In his first interview with maritime media, Minister Elvan addressed to Turkish maritime Sector through SeaNews.
Mr. Lütfi Elvan, was born in 1962 in Karaman. Having graduated from Istanbul Technical University, Faculty of Mining Engineering; Elvan received 2 Master’s Degree, from UK and ABD respectively. Having worked in the State Planning Organization between 1989-2007, Lutfi Elvan entered to Parliament when elected as Deputy from Karaman province in 2007 General Elections. Mr. Elvan was re-elected in 2011 as a deputy from Karaman province again; and on December 26, 2013 appointed as Transport, Maritime Affairs and Communications Minister. Lütfi Elvan; at that time held the Chairmanship of the Parliamentary Planning and Budget Commission. Maritime Sector was not very familiar so far with the thoughts and plans of Mr. Lütfi Elvan regarding the maritime affairs. In this respect, there was a demand from the industry to know about. To address the shortcomings in this regard, SeaNews Magazine interviewed vith Mr. Elvan. We can’t say that we asked all the questions but we did our best, and Mr. Minister frankly answered. Here they are:
Seanews: Dear Mr. Minister, first of all we would like to thank you very much for accepting our request for an interview in the very busy agenda of yours an especially during these days in which we celebrate the Cabotage Day and the Week. The Cabotage Law was accepted on 1 July 1926; and how would you comment on the developments in the maritime field so far?
Lütfi Elvan: In 1913, only 0.5 million tons of cargo was handled at our ports, in 1960, this increased to 5.5 million tons, to 53 million tons in 1983 and this amount reached to 190 million tons in 2003. As of the end of 2013 the amount of cargo handled at the ports of our country was 385 million tonnes. And, the total installed capacity of our ports is 548 million tons. In other words, we use the 70% capacity of our ports. Our maritime transport was 277,4 million tons in total; in which imports constitute 187,8 million tons and exports constitute 89,6 million tons. According to data released by Turkish Statistical Institute (TurkStat), our total annual foreign trade was 403,4 billion dollars and a share of 228,8 billion dollars in this total, 55% in ratio, carried by sea. According to latest data released by TurkStat in 2012, the share of maritime transportation per amount of cargo carried was 93,4% for imports and 75,7 for exports, when compared to other transport modes.
SeaNews: Cabotage monopoly was internally lifted in EU countries. In our country there is also some demands/ideas in favour of discontinuing the Cabotage monopoly. What would be your assessment-in terms of advantages/disadvantages- on this issue?
Minister of Transportation, maritime Affairs and Communication Mr. Lütfi Elvan on the cover of SeaNews magazine
Lütfi Elvan: According to the Cabotage Law, the right for carrying out all kind of maritime activities on our coasts, in and between our ports has been granted exclusively to the citizens of Turkish Republic. First, it should be recognized that this is a national rather than a state monopoly. It could be discussed whether this right has been adequately benefited. However, this should not mean in any way that, we would give up a national right for the benefit of other states. In fact, Turkish maritime sector benefited from the environment that provided by the Cabotage Law with which a trend for growth and development has been achieved.
SeaNews: Is there any statistical data showing the performance of Turkish Flag ships in Port State Controls after the enforcement of MLC 2006 Convention? If you have information on this issue could you share it with us? What is Turkey’s intention on signing the MLC 2006 Convention?
Lütfi Elvan : The MLC 2006 Convention has entered into force on August 20, 2013, and a Liberian-Flagged offshore support vessel was the first ship which was put under detention by Port State Control inspections and the grounds for detention was some deficiencies on the basis of the contract of employment.
In 2013, a total of 502 ships was inspected at Paris MoU ports and 1214 deficiencies were found in total; 220 of them (18%) were related to working and living conditions. And in 2014; so far 216 Turkish-Flagged ships has been inspected at Paris MOU ports and a total of 631 deficiencies were detected. Out of these deficiencies, 99 (16%) were related to working and living conditions. Until now, we have not been encountered a serious problem on Turkish-Flagged hips with regard to MLC-2006 Convention.
