The transportation strategy for the next decade focuses on expansion of the rail sector. The growing significance of Iran as a transit country between Europe, Asia, and Central Asia has made development of the rail sector a strategic priority. The sector priorities are maintenance, improvement, and reconstruction of existing rails. In 2013, the Ministry of Road and Urban Development announced that more than 10,000 km in new lines would be commissioned, but performance has not exceeded an average 250 km per year.

In 2013, the Iranian railways transported around 25 million passengers, which is very low for a country of 80 million. The privatisation of rail services and introduction of express trains have had limited impact.

Cargo transportation capacity was more than 150 million tons in 2013, with 22% of that actually utilised. Some 88% of the cargo wagons were privately owned. The low utilisation of existing cargo capacity is due partly to the fact that many companies use their cargo wagons as storage units and partly to the fact that the sector has a serious lack of maintenance services. The overwhelming majority of cargo – 556 million tons per annum – is transported by road, so rail cargo transportation has considerable growth potential.

Key opportunities in the rail sector are to be found in the constructing and maintaining railways, selling locomotives and wagons to Iranian operators, offering services to utilise the existing infrastructure and capacity (including door-to-door transport), and finding greater energy efficiencies to make prices more competitive with road transportation. As in the aviation sector, the Iranian government will look for foreign companies that can offer technological and financial solutions.

This is an excerpt from an article in our monthly Iran Strategic Focus publication. If you’d like to speak to our Iran expert in more depth about Iran’s railway sector, please do get in touch.