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ITE Transport and Logistics

Russia & Iran: new transport & logistics partners?

Despite being thousands of kilometres apart, Russia and Iran actually have a lot in common – namely, a testy relationship with the United States and economies under international sanctions.

Even so, the biggest sanctions laid against Iran were partially eased at the start of 2016. It is now reinvigorating several sectors of its economy with much needed investment  – and transport and logistics has been identified as an area needing hefty cash injections. Iran is subsequently looking for international partners for investment.

Enter Russia. 

In 2016, Russian trade with Iran leapt an impressive 80% to more than $2 billion. With a Iran recently recieving hefty Moscow loan worth roughly $10 billion, both nations are pressing forward with a number of transportation-related projects designed to keep this fruitful trade relationship rolling.

New Iran-focussed transport and logistics hubs to be constructed

A big part of the Russo-Iranian effort to bump up bilateral trade volumes is the construction of new logistics hubs at key locations.
Russia and Iran are amongst the group of five countries that border the Caspian Sea. Maritime trade from Russian ports to Iranian’s Caspian waters forms a big part of the movement of goods between the two states, so naturally Russia is forging ahead with a transport complex in the region to accommodate increased freight traffic.

Although the Caspian is an obvious location for an Iran-focussed logistics centre,  there are other sites that make sense. Near the border with Azerbaijan would work, as Azerbaijan is sandwiched between one of Russia’s southern borders and Iran. 

How about Ulyanovsk in European Russia? Perhaps that’s a bit too far, what with the city lying nearly 3,000km away from Iran’s capital Tehran.

Not according to some major Russian players – including air freight specialists Volga-Dnepr. A new complex is being built in Ulyanovsk, with input from top logistics companies, focussed on growing Iranian trade.
Iran and Ulyanovsk are connected via the Volga River, which flows into the Caspian sea, offering multimodal possibilities for trade flows between them. The region is also hoping to export goods further afield, to Southeast Asia and Europe too. 

New cargo services launched from Russia to Iran

More and more Russian companies are beginning to offer multimodal or direct transport services to and from Iran, such as the aforementioned Volga-Dnepr. 

Of particular note is the container trans-shipment service launched along the Caspian by the FESCO Transportation Group fin November 2016. FESCO Russian Iran Service (FRIS) is the first route where cargo is shipped directly between Russia and Iran without passing through any other countries.

The route, which was successfully trialled in March 2016, moves containers from St. Petersburg to Iran to the Caspian port of Olya. Transit times take just eight days, despite covering a distance of over 2,500km.

North-South Transport Corridor promises to bump up freight volumes

The ongoing development saga of the North-South Transport Corridor (NSTC) is one of the transport and logistics world’s most intriguing developments. Nominally, it is to bypass the Suez Canal and dramatically slash both delivery costs and times between Russia and India.

Iran is a key stop on this multimodal route. Although much of the route’s success lies on completion of Iranian rail routes. As part of the corridor, containers are moved from Iranian ports via rail through Azerbaijan, before being loaded onto trains and/or trucks in Russia.

The NSTC is meant to be coming online in 2017, although key construction work on Iranian and Azerbaijani stretches is yet to be completed.

Russia to become a chief investor in Iranian transport infrastructure

Since sanctions were relaxed back in 2016, Iran has been undertaking what can only be described as an infrastructure spending spree. It is planning on almost completely replacing its highways with fresh roads, for example, and is spending billions on upgrading and replacing railway lines.

RZD, Russia’s rail monopoly, has recently inked a deal worth $1.65 billion to begin electrification works on some key track sections – namely the 495km route along the Iran-Turkmenistan border. It is also eyeing up another electrification project – this time a 600km line connecting Tehran and Tabriz.

If that wasn’t enough, Transmashholding, Russia’s largest rail equipment supplier, signed a $2.5 billion deal in July 2017 to start up a much-needed rail wagon production operation in Iran. Iran’s rail ambitions are such that as many as 10,000 new wagons are needed to cover the estimated 15,000km of new track currently under construction.

Uncover Russia’s transport potential at TransRussia

Iran has spotted the potential of Russia’s transporters – and you can too at TransRussia. The event is Russia’s biggest transport and logistics exhibition, designed to put international businesses needing transport services in touch with Russia’s logistics service providers.

Want to learn more about the show, or want to find out how you can take part? Contact our team today to get all the information you need on TransRussia.


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