Domestic Economy

Shahid Rajaee Port Gearing Up for Increased Traffic

Shahid Rajaee Port Gearing Up for Increased TrafficShahid Rajaee Port Gearing Up for Increased Traffic

Shahid Rajaee Port, Iran’s biggest container port at the mouth of the Strait of Hormuz, is preparing to handle increased marine traffic in the post-sanctions era, says director general of Hormozgan Ports and Maritime Department Ebrahim Idani.

The port, 23 kilometers west of the port city of Bandar Abbas, the capital of Hormozgan Province, has the capacity to handle up to 3.3 million TEUs (20-foot equivalent units) of containerized cargo per year.

According to Idani, development projects at the port are aimed at increasing container handling capacity to 6 million TEU in the near future and 8 million TEUs later on.

In addition to containerized cargo, Shahid Rajaee Port handled 75 million TEUs of oil and non-oil products during the past Iranian year (ended March 20), accounting for 53% of total port operations during the period.

The port was also responsible for 25% of the country's total exports and 55% of exports through ports during the past Iranian year, said the official.

The port contains 23 berths with alongside depth of 15 meters and has over 19 hectares of roofed warehouses. It has berths with alongside depth of 17 meters, capable of hosting container ships up to 12 million TEUs in capacity.

> An Improving Outlook

The Business Monitor Research Group forecasts that container throughput at Shahid Rajaee Port will expand by 6.5% year-on-year in 2015 to reach 1.7 million TEUs on the back of the nuclear agreement which sets the stage for the return of Iranian crude in the global oil market by 2016, as well as a strong uptick in foreign investment.

In its 5-year forecasts to 2019 of Iran’s shipping sector, Business Monitor International projects that annual container throughput in Bandar Abbas will on average grow 7% per annum. This would take 2019's handling figure to 2.22 million TEUs.

The forecast is still below the pre-sanctions peak of 2.84 million TEUs recorded in 2011, but nevertheless marks the beginning of the recovery for the port.

A number of the world's major shipping lines, including France’s CMA CGM and Taiwan’s Evergreen, have already resumed services to and from Shahid Rajaee Port after a landmark nuclear deal was reached between Iran and major world powers in July to give Iran sanctions relief in exchange for limits on its nuclear program.

A projected increase in the number of container lines serving Iran will improve the country's connectivity to global trade routes and will lead to a decrease in import and export costs.

The sanctions and resulting decrease in calls from global shipping lines has led to a considerable reduction in Iran's connections to shipping routes. This drop is best displayed by the UNCTADstat Liner Connectivity Index, which measures the countries' integration level into global liner shipping networks. Iran achieved its highest position on this Index in 2010, with a score of 30.73 out of 143.57. Since then, with the onset of sanctions Iran's score has continually decreased, dropping to its lowest-ever point of 5.85 out of 165.05 in 2014. BMI believes that Iran's connectivity score will now start to improve. The country is set to benefit from the liner connections of the companies that resumed services at the end of 2014, with their calls likely to have more of an impact in 2015 onwards, and as more companies return, the country's liner connectivity will improve further.

Bandar Abbas is set to become the biggest cotton transit terminal for Central Asia, following the establishment of a private sector loading and offloading unit. Authorities have completed 3 kilometers of railroads and work on the remaining 3 kilometers is 40% complete, according to Ali Estiri, the head of the Ports and Shipping Office in Hormozgan Province. The facility will cost 280 billion rials (about $8.5 million) and will have loading and offloading capacity of 800,000 tons of cotton annually. Goods, including cotton, minerals, chemical fertilizers, oil derivatives and aluminum will be transported to South East Asia and Persian Gulf countries.