companies in this line should be increased. We, as DTD, are ready to give all kinds of support to investors. However, at this point, the state should support companies that will invest in the railway. The government should pave the way for investors. Turkey urgently needs 100 electric locomotives right now. Because 80 percent of the lines will be electrified in the coming period. TCDD AŞ was established, but does not participate in the private sector. If the private sector had a 25 percent stake in TCDD AŞ, for example, we could move forward faster in this area. No one among DTD members has invested in a wagon for 6-7 years! There is a lot of work, a lot of demand. However, the private sector does not invest because it cannot see the way ahead. At this point, the state should activate the incentive mechanism. A long-term low-interest loan facility may be provided to the railway investor. If we cannot develop the railway as Turkey, it would be a dream to be among the top 10 economies. You cannot be competitive with high freight, you cannot sell goods.”

THE SHARE OF RAILWAYS SHOULD BE INCREASED TO 10 PERCENT

Mehmet Özal, General Manager of Ekol Logistics Global Forwarding: “Approximately 1 percent of freight transport in Turkey, both on a value basis and on a volume basis, is done by rail. This rate is quite low when compared to the rail transport statistics of the G20 countries. According to 2019 statistics in Europe, this rate is 17,6. In some European countries it goes up to 25 percent. Infrastructure investments in Turkey are mostly for passenger transportation. Freight transportation infrastructure does not meet the needs of Turkey, which pursues the strategy of becoming an international logistics center and wants to increase its exports. With new investments and regulations to be made, the share of rail freight transportation should be increased to at least 10 percent. In order for Turkey to get a larger share in the international railway market, a free, fair and sustainable competitive environment should be provided in railway transportation. Passenger and freight railway terminals should be brought to an adequate level and modernized by making needs planning. In current practices, it is heard that in the allocation of services and equipment provided by TCDD to private companies, requests cannot be met from time to time or there are non-standard practices in service quality. In the near future, when new intermodal operator company establishments are at the preparatory stage and the private sector can invest more in the railway, it is vital to quickly eliminate the problems in order for the country to become a commercial and logistics center in the region.”

NO SUPPORT FOR RAILWAY FREIGHT TRANSPORT FOR 40 YEARS

Durmuş Döven, Chairman of Reysaş Board of Directors: “Turkey's growth and reaching its export targets depend on the railway. However, everyone is worried about the railway. There is a big problem in terms of management and infrastructure. The number of locomotives and equipment is insufficient. There is only one train going to China. Its capacity is also insufficient. Also, prices are constantly rising. The railway crossed the highway. In other words, there are those who want to invest, but they cannot receive support either. There is an indifference. We expect the same success in this regard from our Ministry of Transport and Infrastructure, which has been successful in airline, communication, passenger transportation, highways and highways. The first investments of the Ottoman Empire were made in the railways. The biggest investments of the Republican period were made in the railways. However, no support and importance has been given to freight transportation for the last 40 years.”

Top 10 expectations of the sector:

  • Let there be a real full liberalization of the railway.
  • Equal opportunity should be provided to all private sector representatives in transportation investments.
  • Private sector investments should be encouraged.
  • Infrastructure problems are solved and operations are made efficient.
  • Improve the functionality of the BTK line. BTK-Mersin, Izmir, Kosekoy, Halkalı, ÇerkezköyLet Kapıkule connections be accelerated.
  • First of all, Kapıkule, the railroad customs should be switched to a 7/24 working system.
  • Let the railway line and connections on the Yavuz Sultan Selim Bridge be put into operation quickly.
  • Railway connections of ports and organized industrial zones should be realized.
  • The arrival and departure of the freight lines should be doubled, and the voyage times should be accelerated.
  • Develop the Van Lake transit capacity and duration.

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