Turkey's shipbuilding sector has been a dominant force in the specialty-vessel market for years, but it appears to be losing ground, based on a string of disappointing sales numbers.
Last month, sales of Turkish ships and yachts fell by more than 60 percent year on year, the latest data from the Turkish Exporters' Assembly (TIM) shows. Just $84 million in orders came in for the month, making shipbuilding the sector that lost the most export business in the Turkish economy. Eexport numbers are expected to shrink by 15 percent for the full year, and payrolls are already on the decline.
The problem, according to Ship, Yacht and Services Exporters' Association (GYHIB) chairman Cem Seven, is the high inflation rate that has afflicted Turkey's economy for years, alongside a weak exchange rate, limited access to finance and high interest rates on loans. These factors make it hard to keep costs down, and Turkish builders now have a hard time competing on price with premium yards in Norway.
He told Turkish outlet Ekonomim that some big names in Turkey are now looking to invest in shipbuilding abroad, given the obstacles at home. Specialist shipbuilder Tersan has already done so with the acquisition of Havyard Leirvik Shipyard.
Turkey's central bank is taking strong action to rein in runaway inflation through tight monetary policy, pushing its benchmark rate to an astonishing 49 percent in recent months (making bank lending expensive in the process). Though Turkey's domestic economy is strengthening, exporters like shipyards face headwinds for the next few years, according to the World Bank.
"Export growth is likely to be limited by the real appreciation of the [Turkish] lira, subdued euro area demand, and uncertainty surrounding trade policies in major economies," the World Bank said in its 2025 forecast.
Source : The Maritime Executive
