Economy, Business And Markets

Iran Container Shipping on Growth Path

Iran Container Shipping on Growth PathIran Container Shipping on Growth Path

Container throughput at Iran’s ports should grow by up to 25% per annum over the next five years, as a confluence of benefits is realized from the expected relaxation of sanctions, a senior Iran-based industry researcher and commentator said.

“Within the coming five years, Iran can expect to expand its throughput to around 8 million teu [twenty-foot equivalent unit] per annum, equating to 25% growth on an annual basis,” Mehdi Rastegary, head of research and development with Sina Ports & Marine Services based in Bandar Abbas, told IHS Maritime.

Iran has been subject to varying levels of United Nations, European Union and United States sanctions due to its nuclear program, but a significant part of those sanctions are set to be relaxed following the agreement reached in July between Iran and P5+1 (the United Kingdom, France, the US, China and Russia, plus Germany).

The agreement was formalized in the Joint Comprehensive Plan of Action under which sanctions are to be withdrawn in a phased manner beginning in the first half of 2016.

Iran was an important driver of growth in global container trades from 2006 to 2010, but a tightening of sanctions at that time quickly eroded its growth. Throughput at its main port, Shahid Rajaei on the Persian Gulf, which is responsible for more than 80% of the country’s total container trades, fell from a peak of 2.8 million teu in 2011 to 1.82 million teu in 2014.

From 2010 to 2014, the position of the port in the ranking of top global container ports fell more than 40 places, from 44 to 87.

“In the fiscal year March 2014-15, total container throughput was 2.45 million teu, an expansion of 10.6% on the previous year. However, throughput in the first half of the current fiscal year is down by around 10%,” said Rastegary.

“Current demand is mainly around gateway business but the termination of sanctions is expected to see growth in transshipment volumes to westbound ports in the Persian Gulf.”

The reestablishment and development of trade ties with the EU, China, Russia, India and the United States will clearly be the key driver of growth, together with demand from a huge and growing market of over 80 million people.

Iran sees itself as a potential shipping gateway for several underdeveloped neighboring countries, including Afghanistan, Iraq and several CIS countries.

“Iran is moving toward becoming a global trade power. It is already an influential member of several important supranational economic organizations, including the GECF [Gas Exporting Countries Forum], the Economic Cooperation Organization and OPEC [Organization of Petroleum Exporting Countries]. The expectation is it will eventually join others, including the WTO [World Trade Organization],” said Rastegary.

Government policies, including plans to develop a value-added export sector to diversify the economy away from reliance on oil and gas production, development of Special Economic Zones and Free Trade Zones in port areas and moves to attract more foreign direct investment are expected to grease the wheels of growth in container shipping.

SEZs are being developed at Shahid Rajaei, Imam Khomeini Port, Bushehr, Noshahr and Astara, while FTZs are being developed at Chabahar, Anzali, Khorramshahr and Abadan.

“Development of the Iranian fleet in the post-sanctions years will be a main driver of throughput at Iranian Ports,” said Rastegary.

According to Mohammad Saeidi, chairman and managing director of the Islamic Republic of Iran Shipping Lines, Iran will add 570,000 teu of containership capacity, 2 million deadweight tonnage of dry bulk vessels and 1.6 million dwt of tankers by 2020.

A series of new contracts is to be signed with yards in China and possibly South Korea as the country invests funds built up in overseas banks through trading during the sanctions era.

On a tonnage basis, containerized cargoes currently account for around 16% of the total throughput of Iranian ports and 25% of non-oil throughput.

Iranian ports currently have the capacity to handle 5.34 million teu per annum, doublethe current throughput levels. There are a number of capacity expansion projects in the pipeline, including second and third phase projects at Shahid Rajaei and construction of new terminals at Chabahar and on Negin Island in Bushehr.

Overseas interest in the post-sanctions potential of the country’s shipping sector is rising. CMA CGM, Hanjin Shipping and Yang Ming have resumed calls at Bandar Abbas.

Most carriers dropped Iran from their networks in 2013-14 when sanctions were tightened, while a few such as Wan Hai and Pacific International Lines resumed calls at Bandar Abbas in 2014 when restrictions were eased.

A French container ship berthed at Iran’s Bushehr Port for the first time on Nov. 1 since the conclusion of the historic nuclear deal on July 14, IRNA quoted general manager of Bushehr Province Ports and Maritime Department, Mohammad Rastad, as saying on Sunday.  

“The 157-meter container ship with a draft of 5.7 meters belongs to France’s CMA CGM Group, the third largest container company in the world,” he added.

In August, Contship Italia, Italy’s largest container terminal operator, signed a strategic memorandum of understanding with Sina Port and Marine, Iran’s biggest port company.

Diego Aponte, the chief executive officer of Mediterranean Shipping Co, and Sultan bin Sulayem, chairman of DP World, the Dubai-based global container terminal operator, have also visited Iran recently, while Maersk Group has had people on the ground exploring investment opportunities in the country for some time.

A delegation from the Port of Antwerp visited in late October to look for opportunities to exploit relaxed sanctions. Led by port alderman and port authority chairman, Marc Van Peel, the group of petrochemical and shipping experts met with officials of various ministries in Tehran, petrochemical organizations and private companies. The exploratory mission was aimed at making contact with official bodies, the Belgian port said in a statement.