Iran Freight Transport Report Q1 2013

Includes 3 FREE quarterly updates

We forecast that Iran will suffer an economic contraction of 0.8% in 2013, following an estimated decline of 3.1% in 2012. In terms of shipping we forecast a much greater decline in container throughput volumes at the Port of Bandar Abbas, projecting that 2012's estimated fall of 29.0% will be followed in 2013 by a drop of 11.3%. Other freight modes will be similarly affected, though developments in the rail freight sector hold hopes for future. The depreciation of the rial against the US$ in Q312 will have impacted hard upon the Iranian consumer and containerised volumes will have dropped off accordingly.

HEADLINE INDUSTRY DATA

• 2013 port of Bandar Abbas throughput is forecast to contract by 11.3%, but will average growth of 1.9% per annum thereafter to 2017.
• 2013 road freight volumes forecast to grow by 2.6% and are projected to average 5.5% over the forecast period to 2017.
• 2013 rail freight tonnes-km is forecast to contract by 2.8%, but is projected to average 1.4 %growth per annum over the forecast period to 2017, however.
• 2013 air freight tonnes-km is forecast to contract by 2.8% and to average growth of 1.4% a year to 2017.
• 2013 total trade is forecast to experience a real contraction of 9.0% in 2013, followed by a return to growth of 4.0% in 2014, and averaging 1.4% to 2017.

KEY INDUSTRY TRENDS

Afghan Transit Trade To Boost Coffers

BMI believes that there is scope for a massive increase in Afghan trade to be freighted through Iran in the coming years, following the recent signing of an access agreement by the landlocked country to use one of Iran's ports. This is part of Iran's strategy to develop itself into a key transport hub for the region, taking advantage of its geographical location.

Maersk Line Quits To Send Costs Skywards

BMI believes that Iran will become increasingly dependent on feeder services from nearby Gulf states for the import of its goods as major container shipping companies become ever more wary of transgressing against the numerous sanctions imposed against the Middle Eastern country, or simply affecting their business elsewhere in the world. Maersk Line, the market leader in terms of container shipping, stated in Ocober that it will no longer call at Iran, and it is likely that other companies will follow its lead. This will bring further economic pressures to bear on the country, which has already seen prices spiking in recent weeks as the value of the rial has plummeted.

Rail Line To Boost Freight Growth

BMI believes that the upcoming inauguration of a new rail line connecting Iran with the Central Asian states of Turkmenistan and Kazakhstan will give upside risk to our current rail freight growth forecast for Iran. Iran, which shares land borders with eight different states, is looking to capitalise on its geographical location through the development of its rail network, with the aim of playing a key role in regional transit.

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. Should these be strengthened still further, or should Iran return to negotiations in a significant manner, and sanctions are slackened, then upside or downside risk elements could come into play.