Unlucky Iran: why the corridor “North-South” is not relevant for Russia

The President of Russia had talks with the heads of Azerbaijan and Iran. Negotiations, in our view, was concerned primarily with energy and security. However, the most powerful response in the media occurred in the transport corridor “North-South”. Why so much interest — is unclear. The President travels across countries and continents — signed dozens of agreements, most of them quite working, including in the field of transport and infrastructure. Any agreement are orphaned, some are actively implemented.

The Friendly North

With the corridor “North-South” for many years, something weird is going on. The first initiatives of Russia in this direction was perfectly calm, and was more similar to the foreign policy response to the statements of Zhirinovsky about the “washing of boots in Indian ocean” and moreover, was reinforced by the foreign policy context. “Pacified” Afghanistan, occupied Iraq, but Russia, which is exclusively economic methods in Iran.

But by the end of the last decade all quietly disappeared. This “no” has been added and the international sanctions against Iran.

Sanctions lifted, now we are looking for new ways of cooperation. But the topics are old. Including the corridor “North-South”. What actually is this corridor?

From the North it is clear to us the system of Railways and roads, as well as Caspian routes between Astrakhan port of Olya, Makhachkala, with the Russian side and Aktau, Baku, Turkmenbashi and the Iranian ports of Azerbaijan, Turkmenistan and Iran. Actually, the first step towards the development of the corridor, the first “next” step will be the completion of the railway from the Azerbaijani Astara to the Iranian Resht. And the construction of a cargo terminal on the border of Iran and Azerbaijan. According to information from the Minister of transport of Russia Maxim Sokolov, Russian Railways and Russia as a whole is not even invited to consultations on potential traffic, not to mention the investment involved.

Strange South

However, the problem is not the connection of Iran with the railway system of CIS countries. In December 2015, Kazakhstan completed through Turkmenistan your railroad connecting Central Asia to the North-East of Iran. But over the past months, notable traffic there did not appear, the terminal, the greeters grain, containers or other cargo from the Iranian side yet. As a result, the trade between Kazakhstan, Central Asian countries and Iran is either on the Caspian sea in Northern Iranian people ports or by road, which is cheaper and more flexible than the Railways of the countries of the region. Vehicles cheaper and within Iran.

Southernmost point in Iran for the alleged transit route “North-South” — the port of Bandar-Abas, development of the port, with all kinds of terminals — container and grain to coal and oil.

Through the country comes to about one million Chinese containers (according to China customs 1.1 million TEU, the equivalent of 20-foot container ). However, almost none of these containers is not available on the railway platform, to send to the Iranian populous North (there are also the country’s capital — Tehran). All containers precariat in local cars and trucks heading North. Empty containers returned container shipping companies at the port.

Dangerous roads

In contrast to Europe, China and Russia, in Iran, the company won’t risk releasing the containers into the country, according to insurers the risk of loss reaches 30% for empty containers, and 5% for Laden. Container for developed countries, these indicators do not exceed thousandths of percent.

And indeed the Railways of Iran is unable to accept containers. In the first place because of their own infrastructure. No container terminals, there are platforms, a little more than 8 thousand km of Railways are electrified only 2.5% of the paths, the second path is only at 19% of the routes. Most of the Railways lies in a mountainous area.

In fact, to learn at least some pricing, marketing or statistical information about the Iranian railway through sunset on an English version of their website — impossible. Find out the cost from local forwarder is not possible. All at once invited to come.

The result of routine exchange of information on prices, which exists and operates in Europe, Russia, Kazakhstan and even China (including language barriers), in Iranian conditions is not cheap to establish. Despite the fact that logistics globally is becoming cheaper and cheaper.

According to the Russian freight forwarders working with Iran, shipping cost from Russia to Bandar Abbas is not less than $2-2,5 thousand for the cargo volume is comparable to a 20-foot container. That if any of the options of the corridor “North-South: even in the water through Astrakhan port of Olya, or even Kazakhstan, Aktau, at least by rail to the West of the Caspian sea, though that Kazakhstan laid on the Eastern shore — is not important.

If you say, take the above a million containers through Kazakhstan from China to Urumqi, the Kazakh railway could get at least $1 billion in revenue and the state taxes.

But it’s not working. First, consumption goods are produced not in Urumqi, and in the East of China, or at least in the center of the country, and secondly, shipping container from Shanghai by sea to Bandar-Abbas costs $200 — according to the Shanghai containerized freight exchange. And then the cargo on the vehicles, cleared, goes to Tehran in the internal message. Cheap.

While Iran’s trade and China is not balanced. From the Iranian side tankers leaving the oil back there is a complete range of manufactured goods in containers (Russia and China the balance of trade is balanced, we are talking equipment and products redistribution and agricultural production in large numbers). And if by land this imbalance means that back the vehicle is empty, and thus increases the overall cost of delivery, in the case of Maritime container lines that go in a circle, everything is solved simply. On the way from Shanghai to Europe, container ships come in and unload containers of Chinese goods, on the way back, they just pass by. No costs.

Organize the logistics

The result is simple. As with other corridors, each member state should establish and invest cheap and high quality logistics services, with equal access to goods of the same value for citizens in any part of the country. It’s not cheap. But only through such a system, you can count on the arrival of transit. Russia and Kazakhstan have embarked on this path, go for it. You can criticize, but the investment and quality of logistics services is growing. In Azerbaijan, while there is nothing about any of the logistics except the oil. In Iran, the state must, in principle, to decide what to develop. How to guarantee to investors and dealers immunity, safety of goods and money. How to develop roads and Railways, how to organize logistics through the mountains and desert.

After goals are identified, it will become clear that it is cheaper than $20 billion for priority action in the transport infrastructure cost can. And this is the only urgent things to do today. And then to discuss with neighbors the transit.

The authors ‘ point of view, articles which are published in the section “Opinions” may not coincide with ideas of editorial.