Looking from a general perspective; following the enforcement of MLC 2006 Convention, Turkish-Flagged fleet has achieved a good progress and corporate firms were better prepared for the inspections. Ships owned by companies that having a good management and organizational structure, successfully passed these inspections. The activities of our Ministry in this regard were serious and healthy, but however, ships were actually under the control of owners and managers; and their accuracy and efforts were necessary in order to bring the working conditions up to the standards required by the Convention.
In 2013, Our Ministry launched the “Voluntary Inspection Program for MLC 2006” with which a pro-active control mechanism put into effect aiming to minimize the detention risk of Turkish-Flagged ships at foreign ports. This program is currently continue to be carried out by Harbour Masters within the context of pre-surveys and non-program surveys. However, as the transition period granted by Paris MOU to carry out PSC inspections with due accordance to MLC 2006 ends by August 2014, a significant increase in the number of ships detained for MLC-2006 related deficiencies is estimated by the world maritime community. It is critically important for our industry to take the necessary actions onboard ships and to always be prepared for the inspections.
The preparatory work for being a party to MLC 2006 convention is being conducted by the Ministry of Labour and Social Security and, “The Draft Bill Approving the Maritime Labour Convention” considered by the Foreign Affairs Committee of Turkish Grand National Assembly on June 18, and was accepted. The legal proceedings for becoming a party to the Convention are on-going.
Since the beginning of the process, Our Ministry took important initiatives with regard to become a party to the Convention for ensuring the improvement of living and working conditions at sea.
SeaNews: The burden of economic crisis on the maritime sector was forecasted to decrease in 2014. How would you like comment on this?
Lütfi Elvan: Now after the six years that 2008 financial crisis has been prevailing, our Country and maritime sector have not yet fully recovered from it’s effects. As you know, with the 2008 crisis, the financing of global trade has collapsed. Maritime transportation is a sector of key importance for global trade. Approximately 90% of all tonnage of world trade is carried by sea. For that reason, maritime transportation was one of the primary sectors to suffer from the crisis. We’ve had our share of these developments, too. On the other hand; as the world population grows and the needs grow accordingly; the effects of the crisis will be reduced. The forecast by IMF estimating an increase in the world trade by 4.3% in 2014 and by 5.3% in 2015 enables us to look to the future with hope.
The main components of the sector, the trade fleet, ports, shipbuilding and ship recycling industries, are amongst the strategic sectors creating high added-value. It can clearly be said that, we have a lot of opportunities and experience in almost all of these strategic sectors enough to make us be optimistic.
Amongst the 30 countries controlling the 94% of world maritime fleet, Turkish-owned fleet was in the 19th place with a capacity of 9 Millions DWT in 2003; and climbed up to the 13rd place in 2013 by reaching a capacity of 30,4 millions DWT.
In parallel with the maritime transportation, our Country’s ports are also growing tremendously. The total amount of cargo handled in our ports was 190 million tons in 2002, and reached to 384 million tons in 2013 with an increase of 102%. The installed capacity of our ports is 548 million tons and, together with the planned capacity, this will reach to 867 million tons.
The quantity of containers handled in our ports was 1.9 million TEUs in 2002, and, by an an increase of 316%, 7.9 million TEU ‘s were handled in 2013.
In shipbuilding sector, we are not in a competitive position yet but however, a rapid momentum of growth is expected.
The competitiveness of Turkish shipyards is tremendously increasing in the field of maintenance and repair and, Turkey is rapidly becoming an important base in the world in this field.
Number of cruise ships calling to our ports was 821 in 2002, and with an increase of 92%, 1572 cruise ship calls were achieved in 2013. Besides; the number of cruise passengers who visit our ports was 332,702 in 2002, and with an increase of 574%, this number reached to 2,240,776. Thus, our country climbed up to the 4th rank in cruise tourism after Spain, Italy and Greece.
