Economy, Business And Markets

High Transportation Costs Hindering Exports

High Transportation Costs  Hindering ExportsHigh Transportation Costs  Hindering Exports

High transportation costs in Iran weigh heavily on exporters, said deputy minister of industries, mining and trade at the First Export Transportation Conference held in Tehran on Sunday.

Valiollah Afkhamirad added that countries with high energy costs are faring considerably better than Iran in keeping their transportation costs in check.

“Transportation cost for Iranian exports is almost twice as that in most industrial countries,” Afkhamirad was quoted as saying by IRNA.

Addressing Iran’s transportation woes, the official compared the country’s port capacity with China and the UAE–two of Iran’s top trade partners.

According to Afkhamirad, the operational capacity of Iranian ports is 5 TEU on average, while the figure is 21 million for the UAE and 182 million for China.

Furthermore, shipping costs and time needed for loading and unloading commodities at the Emirati port of Jebel Ali are about $13 per container and 4 hours respectively, while it is close to $43 per container and 4 days and 9 hours in Iran’s Bandar Abbas Port.

Afkhamirad emphasized that the domestic transportation sector must take advantage of cheap energy resources and become more globally competitive.

The shortcomings of domestic air transportation was another topic of discussion at the conference.  

According to Maqsood Samani, chairman of the Association of Iranian Airlines, compared Iranian airlines with their regional rivals.

“The total number of planes of domestic airlines is less than only one of Qatar or Turkey’s airlines,” he said.

“This is while the global aviation industry has an annual turnover of more than $2 trillion and world’s air transportation traffic is forecast to double in the next 15 years.”

Samani noted that domestic air cargo has followed a declining trend for the past five years, as it fell to 51,630 tons per year in 2011, indicating an 8,000-ton drop in volume compared to 2010.

The transport sector in Iran is expected to be one of the main beneficiaries of the landmark nuclear deal.

The Business Monitor International research group, in its 2015 report on Iran’s infrastructure sector, forecast that the removal of financial sanctions will facilitate project financing and attract foreign investment into Iran’s transport sector.

The report, however, warns that structural weaknesses in the Iranian economy and operational hurdles such as bureaucracy, lack of transparency and weak institutional framework could present obstacles to foreign investors.