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Home / Blogs / Turkey Earthquake: Key Industries, Exports, and Sites Impacted

Home / Turkey Earthquake: Key Industries, Exports, and Sites Impacted

RESILINC BLOGS
A crane lifts rubble from the 2023 Turkey Earthquake.

Turkey Earthquake: Key Industries, Exports, and Sites Impacted

Feb 28, 2023

Resilinc Editorial Team

Aftermath, Crisis Management, Extreme Weather

On February 6th, 2023, a 7.8 magnitude earthquake struck near Nurdagi, Gaziantep, Turkey. The following day, a three-month state of emergency was declared in 10 provinces with roughly 23 million people estimated to have been affected according to The World Health Organization (WHO).

Turkey wasn’t the only country impacted by this severe disaster, either. In total 15 countries were affected including Syria (which also declared a state of emergency), Cyprus, Lebanon, Jourdan, Palestine, Egypt, Southern Cyprus, Turkish Republic of Northern Cyprus (TRNC), Iran, Iraq, Saudi Arabia, Georgia, Russia, Azerbaijan, and Armenia.

According to Resilinc data, 574 suppliers were potentially impacted within the 249-mile radius of the epicenter of the earthquake—with over 900 sites (across the industries Resilinc tracks) at risk. As rescue operations continue throughout the over 6,000 collapsed buildings, freezing weather conditions, aftershocks, flood dangers, disrupted telecommunication services, and port and airport closures impede progress. Resilinc estimates supply chain recovery time will take eight months (32 weeks) total.

On February 20th, a second quake, with a magnitude of 6.3, struck near Uzunbag, Turkey (The New York Times). Then, on February 27th, a third 5.6-magnitude quake struck near Yesilyurt, Turkey (The New York Times). Due to repeated earthquakes, recovery efforts will mostly likely be pushed back even further.

Until now, Turkey’s economy has grown steadily since the pandemic due to a surge in exports and tourism caused by disruptions and weak currency in Asian supply chains according to the Wall Street Journal. However now, while the world rushes to help Turkey recover from this tragedy, inflation is expected to rise, and, with $84 billion in losses, several major industries and exports have been impacted.

 

Top Industries and Exports Impacted

Turkey exports a variety of goods around the world — primarily exporting to Germany, UK, US, Italy, and Iraq. In the US, top imports from Turkey include stone and glass, iron and steel, textiles like bedding and clothing, vehicles, machinery, and electronics. As a result of the earthquake, the following industries were most impacted: textiles, automotive, high-tech, manufacturing, and construction. Within those industries, exports such as textiles, steel, and cement specifically saw the greatest disruptions.

 

All Eyes on the Textile Industry

As Turkey is the world’s 5th largest textile exporter and 3rd largest textile supplier to the EU, all eyes are on textiles following the earthquake at the epicenter of the country’s textile industry. Fortunately, compared to industries such as high-tech or automotive, it is easier for the textile industry to pivot to source from an alternate supplier due to the simplicity of the manufacturing. While high-tech parts and sites require longer testing and set up, textiles are easier to shift and lift—compared to say, an automotive manufacturing site.

According to Textilegence, Diyarbakir Chamber of Commerce president, Mehmet Kaya, disclosed that there are no serious problems to facilities; for now undamaged textile mills are simply being used to house survivors while they pause production.

For companies sourcing from Turkey who may have been impacted, the Fair Labor Association has released a set of guidelines to ensure clear communication with suppliers — starting with confirming impact. And supplier confirmation is essential to resiliency.

 

Automotive and Manufacturing Hit Hardest

Of the primary industries mapped and tracked by Resilinc’s platform automotive and general manufacturing suppliers have been hit the hardest. Automotive is Turkey’s largest export — with vehicle models by Renault and Fiat covering 15.2% of total exports, totaling US$23.9 billion — while machinery exports total US$13.8 billion, and electrical equipment totals US $8.1 billion. Outside of Renault and Fiat, Indian auto firms Mahindra & Mahindra (M&M), Bajaj Auto, Hero, MotoCorp, and TVS Motor Company with operations in Turkey may experience challenges as rescue efforts continue (FinancialExpress).

Many steel manufacturers have also suspended operations. Bastug Metalurji, which produces 2 million tons of steel annually, announced a force majeure clause on February 11 — declaring they could not fulfill contracts as a result of the unforeseen earthquake. This force majeure is likely due to the inability to load or discharge steel and scrap cargo caused by the lack of manpower and support infrastructure at the port of Iskenderun. Other Iskenderun mills have declared force majeure as well, according to EuroMetal.

Additionally, three cement plants of Taiwan Cement’s joint venture with OYAKU have been affected; fortunately, one of the plants, a joint venture with Turkish OYAL Group, has resumed operations in Turkey.

 

Key Sites and Ports

All modes of transportation have been delayed from suspended operations at ports and airports due to damaged infrastructure to disrupted rail service. The Turkish Ministry for Transport recently said, nearly 750 miles of railway lines have been affected.

Power outages, delayed oil operations, and impacted natural gas pipelines compound the problem — interrupting the flow of goods, transportation, and relief efforts. Halting of operations is expected to cost around $680m in trade losses total.

 

Port of Iskenderun Redirects to Port of Mersin  

Resilinc’s EventWatchAI sent alerts on February 7th and 8th about two fires that erupted at the Port of Iskenderun in Hatay. With an annual trade flow of $18 billion in 2021, this port is one of the largest ports in Turkey in terms of revenue (The Grocer). The port handles cargo including fertilizer, corn, wheat, bran, soybeans, as well as pipes and iron. The fires have led to suspension of all operations at the port until further notice.

In the meantime, AP Moller Maersk (the world’s largest shipping company) and Hapag Lloyd rerouted vessels to alternative ports such as the Port of Mersin in Turkey and Port Said in Egypt. According to Global Trade Magazine, while the Port of Iskenderun is suspended, dwell time at Port of Mersin has increased by approximately 10 days, which could prolong the oil shortage caused by the Russia-Ukraine war.

 

Port of Ceyhan Impacts Oil

Ceyhan Port in Adana, Turkey has also suspended operations. This port exports approximately 650,000 barrels a day from Azerbaijan, and also handles crude oil tankers, general cargo, bulk carriers, and cement carriers. BP Azerbaijan, the Azeri unit of BP Plc., has declared force majeure on loadings of crude oil from the port. As a result, oil prices have increased and are expected to continue rising. Analysts also predict operations at other ports could be hit by power outages and other inevitable bottlenecks. Port closures may worsen the chrome ore shortage in China due to shipping disruptions.

 

HTY Airport and GZT Airport

Hatay Airport (HTY) in Turkey closed due to a significant crack in the middle of the runway. As of February 12th, the airport has repaired the runway and reopened for commercial and humanitarian flights according to SimpleFlying. Minor damages also prompted flight suspensions at Gaziantep Oguzeli International Airport (GZT) in Turkey. Before the earthquake, winter weather conditions were already causing backlogs at airports. Now as airports prioritize rescue teams and limit flights, airfreight backlogs are projected to increase (The Grocer).

 

What’s next for supply chains in the region?

Resilinc projects there will be an 8 month (32 weeks) average recovery time for supply chains. As relief efforts continue, operations across multiple industries will be shifted to other locations and put on hold. While it’s impossible to predict when natural disasters will strike, it’s important to plan contingencies and build a resilient supply chain — so your company can recover as quickly and efficiently as possible. To do so, Resilinc recommends mapping and monitoring your company’s entire supply chain, multi-tier tiers deep.

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