With a detention ratio of 24%, the Turkish merchant fleet was Black-listed by Paris Memorandum on Port State Control (Paris MoU) in 2002, but in 2008, enlisted in the White List by a 7% detention rate and in 2013, this rate has been further improved to 2.99%. This was the least detention rate achieved so far and is the best rate of all times. As a result, Turkey has maintained a stable place in the White List within the last 5 years and our Turkish-flagged ships has gained a good reputation in the world’s ports.
Establishing the Turkish P & I Protection and Indemnity Insurance Company was one of our targets for the year of 2023, and it was realised in January this year, with which insurance of 305 ships completed in the first 3 months.
By training the seafarers accordingly with the international regulations, the Turkish maritime education maintained its place in the whitelist and with a number of 178,504 active seamen, we rank 7th in the world.
Turkey has become a brand name in the field of small tonnage and mega yacht building; so that despite the crisis in the industry, still ranks 5th of the world in the list of global shipbuilding orders with 82 vessels ordered as of the end of 2012; this compares to 53 shipbuilding orders that was received in 2003.
The population of our country is expected to reach 90 million in 2035 and transportation volume is estimated to reach 5 trillion ton cargo-km and 500 billion passenger-km at same date; this clearly shows the importance of infrastructure investments that should be in accordance with this target.
Considering that the increase of trend would continue in this way; the road transportation would have difficulty to meet the demand step by step and for this reason; effective use of maritime transportation would become essential.
At this point, capacity expansion and modernization works in our ports continue in full effect; and the construction of “North Aegean-Çandarlı Port” goes ahead and when completed, it will be among the ten largest container ports in Europe. In addition, the tender completed for building the infrastructure of Filyos Port which will handle 25 million tons of cargo per year and be the 3rd largest port of our country.
While there have been positive developments in market conditions, we observe that the effects of crisis do still prevail, especially on the freight rates. Oversupply problem in the maritime markets further deepen the effects of crisis. However, shipping always survived in the past and will survive in the future. We should never be so pessimistic. Despite the crisis, we will continue to grow with great perseverance and decisiveness. Because as far as the propellers rotate and investments continue in the maritime sector; Turkey will continue on her route to be one of the 10 largest economies of the world.
SeaNews: Turkish shipbuilding industry is suffering due to the excess supply of ships in the world and the difficulty to compete with the Far-Eastern shipyards due to cost. What kind of support provided so far and what are the prospects for the future?
Lütfi Elvan : As for the ship building industry;
-The unfinished ship investments in our shipyards were covered by the Credit Guarantee Fund (CGF) in 2010 and, to date, 196.1 million TL of guarantee approved by CGF for 19 ship investments of 10 different companies. In 2012, the grace period was increased from 3 to 4 years for investment credits and from 1 to 2 years for operating loans. The maturity period for operating loans was extended from 3 to 4 years. The maturity period for investment credits is 8 years.
-Shipbuilding investments used to benefit from Government supports according to 2nd Region criteria; but after the crisis; included in the investments which benefit the support in accordance with 5th Region criteria. (Benefits include VAT exception, customs exemption, investment allowance, support for the employer’s share of insurance premiums, interest rates support)
-Through an amendment in the Law, the rents that shipyards used to pay for the land which actually belong to the State, has been lifted. (Shipyard rental fee to be paid to the state; when taking into account shipyards at Tuzla region; costs $ 70 million for year 2013 only.)
-Primarily for the defense industry, especially during the global crisis, 170 new ships of various size has been ordered to Turkish shipyards by Public organizations and companies.
-In addition to the existing credit possibilities and letters of guarantee provided by Turkish Eximbank through “Shipbuilding and Export Financing Program”, possibilities for “Country Loans” to ship projects for export purposes being assessed.
-Negotiations with the industry stakeholders for alternative financing and / or operating models to renew our coaster fleet and search for domestic – foreign funding continue.
SeaNews: In which stage is the work to finalize the Organizational Regulations for Pilotage and Towage Services? What are your plans to improve the quality and efficiency of Pilotage services, which are aiming to ensure the maritime safety?
To read the interview in full extent, refer to the June issue of SeaNews Magazine (Paperback). You can subscribe the paperback magazine by clicking the link below: