Bahram Amirahmadian

Development of Iran's Regional and Trans-Regional Transportation Routes: Perspectives for Partnership

Date of publication : August 12, 2017 00:38 am
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This image was taken near Chakchak (Temple of Fire), most sacred of the mountain shrines of Zoroastrianism, near Ardakan, Yazd province, Isfahan Province, Iran, in December 2015

As a stable country in the turbulent Middle East region, the Islamic Republic of Iran enjoys a remarkable position to play a better role in this region. Iran's land routes (including road and rail), air and marine routes are endowed with good infrastructure and are perhaps without parallel in the region. Completion of the development plans for Chabahar free port and Iran's eastern rail network will turn the Islamic Republic into a powerful country. On the other hand, connecting Iran's national railroad to the port city of Astara after completion of the Qazvin-Rasht-Anzali-Astara railroad network will connect Iran's railroad network to all Russia’s railroad (through the Republic of Azerbaijan) and will be a great step toward development of the International North-South Transport Corridor(NOSTRAC). Unused or underused capacities of Iran’s sea ports and commercial ships have made the country ready to take advantage of emerging opportunities. In this context the Sixth Fifth-Year Economic, Cultural and Political Development Plan of Iran, which will be implemented from 2017, will be able to obtain its far-reaching goals. In the meantime, and on a regional scale, Iran's land and air corridors are important for the promotion of regional communications.
 
This article reviews available transportation infrastructure for the expansion of cooperation between the Islamic Republic of Iran and Eurasian countries and also discusses available grounds for the development of the International North-South Transport Corridor.
 
The Islamic Republic of Iran's logistic capacities
 
During recent years, the insecurity of air corridors over Iraq, Syria and Ukraine has resulted in increased air traffic through Iran's air space. According to a report by news agencies, Iran has ranked first in the world in terms of air traffic growth. Due to its position along the East-West transit route, Iran enjoys a unique position full of potential. This position can be best taken advantage of through completion of plans and projects, which would be competitive in comparison with transport routes crossing other countries. Iran is located at the heart of the East-West superhighway between two high-traffic regions of Asia-Pacific and Europe, and the country’s security, in view of the insecure conditions in neighboring countries and the entire region, is one of the prominent characteristics of Iran.
 
The presence of such terrorist groups as Daesh (ISIS) in the region and the insecurity and other consequences that result from it have encouraged use of Iranian territory to connect Europe to the Persian Gulf region. From an outside viewpoint, Iran is the sole island of stability and security in the turbulent and crisis-wracked Middle East region.
 
From the viewpoint of international standards, road infrastructure, police presence, security, traffic signs, and availability of fueling stations and accommodations, the network of the Iranian roads is of acceptable quality in the region. On the other hand, Iran's railroad has been connecting the landlocked Central Asian countries to Bandar Abbas port city in southern Iran through Sarakhs railroad since 1996.
 
Iran's east-west railroad was also made operational after the country’s national railroad was connected to Zahidan-Mirjaveh border crossing in eastern Iran on the border with Pakistan. This railroad connects Pakistan in the east to Turkey in the west. This is important because it operates within the framework of the Economic Cooperation Organization (ECO). Inauguration of the East Caspian railroad among Iran, Turkmenistan and Kazakhstan in October 2014, has connected Iran's rail network to Central Asia and Russia on the northeast of the Caspian Sea. The movement of the Silk Road train from China to Iran, which took 12 days and reached Iran on February 15, 2016, was a hallmark in the history of regional rail transportation. At present, Iran's railroad network is 13,000 kilometers long and connects Iran to neighboring countries along the “north-south” and “east-west” axes.
 
Iran's rail projects
 
1) Iran's rail connection with Turkmenistan and Kazakhstan on the east of the Caspian Sea; Inauguration of the Gorgan-Incheboroun railroad in August 2015 opened Iran's rail access to Turkmenistan and Kazakhstan. It was through this route that the first steps to revive the rail Silk Road and facilitate transportation of Iranian cargoes to China and from there to Europe were taken in February 2016. At that time, the first freight train arrived in Iran from China; a development, which materialized a trilateral rail transport cooperation agreement, which had been signed by Iran, Turkmenistan and Kazakhstan.
 
