🇮🇷 Iran: shifting transit potential through crisis and uncertainty (Policy brief)

In Policy Brief materials InfraEconomy Group co-founders Pavel Chistyakov and Ekaterina Kozyreva examine structural developments in trade flows and transport infrastructure. Each edition addresses one country, corridor or system and evaluates it through data, modelling and field experience. Below we provide 10 hot takes by InfraEconomy’s founders:

1. Iran Will Inevitably Go Through a Crisis

InfraEconomy Group does not comment on political scenarios. When assessing transport and trade performance, however, geopolitical context cannot be ignored. Iran has experienced repeated cycles of sanctions easing and tightening over the past decade. Temporary relief during previous political thaws has not resulted in sustained reintegration into global logistics systems. Western investors entered during earlier easing phases and exited with losses. Institutional continuity has remained weak.

“The development of events in Iran, in general, seems to have no branching scenario. No matter what the pretext is, the country will inevitably have to go through a crisis… Sanctions can only be lifted under conditions of fundamental political transformation. And that clearly implies a crisis.”

Reintegration into global trade requires predictable regulation, stable corridor governance, reliable cargo monitoring and long-term tariff policy. These elements cannot emerge without systemic change. Crisis is a prerequisite for institutional reset.

2. Sanctions Relief Could Add Up to 40 Million Tonnes of Imports

If sanctions are lifted under conditions of systemic change, Iran’s import profile would expand significantly. Rising incomes, renewed industrial demand and normalization of trade channels would increase total volumes.

“We see up to forty million tonnes of additional imports by 2040 — roughly one and a half times the current volume.”

This projection is conditional. It assumes stabilization, functioning infrastructure and restored investor confidence. Without institutional reform, such expansion would remain theoretical.

3. Iran Does Not Operate a Functional International Corridor (Yet)

Iran is often described as a natural transit bridge between Central Asia, Europe and the Middle East. Geography supports this narrative. Operational reality does not.

Rail infrastructure exists, but it does not operate as an integrated corridor system. When cargo enters Iran, tracking becomes limited and operational responsibility becomes unclear. Cross-border continuity — which defines a functioning international corridor — is weak.

“The most important thing to understand is that as corridors they simply do not function… There is not a single fully operational international corridor in Iran, because once cargo enters Iran, all traceability and responsibility for the cargo are effectively lost.”

4. The West–East Rail Axis Is Structurally Bottlenecked

Iran’s strongest rail axis runs West–East toward Turkey. Yet the system is interrupted at Lake Van, where trains must cross by ferry.

“The railway reaches Turkey and runs into Lake Van… And at Lake Van you have a ferry. No bypass has been built. They say they can transport up to four trains per day, but in reality one goes in each direction. There is no seamless logistics.”

A corridor cannot depend on ferry capacity at its core junction. This bottleneck limits scalability and undermines claims of uninterrupted Eurasian rail connectivity.

5. Bandar Abbas: The Main Gateway with Significant Constraints

Bandar Abbas is Iran’s principal container and general cargo port. It carries the bulk of non-oil maritime trade and anchors what is often described as the country’s North–South access.

“Bandar Abbas de-facto terminates Iran’s all three North-South corridors. […] Practically eighty percent of everything that leaves Iran for the world, except oil, and much of the cargo that comes into or leaves Iran is, in one way or another, routed through other countries of the Middle East. It is relatively shallow: around 10 meters. […] And, Bandar Abbas shipments are expensive.”

Bandar Abbas remains indispensable in the current system. Yet its depth, equipment condition and dependence on external transshipment platforms limit its ability to function as a fully competitive regional hub.

6. Chabahar Port Is Iran’s Strategic Variable

Among Iran’s ports, Chabahar stands apart. Unlike Bandar Abbas, it is deep-water and located directly on the Indian Ocean. Structurally, it avoids the draft limitations of the Persian Gulf and does not depend on transshipment through the Strait of Hormuz.

“Chabahar has very strong prospects to become an alternative transshipment hub. It is well positioned for distribution toward the Middle East, India and East Africa. If the infrastructure and soft factors function properly, Chabahar could capture roughly a quarter of the transshipment market of the region (up to 45-50 mln tonnes).”

In Iran’s long-term logistics equation, Chabahar is the variable that could alter the balance,  but only under systemic reform.

7. Maritime Trade Depends on External Platforms

Bandar Abbas is Iran’s primary container gateway. Draft limitations constrain vessel size. A substantial share of non-oil trade is routed via another countries of the region.

“About eighty percent of everything that leaves Iran for the world (except oil) and everything that enters Iran is in one way or another routed through countries-connectors, primarily in the region… and only then, having effectively exited the sanctions environment, moves further into global markets.”

8. Grain Imports Will Grow Regardless of the Political Scenario

Beyond corridors and sanctions, there is a structural trade trend that is not cyclical.

Iran’s agricultural capacity is under sustained pressure due to climate change: land suitable for agriculture is shrinking; pastureland is declining.

“Iran will increase food imports under any scenario. Under any political scenario, Iran will need more grain… primarily more grain, because pastureland is shrinking, agricultural land is shrinking. Due to global warming and other factors, Iran has very high rates of agricultural land leaving production. And this trend will most likely continue in the coming decades.”

Even without full reintegration into global trade systems, food demand will continue to grow.

9. Central Asia Uses Iran Marginally

Despite geographical proximity, Iran plays a limited role in Central Asian export flows. Trade orientation remains primarily northward and eastward. Southern volumes remain small and largely opportunistic rather than systemic.

“By our estimates, less than 2 percent of exports and import of Central Asian countries move through Iranian ports. Geography of Central Asian trade is currently oriented to the north and to the east, not to the south. The volumes are very small for now.”

This assessment reflects both structural trade patterns and operational constraints. Even in scenarios of disruption or stabilization, Iran does not yet represent a core outlet for the region. Its role remains supplementary rather than strategic.

10. The Active Scenario: What Iran Could Become

Beyond the immediate crisis horizon lies a longer-term “active” scenario. It is not an optimistic forecast, but a conditional one, dependent on stabilization, consistent infrastructure delivery and institutional reform.Under those conditions, Iran’s role in regional logistics could change materially.

“If stabilization occurs and infrastructure projects are implemented… Iranian land transit could become quite significant. These could be flows from Central Asia, flows linking China and Turkey, China (landlocked provinces) and Iraq, flows from Pakistan to Turkey… We estimate this at around thirty-three to thirty-five million tonnes of potential railway transit.”

This estimate refers to land transit potential by 2040, assuming functional corridor integration including rail links toward Turkey, improved southern connections to ports and restored reliability. Without systemic reform, however, the “active scenario” remains a model outcome rather than a market reality.