Domestic Economy

Iran Container Ships Set for Europe Sailings After 5 Yrs.

Iran Container Ships Set for Europe Sailings After 5 Yrs. Iran Container Ships Set for Europe Sailings After 5 Yrs.

Iran’s biggest shipping line hopes to start calling again at European ports, with plans for a biweekly service connecting India, Iran and Europe as early as next month, according to people familiar with the matter.

The service would be the first time in five years that ships from the company, Islamic Republic of Iran Shipping Lines, would tie up at European ports. The plan comes just two weeks after the lifting of broad economic sanctions against Iran, part of an international deal to limit Tehran’s nuclear program, The Wall Street Journal wrote.

Iran borders the Persian Gulf and Sea of Oman to the south and the Caspian Sea to the north. It has long been a power in the global shipping industry. The country’s tanker-ship operator boasts the world’s largest tanker fleet by capacity. IRISL is a much smaller player in the global container-shipping industry.

IRISL or one of its subsidiaries plans to start a regular service shipping 6,000 containers along a route that would include stops at the Iranian port of Bandar Abbas on the Persian Gulf, Nhava Sheva in India, Istanbul and European ports, including Felixstowe in UK, Genoa in Italy and Le Havre in France, according to one person familiar with the plans. More ports could be added later.

Executives hope the sailings will be the first step in an ambitious plan by the Iranian company to win a slice of the global container-shipping market. The company is also contemplating purchases of giant Triple E container vessels, the largest class of container ships in the world.

IRISL’s reentry into global container shipping comes at a rough time for the industry. Freight rates have been stuck below break-even levels for more than a year amid overcapacity estimated by analysts at more than 30%, or 442,000 containers this year.

The planned service won’t add much global capacity and is targeted at boosting the underserved Iranian market. But the company is aiming eventually to add capacity of about 580,000 containers by 2020, people familiar with the matter said, adding to the international glut.

“No matter what they do, IRISL will face a combination of fierce competition and very low demand,” said Lars Jensen, chief executive of Sea Intelligence Consulting in Copenhagen.

“We have a market with severe structural overcapacity, so any move by IRISL to go on a buying spree of big ships to join the big leagues will involve very high risk.”

Jensen said that in addition to IRISL, global shipping firms will be jostling for a slice of the newly opened Iran market.

The last time IRISL made port calls to Europe was in 2010 through its subsidiary Hafiz Darya Shipping Co., or HDS Lines. Brokers said HDS Lines will likely be the one launching the new sailings to Europe.

IRISL Managing Director Mohammad Saeidi told The Wall Street Journal late last year that annual seaborne trade between the European Union and Iran amounted to $15 billion before the first broad, international sanctions were imposed on the country in 2008. Tehran expects to reach that level within three years after sanctions are lifted.

Anne Gronbjerg, Maersk’s managing director in Jordan, Kuwait and Iraq, said overall container volumes last year in and out of Iran were half of what they were in 2011, before the latest wave of sanctions in 2012. Brokers said they expect a boom in Iranian imports of household goods, electronics, clothing and toys this year with all those products moved on container vessels.

Saeidi said in the interview in October that IRISL had a fleet of 41 container vessels, with the biggest ships having a maximum capacity of around 12,000 containers. Over the past four months, Saeidi has been touring European countries with major shipping clusters such as Greece, Germany, Cyprus, France and Denmark, to lay the groundwork for the company’s reemergence.

The IRISL and French giant CMA CGM signed an agreement on Thursday during a visit to Paris by Iranian President Hassan Rouhani, which will see the two operators sharing vessels, routes and port calls.

People involved with IRISL’s plans said the company plans to tap Chinese banks and shipyards for new ship financing and construction. Under guidance from Beijing, lenders such as China Development Bank and the Export-Import Bank of China are providing billions of dollars in loans to operators, provided the orders go to Chinese yards.