The Islamic Republic of Iran Shipping Lines has started piloting the multimodal cargo transit along the International North-South Transportation Corridor carrying goods from Russia to India, according to the head of Solaynka Port in Russia’s city of Astrakhan.
“The consignments are two 40-feet containers of wood laminates weighing a total of 41 tons. The containers were loaded at St. Petersburg and are heading toward Astrakhan where they will be loaded again at Solyanka Port. They will then traverse the Caspian Sea to reach Iran’s Anzali Port where they are scheduled to be transported to Bandar Abbas port city in southern Iran via trucks. The two containers will then be dispatched to Jawaharlal Nehru, India’s largest container port,” Darioush Jamali was also quoted as saying by IRNA.
The official estimated that the transit of this first trial consignment, as part of collaboration between the Islamic Republic of Iran Shipping Line Group’s representative logistic companies in Russia and India, will take less than 25 days.
“The shipments will be using one-way bill along their journey. We hope that this first transit on INSTC will lead to considerable revenues and a boost in transit and logistics in Iran, Russia and India,” he said.
Solyanka is one of the 15 ports located in Astrakhan’s Economic Zone, which is the busiest of them all. Some 53% of Solyanka Port’s shares belong to the Islamic Republic of Iran Shipping Line Group.
The Russian port of Astrakhan is a hub for commercial activities of nearly 200 Iranian firms making the port the largest center of Iranians’ economic activities in Russia.
Iran’s first House of Commerce was inaugurated in Astrakhan in October 2017 with the aim of boosting and facilitating trade between Iran and Russia.
Iran Gains as Ukraine Conflict Diverts Trade to INSTC
The Ukraine conflict has resulted in unexpected increases in eastward trade flows, with one of the beneficiaries being Iran.
This is because the International North-South Transportation Corridor, originally intended as a link to boost India-Iran trade, has now become a key part of the far wider Southern Route between Europe and Asia as the EU’s northern border with Russia remains closed, according to Silk Road Briefing.
The INSTC runs north-south across Iran and connects the Caspian Sea to the Persian Gulf, allowing European goods transit east from the EU’s southern ports in Italy and Greece, in addition to the Bulgarian and Romanian Black Sea ports access via Turkey and Georgia to Azerbaijan’s Port at Baku. From there, Iran’s INSTC route takes them south and to markets in East Africa, the Middle East, Pakistan, India and South Asia.
At present, the Iranian INSTC is a multimodal road-rail connection, wherein the rail construction is continuing and should be fully completed next year. This is having a significant impact in how Iran is now being seen as a vital link between Europe and Asia.
To help speed up delivery times, Iran’s international cargo transportation through its airports increased by 128%, in the first month of the current fiscal year (March 21-April 20), according to the statistics of the Iranian Airports and Air Navigation Company.
About 4,100 tons of cargo were transported internationally through Iranian airports in that month compared with 1,800 tons in the same month of last year. That increase has also been reflected in passenger traffic, with international passenger transits through Iranian airports rising fourfold to 202,000 for the same period, as opposed to 48,700 in the previous year.
Iran’s airports are also undergoing significant upgrades, with both Chinese and Russian contractors retained to develop 116 Iranian airports in stages over the next two decades. Both China and Russia signed off 25- and 20-year investment and development agreements with Iran last year.
The ongoing trend saw Iranian goods transit increase by 52% in March and created something of a political quandary for both the European Union and United States, as Iran, like Russia is also under significant US sanctions.
Washington would prefer not to see any Iranian international trade or the facilitation of this, whereas Europe needs this access route to Asia following Russian sanctions.
At some point, the United States is going to make a call whether attaching the European Union to its own North American supply chains is more desirable than allowing Iranian trade to flourish. For now, Iran is being tolerated. However, one can expect gradual, possibly decade-long sustained pressure to see that this is eventually reversed, and that North American trade routes eventually take priority for the EU over Iranian and Asian ones.
The big attraction of INSTC is its key hub, namely Iran’s sole oceanic Chabahar Port, alongside the Sea of Oman, opening out into the wider Indian Ocean. INSTC was also presented as a transit option via Russia offering routes running from and to European ports, including Helsinki. It has now become a key part of the Southern Route running between Europe and Asia, according to bne IntelliNews.
INSTC Key to Developing Russia-Iran Cooperation: Novak
The INSTC could become key to developing economic cooperation between Russia and Iran, Russian Deputy Prime Minister Alexander Novak said at a meeting with representatives of Iran's business community.
