The maritime sector is a strategic domain at the heart of ever-growing global trade. Safe berthing and unberthing of ships in ports is of paramount importance for import and export traffic—the lifeblood of many national economies. This is precisely where pilotage and towage services step in: they ensure navigational safety and facilitate maneuvering processes for vessels. However, how these services are regulated and to what extent they should be open to competition remain evergreen debates in the industry. In this article, we will analyze the legal framework of pilotage and towage services in Turkey and evaluate them from a competition perspective; we will also discuss the impact on the market of the rule limiting the number of towage organizations to a maximum of two in A-class towage zones, as well as the “queue-based work allocation” system. Finally, we will explore the implications of these arrangements in the light of Turkish Law No. 4054 on the Protection of Competition, while considering the International Maritime Organization (IMO) Resolution A.960 and the International Maritime Pilots’ Association (IMPA) stance on competition.
Administrative Arrangements and the Basic Legal Framework
Pilotage and towage activities in Turkey are shaped by three main legislative documents:
- Regulation on Pilotage and Towage Services (hereinafter “the Regulation”)
- Directive on Fees for Pilotage, Towage, and Mooring Services (hereinafter “the Directive”)
- Ports Regulation
The common objective of these regulations is to ensure maritime safety, protect life and property, safeguard the environment, and maintain order in maritime traffic. The Regulation outlines the number of service providers (known as “organizations” or “establishments”) authorized to operate in each region and sets forth technical, administrative, and financial requirements. The Directive explains the maximum fees (price ceilings) that can be charged for services rendered to vessels and describes how these fees must be applied. The Ports Regulation, on the other hand, governs berthing, unberthing, anchoring, and other operational procedures in port areas—clarifying the authority of Port Authorities over these services.
Complementing these domestic regulations, the Turkish Law No. 4054 on the Protection of Competition (Rekabet Kanunu) aims to protect and develop competition in the marketplace. Yet the pilotage and towage sector is characterized by “administrative regulations” and certain forms of “exclusivity” that set it apart from classic competitive markets. In fact, as underlined in IMO Resolution A.960, pilotage is primarily a safety-oriented service, requiring high levels of expertise, training, and local knowledge, and is often subject to state oversight. Furthermore, IMPA—the International Maritime Pilots’ Association—has long held that pure market-driven competition in the pilotage field can undermine navigational safety and the consistent standards demanded by the maritime industry.
Number of Organizations in A-Class Towage Zones and the “Queue” System
According to the Regulation, in A-class towage areas, a maximum of two towage providers can be authorized. In B-class areas, two providers are also envisaged, while in C-class areas, this number is limited to one. A-class areas typically involve high-traffic ports with large vessel sizes. Allowing two towage organizations in such zones suggests, in theory, a possibility for competition. However, in practice, the Administration (the Ministry or the relevant Port Authority) implements a rotation or queue system. Under this system, which organization will serve which vessel is largely determined by an “order of turn” administered by the relevant authority.
The principal justification for this system is maritime safety and the uninterrupted continuity of service. In heavily trafficked ports, leaving it solely to ships to decide which towage organization to call—often solely based on price—could create uncertainty, inefficiencies, or even safety hazards. Such friction might cause delays, increased risks within port boundaries, or hasty maneuvers aimed at “winning” business. By assigning tasks on a rotational basis, the Administration seeks to ensure that each organization maintains sufficient capacity and that ships receive timely services without undue competition-driven compromise on safety.
However, this queue-based method effectively eliminates classic competition elements like “price discounting” or “special promotional offers.” Since a vessel’s assignment to a towage provider is already structured by the administrative rotation, shipping lines do not typically base their choice on price competitiveness, nor can towage providers meaningfully compete to attract customers with lower rates. Indeed, as also highlighted by IMPA’s formal positions, the potential for “price wars” could eventually erode service quality or endanger consistency in essential maritime safety standards—a scenario pilot associations generally aim to avoid.
