Last weekend, there was an amazing ceremony of first BALO train. Minister of Transport of Turkey, President of TOBB, Head of TCDD and Member of Board of Rail Cargo had attended the ceremony and declared their full support to BALO project. The ceremony smelled a little bit “governmental”, but speeches are generally “to the point”. Furthermore, well-equipped Manisa Station seems ready for BALO trains. Not only the participants, but also the big investment in this project and the long preparation period show that this project is on focus, and will not be short-dated.
But among many other container trains with almost similar routes in Europe most of which are suffering from unbalanced traffic to and from Turkey, and fatal competition which has killed many other new projects, the hardest question is this: Can BALO succeed? Let’s see what BALO has in hand, and what has not:
Customer portfolio in Turkey
It’s for sure that BALO does not have to start from the beginning. Being an NGO, BALO had a fast and easy access to market with the help of other NGOs like Utikad and DTD. The great support coming from TOBB may also be advantage in the future as well. However, being focused mainly at western side of Turkey, BALO has to convince a customer portfolio which until now used trucks or container vessels. There are only a few companies with railway experience in that region. Despite a well-prepared opening ceremony, a start with 8 containers sounds weak.
A big question mark about BALO train is the place of departure. Although Manisa has one of the fastest developing “industrial zones” of Turkey with railway connection, BALO train departed from Manisa station, rather than MOS terminal. Without doubt, MOS companies will (and must) be the backbone of this train.
Customer portfolio in Europe
Of course there’s no evidence about this, since not first BALO train will return back from Europe next week. Rail Cargo CEO, Erik Regter, had declared that BALO project will have Rail Cargo’s full support. But everybody knows that Rail Cargo is one of the strongest players in container train traffic between Turkey and Europe. Furthermore, unlike IFB, Rail Cargo prefers to own clients rather than working with forwarders. Then the question comes: How far will Rail Cargo go about sharing its own customers with BALO?
Adding new European companies to portfolio in short time by self efforts of BALO? Honestly, that is almost impossible.
Competition with railway operators
BALO has one main advantage. All other operators are mainly competing for customers in Marmara region (Istanbul, Izmit, Adapazari & Bursa). BALO, starting with Manisa, may be able to walk alone in Aegean region (Izmir, Manisa & Denizli). The rates, if BALO can stick to these rates for a long time, are competetive enough to convince customers in that region. There are a few companies already using railway containers in that region, so others need to be convinced for a shift to railway with lower rates and higher service quality.
BALO will not easily get a market share from Marmara region, since all container traffic owners (Exif, IFB, AdreaCombi, Borusan and Omfesa) offer very competetive rates in westbound traffic and almost similar service.
Of course, having a budget for warm-up period is very important where BALO will have time to show its performance even with low capacity usage. But it must be taken into consideration that, the recently started projects like Borusan Train or Bosphorus Shuttle of Schenker must have similar budgets as well.
Competition in new markets
BALO selected 2 destinations in Germany, Cologne and Munich. Cologne is already being used by IFB and Omfesa/Schenker. Muhich is a good choice where none of the container trains use. Based on a similar reason, Schenker announced Bosphorus Shuttle to have a stop in Nürnberg. So BALO may not be alone in Europe any more.
Within Turkey, BALO seems not to satisfy with Aegean region, and wants to add Ankara, Konya and Eskisehir to its network. Bandirma will be a rail hub for all these regions, and all these regions will be introduced by direct railway container traffic to Europe by BALO’s trains. Of course, similar problem of customers get used to trucks is the first barrier for BALO. The time limitations of Turkish exporters will be the second barrier. A well-designed and well-executed system from the beginning will be very critical for the success in these regions.
Competetion with trucks and lines
This will be the main challenge of BALO train. The current logistic partners of Aegean exporters, trucks and lines, have very stable and efficient solutions. On one hand, RORO from Cesme to Trieste provides an easy, fast and cheap solution for trucks. On the other hand, railway connected Alsancak and almost connected (via Bicerova) Aliaga ports offer competitive service for the region. In near future, the biggest container port of Turkey, Candarli, will also start to provide competitive service as well.
I believe BALO will differ from other services mainly with service quality. Unlike others, BALO is offering some services from the beginning. A dedicated container handling service at terminals, easy tracking systems for every container, easy access to reservation system for clients, 5 days of transit time (which will be a revolution if succeeded).. None of the existing railway container services offer all at the same time. All these will provide reliability, of course if realized. The first train had left Turkey almost in 36 hours, from Manisa to Kapikule, which is really an unbelievable time.
Coming to question of article.. Will BALO train succeed? Although there are a number of unsuccessful experiences, BALO started with some “cons” none of others had. The answer will be up to first year’s performance of BALO, the performance of competitors, the investments in railway infrastructure in Turkey and regulations in land transport as well. In any case, railway market, as a whole, needs successes to gain confidence and power. So we wish BALO a very good luck and success.
What is BALO?
BALO (Great Anatolia Logistics Organization) is founded as a joint venture company by TOBB (The Union of Chambers and Commodity Exchanges of Turkey), 75 Chambers of Commerce, Chambers of Commerce and Industry, Commodity Exchanges, 15 Organized Industrial Zones, UMAT and UTIKAD (Association of International Forwarding and Logistics Service Providers) with a mission of developing cheap, regular container traffic from and to all important industrial regions of Turkey to support the 2023 targets in logistics.
Cover Photo: Balo ©
Categories: Railway Companies