Iran and Turkey: new transit era

Financial Tribune
Iran and Turkey: new transit era

Roughly 1 million tons of cargo are to be transported via railroad between Turkey and Iran this year, Turkish authorities said on Tuesday, Financial Tribune writes. Turkey’s Transport and Infrastructure Ministry said in a statement that a recent memorandum of understanding signed in a gathering of railroad representatives in Turkey's capital Ankara on Jan. 12-13 would open a new era for the transit railroad, Anadolu Agency reported.

Despite the coronavirus pandemic, three train services were run daily between Turkey and Iran in 2020, transporting 564,000 tons of cargo, according to the statement. The statement also announced that freight trains would also run between Turkey and Pakistan via Iran on a common tariff between the three countries. It added that talks are still ongoing to set this tariff. With a recently completed railroad between Iran and Afghanistan, it will now also be possible to transport freight between Turkey and Afghanistan. "After the rail connection between Iran and Afghanistan was completed on Dec. 10, 2020, it became possible for a wagon loaded in Turkey to transit through Iran to Afghanistan," the statement said.

The rail administrations of Turkey, Iran and Afghanistan will come together in the coming months to set a course for rail transport between Turkey and Afghanistan. The statement noted that efforts were underway for a cargo transportation corridor through Iran between Europe and China.

Iran and Turkey exchanged $335.06 million worth of goods and commodities in November 2020, marking an increase in monthly trade for the second successive month. According to the latest data released by Turkish Statistical Institute, the neighboring country's November trade with Iran was 5% higher than in November 2019.  This could be interpreted as a sign of recovery in bilateral trade between the two neighbors after it declined sharply during the pandemic.  Iran’s exports to Turkey accounted for $121.6 million of the sum, up 26.68% YOY, while Turkey’s exports to Iran stood at $211.464 million, down 4% year-on-year.

Monthly trade between Iran and Turkey fell to under $300 million in September, mostly due to a fall in Iran's exports to the neighboring country. Their bilateral trade stood at $2.93 billion during the first 11 months of 2020 (January-November) to register a decrease of 50% compared with the corresponding period of 2019. Iran exported more than $1 billion worth of goods to Turkey during the period to register a 71% year-on-year decline. Imports from Turkey stood at $1.92 billion, down 22.6% YOY.

The Islamabad-Tehran-Istanbul freight train is expected to resume operations in early 2021 to boost Pakistan’s trade with Turkey and Iran.

“The railroads of Pakistan, Turkey and Iran have mutually agreed to resume regular operations soon,” said Turkey’s Transport Minister Adil Karaismailoglu, after the 10th edition of the Economic Cooperation Organization’s Transport and Communications Ministers’ Meeting in Istanbul, Pakistani media outlet Islamabad Scene reported. The key requirements for the revival of ITI train, also called ECO Container train, have been fulfilled. The train is expected to resume operations in 2021.

The trial run of ITI train was launched in 2009 as a project under the Economic Cooperation Organization, which is a 10-member Asian trade bloc. The rail route, which is recognized by the UN as an international corridor between the three countries, has so far only been used for test journeys.

The railroad intends to greatly reduce the transit route of the goods from Istanbul to Islamabad. During the trial, the freight train from Islamabad to Istanbul took nearly 13 days to make the 6,500-km journey. The journey was later further reduced to 11.5 days. In comparison, transporting goods from European countries to Pakistan via the sea route took almost 45 days. The train has a maximum capacity of twenty 40-feet containers.

The total length of the Islamabad-Tehran-Istanbul project is 6,500 kilometers: - Iran: 2,600 km, Turkey: 1,950 km, Pakistan: 1,990 km

The railroad from Istanbul, through Tehran, all the way to Islamabad has been described as “tremendously beneficial” to all three nations. It aims to boost economic cooperation among Pakistan, Iran and Turkey first and with the other ECO member countries afterward.

Besides Pakistan, Turkey and Iran, the following countries will benefit from the ITI project: Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. Although the project was launched to promote economic relations among the ECO founding member countries, it offers a short, safe and affordable route for transportation of goods between Asia and Europe, extending benefits to several regional countries.  From Turkey, the corridor can link up with the European rail networks via Istanbul’s 76-km-long undersea Marmaray railroad tunnel. Other countries had earlier expressed eagerness to join the project and suggested further expansion to European and Middle East markets.

Highlights of Islamabad-Tehran-Istanbul Rail Corridor include services to facilitate cargo and container transport capacity: 20 containers of 40 feet, estimated travel time is 11 days compared to 45 days via sea route and over 30% reduction in rail fares as opposed to traditional routes.