Iran, Turkey Target 1m Tons in Rail Cargo Transit

Iran and Turkey plan to increase the volume of annual rail cargo transit between the two neighboring countries to 1 million tons as per the agreement Tehran reached with Ankara, Islamic Republic of Iran Railway’s board member, Hossein Ashouri, said.

He also told reporters on Monday that Iran-Turkey transit cargo will be transported via Razi border-crossing in northwestern West Azarbaijan Province where Iran’s sole rail connection with the neighboring country passes.

He did not specify when the agreement was reached or whether a written contract has been signed between the two countries.

Last year, 350,000 tons of goods were transported through Razi border.

Ashouri told Financial Tribune that rail transit via the border-crossing jumped 46% year-on-year during the three months of the current Iranian year (started March 21), without specifying the tonnage of transported cargo.

According to the official, rail freight is in transit between Turkey on the one side and Pakistan, Central Asia and soon Afghanistan on the other.

  Iran-Europe Train

The extension of these transit routes will stretch from Turkey to Europe. Recently, we held talks with various European companies to launch train corridors from Germany to Tehran, Ashouri said.

The official added that negotiations are focused on two potential corridors, including an all-rail path from Europe to Turkey and Iran; as well as a second route that would include transportation of cargo via rail from western Europe to the Black Sea, where the cargo can be shipped by Ro/Ro vessels to Georgia and then carried by train to Iran.

Plans to launch multiple rail corridors to Europe come, as Iran-EU trade ties have been growing following the removal of nuclear sanctions and as Iran wants to shift part of the shipment of commercial exchanges to railroads.

Nuclear sanctions were lifted in January 2016, as part of a deal Tehran signed with world powers in July 2015 to resolve its long-disputed nuclear program.

According to Eurostat’s latest data shared with Financial Tribune, Iran exported €2.77 billion worth of goods to the European Union in the first quarter of 2017, registering a sixfold rise compared with the preceding year’s corresponding period. The country imported €2.52 billion worth of commodities from the continent during the same period, recording a %56 rise YOY.

German firms DHL, DB Cargo and DB Schenekr are among the companies involved in talks to launch the route. IRIR has held multilateral meetings with these companies and the authorities in Turkey to discuss rail corridors using existing infrastructures. IRIR hopes the negotiations will come to fruition in the coming months.

A division of the German national railroad company Deutsche Bahn AG, DB Schenker focuses on logistics. The company is active in air, land and sea freight; and a rail division made up of European rail freight companies.

DB Schenker, which comprises DB Schenker Rail and DB Schenker Logistics, is in charge of various modes of transport and logistical activities of Deutsche Bahn in some 2,000 locations in 140 countries. It is the biggest freight operator in the UK after buying out English Welsh & Scottish.

DB Cargo is also a subsidiary of DB Schenker. It is a German railroad cargo carrier operating across Europe, as well as in Central and Eastern Asia.

On its map of globally operating logistics routes, DB Cargo has already specified a route to Tehran, via Hungary, Romania, the Black Sea, Georgia and Azerbaijan.

Iran is also considering other routes via Azerbaijan as well, including one through Russia.

All the routes passing through Azerbaijan will depend on the completion of railroads from the Iran-Azerbaijan border to the city of Qazvin. These rail infrastructures will need a few years to become fully operational. However, Iran is keen to activate the planned corridors through a road-rail multimodal network.

“Should Turkey be serious in cooperation with Iran, we will prefer the Turkish path. But if Turkey is not serious, the route passing the Black Sea will be a competing path to the Turkish route,” Ashouri said.

Once the Germany-Iran corridor becomes operational, the 1-million-ton figure could reach 3 million tons next year.

  150% Growth Target

In a Monday press conference, Ashouri said IRIR is planning to increase Iran’s rail transit by 150% by the end of the current Iranian year (Match 20, 2018), adding that the state-run company has formed a working group to ensure it meets the target through the activation of cross-border rail connections and growing engagement with Iran’s neighboring countries.

Rail cargo transit in Iran has been on the rise in the past few years. The volume stood at 470,676 tons in the fiscal year to March 2014. It reached 1.2 million tons last year (March 2016-17).

So far this year (started March 21), the volume has exceeded 470,000 tons, registering a 55% rise compared with the similar period of a year before.

This year’s rail transit freight in Iran included fertilizers shipped Uzbekistan and Turkmenistan to the Persian Gulf, sulfur from Turkmenistan to southern Iranian ports, wood from Turkey to Nakhchivan, Mazut from Turkmenistan to the Persian Gulf and aluminum ingots and beans from Tajikistan to southern Iranian cargo ports.

Detergents, sugar, edible oil and steel products have also been transported from the southern Bandar Abbas Port to Central Asia.

Cotton from Uzbekistan has been the only product that has seen a drop in transit and that is due to Tashkent’s ban on the commodity’s export.