Price Ceiling and the Challenge of Fee Structures
The Directive on Fees for Pilotage, Towage, and Mooring Services stipulates maximum charges for these services. In other words, organizations cannot exceed the set ceiling when invoicing vessels. They are permitted to charge less than the ceiling, but the public levy (“kamu payı”) payable to the government is calculated against the full ceiling price. In practice, this creates a disincentive to go below the cap, as it can reduce profit margins while not lowering the overall state-imposed levy proportionally.
Thus, “lowering prices to attract more vessels” or “undercutting the competition” is rarely a viable strategy in pilotage and towage. Even if a provider were to offer a discounted rate, the queue-based allocation system means ships might not have the freedom to choose that particular provider simply because of cost. As a result, the market is shaped more by these administrative controls than by typical competitive mechanisms.
This situation aligns with the viewpoint advanced in IMO Resolution A.960, which underscores that pilotage should be structured to prioritize safety and that pricing models should reflect the specialized expertise required. The resolution emphasizes that pilot training, licensing, and ongoing professional development must not be compromised by downward price pressure. In parallel, IMPA has repeatedly argued in its official communications that unconstrained price competition in pilotage could lead to a degradation in quality, insufficient investment in training or equipment, and potentially higher risks in maritime navigation.
Ports Regulation and the Ordino System
Under the Ports Regulation, every vessel must comply with specific procedures—such as berthing/unberthing permissions (often referred to as “ordino”) and anchorage rules—before entering or leaving a port. The use of pilots and towage services is mandatory for certain ship tonnages, ship types, or dangerous cargo classifications. For instance, a vessel carrying hazardous materials must be assisted by a pilot and a sufficient number or capacity of tugs to ensure safe maneuvers.
The ordino process ensures that the Port Authority can coordinate maritime traffic within port waters. It can impose restrictions, require additional tugs, or limit certain vessel movements based on prevailing conditions. As a result, pilotage and towage organizations cannot arbitrarily refuse service, adjust pricing at will, or otherwise operate outside the purview of the Port Authority. The entire system is designed to ensure that navigational safety, environmental protection, and traffic efficiency remain at the forefront.
Assessment from a Competition Law Perspective
Given the high level of government intervention in this sector, how does this fit within the framework of Law No. 4054 on the Protection of Competition? While the Turkish Competition Authority (Rekabet Kurumu) has the authority to scrutinize any market behavior that may restrict competition, pilotage and towage services are largely governed by administrative regulations and legal exclusivities. Consequently, classic competition concerns—such as price-fixing or customer allocation—are overshadowed by the fact that the Administration itself designates service areas and sets ceiling prices.
In some respects, the rotation-based distribution of vessels among two providers in A-class areas does resemble “customer allocation.” However, it is an allocation mandated by public authority rather than an anticompetitive arrangement orchestrated by the service providers themselves. Since pricing freedom is also curtailed by a ceiling rate and the mandatory public levy, opportunities for typical antitrust violations (collusion or predatory pricing) are significantly diminished. From an international standpoint, IMPA and other regulatory bodies consistently hold that pilotage’s unique safety mandate justifies close regulatory supervision to prevent a “race to the bottom” in terms of quality or safety investment.
Nevertheless, the Competition Authority can, in principle, investigate any potential abuse of dominance, discriminatory practices, or artificially inflated fees. If allegations arise that a pilotage or towage organization has manipulated the system, delayed service intentionally, or overcharged beyond acceptable norms, such complaints could indeed be examined. But in view of the stringent administrative oversight and the maximum fee schedule, significant competition-related infractions are less likely in practice.
The Rationale Behind These Regulations and the Protection of Public Interest
In maritime transport, safety of navigation, life, property, and environmental protection always come first. Pilotage and towage services are high-risk, specialized operations. IMO Resolution A.960 explicitly calls for setting high standards for pilotage to ensure the competence and professionalism of pilots. The resolution advocates that pilotage should be “adequately regulated,” reflecting the fact that the maritime pilot’s role in preventing accidents is indispensable. Allowing unregulated or purely market-driven competition could, in certain viewpoints, compromise these standards.
