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Iran Opportunities for Global Shipping Lines

The anticipated surge in cargo to Iran is likely to attract significant attention from all main carriers, as slow demand growth globally leaves vessels significantly underutilized
Iranian ports’ total container traffic rose by 16% in August, 19.5% in July and 14% in June.Iranian ports’ total container traffic rose by 16% in August, 19.5% in July and 14% in June.

Iran’s changing place in the regional and global trade arenas will feature at this year’s Middle East Terminal Operations Conference and Exhibition, taking place on December 6-7 in Dubai, UAE.

TOC Events Worldwide is a London-based organizer of conferences and exhibitions for cargo owners, ports, shipping and terminal professionals.

The easing of nuclear sanctions against Iran is still expected to provide a much-needed boost to global and regional container supply chains.

As the second most populous country in the Middle East, Iran’s 80 million citizens afford an opportunity for shipping lines to reconnect this important market with international trade lanes and rebuild the country’s economy after years of sanctions-induced isolation.

Iranian state shipping carrier, the Islamic Republic of Iran Shipping Lines, has seen its global ranking rise following fleet investment and new service launches to Asia, Europe and the Middle East.

As of October 2016, IRISL is reported as the 19th largest in Clarkson Research’s list of top operator-owned container shipping fleets and 21st largest by TEU capacity in Alphaliner’s Top 100 list.

Speaking to Reuters this October, IRISL Chairman and Managing Director Mohammad Saeedi, who joins TOC Middle East on December 6 as a keynote speaker in the conference, said he expects the company to be “back to normal” by mid-2017.

  Foreign Interest

Deep sea carriers from around the world have also been dipping their toes in the Iranian water to gauge the true appetite for container traffic.

Most recently, this includes Maersk Line, which announced on October 20 that it will resume service to Iran after a five-year hiatus.

MSC, Maersk’s 2M alliance partner, reentered the Iranian market back in January, while France’s CMA CGM was an early mover, re-initiating service in August 2015 and announcing a tie-up with IRISL in January.

Other lines returning to the market since mid-2015 include Evergreen, China Shipping and UASC.

Iran is also pursuing inter-governmental agreements to boost trade and transport cooperation with other nations, including six memoranda of understanding signed this October 23 following a meeting in Tehran between Iranian Minister of Roads and Urban Development Abbas Akhoundi and Germany’s Minister of Transport and Digital Infrastructure Alexander Dobrindt.

All this has wide implications for Iranian ports, which are clearly benefitting from the relaxation of sanctions on a tonnage basis year-on-year, although those gains have yet to genuinely materialize for the container trade.

Year-on-year to August container volumes actually fell back slightly, by 0.4%, to 1.67 million TEU. But this masks a surge in container traffic in recent months. The total rose by some 16% in August, 19.5% in July, and 14% in June, according to figures released by Iran’s Ports and Maritime Organization.

Iran also sees itself as a maritime gateway for neighboring countries, including Afghanistan, Iraq, and several Commonwealth of Independent States members. This should further boost throughput at the country’s major ports.

“The anticipated surge in cargo to Iran is likely to attract significant attention from all main carriers, as slow demand growth globally leaves vessels significantly under-utilized. With global overcapacity, there is no shortage of tonnage with which to serve a growth in demand,” Lars Jensen, CEO & Partner at industry analyst SeaIntelligence, who will speak in a special session on Iran at this year’s TOC Middle East, was quoted as saying by online newspaper Hellenic Shipping News.

However, two other key risks must be considered by the market participants, Jensen cautions.  “One is the risk of congestion issues in Iranian ports should a demand surge be too big. The other is the risk of a freight rate war, as carriers all battle for position in the growing market.”

  Investment Opportunities

Already, Iran’s port sector is attracting outside investment, sometimes for purely commercial reasons but at other times for geopolitical reasons, looking to leverage Iran’s pivotal role as a bridge between the Middle East and Central Asia.

In May this year, India’s Prime Minister Narendra Modi visited Iran, resulting in the signing of a pact for India to develop the strategic Chabahar Port.

Chabahar is located in southeastern Iran in the Sea of Oman. It is the country’s only port with direct access to the ocean. Indian Ports Global, a recently formed port project investment arm of the Indian shipping ministry and a joint venture between Jawaharlal Nehru Port Trust and Kandla Port, will invest $85 million in developing two container berths with a length of 640 meters and three multi-cargo berths.

In addition, India’s state-run railroad IRCON International will establish a line at Chabahar to move cargo to Afghanistan. The 500­km rail link between Chabahar and Zahedan will link Delhi to the rest of Iran’s rail network.

The port will allow India to bypass Pakistan in transporting goods to Afghanistan using a sea­land route. At present, Pakistan does not allow India to transport through its territory to Afghanistan. It has, however, recently allowed some Afghan shipments to come to India.

Foreign policy experts also see India’s enthusiasm for Chabahar as a means to counter China’s presence in the region, most visibly manifested through China’s support for Pakistan in developing Gwadar Port.

  Collaboration and Expansion

More recently, Antwerp Port Authority signed a collaboration agreement with Shahid Rajaei Port Authority that controls the port of Bandar Abbas. The latter accounts for 90% of Iran’s container import and export shipments and for nearly half of the 200 million tons of freight handled by the 11 Iranian ports combined.

Until 2010 and the impact of nuclear sanctions, Antwerp was the most important European destination port for Iranian cargo. Then in March this year, IRISL returned to Antwerp with the first container ship since sanctions were lifted.

Under the terms of the MoU, Antwerp and Bandar Abbas will join forces so that companies in both ports can collaborate closely once more. This will involve, among other things, exchanging information on statistics and port development projects, as well as collaboration in the field of training. Antwerp runs its own training institute, APEC.

PMO has “kick-started” the rehabilitation of the old 1.2-million TEU T1 container terminal at Bandar Abbas and will also add 3.5 million TEU of capacity to the T2 facility, said Madjid Tehrani, organization development advisor to Sina Ports & Marine Services, Iran’s largest terminal operator, and also a speaker at this year’s TOC Middle East.

Tehrani also said three port tenders issued by PMO are expected to be held before the end of 2016. These include a five-year management contract for T1, a 15-year revenue sharing contract for T2 and a 25-year build-operate-transfer project for T3, a greenfield transshipment terminal at Bandar Abbas with an anticipated capacity of “at least 1.9 million TEU”. Rail and multimodal connectivity and port logistics capabilities are also high on the agenda.

  Conference Highlight

Iran’s reemergence into the international trade arena is just one of the hot topics on this year’s agenda.

During the two-day high-level event, senior consultants and practitioners from across the supply chain will walk delegates through key issues in regional container trade and logistics.

Container Supply Chain sessions will assess the Business, Economic and Container Outlook, the One Belt One Road initiative, Regional Port and Terminal Development and ICT Innovation in Ports and Logistics, plus a special Sea-to-Air Cargo Briefing hosted by the Loadstar magazine.

TECH TOC Operations and Technology sessions will address port design, automation, skills development and training, and digitization, among other topics.

TOC Middle East returns to Dubai for the fifth time, once again with the full support of DP World–UAE region.

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