Focus: Transport

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May. 14, 2013

The amount of cargo and passengers traveling along these routes has increased significantly in the past decade, with airline companies seeing some of the largest growth. In 2011, 27 million travelers and businesspeople passed customs, and the government surpassed its passenger and cargo targets by over 100%.

Sea freight capacity has steadily increased since 2009, on a growth pattern that has been accelerated by better quality services and faster loading and unloading times. By 2011, Iran's TEU handling capacity reached 2.8 million, up from 1.7 million TEUs in 2007. Over the same period, passenger traffic by sea displayed 21% growth, making Iran an increasingly accessible destination for a variety of both new and loyal markets.

LAND

In total, Iran's road network covers a distance of 180,958 kilometers, with 9,124 kilometers of paved highways and freeways. In 2011, the government launched projects to construct 6,500 kilometers of additional roads, many of them designed to enhance the travel experience between major international cities and Tehran, as well as cut transportation costs and times between domestic points such as Tabriz, Zanjan, and Qom.

The Ahmadinejad administration also approved a plan to implement an Electronic Toll Collection (ETC) system, which uses radio frequency identification to electronically debit the accounts of highway drivers. This is expected to reduce traffic and allow both public and private institutions to raise funds for the maintenance of the highway network. The technology is slated to be available at 20 major toll stations by the end of 2012.

One of the largest road-building projects in the country, the North Freeway will connect Tehran to the Caspian Sea and Qom to Mashhad. The completion of this project in the coming years could boost road traffic above the 898 million passengers who used the network in 2010. During the 2010-2011 period, 90% of passenger transport was carried out via road.As set by the fourth FYDP, Iran's railway system has worked to expand by 15% annually. Railroads currently stretch across 11,760 kilometers of the country, with 3,352 kilometers currently under construction. New railroad developments have been aimed to strengthen Iran's ties to its neighboring countries, especially Syria, Iraq, and Azerbaijan. With a wider range and increasingly useful routes, passenger traffic increased 5.3% in 2011. In 2011, 27.7 million people used the country's rail networks, and 32.8 million tons of goods were transported, accounting for 9% and 11%, respectively, of the country's total transportation.

According to Gholamreza Shafei, the Deputy Minister of Industry, Mine, and Trade and Chairman of the Board of the Industrial Development and Renovation Organization of Iran, improvements in the country's railway network could capitalize on the advantageous geographical position of Iran. “It is a vast country that needs a functioning railway system, due to its geographical location among the North-South-East-West corridor, to connect and develop," he said to TBY. In line with this objective, the authorities have launched initiatives to operate locomotives on the Khorramshahr-Shalamcheh stretch, which now links Iran to the city of Basra, Iraq and the Port of Latakia, the main seaport in Syria. In addition, President Ahmadinejad inaugurated the Miandoab-Maragheh railroad project in the northwestern province of West Azerbaijan in 2012, a $57 million investment that provides Azerbaijani nationals with greater access to Iran.

In accordance with the fifth FYDP, the government intends to add 15,000 additional kilometers of rail to its existing network by 2015. To help achieve this goal, the Ministry of Roads and Urban Development worked to attract €17 billion in FDI, much of which will be used to expand the rolling stock of the Islamic Republic of Iran Railways (RAI) and its associate companies, Raja Passenger Train and Railway Transportation.

AVIATION

Growing interest in travel to East Asia has led Iranian aviation in the past few years, with Kuala Lumpur making its debut on the list of top 10 international destinations. National company Iran Air and private player Mahan Air are focused on improving safety and adding new routes to compete with foreign airlines and carry the industry toward a bright future.

With 32 destinations internationally and 52 aircraft, Iran Air is the national carrier, noted for having launched the first route from Tehran to London with a Boeing 747-SB. Today, the company services 6 million passengers per year, many of them flying on one of the 100 daily domestic flights to 28 destinations.

Internationally, “the highest demand these days is for the Tehran-Kuala Lumpur route, for which we have five or six flights a week with 747s," Farhad Parvaresh, Chairman and Managing Director of Iran Air, told TBY. Although over 30 foreign airlines operate in and out of Iran, Parvaresh believes that Iranian companies will remain strong vis-à-vis the competition. “When given a choice, I think Iranians prefer to travel overseas with their own national carrier," he said.

Launched in 1991, Mahan Air is an up-and-coming player in the local market, harnessing a growing market share and focusing on the quality of its services rather than making a quick profit. Hamid Arabnejad, President of Mahan Air, has noted distinct upward trends in air transportation over the past decade. “Domestic passenger traffic has increased by an average of 7% over the last 10 years, and at the same time international air travel in Iran has grown by a robust 9% per year, which is far above the world average," he told TBY. “We are optimistic that this growth trend will continue for at least the next few years." With 3,300 employees and growing, the expansion of the business may lead to a bright future.

In the domestic market, demand for services from Tehran to Mashhad has displayed the highest growth, with over 700,000 passengers carried annually by Mahan Air. The company also carried more than 330,000 passengers to Dubai in 2012, making it the most popular international destination for the country's second largest airline.

The total passengers received at Iran's airports in 2011 reached 36.3 million, illustrating 10.3% growth compared to the previous year. These figures represent 118.6% of the target set by the fourth FYDP in 2005. Air cargo also increased, shipping 38,000 tons and increasing by 11.8% year-on-year.

However, industry experts agree that Iran needs to improve the transfer of technology to build up its airline services and quality. In the coming years, air transportation companies are aiming to invest heavily in the technical side of their operations as they depend less on components, services, and aircraft from abroad.

MARITIME

According to ECO Trade and Development's Iran Country Partnership Strategy 2011-2012 report, the nominal capacity of commercial ports grew to over 150 million tons in 2010-2011, marking an increase of 5.6% over the previous period.

Leading this growth is Bandar Abbas, Iran's main container port in the country and largest hub in the Persian Gulf. In 2010, the port's cargo traffic reached 2.5 million TEUs, accounting for nearly 95% of the country's total TEU handling activity. In addition, the port accounted for 37% of the country's total transit traffic in 2011. Other main ports include Bandar Anzali, the most important seaport on the Caspian Sea, Bandar Noshahr, and Bandar Mashahr, all with local populations exceeding 100,000 people.

Although economic restrictions on Iranian port activity have all but frozen the country's sea trade with the EU, trade between the two entities grew as large as $17.3 billion in 2010. The main exports were oil, machinery, transportation equipment, and chemicals, with activity expected to resume full force as soon as sanctions are lifted. In the meantime, Iran has enhanced its trade relationship with China, reflected by the 52% increase in cargo volumes exchanged between the two nations in 2011.

Passenger traffic by sea also increased in 2011, with 21% more people choosing to travel on the water. According to statistics released by the Ministry of Roads and Urban Development 3.8 million people arrived in Iran through one of its major ports during the 2010-2011 period. The increased number of tourists and visitors coming into the country by sea, as well as the growing amount of passengers passing through Iran through a myriad of transport links, reveals the significance of the country's role as a corridor from east to west and north to south.

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