The Iranian Conundrum: How sanctions removal affects global logistics

The deluge continues

With each passing month the interest in Iranian trade appears to grow stronger. As this issue went to press in late March, London-based freight forwarder Eurogate Logistics announced that it also will begin providing logistics services, including airfreight, with the Islamic Republic. The company is establishing a local network in Iran to take part in project and heavy-lift shipping, warehousing, and customs clearance.

“As an oil-rich nation… Iran offers huge potential for U.K. businesses,” said Eurogate managing director Adam Nagy. “Much of the country’s infrastructure needs renewing and industries such as automotive and aerospace also have significant requirements.” He added that the retail sector looked promising as “strong consumer demand for western goods” increases.

Lufthansa Cargo’s Braun said he has high hopes for Iranian trade. “We actually do expect a significant increase on the import side,” he said, adding that “the export side is also likely to perform better than in the two years ago.” Export commodities that should do well and not violate remaining restrictions include dry fruits, carpets and personal effects.

Later this summer, Braun said Lufthansa subsidiary Austrian Airlines is going to open a new route to the city of Isfahan, bringing more bellyhold capacity to the central Iranian market, while frequencies are expected to increase along the Munich-Tehran route in July.

Panalpina’s Triebel predicted that air cargo volumes will increase gradually in 2016, leading to “higher volumes only for 2017,” but that is only on condition that “the banking system will have to be re-established.” Growth of this “returning market” will be driven, he said, by the high-tech, telecom, automotive and aerospace industries.

Schenker’s Dietmar said he sees a bright future for machined parts in the near future, as well as “everything related to oil and gas projects” as the most important levers. Though it might seem counter-intuitive, solar power is also a rising market in Iran. “When you have 340 sunny days during a typical year, you become a haven for solar technology,” he added.

In spite of Iran’s ruling theocracy, the government is demonstrating “a high degree of stability and modernism,” Dietmar said. But because of the remaining restrictions, “the more inter-connected we’ve become, the more complicated it has become to do business.”

So, has the complexity and pressure been worth it? “I say it’s the same as if you asked a watch-maker whether he gets tired of the complexity,” Dietmar said. “Of course not. He loves the job because of the complexity.”

But, likely speaking for many forwarders, the difficulty of trading with Iran is half the fun, Dietmar explained. “The more complicated it is,” he said, “the more joy I get out of developing it.”

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