Assessing Iran’s true trade potential


Iran’s changing place in the regional and global trade space will feature at this year’s TOC Middle East conference, taking place 6-7 December 2016 at the Le Méridien Dubai Hotel & Conference Centre, Dubai, UAE.

The easing of international sanctions against Iran is still expected to provide a much-needed boost to global and regional container supply chains. As the second most populous country in the Middle East, Iran’s 80 million citizens afford an opportunity for shipping lines to reconnect this important market with international trade lanes and rebuild the country’s economy after years of sanctions-induced isolation.

Iranian state shipping carrier, the Islamic Republic of Iran Shipping Lines (IRISL) has seen its global ranking rise following fleet investment and new service launches to Asia, Europe and the Middle East. As of October 2016, IRISL is reported as 19th largest in Clarkson Research’s list of top operator owned container shipping fleets, and 21st largest by TEU capacity in Alphaliner’s Top 100 list.

Speaking to Reuters news agency this October, IRISL Chairman and Managing Director Dr. Mohammad Saeedi, who joins TOC Middle East on December 6 as a keynote speaker in the Container Supply Chain conference, said that he expects the company to be ‘back to normal’ by mid-2017.

Deep sea carriers from around the world have also been dipping their toes in the water to gauge the true appetite for container traffic to and from Iran. Most recently this includes Maersk Line, which announced on October 20 that it will resume service to Iran after a 5-year hiatus. MSC, Maersk’s 2M alliance partner, re-entered the Iranian market back in January, while France’s CMA CGM was an early mover, re-initiating service in August 2015 and announcing a tie-up with IRISL in January. Other lines returning to the market since mid-2015 include Evergreen, China Shipping and UASC.

Iran is also pursuing inter-governmental agreements to boost trade and transport cooperation with other nations, including 6 MoUs signed this October 23 following a meeting in Tehran between Abbas Akhoundi, Iranian Minister of Roads and Urban Development and Germany’s Minister of Transport and Digital Infrastructure, Alexander Dobrindt.

All this has wide implications for Iranian ports, which are clearly benefitting from the relaxation of international sanctions on a tonnage basis year-over-year, although those gains have yet to genuinely materialize for the container trade. Year-on-year to August container volumes actually fell back slightly, by 0.4 percent, to 1.67 million TEU. But this masks a surge in container traffic in recent months. The total rose by some 16 percent in August, 19.5 percent in July, and 14 percent in June, according to figures released by Iran’s Ports and Maritime Organization (PMO).

Iran also sees itself as a maritime gateway for neighboring countries, including Afghanistan, Iraq, and several Commonwealth of Independent States members. This should further boost throughput at the country’s major ports.

“The anticipated surge in cargo to Iran is likely to attract significant attention from all main carriers, as slow demand growth globally leaves vessels significantly under-utilized. With global overcapacity, there is no shortage of tonnage with which to serve a growth in demand,” says Lars Jensen, CEO & Partner at industry analyst SeaIntelligence, who will speak in a special session on Iran at this year’s TOC Middle East.

However, two other key risks must be considered by the market participants, Mr. Jensen cautions. “One is the risk of congestion issues in Iranian ports should a demand surge be too big. The other is the risk of a freight rate war as carriers all battle for position in the growing market.”

Investment opportunities
Already, Iran’s port sector is attracting outside investment – sometimes for purely commercial reasons, but other times for geopolitical reasons, looking to leverage Iran’s pivotal role as a bridge between the Middle East and Central Asia.

In May this year, India’s Prime Minister Narendra Modi visited Iran, resulting in the signing of a pact for India to develop the strategic Chabahar port. Chabahar is located in south-eastern Iran in the Gulf of Oman. It is the country’s only port with direct access to the ocean. Indian Ports Global, a recently formed port project investment arm of the Indian shipping ministry and a joint venture between Jawaharlal Nehru Port Trust and Kandla port, will invest US$85 million in developing two container berths with a length of 640m and three multi-cargo berths. In addition, Iran’s state-run railway IRCON International will establish a line at Chabahar to move cargo to Afghanistan. The 500­km rail link between Chabahar and Zahedan will link Delhi to the rest of Iran’s railway network.

The port will allow India to bypass Pakistan in transporting goods to Afghanistan using a sea­land route. At present, Pakistan does not allow India to transport through its territory to Afghanistan. It has, however, recently allowed some Afghan shipments to come to India.
Foreign policy experts also see India’s enthusiasm for Chabahar as a means to counter China’s presence in the region, most visibly manifested through China’s support to Pakistan in developing Gwadar port.

Collaboration and expansion
More recently, Antwerp Port Authority signed a collaboration agreement with Shahid Rajaee Port Authority which controls the port of Bandar Abbas. The latter accounts for 90 percent of Iran’s container import and export shipments and for nearly half of the 200 million tonnes of freight handled by the 11 Iranian ports combined.

Until 2010 – and the impact of international sanctions – Antwerp was the most important European destination port for Iranian cargo. Then in March this year IRISL returned to Antwerp with the first container ship since sanctions were lifted. Under the terms of the MoU, Antwerp and Bandar Abbas will join forces so that companies in both ports can collaborate closely once more. This will involve, among other things, exchanging information on statistics and port development projects, as well as collaboration in the field of training. Antwerp runs its own training institute, APEC.

PMO has “kickstarted” the rehabilitation of the old 1.2m TEU T1 container terminal at Bandar Abbas and will also add 3.5m TEU of capacity to the T2 facilitiy, according to Dr. Madjid Tehrani, Organization Development Advisor to Sina Ports & Marine Services, Iran’s largest terminal operator, and also a speaker at this year’s TOC Middle East.

Dr. Tehrani says that three port tenders issued by PMO are expected to be held before the end of 2016. These include a five-year management contract for T1, a 15-year revenue sharing contract for T2 and a 25-year build-operate-transfer (BOT) project for T3, a greenfield transhipment terminal at Bandar Abbas with anticipated capacity of “at least 1.9m TEU”. Rail and multimodal connectivity and port logistics capabilities are also high on the agenda.

Conference highlight
Iran’s re-emergence into the international trade arena is just one of the hot topics on this year’s agenda. During the two-day high-level event, senior consultants and practitioners from across the supply chain will walk delegates through key issues in regional container trade and logistics. Container Supply Chain sessions will assess the Business, Economic & Container Outlook, the One Belt One Road (OBOR) initiative, Regional Port & Terminal Development and ICT Innovation in Ports & Logistics, plus a special Sea-to-Air Cargo Briefing hosted by The Loadstar magazine. TECH TOC Operations and Technology sessions will address port design, automation, skills development and training, and digitization, among other topics. TOC Middle East returns to Dubai for the 5th time, once again with the full support of DP World – UAE region.
Source: TOC Events