Economy, Domestic Economy

Dry Ports and Decentralization

Dry Ports and Decentralization
Dry Ports and Decentralization

In August 2010, the government of former president Mahmoud Ahmadinejad issued a bylaw to establish six major dry ports across the country established with the aim of decentralizing the country’s limited major seaports.

A dry port is a terminal situated in an inland area with rail connections to one or more container seaports. A container freight train service runs between the seaports and the dry port, on a service timetable that is integrated with the schedules of the container ships arriving at the seaport.

Since Iran has just a few major container seaports, including the southern port city of Bandar Abbas on the Persian Gulf coastline and Bandar Anzali on the southern Caspian Sea shores in the north, the dry ports are expected to help decentralize such congested harbors.

Seaports have grown larger as world trade has increased over the decades, and they now lack space to expand and are restricted by overcrowding on the various routes into the port.

During the past decade, imports have significantly grown, especially from countries such as China. On the other hand, Iran’s exports, according to the Export Guarantee Fund of Iran (EGFI), have increased eightfold during the same period. Such rapid growth in imports and exports, in line with the five-year economic development plans and also the 20-Year Vision Plan (to conclude in 2025), has rendered Iran’s few container seaports highly congested and, thus, incapable of dealing with the heavy shipping traffic. This problem can be eased through the establishment of a dry port consisting of rail and multimodal terminals situated inland from the seaport. The long line at the seaports make truck drivers nervous, thus increasing the risk of accidents on the roads. Such problems, however, would rarely happen at dry ports.

The infrastructure available at dry ports are similar to that of a seaport in terms of the logistics and the facilities provided for importers and exporters. The dry port would be equipped to handle cargo and transfer freight to warehouses or open storage. Also, customs brokerage documentation and customs clearance could be handled at dry ports.

The Rouhani administration, within the scope of the Economic and Social Commission for Asia and the Pacific (ESCAP), located nine main dry ports with careful scattering across the country. Aprin dry port, for instance, is located 21 kilometers southwest of the capital Tehran. Other dry ports include Motahari near the northeastern city of Mashhad, Salafchegan dry port in a special economic zone with the same name in the central Qom Province, Sirjan dry port in southeastern province of Kerman, Kowsar dry port in the central Yazd Province, and a dry port in the Arvand free industrial zone in the southwestern Khuzestan Province.

 Cost-Efficient Transit

Aprin, as a dry port, has the potential to supply Tehran as a high-consumption market and its surrounding industrial regions. A warehouse covering an area of 9,000 square meters has already become operational in Aprin. The goods destined for Aprin center will be transported through railway after discharge and loading at seaports of Mahshahr and Shahid Rajaee on the Persian Gulf coasts and the importers are able to go directly to Aprin center near Tehran to clear their cargo.

The development of dry ports has become possible owing to the increase in multimodal transit of goods utilizing road, rail and sea. This in turn has become increasingly common due to the spread of containerization, which has facilitated the swift transfer of freight from sea to rail or from rail to road. Dry ports can therefore play an important role in ensuring the efficient transit of goods from a factory in their country of origin to a retail distribution point at destination point.

Kowsar dry port, also known as Pishgaman dry port, is also among the major dry ports considering the strategic location of Yazd Province in central Iran.  

A serious challenge, however, in developing the dry ports in Iran is the current shortage in steel industry, which makes it difficult to supply the projects with the rails. The shortage of locomotives and wagons is another issue the ministry of industry, mine, and trade is expected to resolve in the near future.

In addition to the facilitation of freight transport to the country’s hinterland, Iran can benefit from the existence of dry ports to become a safe route for its eastern neighbor Afghanistan, which has no access to sea and international waters. Afghanistan is also constructing a dry port in its eastern Nangarhar Province, which could be connected through rail to Iran’s Motahari dry port near Mashhad.

Although the dry ports have been, for decades, in use in many countries such as Canada, Brazil, Pakistan, India, Chile, and Mexico; the Intergovernmental Agreement on Dry Ports was designed in 2013 by the United Nations to promote the development of dry ports in the Asia-Pacific region. The agreement was finalized under the auspices of the UN Economic and Social Commission for Asia and the Pacific (UNESCAP). The Agreement will remain open for signature until December 31, 2014 and will enter into force after being ratified by eight states. It identifies a number of existing and potential dry port locations that are to be the basis of a coordinated effort to create nodes along an international integrated intermodal transport and logistics system.

The development and operation of dry ports allow for the transfer of goods between different modes of transport and support the use of efficient and environmentally friendly transportation means.

The main economic benefits of dry ports include bringing economic development from coastal areas to hinterland, reconciling transport infrastructure to the supply chain management, and reducing transportation costs.

Dry ports also help reduce pollution. For instance, one liter of gasoline can move 25 metric tons of cargo on the road for one kilometer while the average CO2 emission factor is 62 grams of the gas per metric ton of freight and per kilometer of transport. This is while the same amount of the fuel can move 85 tons of cargo on the rail for one kilometer and the average CO2 emission factor is 22 grams of the gas per metric ton of freight and per kilometer of transport.