Several underlying reasons support this rigid regulatory framework:
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Limiting the Number of Organizations:
Due to the critical nature of these services, not just any entity can offer towage or pilotage. Organizations must meet strict technical and operational criteria, consistent with IMO A.960’s emphasis on rigorous professional standards. By restricting the number of players, authorities aim to ensure that only highly qualified providers operate, thereby reducing the risk of accidents. -
Queue System:
Having two towage providers simultaneously compete head-to-head for every single job could lead to hasty or even unsafe maneuvers. The rotation system, supervised by port administrations, ensures an orderly allocation of vessels and preserves service quality—an approach that resonates with IMPA’s warnings about the perils of unfettered competition in pilotage services. -
Price Ceiling:
Pilotage and towage services are often mandatory for large or dangerous-cargo vessels. Without a cap, providers might impose exorbitant charges. The ceiling system shields shipowners from excessive pricing. Nonetheless, tying public levies to the maximum rate also neutralizes the incentive to reduce prices as a competitive tool, aligning with the broader regulatory principle that safety-critical services should not be subject to aggressive underbidding.
These measures reflect a “public interest” orientation, in which protecting maritime safety takes precedence over fostering classic price-based rivalry. The maritime environment is unforgiving; errors in pilotage or towage can have catastrophic consequences for both the vessel and the surrounding ecosystem.
Potential Practical Issues and Mechanisms for Resolution
Despite the merits of this strict regulatory regime, problems can arise:
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Service Delays:
Even with two providers rotating, port congestion can lead to extended waiting times. During peak demand, vessels might face scheduling bottlenecks. -
Higher-Than-Expected Charges:
Although a price cap exists, ancillary fees (overtime, public holidays, extra services) can cause invoices to exceed initial expectations. -
Allegations of Discrimination:
There may be claims that certain vessel owners or agents receive preferential treatment, or that the queue is being manipulated. However, port authorities generally keep a close watch to prevent such issues.
When disputes emerge, the primary bodies responsible for intervention are the Port Authority and the relevant Ministry. In cases of noncompliance with the regulations, enforcement actions can be taken under the applicable legislation (e.g., statutory decrees, port laws, or laws on protecting life and property at sea). The Competition Authority typically enters the fray only if a clear competition violation (e.g., discrimination, refusal to supply, or exploitative pricing) is alleged. Given the regulatory environment, such blatant competition infringements are uncommon.
Conclusion and General Evaluation
In Turkey, pilotage and towage services are subject to a detailed regulatory framework anchored by the Regulation, the Directive, and the Ports Regulation. The rule “no more than two organizations in A-class towage areas” and the administrative allocation of vessels primarily via queue-based rotations leave little room for classic free-market competition. From a competition law standpoint, the standard drivers—price, quality, diversity, innovation—are overshadowed by a system meticulously designed and overseen by public authorities.
Moreover, by setting maximum fees and calculating public levies against the ceiling rate, the Directive further diminishes any potential for price-based competition. Even when two organizations are active in the same zone, it is the queue and not market forces that determine who services which ship. This framework is consistent with IMO Resolution A.960, which places pilotage safety and professional standards above free-market concerns, as well as with IMPA’s stance that pilotage is a core safety service best regulated in the public interest.
Though this setup may be criticized from a purist perspective of competition, it finds justification in maritime operations, where safety, environmental protection, and public welfare hold paramount importance. Indeed, pilotage and towage require specialized vessels, trained personnel, and continuous investment. In this context, cost alone is not the sole criterion; the emphasis on safe and efficient handling of large ships—and potential hazards involved—supports a model that prioritizes oversight and regulation.
Looking ahead, advancements in maritime technology—such as automation or remote-controlled ships—may eventually redefine parts of pilotage and towage. Yet in the foreseeable future, the fundamental driver of this sector remains safety, backed by strict administrative control. Discussions on competition are likely to stay more theoretical than practical, as the overarching priority remains consistent with IMO and IMPA guidelines: to guard life, property, and the environment in maritime operations. Ultimately, in pilotage and towage, public interest and navigational safety continue to take precedence over free-market competition.