At present, the Iranian railroad is connected to railroads of neighboring countries at five points:
 
- Razi border crossing with Turkey (in the northwest of Iran);
- Jolfa border crossing with Nakhichevan (in the northwest of Iran) and through that crossing to Armenia’s railroad, which has been blocked since 1988. Negotiations are underway with both Azerbaijan and Armenia to reopen that border crossing, but it is inactive at the present time;
-Incheboroun border crossing (in the southeast coast of the Caspian Sea);
-Sarakhs railroad (in the northeast of Iran), which was inaugurated more than 15 years ago; and
-Mirjaveh border crossing (in the east of Iran) in Sistan and Baluchestan province, which connects Iran to Pakistan.
 
At present, establishing rail connections with the Republic of Azerbaijan, Iraq, and Afghanistan is on Iran's agenda to complete the country’s rail network with neighboring countries.
 
2) Iran-Azerbaijan rail connection; An agreement between Iran and the Republic of Azerbaijan for establishment of a rail connection between the two countries was finalized in October 2015 through a meeting of the Iran-Azerbaijan Joint Economic Cooperation Commission (known as the Astara-Astara meeting) and the final document for this rail connection was signed. Inauguration of this rail link was an important step toward the realization of Iran's goals for developing rail transit. Construction of this 10-km rail connection started in late April 2016. It can be considered the most important foreign rail connection for Iran. Since Iran shares many economic and transit interests with Azerbaijan, the two countries have agreed on establishing this connection and it has been decided that Azerbaijan would provide Iran with 500 million Euros in finance for the completion of this rail line. On the other hand, the Iranian government is to undertake provision of funds for the construction of a section of the railroad and acquisition of land across its path in order to implement this joint project. When this rail connection becomes fully operational, it would connect Iran's national railroad to that of Russia.
 
Iran will also establish a transit terminal with a capacity of five million tons at this border crossing. Iran and Azerbaijan are also expected to work on building a rail bridge, which will run for 80 meters over the Astara-Chai border river (which forms the border between the Iranian city of Astara and the city of Astara in Azerbaijan) with a 50-percent share for each country. As announced by officials, construction of this rail route will increase the volume of trade between Iran and the Republic of Azerbaijan by 400%. Construction of a railroad connecting the three cities of Qazvin, Rasht and Astara on the Iranian side will link Iran's domestic railroad to this rail connection. The rail connection between Iran and Azerbaijan will complete a rail route, which runs for 5,200 kilometers from India to the Port of Helsinki in Northern Europe and will reduce the needed time for transport of cargo along the International North-South Transport Corridor from 45 days to 20 days.
 
3) Iran-Iraq rail connection; The decision to build the “Iran-Iraq” joint railroad, which is also known as the “Basra-Shalamcheh” railroad, dates back to the signing of a memorandum of understanding for development of rail cooperation between Iran and Iraq in January 2015. That agreement entered the implementation phase in April 2015 through a ceremony attended by Iran's minister of road and urban development and Iraq’s minister of transportation at the border crossing. Meanwhile, Iran's President Hassan Rouhani recently expressed hope that after the finalization of the project, Iranians would be able to go on pilgrimage trips to the Holy Shrines in Iraq by train in 2017.
 
There is an existing railroad, which runs for 13 kilometers from the Iranian port city of Khorramshahr to Shalamcheh and the new railroad, which is going to be constructed, will extend for 33 kilometers from Shalamcheh border crossing to Basra port on the Iraqi soil and it must be constructed by the Iraqi side. Iran's share of the rail connection with Iraq is construction of a bridge over the Arvand River and Iran is currently waiting for the Iraqi side to start building the 33-km railroad from Shalamcheh to Basra before beginning the construction of the aforesaid bridge. Inauguration of Shalamcheh-Basra railroad will connect the Iranian rail network to Iraq and East Mediterranean countries through Khorramshahr and will provide new momentum to transit and transport of goods and passengers. Among the most important achievements of this rail connection one can point to the use of railroad instead of road to transport a large part of imported and exported goods between Iran and Iraq in addition to the movement of passengers between the two countries.
 