"Russia is interested in creating the North-South international transport corridor. Its successful implementation, we believe, will give a powerful push to the development of trade with the Caspian basin and Persian Gulf. This is a landmark project that could become key for the development of our trade and economic cooperation," Novak was quoted by Interfax as saying.
Trade turnover between the two countries jumped by 81% to almost $4 billion, one of the highest figures in many years, as it grew by another 10% in the first quarter of 2022.
"Thanks to the efforts of the leaders of our countries, a path is being pursued to increasing trade, economic, logistics, investment, financial and banking cooperation, despite the unprecedented pressure that Russia is currently experiencing from unfriendly countries," Novak said.
He noted that special conditions are now taking shape for the countries to significantly expand cooperation and add momentum to major projects that are already being implemented in Iran, such as the construction of the Bushehr Nuclear Power Plant and Sirik thermal power plant, and ensure new development.
"Despite the geopolitical situation, Russian currently has the reserves of strength needed for the further transformation of the economy and its growth. We are ready to continue the implementation of projects that have begun and to launch new ones," Novak said.
The Russian official said comfortable conditions are being created for Russian companies to do business in Russia and in international trade.
"Together with our partners in the Eurasian Economic Union, almost 15% of Russian imports have already been exempted from import duties and this could become one of the stimulus measures for the development of trade and economic relations, cooperation and imports from Iran. Product certification and declaration procedures have been accelerated, control at the border has been simplified, and transport and logistics barriers are being removed. We need to continue to eliminate administrative barriers and simplify bureaucratic procedures," he added.
Novak noted that "additional budget investments" are being channeled "into Russian regions, sectors of the economy, major infrastructure projects; this is also an additional opportunity for cooperation with our businesses".
"Support measures for Russian businesses are constantly expanding and we are taking steps to expand border checkpoints. This will make it possible to increase freight traffic and accelerate imports of necessary products into the country," he said.
He also said a decision has been made to simplify the state registration of important goods such as medical products, drugs and medical equipment.
Additional measures of support are being offered in the form of subsidized loans for companies in the agribusiness, manufacturing and trade sectors, and there are special programs to support systemic companies adversely affected by sanctions.
"Today we see a significant number of vacated market niches that could be filled by Iranian products," the Russian official said.
"Russia has laid a course toward lifting restrictions in the way of imports, and in this regard establishing trade in national currencies acquires particular importance. The financial messaging system of the Russian Federation is currently one of the most reliable and it needs to be expanded."
INSTC is a major transit route designed to facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.
The corridor, which will connect Iran with Russia’s Baltic ports and give Russia rail connectivity to both the Persian Gulf and the Indian rail network, was high on the agenda of Iran’s Minister of Roads and Urban Development Rostam Qasemi during his recent visit to Moscow.
With the operationalization of the corridor, goods could be transported from Mumbai to the Iranian port of Bandar Abbas and further to Baku. They could then pass across the Russian border into Astrakhan before proceeding to Moscow and St. Petersburg, before entering Europe.
INSTC would substantially cut travel time for everything from Asian consumer goods to Central Eurasia’s natural resources to advanced European exports.
Railroad Cooperation
Iran and Russia signed a memorandum of understanding on expanding transportation cooperation between the two sides in the rail sector in Moscow recently.
This comprehensive rail cooperation MoU was signed by Qasemi and his Russian counterpart Vitaly Savelyev.
“We hope this agreement will further increase our transportation cooperation. The International North-South Transportation Corridor can serve as the main project connecting Russia, Iran, Central Asian countries and Caucasia. We also hope that, by collaborating with each other, we can complete the Rasht-Astara railroad,” Savelyev was quoted as saying by News.mrud.ir.
Qasemi said the Rasht-Astara railroad is the shortest and most cost-effective route in the region and by operationalizing it, trade and transit between Iran and Russia will increase significantly.
According to Kazem Jalali, Iran’s ambassador to Moscow, the Rasht-Astara railroad will be a great means to expand Iran’s economic relations with Russia.
He said the Rasht-Astara railroad will connect Iran’s economy from the east to the west and the implementation of this project is crucial for the country’s economy.
Jalali noted that Russia has realized the importance of the railroad and is determined to utilize this route in the future.
The Astara–Rasht–Qazvin railroad will provide a faster and more reliable connection from Russia and Azerbaijan to Iran. Presently, all freight is transshipped at the Astara terminal from wagons to lorries for further transportation across Iran. The Rasht-Qazvin section was launched in March 2019, but the Astara-Rasht stretch is yet to be launched.
