The e-commerce industry has been growing rapidly since the pandemic. Likewise, the cargo market, in which the industry is advancing together on this path, is developing day by day. To respond to the increasing customer demands of the players in the market, we have dug into the latest situation and the future of the cargo sector, as it is in the process of development and improvement.
In parallel with the global pandemic, the e-commerce market has grown rapidly in the last two years, both in the world and in Turkey, and this growth is expected to continue. Considering that the global e-commerce market share is 4.9 trillion dollars, the growth rate of the sector within the borders of Turkey is not surprising. Door-to-door marketing is not a new concept, but it has developed so much in the last few years that e-commerce marketing methods have reached completely different dimensions. Today, especially consumers of Generation Y and Z do research on the Internet before purchasing any product, examine the customer experiences and often make the purchase through online channels. At this point, the growing structure of e-commerce volume leads to the transformation of many sectors and businesses. The first of these is the cargo and logistics sector.
Targets are Growing in e-commerce
In the last few years, e-commerce has experienced its fastest growth ever in all countries and continues to grow. The biggest trigger in this growth was the pandemic. The record increase in e-commerce during the pandemic has enabled e-commerce and merchandising to become strategic partners that complement each other. According to the report “Digitalization Trends in the Retail Sector and Investments in the Light of Digitalization” published by KPMG Turkey in April 2022, the global e-commerce volume, which reached $4.9 trillion in 2021, is estimated to exceed $5.5 trillion shortly.
On the other hand, there was an increase of 165% in Turkey’s e-commerce market in 2020. In addition, it was reported that reached 220 billion TL in one year, reaching the level that is expected to reach an average of three years. As of the first six months of 2022, Turkey’s e-commerce volume increased by 116 percent compared to the same period of the previous year and amounted to 348 billion TL. In the first six months of 2022, the number of orders increased by 38 percent from 1 billion 654 million to 2 billion 294 million.
By 2025, the Turkish e-commerce market is expected to reach a value of 638 billion TL. Again, according to KPMG’s research, while the pre-pandemic mobile e-commerce market in Turkey had 41 percent of the total e-commerce market size, this rate increased to 53 percent with the pandemic. It is estimated that this rate will reach 80 percent by 2025.
Improvement is Conditional for the Future of the Market
The Turkish cargo market continues to grow with the limited physical shopping opportunities that emerged with the COVID pandemic and the rise of e-commerce accelerated by working from home. According to the research of the Turkish Cargo, Courier, and Logistics Operators Association (KARID), cargo is delivered to 15 million households in a day on average in Turkey. Considering the forecasts of these figures, the market is expected to grow at a growth rate of 15 percent in the next five years. The fact that the growth chart in the market put significant pressure on the cargo players enabled the leading cargo players to invest 10 billion TL in the sector last year.
Despite the investments made and the growth potential of the market, the Turkish cargo market is unfortunately still struggling to meet the current capacity demand. The market is short of capacity by about 30 percent on an average day. On-time delivery performance varies between 70 percent and 95 percent for industry players. On the other hand, the sector is transforming into a competitive environment that is diversified with changes in consumer expectations and new business models. This not only forces the existing players in the market to change but also keeps the competitive environment alive.
All improvements from digitalization to operational excellence and sustainability need to focus on improving the customer experience at customer journey steps such as presales, service, delivery, and after-sales. Thus, cargo players can gain the right to stay in the market or increase their resistance against increasing competition.
What Awaits the Industry in the Future
As in all sectors, the cargo sector will also develop in the future under the influence of digitalization and sustainability. In the future, cargo industry players will need to improve on every step of the journey to maintain their competitive advantage and at the same time respond to increasing customer demands. It is a must that new updates come, especially in the understanding of service and delivery steps in the customer journey.
