With container traffic in slowdown in most areas of the world, the lifting of Iranian sanctions offers a ray of hope to carriers, according to the latest Container Insight report by Drewry.
While the easing of Iranian sanctions will not cover the shortfall in global container volumes, there is considerable opportunity for lines to re-connect to an economically recovering country with a population of nearly 80 million that will be eager to spend on goods previously denied them.
This could be especially true with the introduction of a new cargo and passenger route between Iran and Oman, which the Chairman of the joint Iran-Oman Chamber of Commerce believes will see the countries overtaking volumes between Iran and the UAE in the future.
The Port of Shahid Rajaee (commonly known as Bandar Abbas) is the largest of Iran’s container ports – accounting for some 90% of all Iran’s container handling – but it saw volumes decline sharply after the US Treasury blacklisted its operator Tidewater Middle East Company in June, 2011 for alleged ties to the banned Islamic Revolutionary Guard Corps and for allegedly facilitating illicit shipments.
Before the blacklisting container volumes at Bandar Abbas were growing at 13% annually (based on the Iranian calendar year starting March 21) between 2005-6 and 2011-12 when they reached a record 2.6 million TEU.
The port used to count a large number of major shipping lines among its customers but when sanctions kicked in those slipped away to other regional hubs such as Jebel Ali.
Drewry believes that tidewater has been quick to get back in the game, releasing a statement saying that it will soon begin “serious negotiations” with foreign interests for new trade.
It may face competition as DP World is reportedly interested in starting operations in Iran, but whatever the competitive environment post-sanctions more investment on infrastructure and capacity after years of under-utilisation will be required to achieve its full container potential.
The Drewry View: Much political work is still to be done but when sanctions are relaxed the Iranian economy will be given a significant boost, which should release the pent-up demand for containerised goods in the 80 million-strong population. Expect more carriers to reinstate calls at Bandar Abbas to take advantage.