The number of Turkish flagged ships decreased by 55 percent

According to the report announced by the Turkish Shipowners Association yesterday, the number of Turkish-flagged ships decreased by 55 percent in 2022, when the Turkish-owned fleet grew by more than 30 percent. In addition to the fact that foreign financial institutions do not prefer Turkish flagged ships, the tax burden on the domestic flag and the harsh conditions of labor law are cited as the most important reasons why shipowners flee to foreign flags.

In the seaway, where more than 80 percent of global trade is carried, record increases in freight with the pandemic mobilized shipowners to invest in ships, and the Turkish-owned fleet entered a growth trend again in 2021 for the first time after 2013. The Turkish-owned fleet of 1000 GT and above, which ranked 15th globally in January 2021, rose to 14th place in January 2022, almost 10-folding global growth. Shipowners’ ship investments continued throughout 2022. The fleet, which was approximately 28 million DWT in January 2021, increased to 31 million DWT in January 2022 and 41 million DWT in January 2023.

Local flag share decreased to 13%

In recent weeks, Minister of Transport and Infrastructure Abdülkadir Uraloğlu announced that as of July 2023, the Turkish-owned fleet reached 45 million DWT and ranked 12th globally. Turkish Shipowners Association published a report yesterday and detailed the current data of the domestic merchant fleet and its development on a segment basis.

According to the news by Aysel Yücel from Ekonomim.com, although there are local and global fleet data for 2022 in the Maritime Transportation 2022/2023 Outlook Report, according to the information provided by the Turkish Shipowners Association, as of November 1, 2023, the Turkish merchant fleet capacity is 49, It reached 7 million DWT and the number of ships reached 1786. Thus, the growth rate in the last 19 months was 67 percent. One of the most striking points in the report was the decrease in the number of Turkish flagged ships despite the rapid growth in the fleet. By the end of 2022, the share of the Turkish flag in the fleet decreased from 16.82 percent to 13.4 percent. On the other hand, the number of ships flying the Turkish flag in 2022 decreased by 55 percent, from 795 to 359. Türkiye ranks 32nd in the flag rankings.

“Changing to the Turkish flag should be encouraged”

Shipowners said that one of the most important reasons for local shipowners to switch to foreign flags is that easy flags provide a sustainable competitive advantage. Local shipowners want to fly the Turkish flag on their ships, but they state that the conditions must be eased for this.

In order to encourage the return to the Turkish Flag, it is requested that studies be carried out to eliminate or alleviate the factors that cause a significant disadvantage compared to the easier flags.

Fleet value reached $ billion in 2020

According to the report of the Turkish Shipowners Association, while the domestic fleet grew by over 30 percent last year, global growth remained below 4 percent. In the ‘Highest Increase in Global Fleet DWT Rankings in 2022’ category, the Turkish Merchant Fleet ranked 2nd among 30 countries in terms of growth worldwide; Meanwhile, there was a decrease in the fleets of 12 of 30 countries. The Turkish Merchant Fleet constitutes 1.77 percent of the world fleet as DWT and 3.48 percent in number. The value of the Turkish-owned fleet, which was approximately $9 billion in 2019, has almost tripled in just 3 years. The value of our fleet in August 2023 reached $19.7 billion. The domestic fleet, which ranks 12th globally on the basis of all segments, ranks 9th in dry cargo with a share of 2.16 percent. In the World General Cargo Ships Ranking, Turkey ranks 5th with a share of 4.7 percent. Turkish Shipowners Association General Coordinator Hüseyin Çınar said, “This unique report was prepared by the Turkish Shipowners Association Team and includes many numerical titles that are known or unknown about the Turkish transportation sector until now. This report provides a very detailed map of Turkish Maritime Transport and many numerical data about the sector. He emphasized the importance of the report prepared by the union by saying, “Turkish Shipowners Association prepares this report every year and it is shared with the whole world maritime.”

Taxes and other compulsory payments are 35 percent more in the local flag

Shipowners list the main reasons for the flight from the Turkish flag to the foreign flag in the maritime merchant fleet as follows:

Flags of countries such as Malta, Panama and the Marshall Islands are more easily transported than the Turkish flag.

Taxes, other mandatory expenses and personnel costs for the Turkish flag are approximately 35 percent higher than for “easy flags”.

International financial institutions do not favor the financing of high-tonnage ships purchased by Turkish shipowners.

Freight revenues of Turkish-owned ships flying a foreign flag can be kept in foreign banks.

The revenues of international cargoes are higher than cabotage cargoes.

The low number of compulsory personnel on a foreign flag provides a cost advantage. – Newly graduated officers prefer foreign flag ships to benefit from paid military service.

Turkish flagged ships do not have the flexibility to employ foreign personnel. (7Deniz)