4) Khaf-Herat railroad; The rail connection between Iran and Afghanistan will complete Iran's rail links to its neighboring countries. To achieve this goal, construction of a railroad connecting the Iranian city of Khaf (in Northern Khorasan province) to the city of Herat (in the west of Afghanistan) has been on agenda since 2014. Of course, construction of this railroad has been finished in Afghanistan up to the Iranian border and only part of this route remains to be built in Iran. Necessary credits for construction of this part have been appropriated in Iran's 2016 budget and it is expected to be finished before the end of the first half of the Iranian calendar year, 1395 (which started March 20, 2016). Construction of this railroad will not only solve the problem that faces transport of minerals from Iran to other regional countries, but will also offer Afghanistan with new opportunities for trade. Officials in the two countries hope that construction of this railroad would be finished by the end of the current Iranian year (ends March 20, 2017) when this project is expected to be inaugurated.
 
Ports
 
Having 2,043 kilometers of shoreline in its south – including 1,358 kilometers along the Persian Gulf and 796 kilometers along the Sea of Oman – in addition to 675 kilometers of sea border in the Caspian Sea, Iran enjoys considerable environmental and economic potentialities for the development of regional cooperation.           
 
In the Persian Gulf region, Iran's Shahid Rajaei port exchanges goods and conducts trade with more than 80 famous ports of the world through the world’s 35 top container carrier lines. Shahid Rajaei port complex can accommodate 70 million tons of commodities a year and has 36 dock posts in addition to the biggest and most advanced container terminal in the country. After completion of the second phase of its development plan, Shahid Rajaei port will have a capacity to accommodate 5.8 million TEU of containers per year and will be handling a vast amount of public goods.
 
This humongous port complex, which serves as the main gateway for Iran's imports and exports and regulator of the Iranian economy, has taken a long stride toward globalization by claiming a bigger share of the marine transport and international trade in recent years. In order to rank first among regional ports, special plans have been made according to Iran's 20-Year Perspective Plan (Vision 2025) to develop and boost efficiency of this port and encourage private sector investment. As a result, more than 9,000 billion rials (about 260 million dollars) of private sector capital has been so far attracted to this port
 
As a result of these efforts, Shahid Rajaei port registered an annual growth of 46 percent in 2011, which caused its ranking among 3,500 important ports of the world to improve by 28 points from 72nd to 44th.
 
Imam Khomeini port is also located to the northwest of the Persian Gulf and is considered one of the most important Iranian ports in the Persian Gulf with an annual capacity of about 55 million tons. Having 38 dock posts over a stretch of seven kilometers, this port can accommodate high-capacity vessels. Access to an airport as well as communication roads and railroad network are among advantages of this port.
 
With regard to the Sea of Oman, major Iranian ports include Jask port and the country’s sole port with access to the ocean, which is Shahid Beheshti port in Chabahar. The port city of Chabahar, which is located close to free waters and is the sole Iranian port with access to the ocean, can reduce strategic bottlenecks which the country has faced in the Persian Gulf and play the role of an important port of entry in the easternmost part of the country. Therefore, the development of Chabahar port city can attract international liner ships and account for a remarkable share of the Persian Gulf market.
 
After development of the Chabahar port city and completion of the “southeast-northeast transit corridor” from Chabahar to Sarakhs, ships will certainly choose Chabahar for offloading and onloading of goods in order to reduce fuel consumption and cost and also to save time. Iran is planning to transfer an important part of its oil export terminals from the Persian Gulf to the eastern coasts of the Sea of Oman in Chabahar in the future. Implementation of this plan will lead to the development of southeastern region of the country.
 
In the Caspian Sea region, Anzali port, Amirabad port and Noshahr port are the most important Iranian ports. Anzali port is a multipurpose commercial port and the Caspian port, which is located close to it and within the bounds of the Anzali Free Trade and Industrial Zone, will turn into an active zone in the future when completion of the railroad connecting the cities of Qazvin, Rasht, Anzali and Astara is finished. Amirabad port enjoys good logistic facilities for oil swap with littoral countries of the Caspian Sea and can swap up to one million barrels of crude oil per day after Iran restarts the swap deal with neighboring countries, thus playing a remarkable role in development of the regional economy. Noshahr port is also very active in the field of offloading and onloading of general commodities.
 
