Iran Logistics Industry
Iran Logistics Industry Opportunities
As home of one of the most ancient civilization of the world, Iran has a broad variety of business and logistics attractions to offer. During last years, the Iranian government was actively seeking to develop the logistics infrastructures industry and improve its global ranking.
Iran used to be one of the most important countries in the way of silk road in ancient times, and nowadays because of its strategic location in the Middle East is considered as one of the important hubs in the world.
Some of the key points about Iran logistics conditions are as the following:
Finally, as an important point in Iran’s contemporary history, the election of a moderate president in 2013 and its comprehensive deal with other leading countries around the nuclear deal has been the restarting point for many changes in the country.
The Logistic Performance Index (LPI) is based on a worldwide survey of operators (global freight forwarders and express carriers), providing feedback on the “logistic friendliness” of the countries in which they operate and of those with which they trade. They combine in-depth knowledge of the countries where they operate, informed qualitative assessments of other countries they trade in and, their experience of global logistics environment. Feedback from operators is supplemented with quantitative data on the performance of key components of the logistics chain in the country of work.
The LPI consists therefore of both qualitative and quantitative measures and helps build profiles of logistic friendliness for these countries. It measures performance along the logistics supply chain within a country and offers two different perspectives: international and domestic.
The LPI overall score reflects perceptions of a country’s logistics based on efficiency of the customs clearance process, quality of trade and transport-related infrastructure, ease of arranging competitively priced shipments, quality of logistics services, ability to track and trace consignments, and frequency with which shipments reach the consignee within the scheduled time. The index ranges from 1 to 5, with a higher score representing better performance.
Countries are assessed on the basis of six key dimensions:
|Country||LPI Score||Customs||Infrastructure||International shipments||Logistics competence||Tracking & tracing||Timeliness|
|Region: Europe & Central Asia||3.03||3.16||3.14||3.17||3.24||3.62||3.23|
|Region: East Asia & Pacific||2.98||3.02||3.08||3.07||3.12||3.54||3.14|
|Region: Middle East & North Africa||2.6||2.78||2.96||2.81||2.86||3.29||2.89|
|Region: Latin America & Caribbean||2.48||2.46||2.69||2.6||2.67||3.05||2.66|
|Region: South Asia||2.42||2.45||2.68||2.56||2.56||3.03||2.62|
|Region: Sub-Saharan Africa||2.36||2.29||2.49||2.42||2.39||2.84||2.47|
|Iran, Islamic Rep.||2.6||2.33||2.67||2.67||2.67||2.44||2.81|
Within the Middle-East region, Turkey and Saudi Arabia have similar LPI scores across most aspects, while Iran still is far behind them.
The Iranian government has acknowledged many of these deficiencies and has prioritized improvements in the future. Post the adoption of the JCPOA, a substantial step forward can be expected, which should result in Iran’s LPI increasing over the coming years.
Iran’s total non-oil exports in 2015 (including gas condensates) was 93.5 million tons and 42,414 million USD.
Iran’s total imports in 2015 reached 35 million tons and amounted to 41,490 million USD.
Iran is the 56th largest Export country, with the five largest categories by value (in million USD) being:
Iran is the 51st largest Import country, with the five largest categories by value (in million USD) being:
Iran main ally in trade is China both in export and import of products.
The following icons show the first five export/import countries; and the trade value in billion USD in 2015.
These countries have 65.7 % market share of Iran’s total exports:
These countries have 65 % market share of Iran’s total imports:
Iran’s first line was the Trans-Iranian railway, built in the 1930s to connect the Caspian Sea at Bandar-e-Torkaman with the Persian Gulf at Bandar-e Imam Khomeini. The topography of Iran consists of rugged, mountainous rims surrounding high interior basins and this has played a large role in stifling development of a comprehensive railway network. The Trans-Iranian railway for example required more than 3,00 bridges and over 100 tunnels.
Iran’s rail infrastructure requires significant investment. Currently there is less than 13,000 kilometers of track. For a country of its size, some 1.64 million square kilometers, this is far from adequate for both passenger travel and international trade. If you compare the length of Iran’s railway lines to that of country’s with a similar area, Germany has 19 times more than Iran, Poland 10 times more and Turkey has more than double.
There are however significant plans to invest and expand railway infrastructure with an expected spend of over 8bn USD in the coming 5 years. The ultimate goal is increase total rail cover to over 25,000 kilometers by 2025. This is much needed and should add significant value to Iran’s economy over time, allowing more domestic and international trade.
|Number of passengers||27015250||25533120||24802384|
|Tonnage of non-oil transit||704801||361232||715497|
|Number of freight cars||22230||22562||22715|
|Number of passenger cars||2105||2160||2205|
|Total number of locomotives||778||821||869|
There are 8 active airports in Iran. Imam Khomeini Airport, located 30 kilometers south west of Tehran, is the largest and most profitable one. In 2015, it handled over 6.5 million passengers, and this is expected to grow to 8 million in 2016.
According to the Minister of Transportation and Metropolitan Development, there are 266 aircraft in Iran, however only 108 of which are currently active and just 12 were built after the year 2000. There is an intention to modernize their fleet however, with nearly 550 planes likely to be purchased by 2025. Post the adoption of the JCPOA, Iran Air has already put forward a purchase order of up to 100 Boeing Aircraft.
|Title||Number of internal passengers||Number of international passengers||International flights distance (Thousands of Km)||Internal flights distance (Thousand KM)||Tonnage of|
|Tonnage of international Load|
With almost 90 percent of Iran’s foreign trade taking place through its territorial waters, Iran’s ports (of which there are 11 primary ones) are especially important. The Islamic Republic of Iran Shipping Lines Group is the primary domestic player in this area, and following the adoption of the JCPOA, have announced their intention to be one of the worlds top 10 shipping lines by 2020.
Iran has a total area of 1,648,195 square kilometers including 31 provinces. All provinces, capital and main cities, villages and urban areas are connected via roads. Roads similarly link Iran internationally via borders at the north, west and east of the country. In total there are 83,485 kilometers of “inter-province” roads, including main roads, highways, freeways and access roads and a further 140,000 kilometers of inner-town and suburban roads. There are over 11 million registered vehicles in Iran.
All freeways and highways are asphalted and surfaces are in good condition. Around 28,000 kilometers of inner-town and suburb roads are not asphalted however the surface condition is good and all are accessible for small trucks and vehicles.
Road marking and guard rails are under maintenance and supervision of the Ministry of Roads and Construction. All roads are under control of the Traffic Police and security-wise under control of the Security Police Force. On all highways, main roads and freeways, the speed control is under supervision of the traffic police and all highways and freeways are equipped with speed-cameras. All trucks and transit trailers are equipped with GPS in order to allow the police to locate and control them.
|Classification||Network Length (Km)|
There are 3 main categories for Iran logistics’ stakeholders: Government and local Authorities, Associations and Academia, and Operators. Each of these contain a number of subcategories. The diagram below explores this further.
Iran is a country that links the west and east of the world, and it always has had a great strategic importance for trading, transportation and logistics.
This white paper thought to present a brief introduction to Iran’s Logistics Industry. Key figures and facts in regards to the industry include:
In conclusion, Iran’s logistics industry needs a lot of investment and it is seen as a profitable sector for foreigners to invest. A large market of 80 million inhabitants that are affected by the current infrastructure (old, non-secure and slow) and a government that is trying to improve the infrastructure, especially after sanction relief.
With special thanks to other contributors:
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