Turkey Currency Crisis and its Impact on Global Trade
If you’re a fan of holidays in Turkey, you’ll no doubt have been enjoying more affordable breaks away thanks to Turkey’s plummeting exchange rate during 2018. So much so, because of Turkey’s currency and political crisis, the pound is worth around 90% more against the Turkish lira than it was in 2017!
While the tumbling Turkish Lira might be good news for holidaymakers, its impact on the Turkish economy is not so good. Over the past five years, the Turkish economy has been growing at a similar rate of that of China and India, but it is now showing signs of overheating, a large trade deficit, a construction boom and soaring debt. According to Wikipedia, an economy is overheating when inflation increases due to prolonged good growth rate and the producers produce in excess thereby creating excess production capacity. The main reason behind overheating is insufficient supply allocation because of excess spending by the people due to the increase in consumer wealth.
To make matters worse, relations between the US and Turkey are at an all-time low with the US imposing sanctions and double tariffs on imports of Turkish steel and aluminium.
How does this affect trade with Turkey?
Inevitably, the issues currently being experienced by Turkey have implications on trade which varies depending on the direction of business. Due to the falling exchange rate, goods in other countries are becoming more expensive which causes imports to decrease; whereas export volumes increase as local goods become cheaper. So while there is plenty of demand for goods coming from Turkey, the demand for goods going into Turkey is much lower. This increased trade imbalance means trailers are often moving back from the UK to Turkey with no backload cargo. Road hauliers are therefore recovering this cost by drastically increasing the Turkey-UK rates.
Paul Ferguson, Sales Director for John Good Shipping, commented, “We have seen some quotes for trailers double as ultimately operators are having to cover the price of the trailer going back to Turkey empty. As such road freight from Turkey is proving extremely challenging for a variety of reasons at present, namely significant cost increases, regular delays before trailers are available to load cargo, additional delays in transit, breaks in the chain of communication, ongoing delivery failures, groupage shipments loaded alongside unsuitable & excessive cargo and the implementation of surcharges. We’re therefore recommending to our clients that shipping from Turkey by sea freight is a more viable option with the current market conditions, both for part load and full load movements.”
How should I ship products from Turkey in the current situation?
Based on the current economic conditions, the best method of getting goods from Turkey to the UK is sea freight or air freight. Sea freight will typically be the cheaper option but will take longer, while air freight will be faster but more expensive. Our weekly sea freight services from Istanbul and Izmir offer fast transit times of around eight days, so unless you need your shipment in a real hurry, shipping by sea from Turkey is usually suitable for most needs and offers an excellent alternative to road transport and delivers significant reductions in freight costs. Sea Freight transits are similar to current road freight transits with port to port in around 8-9 days and door to door in 14-16 days.
John Good Shipping has its own offices in Istanbul & Izmir, we provide weekly direct groupage services, also known as Less than Container Load (LCL) services, which means you don’t need to fill an entire container, you share a container with other customers, making shipping by sea a much more affordable option. We are the only Company offering this weekly container groupage service from Turkey. Upon arrival in the UK, the LCL cargo is unloaded as a priority at our Warehouse in Felixstowe for urgent onward delivery anywhere in the UK.
We also offer weekly Full Container Load (FCL) services to and from all major Turkish ports.
Here are five key advantages:
- Cost Savings
- Reliable & Fixed Transit Times to UK
- Cargo Safety
- Environmentally Friendly
- Deliveries / Fixed Schedules
Where can I find more information?
With a dedicated team of experienced professionals in Turkey, we offer in-depth, specialist knowledge of the market, including business practice, and are fully informed about the latest developments which may influence trade.
Contact your local John Good Shipping specialist who can advise you on the best options for your business.