Despite the benefits of rail freight transportation compared to other modes, Iran has been suffering from a low share of railroad in the movement of cargo.
Rail freight transport holds critical importance in supporting a country’s economy due to its role in ensuring seamless and efficient flow of goods locally and across borders.
Iran has close to 15,000 kilometers of railroad, yet the share of rail in freight transportation is less than 10%, according to Minister of Roads and Urban Development Rostam Qasemi.
The low speed of cargo trains in Iran (currently at an average of 100 kilometers per hour), long distances between rail corridors and freight centers as well as the dilapidated rail fleet are the main reasons behind the lackluster performance of the country’s rail sector, Mehr News Agency reported.
Rolling stock imports are banned and the market is entirely supplied by domestic producers, mainly Arak Province’s Wagon Pars Company, Isfahan’s Kowsar Wagon Company, Derakhshan Steel Company and MAPNA Group.
Iran unveiled its first domestically-manufactured locomotive in November 2020 after 10 years, called “Pars 33”, and consequently, Wagon Pars Company, which had ceased manufacturing locomotives around 10 years ago, officially resumed its activity in the field of locomotive production.
Wagon Pars, launched in 1974 in the city of Arak in Markazi Province, is a subsidiary of the Industrial Development and Renovation Organization of Iran and the largest manufacturer of freight, passenger and subway wagons in the Middle East.
Wagon Pars CEO Morteza Molla-Nejad said Iran has succeeded in manufacturing wagon brakes.
“Very soon, we will become self-sufficient in all railroad requirements, including passenger wagons and locomotives,” former roads minister, Mohammad Eslami, was quoted as saying by the news portal of the Ministry of Roads and Urban Development.
A total of 788 units of rolling stock, including passenger and cargo wagons as well as locomotives, were manufactured in Iran during the last Iranian year (March 2020-21), showing a 30% increase compared with the year before, according to the minister.
“All the manufactured rolling stock were 100% locally-made. The process will continue in the current year and the years to come and domestic wagon and locomotive construction firms keep receiving orders from rail transportation companies,” Eslami said.
With the aim of reducing road traffic and battling air pollution, the Ministry of Roads and Urban Development has placed the development of Iran’s rail sector on top of its agenda.
Iran’s rail freight transportation grew by 29% in the last fiscal year (ended March 20, 2021) compared with the year before, despite border closures during the first four months of the Covid-19 pandemic.
The statement was made by Saeed Rasouli, former managing director of the Islamic Republic of Iran Railways, in a virtual meeting of the 36th Conference of the Organization for Cooperation of Railroads (April 19-23, 2020).
“Exports by the Islamic Republic of Iran Railways increased by 5% in the last fiscal year [March 2020-21] compared with the year before. More than 650,000 tons of cargo were carried across Iran-Turkey rail border [Razi border terminal, Iran’s sole rail connection with the neighboring country], reaching a record high in the past 10 years,” IRNA quoted Rasouli as saying.
A report, published by Research and Markets, an American-based specialist in business analysis, has singled out rail freight as a significant area of commercial growth in the next five years. The report suggest that the global rail freight transport market was valued at $247.39 billion in 2020 and anticipates a compound annual growth rate of around 2% during 2021-26. That makes rail freight a significant part of global economic recovery and investors have taken note.
“North America leads the global rail freight market,” says the company’s senior press manager, Laura Wood. “Asia-Pacific is expected to overtake North America during the forecast period. Moreover, the rise in global trade and various trade agreements are boosting global trade flows.”
While rail freight can play a role in globalization, the report notes that in many regions, rail freight is a factor in developing local economies.
“In some regions of Central Asia, Eastern Europe, South Asia, Southeast Asia and Sub-Saharan Africa characterized by groupings of many small countries, rail freight can increase economic integration by providing access to international and regional markets and connecting landlocked countries,” it says.
