Recently we spoke to Emrah Erkut, the Managing Director of MEL Logistics, one of New Silk Road Network's (NSRN) founding members. Mr Erkut, a dedicated and hardworking individual, who strives to provide logistics solutions for CIS countries, the Middle East and Central Asia. We learnt about the knowledge and experience required in operating in Central Asia, as each country is fraught with complex bureaucratic processes.
Mr Erkut also shared his experience with solidifying their rail freight unit during the coronavirus pandemic, which was welcomed as a silver lining. Finally, he also stressed on the various aspects of rail freight that made it more stable and secure as compared to other logistics options. Mr Erkut's lively and determined nature conveyed to us that he received challenges, and emerged with the right solution in mind.
In conversation with Emrah Erkut…
NSRN: MEL Logistics is a relatively young company, and it is making its way as a key forwarding unit in Turkey and along the New Silk Road. What was the motivation to start MEL? And what are your future expectations from the company?
Emrah: MEL Logistics was established in May 2018. It is a new addition to our family's business group, which was founded in 1984. The idea to start MEL was to have an undoubtedly different set up from other companies because we aimed to provide service to Central Asia, CIS countries and the Middle East. The other companies in the group are mainly focused on European traffic and intercontinental sea freight and generally relating to the Turkish sea base.
The idea of the business group was to expand our reach to other business areas, especially in the regions that I mentioned because there is a huge demand for logistics. Though we may be young, we have an experience of 21 years as a family-owned business group and have professionally managed our logistics business. During the coronavirus pandemic, we learnt quite a lot, and it had some influence on our plans, but we knew we had to adapt and change according to the situation. Eighty per cent of the logistics stopped, but it was also an excellent opportunity to work with the railway. We had practised rail freight a bit before, but only on specific routes like EU-Turkey or vice a versa while moving our equipment like swap bodies or containers. But the situation changed the course for our future as we had to use wagons, or hire container wagons, and we decided to step up and become railway service providers. In that period, we loaded more than 100 containers successfully. Generally, we prefer to make long term plans, but unfortunately, the pandemic made it a little complicated. Back then, we had to plan daily; at least now we can suit ourselves with monthly goals. We have been investing quite a lot in different kinds of equipment such as 45 FT swap body equipment, which is a significant advantage for us and our multimodal and intermodal services. We aim to be the bridge between Europe and Asia.
NSRN: What does your day to day look like? What are the roles and responsibilities that you overlook?
Emrah: I spend a long time in the office, and I think I am a bit of a workaholic (laughs), my day never finishes. I work a minimum of 10 hours every day, and apart from this I have an office space in my home, a sort of real 'home-office'. I turned one of my rooms at home into an actual functional office. I end up working on holidays too. We never give up on looking for alternative solutions, that is what we do. We are a young and energetic company, and the management has selected the team with the same outlook. Because of this reason, my team and I work a lot.
NSRN: As a trucking company, you have a stable connection in Central Asia, what are the benefits that you offer in the region? Moreover, what kind of challenges do you see while functioning in this geographical area?
Emrah: We have a stable and robust connection in Central Asia and the regions around. We are mapping a wide variety of solutions for all the different needs that this region has. Every country in the CIS region has different kinds of procedures. It needs lots of experience and know-how to provide the exact solution which is specific to the area. This is one of the biggest advantages that we offer to our partners and clients. While working with the countries in this region, your job is not just to be the logistics provider. It starts with consulting from beginning to the end, and even starting from the trading phase sometimes. The region is a bit complex, but that's what I like about it. We also have a significant advantage as we are located in Turkey, which connects the two continents. Turkey is a natural intercontinental hub, giving us cost advantages in managing cross trading etc.
There are many challenges in this region too. The main trouble is the bureaucratic procedures for each of these countries. They all have different regulations, which means that you need to have much experience and good connection with partners in the areas to stay updated. Moreover, it would help if you had practised in his region before. We are one step forward in this particular region because we offer tailored solutions to the varied needs of the customers there.
NSRN: You have gained profitable business with the loading of rail wagons in the past couple of months. This has also allowed you to create a strong foundation for your operations in Turkey. Can you tell us a little more about these developments?
Emrah: Railway has always been a part of our business. As I mentioned earlier, it was usually between the EU and Turkey. Before the pandemic, it was only a part of our business. But when the lockdown began and the borders closed, the regular logistics lanes were restricted, and it was an excellent opportunity and a ripe time to increase our rail activities. We switched eighty per cent of our active shipments to the railway. This also allowed us to keep our customers' trade flowing. Apart from the active shipments, we also started receiving new ones by offering railway services. We also invested in eighty 40FT containers to bypass the shortage of wagon availability.
At one point, people had to wait for one or one and a half months to avail a single wagon. Thankfully, we signed a fair contract with the Turkish National railway company, a semi-government company that manages the railway system. We started using their wagons and hiring container wagons to move cargo within Central Asia. We successfully managed to handle more than 300 wagons in a couple of months. It was a good flow. When the pandemic started, our staff switched to home-office mode, and all these operations were conducted with the staff working from their respective homes. I am thankful to have such an energetic team that is also so supportive.
NSRN: The coronavirus pandemic had affected businesses across the world, were there any effects felt by your company? How has the recovery been? Do you think post-pandemic, rail freight has emerged as a suitable alternative as compared to air and sea freight?
Emrah: It is very different for all of us because no one has ever seen such a situation, in both personal and corporate spheres. This was new for everyone, and we were a bit shocked with the closing of the borders and the slowdown, as we did not know what measures to take. So, the days were a bit tough in between.
When we began our operations with rail during the pandemic, we realized that the railway is one of the most stable services which is not affected even when there are serious emergencies, such as the coronavirus pandemic. The only effect that we noticed was the heavy traffic across the rail routes. Even the Turkish National Railway told us that they had never seen so much traffic since 150 years of its existence (laughs). But this reality is a perfect opportunity for us to know that rail freight works well. We have also shown our partners and clients that this is a stable service. Apart from being so steady, we have demonstrated how cost-effective it has been. There is some specific cargo that is suitable for rail, such as bulky cargo. For example, we had 16.5m long pipes that we usually moved to Azerbaijan, Iran and Iraq using oversized trucks in the past. With the railway, we have 17.5m long wagons, which carry these long pipes on standard tariff as compared to oversized land transport, making a huge difference.
As we experience these advantages, we offer them to our clients. So far, we have served 30 per cent of our clients this way, and within this period we continue with our rail services. Honestly, we acted right when the pandemic began, which helped. Not all my friends in the field leveraged this opportunity, and some saw losses at a particular stage. Since we are part of a family-owned business group, we have their longstanding experience too, which helped to drive this decision. This decision also prevented our staff from incurring losses, and now they are back in the office with some extra measures and protocols in place. The recovery has begun, and a part of that recovery has been railway. As I said, it was a small part of our business before, and now it has become one of our core business with its own client portfolio. Yes, at the time it was an emergency button, but now it is an opportunity to have a department for rail.