Saturday, 23 September, 2017

Transportation/Logistics: Iran is Back Open for Business

iran-is-the-second-largest-country-in-the-middle-east-with-a-population-of-80-million-and-expected-growth-of-up-to-6_7-percent-in-the-next-two-years

When those 2016 Year in Review pieces start appearing, one of the news stories featured will be the resumption of business and commercial interests in Iran, after years of that nation being off-limits due to economic sanctions.

The demand for logistics solutions in particular is on the rise, and companies like DHL Freight are eager to fill the void. DHL recently installed two competence centers in Germany and Turkey for the more efficient handling of exports to Iran.

Truckloads destined for Tehran are being filled by a wide range of European companies, now that weekly departures for groupage shipments are available. German trade associations in particular are looking forward to an increase in bilateral trade, which will require a functional logistics network and stable trade lanes, both of which are in development.

Maersk Line is also reentering the Iran market after a five-year absence at a time when global container trade is down around the world.

Maersk’s Iran business will be managed by a team that oversees a cluster of countries, which also includes the UAE, Oman and Qatar.

Access to the new market “will present significant growth opportunities”, said the cluster’s head of sales, Marcus Connolly.

Risk Vs. Reward

Iran is the second largest country in the Middle East with a population of 80 million and an estimated GDP of $435 billion, with expected growth of 5.8-6.7% in the next two years.

The country is also positioned as a global trade gateway to the Commonwealth of Independent States, a market of more than 400 million.

So despite concerns over regulation and reputation, that opportunity explains the caravan of container carriers that started resuming service to Iran back in January. Mediterranean Shipping Co. has returned, as has CMA GGM. Panalpina began planning for a potential lifting of sanctions two years before it happened and now offers regular air, ocean and road services to Iran.

The Iranian port at Bandar Abbas now welcomes ships from Evergreen, Hyundai, OOCL, Hanjin, “K” Line, KMTC, X-Press, Yang Ming and many more.

However, most of the primary sanctions applicable to Iranian individuals and companies remain in effect, contrary to the beliefs of those who thought they were wiped away by the Joint Comprehensive Plan of Action.

The deal lifted all nuclear-related secondary sanctions, but several activities are still prohibited. This includes direct or indirect export or reexport of US goods, technology or services, without separate authorization from the Office of Foreign Assets Control.

For other products, such as civil aircraft, a separate special license is required for American firms to do business with Iran. That restriction does not apply to EU-based businesses.

Making America Wait Again

With very few exceptions, US citizens are still prohibited from doing business with Iran or the Iranian government.

As freight forwarders and third-party logistics providers throughout Europe and Asia plan for a surge of renewed energy exports and consumer goods imports, it’s non-business as usual for American business.

Given the dearth of capital investment in Iran dating back 30 years, there are also significant infrastructure building opportunities to support the expansion in global trade.

So, while companies like UK-based Seafast Logistics are forming joint ventures with Iranian logistics providers on container shipping, break bulk, project cargo, refrigerated goods and air freight into and from all Iranian ports, US logistics firms can only watch and wait for something to change.

Source: Global Trade

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1 Comment

  1. Amir

    October 30, 2016 at 5:53 pm

    There is only one reason that United States will not yet allow its citizens to do business with Iran; United states of America is afraid that after total removal of all sanction restrictions, the floods of money from US towards Iran, specially from Iranian- Americans, would go viral, if not trillion, perhaps billions. They know it- you know it-we all know it. This fear is not because US assumes its citizens do this one way financial favors to Iran out of love, not at all, they are afraid that US citizens do it because of the worse financial situation all citizens are in. The era of today’s United States of America is like the era of the presidency of Ahmadinejad in Iran; “without government spending, most business will shut down in matter of days”. So, what a respectful businessman does, he would invest his money where he can make real money, not airy electronic money that you have it today and tomorrow “ops”.
    Iran has not been touched by any super-duper investors in years. Average Iranians only owe 40 to 50 Dollars to any bank in the world compared to US citizens who owe an average of 55000 Dollars to any US banks or abroad. If I had real 10 Dollars I would invest it where the returns are real and promising. In US, without credits we are doomed,
    we are swimming in an ocean that anytime soon drowning is just the matter of time.

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