The segments in the Turkish cargo market consist of C2X (High-value-VIP and middle-income, mass) and B2X (Large companies, e-commerce, SME, and SoHo-small office/home office). While reliability, service quality, and on-time and fast delivery are important for high-value customers in the retail segment, purchasing factors such as more affordable prices and after-sales service quality come to the fore for mass and wealthy customers. In the corporate segment, large companies and e-commerce customers value operational excellence and system integration in transfer center technologies, along with innovative products and services, while SMEs and SoHos value price and prevalence.
Innovative Products will Shape The Future of the Industry
Time-spaced or scheduled delivery, evening home delivery, same-day delivery, estimated delivery time, and forwarding delivery to neighbors or families will be key examples of innovative products and services that shape the future of the cargo industry in Turkey. However, the biggest handicap at this point is that customers do not want to pay more for these services even though their demands for innovative products and services increase. Therefore, for the near future, differentiated pricing policies seem to be a good alternative to attract more customers.
According to the industry standard in Turkey, shipments are delivered in 1-2 days for up to 600 kilometers and in 2-4 days for longer distances. The delivery time commitments given by different cargo players to their customers may vary. Price, availability, and prevalence are among the factors that affect the decision-making process for cargo shippers. While customers demand uninterrupted service quality and easy access to customer services, issues such as transparency in delivery, improved branch and agency experience, and easy changes in delivery details are among the prominent expectations.
How Functional is Drone Delivery?
Cargo delivery by drones has been a hot topic since the day drones entered our lives. Jeff Bezos, the founder of Amazon, was the most enthusiastic about this issue. Amazon, whose studies on this issue -which it put on its agenda in 2013- have just yielded results, announced that they started to deliver by drone to some states in the USA in December 2022 with its service called “Prime Air”. Although it is stated that only certain special products can be transported with Prime Air, no detailed explanation was made about these products. Drones, which can carry packages of 2 to 3 kilograms, can travel 50 kilometers per hour and have an altitude of 120 meters.
Global logistics giant FedEx, which signed an agreement with the aviation company Elroy Air, which produces cargo planes, in March 2022, has also made significant progress in drone delivery. The company announced that it is preparing to make the first drone deliveries in 2023. Yurtiçi Kargo was the first company to deliver using a drone in Turkey. The company, which made its first drone delivery in the last days of 2022, says that 2023 will be the year of autonomy. According to the statement made after the flight in Ankara, autonomous cargo UAVs can carry 25x25x15 cargo up to 5 kilos and can serve at temperatures between minus 20 and 50 degrees.
This growth in the e-commerce market affects the cargo industry in three aspects, especially for corporate and individual shipments:
- Changing consumer habits: Consumers began to order a wider variety of products (tires, furniture, white goods) and the frequency of shipments increased due to new online services such as fast e-commerce.
- The emergence of new users from different segments and geographies in Turkey: The number of online shoppers is expected to reach 45 million in 2026, representing more than 70 percent of the total accessible population (ages 16-74).
- Many traditional retailers are seeking market opportunities: The growing number of online marketplaces and e-commerce channels from Instagram to websites due to this fact.
The Cargo and Logistics Industry is One of the Most Important Bridges in Trade
President of the Turkish Cargo, Courier and Logistics Operators Association Mr. Fatih Önyol stated: “Today, the cargo and logistics industry, which provides services to our citizens all over Turkey with its more than 200 thousand employees, employs millions of people if you consider the supplier companies. More than 50 thousand vehicles in the industry make 100 thousand kilometers on the roads every day. The industry contributes over 100 billion Liras to the Turkish economy. The cargo and logistics industry has become one of the most important bridges of trade. Our logistics power does not only consist of the operations we carry out within our borders. We carry Turkish trade all over the world.
The expectation of the industry for the next year is to reach 4 billion 685 million units with an increase of 40 percent. Apart from e-commerce cargoes, there are also cargoes going between businesses. Investment is essential to meet these growth expectations healthily. Despite the fluctuations in the economy, the industry has invested 10 billion Liras last year. The old cargo and logistics industry no longer exists. In the last few years, we have created a cargo and logistics industry that can easily meet all demands.”
Today, we can see the clues that we will