A total of 4.92 million tons of foreign goods transited from the Iranian borders during the first four months of the current year (March 21-July 22), registering a 31% rise compared with the similar period of last year, according to the spokesperson of the Islamic Republic of Iran Customs Administration.
“Shahid Rajaee Special Economic Zone registered the highest volume of transit among Iran’s border terminals with 1.73 million tons,” Rouhollah Latifi was also quoted as saying by IRNA.
The zone was followed by Parvizkhan in Kermanshah Province with 582,000 tons (up 141%), Bashmaq in Kurdestan Province with 448,000 tons (down 30%), Bazargan in West Azarbaijan Province with 410,000 tons (up 9%), Sarakhs in Khorazan Razavi Province with 332,000 tons (down 40%), Bileh Savar in Ardabil Province with 245,000 tons (up 88%), Jolfa in East Azarbaijan Province with 217,000 tons (up 61%), Lotfabad in Khorasan Razavi Province with 150,000 tons (up 115%), Bandar Lengeh in Hormozgan Province with 137,000 tons (up 124%) and Mirjaveh in Sistan-Baluchestan Province with 107,000 tons (up 174%).
With 12 wharfs, Shahid Rajaee is Iran’s biggest container port, accounting for 90% of the country’s total container throughput. Over half of Iran’s commercial trading is carried out at Shahid Rajaee, which is located 23 kilometers west of the port city of Bandar Abbas, the capital of Hormozgan Province.
Iran reportedly earns $150 and $50 for each ton of transit goods via road and rail respectively.
The government says foreign transit is expected to reach 20 million tons by the end of the current year in March 2023.
INSTC to Boost Transit
Latifi said Iran intends to direct more than 10 million tons of the overall figure to the International North-South Transportation Corridor, the news portal of the Ministry of Roads and Urban Development reported.
According to the Islamic Republic of Iran Customs Administration, after seven years of decline in transit rates, more than 12.65 million tons of goods were transited from Iran in the fiscal 2021-22, registering a 68% rise compared with the year before.
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 carried 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.
Iran’s state-run Islamic Republic of Iran Shipping Line has moved to extend its network by facilitating the transport of Russian goods to India via INSTC, a land-sea corridor passing through a dozen countries to bypass Western sanctions against Russia.
The corridor entered the operational phase after completing a trial phase in June when containers of wood laminate sheets departed from St. Petersburg toward Nhava Sheva Port in India.
The cargo arrived in India earlier this month after traveling from Astrakhan Port in southern Russia to the Iranian ports of Anzali on the Caspian Sea and Bandar Abbas on the Persian Gulf.
The establishment of INSTC, the multimodal network of ships, rail and roads for moving freight between Eastern Europe and South Asia, was first introduced in September 2000. Due to geopolitical obstacles, interest in the route waned over time, but it has been reintroduced following the conflict in Ukraine.
IRISL has assigned 300 containers to transport goods between Russia and India, and if demand increases, the number of these containers will increase continuously
Opportunity Arises From Ukraine Conflict
The Ukraine conflict has resulted in an unexpected increase in trade flows east, 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.
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, rail construction in the Iranian INSTC segment is continuing and should be fully completed next year. This is having a significant impact on how Iran is being seen as a vital link between Europe and Asia.
According to bne IntelliNews, 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 port, Chabahar, on 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.
“Since the inevitable cancellation of western trade with Russia after the Ukraine conflict erupted in February, Putin has increasingly made clear that the strategic reorientation of Moscow’s economic ties from east to west had to make a dramatically new emphasis on north to south and north to east relations not only for Russia’s survival, but for the survival of all Eurasia. Among the top strategic focuses of this reorientation is the long overdue International North-South Transportation Corridor,” wrote Matthew Ehret, senior fellow at the American University of Moscow and a BRI expert for The Cradle.
“Until recently, the primary trade route for goods passing from India to Europe has been the maritime shipping corridor passing through the Bab El-Mandeb Strait linking the Gulf of Aden to the Red Sea, via the highly bottlenecked Suez Canal, through the Mediterranean and onward to Europe via ports and rail/road corridors. Following this western-dominated route, average transit times take about 40 days to reach the ports of Northern Europe or Russia. Geopolitical realities of the western technocratic obsession with global governance have made this NATO-controlled route more than a little unreliable. Despite being far from complete, goods moving across the INSTC from India to Russia have already finished their journey 14 days sooner than their Suez-bound counterparts while also seeing a whopping 30% reduction in total shipping costs. These figures are expected to fall further as the project progresses.”
Ehret noted that INSTC would also provide a new basis for international win-win cooperation much more in harmony with the spirit of geoeconomics unveiled by China’s Belt and Road Initiative in 2013.
Vali Kaleji, an expert on Central Asia and Caucasian studies, says given the conditions of the Ukraine war, Astrakhan Port and Solyanka have become two of the most important transit links between Iran and Russia. “This route should be considered in the context of INSTC, which has three routes running from Russia to Iran, through Central Asia, the Caspian Sea and South Caucasus. Since restrictions have been placed on passages from Russia to Europe in response to the war, Moscow’s attention to all three transit routes has increased significantly,” he wrote for Eurasia Daily Monitor, a publication of the Jamestown Foundation.
“In Central Asia, the road and rail routes connect Russia to Iran through Kazakhstan and Turkmenistan. In South Caucasus, due to the severance of relations between Russia and Georgia, the road route from Russia to Azerbaijan through the Baku-Astara highway is the most consequential passage from Russia to Iran. Although the linked rail networks of Russia and Azerbaijan still lack a physical connection with Iran, at present, the only remaining gap is a 164-kilometer railroad section from Rasht to Astara. Until this segment is finished, freight moving by train must be transferred to trucks and then back again.”
Kaleji noted that due to Russia’s strong need for the north-south corridor, new agreements have been made between Iran and Russia to complete the Rasht-Astara section and Tehran has sought to attract Russian investment for the project.