Shipping
 
At present, the Islamic Republic of Iran Shipping Lines (IRISL) Group is known as a worthy global partner for commodity owners and other customers due to about half a century of brilliant activity in the field of global marine transport and also because of its secure international network and the ability to provide diverse and rapid transportation services, which exceed the customers’ expectations.
 
The IRISL Group possesses a powerful and diversified fleet of oceangoing ships and service vessels at a capacity proportionate to market needs, which is active along all international marine routes. The group’s ships call at most important ports of the world to transport commodities in addition to providing diverse and modern services such as door-to-door services.
 
On the other hand, the National Iranian Tanker Company (NITC) is currently the world’s biggest tanker company by having 42 VLCC (very large crude carriers) supertankers. This company transports Iran's crude oil to export markets and is also active in reciprocal oil trade by carrying oil consignments for some of the world’s 150 major oil companies, including the Royal-Dutch Shell, France’s Total, Saudi Arabia’s Aramco, and the state-run oil companies of Kuwait and Abu Dhabi.
 
The Caspian Sea Shipping Lines Company started its activities in 1992 and is currently operating 24 vessels carrying cargos belonging to businesspeople and various industries between Iran's northern ports and foreign ports in the Caspian Sea region. The company’s main goals include development of Iran's national and commercial fleet in the Caspian Sea, developing the activities of Iranian shipping lines at all littoral ports of the Caspian Sea, development and optimization of marine transport, and establishing a presence of the Islamic Republic of Iran's national fleet in the Caspian Sea region in view of the rising volume of trade, as well as commercial and economic exchanges across the Caspian Sea. The Caspian Sea Shipping Lines Company, as Iran's sole flag carrier in the Caspian Sea, transports cargo across the Caspian Sea, the Volga–Don Canal, and the Black Sea and provides transportation, transit, and combined transport services to all ports along the aforesaid routes. The company handled 2.15 million tons of cargo in the Caspian Sea throughout the Iranian calendar year 1394 (2015-16). The company accounts for 32 percent of a total of six million tons of cargo offloading and onloading in Iran's northern ports. The Caspian Sea Shipping Lines Company is Iran's biggest commercial fleet in the Caspian Sea and accounts for 31 percent of total marine transport in the Caspian Sea.
 
Iran's transportation routes in the Caspian Sea
Iran and Russia consider themselves as two neighboring countries (though without land borders). In this context they should have taken advantage of the existing land transport facilities (including the land route through the Republic of Azerbaijan at the border with Dagestan), of the Caspian Sea and air transport routes, but these potentialities have, unfortunately, received less than adequate attention. Since the outbreak of armed conflicts between Chechens and the central government of Russia in the middle of the 1990s, Iran's land route through the Republic of Azerbaijan has been cut and the border crossing near the historical city of Derbent on the Russian Federation’s border with the Republic of Azerbaijan has been closed to Iranian passengers and cargo trucks. Therefore, all Iranian export goods to Russia, especially fruits and vegetables, crossed this border post aboard non-Iranian trucks registered to Turks or Azeri nationals of the Republic of Azerbaijan. As a result, the cost price of all Iranian goods increased in the Russian markets and, due to these conditions, Iran lost those markets in competition with Turks and Azeris. Iran has frequently asked Russia to open this border crossing to Iranian trucks and Russians have given promises in this regard, none of which has been fulfilled so far. Therefore, high-volume trade exchanges between Iran and Russia are handled through the Caspian Sea between Iranian and Russian ports, but even these exchanges are limited to freighters and do not include passenger ships.
 
Air routes between Iran and Russia
Unfortunately, since the opening of air routes between the two countries within the former Union of Soviet Socialist Republics (USSR), there has been only one flight between Iran and Russia, which connects Tehran to Moscow. This has remained unchanged since the Soviet period. However, Iran's northwestern neighbor, Turkey, conducts many flights to various cities in both the European and Asian parts of Russia.
 
