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Greenbrier to take critical steps in Turkey this year

Greenbrier, the US company supplying railroad equipments and related services, has focused on Turkish market for a while.

We had an interview with Mr Adem Saglik, the Assistant Vice President for International Marketing, to get more details about Greenbrier’s future plans about Turkey.

Thank you for accepting our interview request Mr Saglik. Could we have a few words about you?

I have been in the rail industry for about 8 years. I have spent considerable time focusing on the European, CIS, Middle East, and North African markets. Currently, I am the Assistant Vice President for International Marketing for The Greenbrier Companies, Inc. My responsibility is to develop key growth initiatives for Greenbrier outside of North America.

Greenbrier’s name is being heard  frequently in Turkish market for a while. What takes your interest in Turkish market?

We have a favorable long-term view of the rail freight market in Turkey due to its geographically strategic location acting as a transit hub on the China-Europe corridor, the liberalization scheme which will bring to the market new rail operators and logistics service providers offering more competitive solutions, the vision and focus by the government to increase the share of rail in freight transportation, and the positive economic outlook where exports and imports continue to increase across a number of commodities.

Greenbrier has various services about rail. What’s your scope in Turkey?

We are currently evaluating various services that we can potentially introduce in Turkey ranging from introduction of high quality and more innovative wagons to wagon management, leasing and repair. Greenbrier is actively engaged in all of these services around the world.

Considering the modal share, rail freight is not very popular in Turkey. Do you think this will change?

We believe there is a lot of unlocked potential in the Turkish rail freight market. According to our estimates, the transport industry in Turkey will grow by more than 10% by 2023. Given the level of economic activity and the size of the country, rail has to take an even bigger role in freight transportation. The current modal share of 4% shows significant underutilization of rail in freight transportation. Rail is a proven solution for freight transportation in many developed countries and economies due to its increased efficiency, contribution towards more energy independence, and lower environmental impact.  The logistic companies in Turkey are looking for improved technical solutions and are able to change transport from road to rail transport if more efficient and higher quality freight wagons and locomotives are available.

Not many global companies have made investments in Turkey yet, despite liberalization is on the table for a few years. What may be the reason?

Whenever there is a fundamental change in the way rail freight environment is regulated, we expect that there will be a transition period where uncertainty will exist and changes will take longer to be incorporated in the new environment. While liberalization of the Turkish railway market will present future opportunities, the current pace of change has been slower than we had expected. However, with most of the regulation now in place, we see a clearer path to increasing participation and activity by new players in the rail freight market.

What difference do you think Greenbrier can make for Turkish rail market?

What makes Greenbrier unique is that we are able to develop and to produce a diverse portfolio of product offerings and solutions based on our vast global footprint, expertise and experience, working according to various technical standards, including TSI in Europe. We offer an integrated business model where we can deliver value to our customers through new wagon manufacturing, maintenance, management, and leasing.  We believe the same approach will help us to establish a strong Greenbrier presence in the Turkish market where our portfolio already includes solutions that will meet the needs of our new customers. One example for different approaches is actually the first transport of finished vehicles from the production plant in Izmit to the ports in South East of Turkey over a distance of more as 800 Km.

This is a real way for changing of transport from road to rail and a good way to show environmental solutions.

TCDD Tasimacilik still dominates the market and currently buys wagons from TCDD subsidiaries. Will you focus only on private companies?

We see opportunities to serve both TCDD and private companies. We strongly believe we are uniquely positioned to offer innovative wagons that meet high quality standards, as well as harsh environmental and operational requirements as proven in North America, South America, Europe, and Middle East. In addition, our ability to develop custom solutions will distinguish Greenbrier from others.

Profit margins are low in rail freight. Will rail logistics companies prefer lease of wagons instead of buying them?

We believe decision to buy vs. lease depends on the specific operational model adopted by rail operators, logistic companies, or shipping companies. The merit of this approach must be carefully evaluated based on availability of CAPEX resources, scale of freight volumes, and other relevant criteria. For new logistics companies, leasing may be more preferable option for financial flexibility while wagon ownership in the long term may be more preferable to established rail shippers.

Do you have plans for producing freight wagons in Turkey?

This is still an ongoing assessment, but national requirements dictate that we localize in Turkey. We are currently looking at all options. We are interested in building strong partnerships for long-term success in Turkey, including the possible adaptation of existing facilities.

Will this production be only for Turkish market or do you target any other countries?

We believe there will be increasing demand for wagons for the domestic Turkish market due to forecasts of growing rail freight transportation and the current need to replace older wagons in service. The current capacity of the wagon suppliers may not be adequate to meet this demand; hence, we believe there will be significant opportunities for the Turkish domestic market itself. However, we fully expect that there will also be other opportunities to serve other countries and regions from Turkey in the future.

How will Greenbrier wagons differ from others?

At Greenbrier, we take pride in the quality of products and services that we offer to our customers. In North America, we are consistently ranked very high on TTX audits which is considered one of the most trusted industry quality metrics. We have implemented quality improvements in our manufacturing processes such as the Andon System and Kaizen approach to ensure we meet the highest quality expectations of our customers consistently. A wagon is a long-term asset and when our customers trust us with their wagon needs, we strive to deliver the best value over the life cycle of this asset.

You started supplying some parts from Turkey. How was your experience until now?

We do not yet have dedicated suppliers in Turkey, but we believe the local supply chain presents future opportunities to leverage the increasingly more sophisticated capabilities of the local supplier base. Once wagon building increases in Turkey, component and sub-assembly suppliers will enter the market, both Turkish and international. During the last year we started to buy some parts from a Turkish company for one European customer with very good result in quality and in time delivery.

Import of freight wagons is restricted until 2020. Local production has become “a must” in almost all rolling stock tenders. How does this effect your plans in Turkey?

We actually see this restriction as an opportunity to invest in local production of wagons in Turkey. We believe the increasing demand for wagons over the next decade will require an expanded supplier base which aligns well with our investment plans.

When will we be able to see Greenbrier’s investments in Turkey?

We are happy to see that Greenbrier has already made a difference in Turkey when Omsan Logistics has been able to conduct a trial run of the first ever domestic transportation of automobiles on rail using Greenbrier manufactured wagons. With a diverse offering of wagons, we are confident that we will be able to serve a diverse group of shippers in Turkey. Most importantly, with our experience we will able to introduce high quality custom and specialty wagons. We believe there will be some critical steps that we will take during 2018 and hope that we will be ready to serve the Turkish market soon afterwards.

Anything you want to add?

We hope that the government will keep its focus on improving the rail freight environment in order to reach its goals for 2023. The robust economic growth and increasingly more connected regions/countries on the Iron Silk Road will require more efficient and competitive solutions from the rail freight industry. Greenbrier is looking forward to being part of this transformation. Additionally, we are encouraged by the Turkish government’s support for strategic investment projects and we hope our investments may qualify for such support.

We thank you and wish you the best in Turkey.

Cover Photo: Greenbrier ©


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