Around half of Iran’s 950 locomotives are out of order and, according to Minister of Roads and Urban Development Rostam Qasemi, there is a severe shortage of rail freight fleet.
“We need close to 1,000 more locomotives for our 14,000 kilometers of railroads. If this amount is procured, we can reach transit figures of up to 20 million tons per year, which can bring in more than $20 billion in revenues for the country,” Qasemi was quoted as saying by the Persian daily Shargh.
The problem, he added, is that local companies do not have the capacity to supply locomotives and the manufacture of 1,000 locomotives will take Iranian manufacturers around 15 years.
“This is time we don’t have. Therefore, we plan to cooperate with foreign companies and link them to Iranian companies to supply this demand.”
Qasemi noted that freight transportation via railroad in Iran is slow and many wagons are substandard.
According to Miad Salehi, CEO of the Islamic Republic of Iran Railways, about 200 locomotives went out of service around 20 years ago and since then, their spare parts are being used to repair the locomotives in operation.
“Some 200 more became dilapidated between 2018 and 2021 and about 60 others went out of order last [Iranian] year [March 2021-22],” he added.
He noted that the shortage of rail fleet is causing problems for different sectors.
Steel company owners in particular are very discontent with how poorly the rail system is working, as some factories have decreased production since their demand for raw materials is not being met due to slow rail transportation.
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 Company
IRIR data show transportation via railroad stood at around 50 million tons in the fiscal 2018-19 and declined to 40 million tons in the fiscal 2021-22.
Secretary of Rail Transportation Companies and Related Industries Guild Union says IRIR has strict rules that make it extremely difficult for private sector businesses to enter the field of rial transportation and locomotive production.
“Private sector businesses believe they can fix the dilapidated locomotives and put them back on track, but IRIR believes new or secondhand locomotives need to be imported through oil barter since the budget dedicated to Iranian railroads is not sufficient to meet repair expenses. I would side with the private sector because this way instead of waiting for locomotives to be manufactured and imported over months, we can repair many in a very short period of time,” Sobhan Nazari added.
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 Company.
Iran unveiled its first domestically-manufactured locomotive in November 2020 after 10 years, called “Pars 33”, and with that, Wagon Pars Company, which had ceased manufacturing locomotives around 10 years ago, officially resumed 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.
A total of 788 units of rolling stock, including passenger and cargo wagons as well as locomotives, were manufactured in Iran in the fiscal 2020-21.
Nazari noted that the government was supposed to hand all locomotives to the private sector as of the fiscal 2009-10, but because its other locomotives are working and generating revenues, it is reluctant to do so.
According to Reza Shahrestani, the head of Steel Sellers Association, rail transportation globally costs around one-sixth of road transportation.
“This is while in Iran we sometimes pay more for our consignment to be transported via railroad [compared to road],” he added.
Referring to the slow speed of rail transportation in Iran, he said, “Elsewhere in the world, the average speed is around 80 kilometers per hour but here it is between 20 and 25 km/hour.”
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 years to come.
The report said the global rail freight transport market was valued at $247.39 billion in 2020 and anticipates a compound annual growth rate of around 2% over 2021-26. That makes rail freight a significant part of global economic recovery and has investors taking 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 the global trade flows.”
While rail freight can play a role in globalization, the report notes that in many regions, it is a key 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,” the report said.
