Our outlook for the Iranian freight transport sector in 2014 is that the country will begin to see a return to growth in volumes, in part due to base effects, and in part due to the more moderate stance adopted by new President Rouhani, and the loosening of sanctions against the country. Although the ports and shipping continue to face significant challenges, rail freight continues to see strong investment.
Headline Industry Data
- 2014 port of Bandar Abbas throughput is forecast to return to growth at 3.1%, and to average 6.0% to 2018.
- 2014 road freight volumes forecast to grow by 4.6% and are projected to average 7.1% over the forecast period to 2018.
- 2014 rail freight tonnes-km is forecast to grow by 1.8%, and is projected to average 2.4% growth per annum over the forecast period to 2018.
- 2014 air freight tonnes-km is forecast to grow by 1.6% and to average growth of 1.8% a year to 2018.
- 2014 total trade is forecast to experience a real growth of 2.0% in 2014, and average 1.9% to 2018.
Key Industry Trends
Easing Of Sanctions Provides Limited Upside For Exports: Iranian Oil Minister Bijan Zanganeh's comments in November 2013 that Iran does not expect to raise its oil exports in the immediate term is in line with our view that despite the recent agreement, any significant easing of the oil export ban would only come as part of a broader, final settlement, which would be at a minimum six to 12 months away. However, the deal offers a measure of optimism whereby several international companies are reportedly discussing with Iranian officials a potential return of investments should the sanctions be relieved. In addition, we note that the deal could provide an easing of the ban on European shipping insurance for Iranian oil. This could result in a slight increase of oil exports from Iran to major customers like India and South Korea to at least the level permitted under current the sanctions regime.
Armenian Railway To Go Ahead: It was reported in Iranian media in December 2013 that a railway linking the country with Armenia, the Caucasus country with which Iran shares a small land border to its north, is to go ahead. We wrote in our last Iranian freight report that the project was under discussion. Iran And Turkey Reach Understanding On Roads: On November 28 2013, Iran and its neighbour Turkey signed a memorandum of understanding (MoU) with regards to road transport. The MoU was signed by Iranian Vice Minister of Roads and Urban Development Davood Kesharvazian and his Turkish counterpart Talat Aideen. The two parties will make efforts to coordinate the registration of trucks on either side of the border.
Key Risks To outlook:
There are numerous risks to our outlook and forecasts for Iran, largely stemming from the country's alleged nuclear weapons development programme, and the effect the Western sanctions targeting this have on the country's trade and economy. Under the new leadership of moderate President Rouhani, elected in June 2013, there has been growing rapprochement between Iran and the West, and sanctions look set to be significantly eased. However, should talks fail at this stage we could see a return to even more stringent restrictions.