Mid-February saw the first arrival of what will become a familiar site in Iran as the first Chinese freight train pulled into Tehran station. The 14-day journey from Northern China traversed Kazakhstan, Uzbekistan and Turkmenistan – demonstrating Iran’s up-and-coming status as a regional rail freight hub. 

 

“We’re becoming a global hub between East and West,” one Iranian official stated when the Chinese locomotive rolled into Iran’s capital. As numerous sanctions enforced on Iran have since been rolled back, the country is eager to quickly expand its rail networks so as to attract huge levels of international trade. 

 

Iran’s strategic location, and re-emerging reputation of one of the world’s foremost oil producers, means world-class railways are an absolute must. As a country that spans 1.64 million square kilometres, the pre-existing 13,000 kilometres of track has been noted by the government as woefully ineffective for Iran’s expansion plans.

 

According to Minister of Industry, Mines and Trade Mohammad Reza Netmatzadeh, Iran needs $1.5 billion of annual investment in the railway sector over the next six years to realise its railway ambitions. Netmatzadeh said there are plans to stretch out the nationwide railroad line to 25,000 kilometres by 2025 from the current length.

 

Multi-billion rail deals have been inked with various countries, including a $2 billion loan from China to develop a 920 kilometre rail link from Tehran to Mashhad. Companies from Italy, France, Germany and South Korea have also signed agreements to help develop, supply and maintain Iran’s railways and rolling stock. 

 

Once Iran’s rail network reaches peak capacity, exports are likely to increase – especially as the country is located next to a variety of oil trading partners such as Kazakhstan and Azerbaijan. Iran won’t have to focus on its 80 million strong domestic market. Soon, it will have clear access to the 500 million people who live in the EU plus stronger trade links with China, India and Russia.

 

Several international railways under construction or nearing completion will link Iran to global markets. For example, Abbas Akhoundi, Iran’s Transport Minister, will open a track that connects the southern Iranian port of Chabahar to Afghanistan’s mines. The Chabahar track will ultimately play a huge role in supplying raw minerals to India. Pakistan will be by-passed, speeding up transit times and showing off the importance of Iran in global supply chains. 

 

Further linking Iran to India and beyond will be the North South Transport Corridor. This trade route will span 5,600 kilometres from Northern India through Iran and Azerbaijan before terminating in Moscow. The North South Transport Corridor, beyond improving trade connections across Central Asia, will also dramatically lower transit times from India to Russia. Goods currently take 45 days to reach Russia from India via sea. Once the NSTC is completed this will drop dramatically to just 20 days.

 

The China-Iran rail route, a potential candidate for a modern day Silk Road, could even replace the Suez Canal as China’s primary gateway to Western Europe. While the current the transit time along the route stand at 14 days, Iran’s authorities are hoping this will drop to 8 days once the trans-Kazakh railway is fully completed.

With significant foreign investment, strong relations with major global trade players and a willingness to expand, Iran is on the fast track to becoming a major hub for rail freight.