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Egypt's Turmoil Batters Turkey's Exports

A container ship heads south in the Suez Canal toward Suez, Egypt, on Apr. 6

Photograph by Kristian Helgesen/Bloomberg

A container ship heads south in the Suez Canal toward Suez, Egypt, on Apr. 6

Turkey sells one-fifth of its exports to customers in the Middle East, and its reliance on that market has tripled in the past decade. Now the civil war in Syria and strife in Egypt are putting that growth in jeopardy. Turkish trucks used to reach the Persian Gulf via Syria, but the civil war shut that route down. The solution was to ship trucks in specialized vessels nicknamed ro-ros (for roll on/roll off) to Egyptian ports. There the trucks drive off the vessels and go on their way.

That trade route became problematic after the Egyptian army toppled Islamist President Mohamed Mursi on July 3. Since then, Turkish exports shipped through Egypt’s ports have dropped as much as 30 percent, according to data from OSF International Logistics Services, a privately held transport company in Turkey. This comes on top of a 5 percent drop in exports to 10 Middle Eastern countries in June, Turkey’s statistics office shows. “Nobody seems to realize there is a very serious problem here,” says Mustafa Yilmaz, owner of Cem-Ay International Transportation. “We are losing trade just because of political developments with those countries.”

Yilmaz is referring to the recent tension between Turkey and Egypt, as well as with backers of the Egyptian military such as Saudi Arabia. Turkish Prime Minister Recep Tayyip Erdoğan has opposed the Egyptian army’s violent crackdown on pro-Mursi protests. Turkish transport executives complain that animosity toward Turkey and a breakdown of order in Egypt have increased the time needed to get clearance from Egyptian port and customs agents for Turkish trucks to drive through the country. “After the tensions in Egypt increased, government offices can’t finalize procedures easily,” says Ali Serdar Kocaoglu, general manager of OSF. “Bureaucracy is difficult to deal with in any country, but lately in Egypt it has become a lot more difficult to deal with. Exports through Egypt can only continue if tensions there do not increase.”

As further evidence of Egypt’s intransigence, Yilmaz of Cem-Ay International points to the actions of the Egyptian government, which he says has seized “100 Turkish trucks because they couldn’t pay certain fees.” Egyptian Major General Ahmed Naguib, head of the Port Said Ports Authority, notes that maritime agreements between the two countries have not changed, and that any difficulties the Turks have encountered are unrelated to the war of words with Egypt.

Issues involving Egypt will probably be resolved within a month, says Zuhal Mansfield, head of the Turkey-Egypt Business Council in Istanbul. “At the moment there is not a big problem with Egypt with regard to transportation of Turkish goods,” he says. Others take a darker view. “Turkey has increased its exports to the Middle East region,” says Nihan Ziya-Erdem, an economist at Turkiye Garanti Bankasi. “But this contribution will go down along with increasing tensions there.”

The bottom line: The Middle East accounts for a fifth of Turkey’s total exports. A dispute with Egypt could hurt that trade.

With Ola Galal
Ant is a reporter for Bloomberg News in Ankara.
Ersoy is a reporter for Bloomberg News in Istanbul.

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