Following the establishment of regular marine transport lines from Iran's northern ports to the port cities of Astrakhan in Russia and Aktau in Kazakhstan, which were inaugurated in June 2015 to help Iranian businessmen and exporters ship their goods to Astrakhan port, a regular flight between Tehran and Astrakhan was also planned. The flight connecting Tehran to Astrakhan fortunately started in early June 2016 and is expected to greatly reduce time and cost of trade with Russia as well as the cost of access to Astrakhan port. Establishment of this flight, which is scheduled to be twice a week, followed requests by Iranian businesspeople, merchants and the private sector, and it can help facilitate economic cooperation between the two countries.
 
Iran's plans to develop air transport
When Iran announced that it needs 500 new aircraft to renovate its aging air fleet, many airplane manufacturing companies indicated their willingness to be present in the Iranian market. Finally, Airbus and Boeing managed to sign preliminary agreements in order to sell airplanes to Iran. Immediately following the conclusion of Iran's nuclear deal, which is known as the Joint Comprehensive Plan of Action (JCPOA), Iran's president paid a visit to France during which a contract was signed with the Airbus to buy 118 airplanes. According to Iran's minister of road and urban development, the French side has promised to give Airbus jets to Iran over a period of 16 years. The purchased aircraft include 45 Airbus A320, 45 Airbus A330, 16 Airbus A350, and 12 Airbus A380 airplanes. The Iranian minister of road and urban development also announced that Iran was planning to buy 100 Boeing airplanes as well.
 
International North-South Transport Corridor, a factor for regional cooperation between Iran and Russia
Iran's situation as a crossroads in the region has great potential, which has been frequently mentioned by Iranians and non-Iranians. Iran enjoys suitable capacities in terms of transportation infrastructure, including rail and road transportation, ports, and commercial services such as loading, offloading, storage and distribution of commodities. The International North-South Transport Corridor is one of Iran's infrastructural options, which has received less than adequate attention. Under present conditions, it seems necessary to pay more attention to this corridor.
 
The International North-South Transport Corridor project was launched in 2000 by Russia, India and Iran with the goal of establishing a shorter transportation route compared to the Suez Canal marine route in order to reduce transportation time and the overall cost of commodity trade. Belarus, Kazakhstan, Tajikistan, Oman, Armenia, Azerbaijan, Ukraine, Kyrgyzstan, and Turkey joined the project a few years later.
 
Some factors, however, have stopped implementation of this project over the past 15 years. Major factors, which barred development of this corridor included mounting pressure on Iran's economy by the United States and member countries of the European Union over Iran's nuclear program in the early 2000s and Russia’s unwillingness to take part in this project due to legal barriers created by anti-Iran sanctions in addition to India’s unwillingness to take practical steps to invest in this project. Now that sanctions have been removed, Iran is able to activate this corridor. Operations along the corridor will increase regional trade exchanges, energize trade services, develop international trade by member countries, create new jobs, and help overall economic development of the region.
 
Major goals and reasons behind implementation of the International North-South Transport Corridor project are as follows:
 
- Development of transportation relations in order to regulate transport of goods and passengers along the International North-South Transport Corridor,
- Increasing access of parties to this agreement to global markets by providing them with rail, road, marine, river and air transportation services,
- Increasing the volume of international transport of goods and passengers,
- Ensuring secure travel and security of products in addition to protecting the environment according to international standards,
- Coordinating transportation policies and passing necessary transportation laws and regulations in line with the goals of this agreement, and
- Providing equal conditions for providers of all types of goods and passenger transportation services to countries that are parties to this agreement within framework of the International North-South Transport Corridor.
 
Investment made in implementing the International North-South Transport Corridor
- Investment by the United Arab Emirates, which includes building two Freeport ships for the Persian Gulf region, construction of docks for Freeport vessels and construction of a railroad station in Dubai port;
- Investment to be made by Iran includes construction of Freeport docks in Bandar Abbas, construction of Freeport docks in Shahid Rajaei port (in Bandar Abbas), construction of Freeport docks in Amirabad port, and construction of a railroad station in Amirabad port;
- Investment to be made by the Russian Federation within the framework of this project includes construction of port and infrastructural facilities in the city of Lagan, construction of Freeport docks in Lagan, building 34 Freeport vessels for Caspian Sea transport, and building four towboats for container shipments.
 
