Economy, Domestic Economy

Int’l Forwarders Upbeat About Iran Opening

Int’l Forwarders Upbeat About Iran OpeningInt’l Forwarders Upbeat About Iran Opening

Forwarders expect Iran to offer a medium-term demand boost and many are gearing up for new business, as they seek to expand operations in the country of some 80 million people.

A number of forwarders and third-party logistics providers are cautiously taking steps to extend operations in Iran in anticipation of a surge of infrastructure spending, renewed energy exports and higher imports of fast-moving consumer goods, freight forwarding industry’s journal Lloyd’s Loading List reported.

Panalpina already offers regular air, ocean and road services to Iran, having prepared for the lifting of sanctions for the last two years.

“Commodities vary from telecom to automotive and oil and gas equipment as well as aerospace,” said a spokesperson. “The facilities in Iran can handle the current growing demand and there are plans in place to improve the infrastructure going forward. We expect a gradual increase of traffic, and not a surge overnight.”

Middle East-based Aramex has been operating in Iran for the last 10 years and now employs around 150 professionals there.

Chadi Fares, global air freight director, said the company has had to limit its network to domestic operations due to the imposed sanctions and in order to abide by international laws and regulations.

“Once the sanctions are completely lifted, business should be as usual in Iran,” he added. “Currently, we are monitoring and will evaluate the situation accordingly.”

Fares forecasts that lifting sanctions would see a growth in all market segments, particularly imports of spare parts, commercial and high-tech goods.

“Iran is a big regional market, has a massive potential and developing infrastructure,” he said. “For us, our approach for doing business in Iran is the same as any other market. The lifting of sanctions means that opportunities for trade are opening. We believe that any change in the market that enhances global trade and connectivity is good for our business,” he said.

“We are continually evaluating the situation and how the environment is developing in Iran in light of the sanctions being lifted.”

  Biggest Market Opportunity in a Decade

Some freight forwarders see major new market opportunities following the lifting in January of UN nuclear-related trade sanctions imposed on the Islamic Republic, even though US companies are still excluded from most trading activities with Iran because of unilateral US sanctions that remain in place.

“It’s the biggest market opportunity to have emerged in the past decade or so,” observed Thomas Blank, Europe managing director for Hong Kong-headquartered 3PL Kerry Logistics.

“The removal of the sanctions is something people have been waiting for for many years, and it’s going to have a big impact on exports from Germany and China to Iran, because for the past 30 years, capital investment (in the country) has been close to zero,” he said.

Blank said the interesting part is that only a few forwarders have been dealing with Iran until now, which means there will be a similar starting point for us all, and therefore a real race to land business.

“Kerry Logistics has a plan for Iran and we are determined to be there,” he said.

Panalpina believes Iran is a highly attractive market.

Regional CEO for the Middle East, Africa and CIS, Peter Triebel, said, “Our staff in the Middle East and from Europe have conducted regular business trips to Iran in the last couple of months and we are in the process of deploying a Panalpina delegate to the country. Indeed, regular business relating to the telecoms vertical has already started and is handled in close cooperation with our local agent, Chain International Transport.”

DB Schenker, a major player in the automotive vertical, is expecting the lifting of sanctions to provide scope for Iran, a country with a population of 80 million, to become a major importer of vehicles, the company confirmed.

Before the sanctions, Germany used to be Iran’s biggest trading partner. DB Schenker’s presence in Iran dates back to the 1950s and in recent years has focused on an agency agreement.

The German firm is making preparations to provide multimodal solutions—by air, ocean and land—in anticipation of growth in the Iranian trade. “(Cargo) space (to Iran) is not an issue right now and we will be establishing procedures well in advance to ensure that the necessary capacity can be secured in the future,” a spokesman said.

Small and medium forwarders are also looking to participate in potential new opportunities coming from the reopening of Iran’s economy.

UK forwarding and logistics services group Seafast Logistics has announced the formation of a joint-venture partnership with long-established Iranian logistics provider Seven Seas Tehran, following the lifting of the nuclear-related trade sanctions.

The joint venture “Iran Shipping & Logistics Limited” was registered with UK authorities in August 2015, immediately following the announcement of the nuclear-related agreement with the European and US governments.

The developments now permit Seven Seas and Seafast to activate their plans to provide global shipping and logistics services from 90 countries to and from Iranian Ports.

Seafast said the companies had been patiently waiting for this opportunity and would now be able to offer solutions for container shipping, break bulk, project cargo, refrigerated goods and air freight into and from all Iranian ports.

A number of container shipping lines have already announced their return to Iran, although some, including Maersk, remain cautious. Maersk Line said it was considering plans to resume services to Iran following the lifting of nuclear-related sanctions, but has not yet decided when, even though 2M partner Mediterranean Shipping Company had already resumed Iran calls late last year.

CMA CGM resumed Iran services last August and a number of Asian carriers have also been serving Iran for several months, including Hanjin Shipping, Hyundai Merchant Marine, Evergreen and Yang Ming Marine Transport.

  Air Cargo Capacity Expanding

Air cargo capacity to and from Iran was also expected to increase, as passenger and cargo airlines expand their services. For example, the belly cargo capacity to Iran offered by Lufthansa Cargo, via the Lufthansa group of airlines, will increase further with the introduction of summer schedules at the end of March.

Lufthansa will increase capacity by more than 20% on its daily Frankfurt-Tehran flight, using a B747-400 and will also launch a second route to Iran with three weekly flights from Munich to Tehran, commencing in April and operated by an A330.

Its sister carrier Austrian Airlines will also increase its frequencies on the Vienna-Tehran route, offering up to 14 weekly flights between both cities during the height of the summer season.

Additionally, commencing in April, the Austrian flag carrier will launch four weekly flights between its Vienna hub and the Iranian city of Isfahan.

Nevertheless, some believe the Iran market will take some time to build up. Peter Sand, chief shipping analyst at Bimco, said that while the lifting of Iran’s sanctions would benefit shipping by stimulating foreign trade, large-scale investments would be needed before Iran could emerge as a major new market.

“Investments in the oil and gas industry are needed to facilitate a growth in exports, as well as increasing the purchasing power of the 80 million Iranians before imports can be boosted,” he added.