As a senior executive of CEVA Logistics, Turhan Özen probably hadn’t envisaged himself one day heading up the cargo division of his home airline, which brought him around the world on many of his business trips.
“Of course, CEVA was also a customer of Turkish Cargo, and I was able to follow all their progress,” says Özen, who was appointed chief cargo officer of Turkish Airlines in December 2016. “But when I joined and got to see the numbers, I started to get acquainted and work with people all around the world, and saw how this success story is really built.”
Özen says that the numbers showed an average of 15% growth every year for the past six or seven years, which impressed him because it isn’t easy to sustain.
“Turkish Airlines is already very successful with an extensive network on the passenger side,” he says. “In the next step, top management wants to grow cargo even further. The ambition is to become one of the top five air cargo carriers by 2023.”
2023 marks the 100th anniversary of the establishment of the Republic of Turkey and is therefore an especially important and symbolic year for Turkish companies, many of which have set themselves some form of target to be achieved by then.
Özen joined the carrier at the end of what was a turbulent year for the industry, with an excess of capacity, heavy competition and a drop in prices and revenues. June 2016 also saw Istanbul’s Atatürk Airport attacked by terrorists, causing the temporary shutdown of all flight operations.
“Even though business and stability were restored very quickly, the incidents had an impact on the results, especially in June and July,” Özen says. “Fortunately, from the end of August, the numbers for Turkish Cargo started to improve significantly and we performed better than the market average both in revenue and tonnage. The numbers for the last four months were so strong that Turkish Cargo was also able to increase its global market share up to 2.7-2.8% from 2.3% at the beginning of the year.”
One of Özen’s first priorities is to keep that momentum going by positioning the carrier as a close partner of its agent and forwarder customers. Turkish Cargo hopes to be able to achieve that by coming up with joint initiatives to provide solutions for specific groups of shippers.
“We’re not so strongly engaged and active with some customers in Africa, the Middle East and the Americas as we are in Hong Kong and the peripheral region,” says Özen. “In my opinion, Africa is going to be a very important destination in the long run, so we need to be much more active there. We’re targeting exports from Hong Kong and China to Africa.”
Another priority is to increase the focus on special cargo and special solutions. According to Özen, Turkish is already quite efficient at handling standard cargo but this needs to be replicated for special segments such as time- and temperature-sensitive cargo, priority cargo, express and e-commerce, valuable cargo and high-tech cargo.
“We’ll be more aggressive than we used to be in these markets,” he says. “This group of special cargo makes up just 15% of our business. I believe that by 2020 it will be up to 33-35%.”
In Özen’s opinion, Turkish Airlines hasn’t yet reached the optimum level in terms of scale, particularly on the cargo side, and has the opportunity to exploit its hub much more, given Istanbul’s location at the crossroads of the Asia-Europe and Europe-Middle East/Africa trade lanes.
“So far, Turkish Cargo has relied heavily on the passenger network, which is already the largest in the world,” he says. “But we can also capitalize further on the network by connecting smartly managed freighter capacity. We’re going to provide more volume to the ever-growing network so that we can take advantage of it in a more optimized way. The current ratio is 35% freighter and 65% belly; I would like to increase it to 50:50 by 2020.”
The carrier currently operates a freighter fleet of nine Airbus A330-200Fs and has two Boeing 777Fs on order that were converted from 777-300ERs, scheduled for delivery in 2018.
“That will obviously not be enough,” says Özen. “We’re still discussing with the strategy department and top management on the next options for 2018 onward. It is important that we grow in this way, because the Turkish network is so well designed and wide that in order to use it to the maximum, we need a lot of capacity between the main hubs to be fulfilled by freighters. The belly strategy has served us well for the past 10 years, but for the next 10 years we should have a different balance.”
A new, third airport to serve Istanbul is under construction and is scheduled for completion in February 2018, which will solve the congestion and slot availability issues which Atatürk Airport now faces.
“From the cargo-handling perspective, we aren’t too constrained yet,” Özen says. “The cargo terminal is just over two years old, with a capacity of 1.2 million tonnes per year. Our usage should be at about 80-85% this year so we’re not facing huge capacity issues with cross-docking, warehousing and deliveries, etc.”
The first phase of the new airport will include a 65,000-square-metre cargo terminal, boosting capacity to approximately 2 million tonnes per year. Automated systems and better aircraft parking positions mean that there will be an improvement in not just capacity, but also speed and flexibility.
“When you grow up to 1.5-2 million tonnes, I believe automation is compulsory,” says Özen. “You have to be able to respond to customer needs, seasonal fluctuations and any volatility. At the new hub, we will keep it semi-automated and semi-manual so we can switch between them according to volumes. When we go above 2-2.5 million, then it becomes a game of automation.”
Turkish Airlines obtained the Center of Excellence for Independent Validators in Pharmaceutical Logistics certification from the International Air Transport Association in August 2016. According to Özen, that achievement clearly generated more interest among the forwarders and shippers because pharma traffic grew more than 30% in 2016.
“We won’t stop at just CEIV and will continue to invest in our pharma capabilities,” he says. “We’re going to also focus on destinations and on full end-to-end capability for most of the network. We’re going to look at the GDP requirements as well and we’ll get that certification sooner rather than later.”
As a third-party and contract logistics executive in charge of large contracts with global shippers in warehousing, distribution and freight forwarding, Özen says his experience has taught him one important message.
“If you’re able to create value for the final customer who pays the bill, they’ll appreciate your contribution,” he says. “They won’t forget it and they’ll be loyal for a long, long time.”
By Jeffrey Lee
Asia Cargo News | Hong Kong