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Iran Freight Transport Report Q1 2012
Business Monitor International, Dec 2011, Pages: 46
Business Monitor International's Iran Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Iran's freight transportation industry.
The Iranian freight transport sector continues to be informed by the effect of the Western sanctions against the country's primary companies and maritime facilities. Double-digit throughput growth at the primary Iranian port of Bandar Abbas appears to have come to an end as US sanctions against the pariah state's shipping sector continue to strengthen. The country's national shipping lines have also been facing increasing pressure in their operations, as have airfreight carriers. Nevertheless, BMI does project continued growth in Iranian freight transport in the face of Western sanctions, as the domestic consumer demand continues to grow.
Headline Industry Data
- 2012 port of Bandar Abbas throughput growth forecast is 2.7% and is expected to average 3.3% a year to 2016.
- 2012 rail freight tonnes km growth forecast is 1.8% and is expected to average 2.1% over the forecast period.
- 2012 air freight tonnes km growth forecast is 0.6%, and is expected to average 0.7% a year to 2016.
- 2012 total trade real growth forecast is 2.0%, and to average 2.4% over BMI's forecast period.
Key Industry Trends
Iran Invests In Making The Most Of Location
Iran, which shares land borders with eight different states, is aiming to capitalise on its strategic location. The Islamic Republic is developing its freight transport capabilities in order to play a greater transit role in the region. BMI notes that the investment offers upside risk to its rail freight growth forecast in the country. The launch of the new freight train service on the Bandar Abbas-Almaty Corridor on October 17 2011 was attended by representatives of Economic Cooperation Organization (ECO) members and international organisations. ECO is the international organisation established to promote development and trade between the countries of the region. Originally it comprised just Iran, Pakistan and Turkey, before expanding to encompass the Central Asian republics and Afghanistan. BMI notes that the bloc stands to benefit from the corridor; it runs from the Persian Gulf port of Bandar Abbas, in Iran, through Turkmenistan and Uzbekistan to the Kazakh commercial capital of Almaty, giving the landlocked Central Asian countries access to the sea.
Iran Requires US$5bn To Upgrade Aircraft Fleet
Iran requires finances of US$5bn to buy navigation equipment and planes said parliamentary member Mehrdad Lahouti in September. Lahouti added that 150 planes are required to be retired from the country's fleet of 215 aircraft in the next five years. To substitute the retired aircraft, Iran is required to put in US$4bn to purchase aircraft and US$1bn for navigation equipment. He added that the average age of the country's passenger planes should be reduced from 22.5 years to 15 years. The UN Security Council had imposed sanctions on Iran due to its nuclear programme, which is affecting the country's efforts to upgrade its ageing aircraft fleet. BMI notes that any upgrade to the country's passenger fleet will bring with it a potential uptick in airfreight volumes, utilising the aircraft's belly-holds.
Sanctions Continue
The Iranian shipping sector continues to be targeted by western sanctions in a bid to halt Iran's alleged nuclear weapons development programme. The number of separate shipping bodies and entities related to the Islamic Republic of Iran Shipping Lines (IRISL), now blacklisted by the US Treasury Department, has risen to 150 after six more companies, registered in Panama, were added to the list during Q411.
Key Risks To Outlook
The sanctions imposed on Iran provide considerable risk to BMI's forecasts. With the nuclear energy development programme, which the Iranians insist is not for the development of weapons, elevated to the status of a national cause, it seems unlikely that it will be dropped anytime soon. It has long been known that Tehran's intention is to become a political and military powerhouse in the Gulf, a situation that has proved unnerving to its regional neighbours. That several Middle Eastern states have been actively calling for military action against Iran's nuclear facilities, despite the massive risks to regional stability that this would pose, clearly highlights their concern over the possibility of a nuclear-armed Tehran in the region.
The addition of Tidewater, and the company's ports, to the boycotted list will have massive ramifications for the port of Bandar Abbas and will halt the double-digit growth the facility has had in recent months. Equally, as Iran is so reliant on the export of its oil to feed its economy, any fluctuation in the price of fossil fuels could provide risk to BMI's projections.
On the upside, the agreement reached with Qatar Airways to operate flights in Iran provide upside risk to BMI's airfreight forecasts, while continued investment in developing rail corridors also provide positive risk.
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