Global supply chains are evolving away from single-centered structures and evolving into a more flexible and multi-centered model due to post-pandemic vulnerabilities and increasing geopolitical tensions. In this new era where nearshoring and friend-shoring approaches are gaining strength, Türkiye stands out as a strategic production and supply partner for Europe with the advantages it offers as well as the structural issues that need to be managed.

The global production and trade system is being reshaped by recent geopolitical developments, supply chain disruptions and economic uncertainties. While models based on the concentration of production and supply activities in specific geographies are being questioned, supply chain management is becoming a strategic area for companies not only in terms of cost and efficiency, but also in terms of access to markets, production flexibility and long-term planning. For this reason, supply chain decisions are increasingly being handled at the senior management level.

In this transformation process, the geographical rebalancing of global supply networks comes to the fore, and Türkiye is among the countries that stand out in the new era with its proximity to European markets, industrial infrastructure and logistics capacity. However, the free trade agreements signed by the European Union with third countries are also gaining importance as a topic that directly affects Türkiye’s competitive balances. In this context, the EU-Mercosur Free Trade Agreement is among the developments that should be closely monitored in terms of Türkiye’s foreign trade balances and export position due to the Customs Union structure.

Regional conflicts and sanctions are redefining supply chain decisions

Geopolitical developments shaping the direction of global trade are becoming a decisive factor in supply chain strategies. Trade competition between major economies, regional conflicts and sanctions policies are prompting companies to reassess their current timing and supply structures. Strategic and trade tensions, especially between the USA and China, have increased in recent years, directly affecting global trade through tariffs, technology restrictions and investment limitations. This picture makes it imperative for companies to consider their supply chain decisions not only in terms of cost and efficiency, but also in terms of political alignment and predictability. The strategic autonomy approach adopted by the European Union aims to reduce external dependence on critical products and technologies, limit vulnerability in supply chains, and develop deeper and longer-term collaborations with politically and economically compatible, predictable and reliable partners. This reveals that supply chain choices are increasingly shaped on a more strategic basis.

Not “where is it cheap?”, but “where is it safe?”

Recent developments are leading to a change in the criteria for supply chain management. In the new era, success is no longer defined solely in terms of cost and speed; political risks, regulatory compliance, energy security and geopolitical stability are among the determining factors in companies’ supply decisions. This change is causing the “far-cheap” production approach to gradually give way to “near-safe” models. The main question for companies is no longer “where can I produce cheaper”, but “where can I produce more sustainably and safely”.

Nearshoring and friend-shoring: key approaches of the new era

As a natural consequence of this search, the main approaches that stand out in the new global order are nearshoring and friend-shoring. Companies prefer to move their production and supply processes from distant and low-cost countries to geographies closer to markets. The nearshoring approach aims to shorten logistics times, reduce inventory risks and increase agility in the supply chain. In parallel, the friend-shoring model, which is gaining importance, is based on establishing supply chains with countries that are considered politically, economically and legally reliable. In this model, political harmony, regulatory security and predictability become the determining criteria rather than geographical proximity.

Geographical diversity at the forefront of alternative supply pools

Geographical diversity is rapidly increasing in global supply chains due to geopolitical developments. Production models based on a single country or region are being replaced by regional production structures spread across different geographies. This polycentric approach helps to balance supply networks and strengthen production continuity. The European periphery, Latin America, Southeast Asia and the Middle East are among the prominent production and supply centers in the new era. Although China remains an important actor in supply chains, many European and international companies aim to make their production and supply activities more flexible. In this context, Türkiye, with its geographical location and industrial infrastructure, is considered to be one of the leading countries in the multi-center supply chain architecture.

What does the EU-Mercosur Free Trade Agreement mean for Türkiye?

There is an important development that has not been on the public and sector agenda much recently, but which could directly affect Türkiye’s foreign trade balances as a result. Although the free trade agreement between the European Union and Mercosur countries may seem like a technical trade title, it brings with it a new picture for Türkiye that needs to be handled carefully. Due to the Customs Union, products originating from Mercosur will be able to enter the Turkish market tax-free, whereas Türkiye’s exports to these countries will continue to be subject to customs duties, which brings with it the risk of a deterioration in the competitive balance against Türkiye. In this context, it is important for Türkiye to take steps to update the scope of the Customs Union with the European Union and to strengthen simultaneous negotiation mechanisms in free trade agreements with third countries. At the same time, putting direct trade arrangements with Mercosur countries on the agenda stands out as a critical issue in terms of limiting the structural competitive disadvantages that may arise.

Türkiye’s nearshoring advantage

Despite these new trade regulations and increased competitive pressure, Türkiye continues to stand out in reshaped global supply chains thanks to its structural advantages. Its geographical location, production infrastructure and proximity to major markets make Türkiye a long-term supply and production partner, not just a short-term alternative. Türkiye’s location at the crossroads of Europe, Asia and the Middle East, its integration with the European Union through the Customs Union, and its medium-high technology production capacity make it a natural candidate in the nearshoring perspective. Physical proximity to Europe’s main industrial centers, advanced logistics infrastructure and flexible production capabilities support Türkiye’s positioning as a preferred production and supply point in supply chains. Türkiye stands out as a rational and functional business partner in line with the European Union’s goals of reducing dependence on distant markets and diversifying its supply sources. However, in addition to the opportunities that Türkiye offers, this picture also brings along some structural issues that need to be managed in order to sustain its competitiveness.

Türkiye’s prominent advantages in the supply chain are listed as follows;

  • Geographical proximity to European markets and short lead times
  • Integration with the European Union under the Customs Union
  • Advanced industrial infrastructure and flexible production capacity
  • Increased competence in medium-high technology production
  • More predictable logistics processes compared to East Asia

However, the main challenges that directly affect Türkiye’s competitiveness are concentrated in the following areas;

  • Fluctuations in energy costs
  • Conditions for access to long-term and favorable financing
  • Need for predictability in regulatory processes
  • Pressure for green transformation and compliance with carbon regulations

The structural improvements and stability to be achieved in these areas are considered among the critical elements that will strengthen Türkiye’s position as a reliable, sustainable and long-term supply partner not only within the scope of nearshoring but also within the framework of the friend-shoring approach.