Practical realization of plans made within framework of the International North-South Transport Corridor requires attention to the following issues:
 
1. Improvement and development of the corridor’s management structures,
2. Promoting unity among the corridor’s members within framework of its regulations,
3. More attention to infrastructural requirements of the corridor by governments,
4. Increasing the volume of cargo transport through all routes and in both directions.
 
From a geopolitical viewpoint, transport of goods through the International North-South Transport Corridor will not only have many benefits for Iran, but also strengthen Iran's standing in the Caspian Sea region, because Iran plays an axial role in this corridor. From a strategic standpoint, under critical conditions in international free waters when shipping traffic hits barriers, this corridor can be used to guarantee the free flow of goods. Since Iran is the gravitational center of this corridor, making the corridor operational will be beneficial to Iran from various viewpoints. This mechanism is also a means of upgrading Iran's geographical position to a geopolitical position.
 
Transit
 
Unfortunately, due to anti-Iran sanctions and aging of the country’s land transportation fleet, difficulties associated with rail transport, inefficiency of some ports of entry and exit due to various reasons such as insecurity in Afghanistan and inefficient customs systems in Turkmenistan and Azerbaijan, and also due to customs barriers like corruption of customs officers and prevalent bribery in those republics, these routes are less appealing to truck owners and economically active people. Therefore, despite having good logistic facilities and great advantages of its transportation networks, as well as storage and port facilities, Iran has been less active in transit of goods even compared with the Republic of Azerbaijan.
 
Figures related to transit of goods through Iran and the quantity of transited goods clearly prove the role and importance of the International North-South Transport Corridor in boosting transit through the country. This role will become even more significant once necessary infrastructure is fully provided. However, a review of Iran's transit performance will show that the East-West Transport Corridor is still playing a low-key role in the country, because transit of goods is predominantly taking place through northern and southern border crossings. On the other hand, existence of suitable infrastructure at ports of entry and exit will greatly increase the share of such points in country’s economy. In view of more suitable cargo onloading and offloading facilities and due to having Shahid Rajaei port, the city of Bandar Abbas in southern Iran is currently claiming the biggest share of goods transit in the country. Paying equal attention to ports of entry and exit in north, south, east and west of the country, which complement international transport corridors, will strengthen Iran's standing in this industry. Presence of Turkey, which connects Asia to Europe, along Iran's northwestern border, and propinquity to countries like Iraq, Afghanistan, Pakistan and India, which are in dire need of importing raw materials, are among the existing potentials for activation of Iran's East-West Transport Corridor.
 
The total tonnage transited via the Islamic Republic of Iran's railroads increased by 50 percent in 2014 compared with 2013, with most of that rise being a result of increased transit of cotton, lumber and containers. Cotton accounts for the highest amount of transit through Iran's railroads, making up more than one-fourth (26 percent) of the total rail cargo transit.
 
More than 99 percent of cotton shipments entered Iran through Sarakhs border crossing and left the country through Bandar Abbas during 2013 and 2014. Most lumber consignments entered the country through Razi border crossing during the same period. Sarakhs border crossing was the port of entry for the highest cargo tonnage totaling 331 tons in 2013 and 2014, which later left the country through Bandar Abbas.
 
Available statistics and data show that during March 21, 2015 to March 19, 2016, a total of 10.919 million tons of goods were transited through the country, showing a reduction of 11.5 percent compared to the corresponding period of the preceding year.
 
The largest amount of goods transited through Iran during the same 12 months consisted of various types of fuel (42 percent), as well as different types of cotton, chemical compounds, construction material, and home appliances with a 4-percent share for each category. Instruments, medicine, various types of leather and other articles accounted for more than 2.105 million tons of goods transited during the same period, which have been put under the “miscellaneous” category.
 

NB: This article first appeared at "Russia-Iran Partnership: an Overview and Prospects for the Future", co-published by IRAS and RIAC.
 
 

Bahram Amirahmadian, an assistant professor at University of Tehran, is the senior fellow at IRAS.



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ID: 3288
Author : Bahram Amirahmadian