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Focusing on Quality and Investing 1 Billion TL

Publication: Economist Logistics Special Edition
Issue: 2020-2021 Assessment
Spokesperson: Aras Kargo General Manager Utku Ayyarkın

1. What has been the evolution of shipping industry spending over the past year? How did the pandemic hit the sector?

Ever since the pandemic burst into our lives in March this year, we have undergone an unprecedented transformation in both social and economic terms. In this unusual period, with major shifts in the way business is transacted in almost every sector, we have certainly seen the prominence and rise of e-commerce and shipping in the supply chain.

For the shipping sector, which serves as a conduit between consumers and e-commerce companies, a phase of decline in the number of bulk deliveries and an increase in the number of individual deliveries to households began. This substantially increased the number of doors visited by shipping companies in the daytime. The 2-fold growth in e-commerce also had a direct impact on the transaction volume of the shipping sector. Currently, the logistics sector has reached an average daily transaction volume of 8 million. Over 4 million of these are in the shipping volume. To match this transaction volume, our sector has been working hard to ensure the continuity of the supply chain, with more than 100 thousand employees and additional jobs. The pandemic has once again demonstrated how important the work of our couriers is. Our staff, who are on duty all day round, have taken all the necessary precautions according to the information provided by our Ministry of Health and have worked with all their strength. Just like the healthcare personnel, the security guards and the employees of the markets, the couriers have been the heroes of this difficult process in the eyes of the public. I would like to take this opportunity to sincerely thank each of them once again for their efforts.

2. Can you elaborate on the growth dynamics of the sector in the new period? What can we expect?

Over the past few years, the shipping sector has gained a lot of momentum in response to changing consumer habits, developments in the e-commerce market, the global pandemic and technological change. Our activities and their importance have grown by leaps and bounds. Concurrent with all these developments, the shipping sector must also evolve technologically and adjust to the conditions of the times. As the sector evolves digitally, business processes are simplified, risks are reduced, and both efficiency and capacity are increased. While brands that can match the pace of change will take their place in the competition, brands that cannot do so be left behind in this race. Therefore, we fully accept change as our compass and gear all our investments and planning in this direction.

Taking these developments into account, it would be safe to say that digitalisation and new distribution models will be central to the shipping industry in 2021. In addition to the digital transformation of the sector, it is important that e-commerce companies can support the process with the operation of marketplaces at the point they have reached today. That is to say, shipments are not all there is to the delivery, but the purchase also requires a very serious operational process. Proper management of this process is through proper customer integration between the two sectors. Through mutual integration and mutual investment in the technological infrastructure of the e-commerce and shipping sectors, we will be able to respond together much faster to the growing market.

3. What was 2020 like for you as a company?

Aras Kargo currently operates 28 transfer centres, more than 1,000 branches, around 15,000 employees and a fleet of over 4,500 vehicles.
Based on our investments in automation and IT infrastructure, our operational experience and our expertise, we have achieved double-digit growth in recent years. In 2020, we have achieved 65 percent growth. Going forward, we plan to continue this trend this year.

We are engaged in a process where Aras Kargo has transitioned from an operational company to a technology company. We are investing to apply digital transformation to every step of our business processes. In the last two years, we have invested almost TL 300 million in the transfer centre, IT infrastructure and operational processes.

Among the three most important measures in the new environment introduced by the pandemic is social distance. With this in mind, we have accelerated our work on coded delivery and reading method with handheld terminals for the new type of chip IDs, for which we started infrastructure work two years ago, and we have introduced the contactless delivery application, which has become an important need.

As the pandemic has taken hold, we have started knocking on more than 1 million doors every day. We have significantly improved our GIS and mapping infrastructure to handle the increasing address and data operations. We have built the most suitable infrastructure to properly manage the daily volume of transactions, as well as to provide additional staff augmentation at times when the number of shipments is increasing, thanks to these projects.

We have technologically renewed our İkitelli Transfer Centre, one of our largest transfer centres, both operationally and in terms of square metres. The capacity of the centre was increased from 5,500 shipments per hour to approximately 28,000. Subsequently, we technologically renewed our transfer centres in Istanbul Orhanlı, Izmir and Ankara. To better handle the increasing volume of shipments between 1-5 desi, we also commissioned machine investments last year to separate small parcels on both sides of Istanbul. With the technology investments we have made in our handling centres, we have become the best in the industry by increasing our hourly processing capacity threefold.

5. What were the effects of the pandemic on your company?

With the pandemic-related shifts in the shipment structure, bulk delivery was reduced drastically to a bare minimum, while the number of points we visited with individual home delivery was increased many times over. The e-commerce volume doubled compared to the previous year. Concomitantly, the number of addresses visited increased by 90 percent. In previous years, we stopped by 600-700 thousand addresses a day on average, but in 2020 this number rose to over 1 million. Although we had difficulties at the beginning of this process, which the whole world experienced for the first time, the automation investments started in 2016, our operational know-how and our competence enabled us to manage this process well. We quickly adapted to the increasing transaction volume caused by the pandemic using the digital transformation we implemented. The preparatory work we have undertaken over the past few years for the intensive e-commerce campaign phases has also been extremely beneficial in this regard.

In addition, there were times when calls to our branches and call centre increased many times over due to the increase in transaction volume. To best manage this process and ensure that our customers can reach us at any time, we increased our call answering capacity by 2.5 times by developing our call management processes from scratch. In addition, we have activated the voice response system for questions related to shipping information, such as "where is my shipment", which accounts for a large proportion of calls, and allows our customers to get this information quickly and without a customer representative.

6. As a company, what lies on your agenda this year? Where will your investments be directed at?

In 2021, we will prioritise quality. We have a plan put in place to improve our quality with our investments in integration, route optimisation and integrated management systems. We have an overall investment goal of TL 1 billion for the coming period. Our goal is to create a unique customer experience with step-by-step customer information, buyer convenience, CRM and customer service management. With our ongoing investments in transfer centres and IT infrastructure, we will maintain our leading and innovative position in the industry. We will focus on our Courier Route Optimisation project and technological investments in our transfer centres in Anatolia following the 4 major cities. In 2021, we aim to solidify our market leadership with these projects. We will pursue our efforts to further boost Aras Kargo's dynamic position in the market and invest in the customer-focused solutions we offer.

Aras Kargo in Figures 2020

  • We stopped by 200 million homes
  • We carried the most amount of shipment in December
  • We carried 120,000 times the weight of the Galata Tower.
  • The number of shipments we carried reached 2.5 times the population of Turkey
  • We travelled the distance equivalent of 469 trips to the moon and back.
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