A total of 2.8 million tons of foreign goods transited via Iran during the first three months of the current Iranian year (March 21-June 21), registering a 43% rise compared with the similar period of last year, according to Javad Hedayati, director general of Transit and International Transportation Bureau with the Road Maintenance and Transportation Organization.
Shahid Rajaee Special Economic Zone in Hormozgan Province is Iran’s biggest transit gate in terms of volume of goods crossing the country.
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 goods transited via road and rail respectively.
Hedayati said the government is aiming to reach 20 million tons in foreign transit by the end of the current fiscal year (March 2023).
INSTC Operationalization Give Boost to Transit
Iran is looking to direct more than 10 million tons of the overall figure to the International North-South Transportation Corridor, the official was quoted as saying by the news portal of the Ministry of Roads and Urban Development.
According to the Islamic Republic of Iran Customs Administration, after seven years of decline in transit rates, in the fiscal 2021-22, more than 12.65 million tons of goods were transited from Iran, 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 the 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 Lines has extended 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 the demand increases, the number of these containers will increase continuously
Opportunity Arises From Ukraine Conflict
The Ukraine conflict has resulted in unexpected increases 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.
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, where rail construction is expected to be fully completed next year. This is having a significant impact on how Iran is now 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 a 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. But, given events, it has now become a key part of the Southern Route running between Europe and Asia.
“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 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 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. Most importantly, 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. He noted that this route should be considered in the context of INSTC, which has three routes running from Russia to Iran: through Central Asia, 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.
“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,” he wrote for Eurasia Daily Monitor, a publication of the Jamestown Foundation.
“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.”
