Christmas orders signal that 'recession will deepen'

The heavy traffic usually seen in export shipments before every Christmas is not happening this year. While logistics professionals state that there is a contraction of up to 50% in cargo volumes, there are interpretations that this decline is a signal that 2024 will also be a weak year.

International freight transport, considered one of the leading indicators of economic activity, points to a deepening of the stagnation in the global economy and a contraction in Turkey's exports. The Christmas activity, which usually occurs in the final quarter in normal years, has given way to a contraction this year. Sector representatives say that the decreasing cargo volumes in air, land, and sea transport are signals that not only Christmas but also 2024 will be weak.

Due to the contraction in the global economy, a decline had begun in Turkey's exports in many sectors, primarily textiles. While this trend continued in September, the hope of both exporters and logistics professionals was in the shopping to be done before Christmas. However, the fact that the first two weeks of October were also quiet after September caused this hope to fade.

DECLINE IN FREIGHT RATES CONTINUES

Barış Talay, CEO of EvoLog Lojistik, which mainly carries out international road transport to Europe, said that there is a minimum 15 percent contraction in his customers' cargo volumes. Stating that "the recession is making itself felt," Talay expressed that this contraction experienced before Christmas signals that the recession will deepen in 2024.

Mehmet Serkan Erdem, Turkey General Manager of the Italy-based shipping company Rif Line, also drew attention to the slowdown in the movement of goods, saying, "In normal periods, the period from September, October, November, and even until the middle of December is the time when we logistics professionals make the most shipments throughout the year for shipments to Europe. However, this year we are experiencing a serious contraction on the retail side, especially in textile products. We can say that the cargo volume in these sectors has decreased by nearly 50 percent compared to the same season last year." Erdem also underlined that they are not experiencing this contraction in shipments for the automotive sector. The decline in the Drewry World Container Index, which has returned to pre-pandemic levels and even dropped to 2016 levels on some routes, continued in the week of October 12. The index fell 1.5 percent last week to 1,369.06 dollars. Thus, the index has fallen 60.7 percent compared to the same week last year.

CONTRACTION IN PORTS ACCELERATED

The September port handling data announced by the General Directorate of Maritime Affairs this week also shows that the contraction is deepening. In August, the total amount of cargo handled in Turkish ports decreased by 2.5 percent on an annual basis to approximately 44 million tons. In September, the cargo traffic of the ports decreased by 2.9 percent compared to September of the previous year, reaching approximately 42.4 million tons. Aydın Erdemir, Chairman of the Board of the Turkish Port Operators Association (TÜRKLİM), said in a statement to our newspaper last month that a contraction in total cargo at the end of the year was inevitable. The September data further strengthened the possibility of a contraction in total cargo at the end of 2023 for the first time in 5 years. Thus, the amount of cargo handled in ports in the January-September 2023 period decreased by 4.18 percent on an annual basis to 391.8 million tons.

TURKISH EXPORTERS UNDER A DOUBLE PINCH

Logistics sector representatives say that in addition to the contraction in the global economy, an important reason for the decrease in Turkey's export cargo is the suppressed exchange rate. Reminding that the exchange rate has not risen in parallel with the increase in inflation, logistics professionals state that the global competitiveness of Turkish exporters has weakened in many sectors from textiles to shipbuilding, and that this situation has slowed down the movement of goods out of Turkey.

News Source: 12punto