Iran Sees Surge in China-Europe Rail Traffic Following New Trade Agreement

In a significant development for international freight transport, Shahryar Naqizadeh, the Director-General for International Commerce at Iranian Railways, has highlighted the Southern Corridor as the most efficient and cost-effective rail route connecting China to Europe. This corridor not only enhances trade opportunities but also promises to streamline logistics for businesses across the continents.

In an insightful interview with IRNA, Naqizadeh discussed the recent six-party railway agreement signed in Istanbul. This agreement involves key stakeholders, including Iran, China, Uzbekistan, Turkey, Turkmenistan, and Kazakhstan, all working towards optimizing the East-West corridor that traverses Iran.

During this year’s earlier meeting in Beijing, representatives from these nations focused on strategies to advance the Southern Corridor. Notably, Naqizadeh pointed out that the participating states have committed to implementing unified tariffs and reducing transit times, which are critical steps towards making this rail corridor operational.

Key Features of the Southern Corridor

Naqizadeh outlined the three primary transport corridors that link China to the European Union:

• The Northern Corridor: This route runs through Mongolia and Russia.
• The Middle Corridor: This corridor splits into a rail route towards Russia and a mixed sea-rail route traversing the Caspian Sea towards Azerbaijan, Georgia, and the Black Sea.
• The Southern Corridor: Historically significant, this route dates back 2,000 years to the original Silk Road and has remained largely inactive until now.

Naqizadeh emphasized the importance of Iran’s rail diplomacy, particularly the meetings held in Beijing and Istanbul, which have catalyzed the activation of the Southern Corridor. He noted that these discussions have led to substantial agreements, such as:

1. Implementing unified tariffs among the six participating countries.
2. Reducing transport costs through collaborative efforts.
3. Cutting transit times to expedite cargo movement across borders.

Positive Trends in Freight Transport

Highlighting the initial successes of these agreements, Naqizadeh revealed that since the beginning of this year, 40 trains from China have entered Iran, a remarkable increase compared to just seven over the past seven years. This surge in rail traffic signifies a growing trust and reliance on the Southern Corridor.

With an estimated annual cargo flow of 60 million tons transported from China to Europe by rail, Naqizadeh stated that even capturing 10 percent of this traffic through the Southern Corridor could yield considerable economic advantages for Iran. However, to facilitate this, it is essential to complete several key rail links:

• Marand to Maku
• Bazargan to Cheshmeh Soraya
• Extending onward to Kars in Turkey

Naqizadeh also mentioned that memoranda related to these projects have been signed and are expected to be finalized in an upcoming meeting between the leaders of Iran and Turkey.

Strategic Advantages of the Southern Corridor

The disruptions along the Northern Corridor due to the ongoing Ukraine-Russia conflict and the complexities of the Middle Corridor, which involves multimodal transport and higher costs, have reinforced the appeal of the Southern Corridor. Naqizadeh asserts that a fully rail-based route will be the most attractive option for cargo owners.

Currently, the cost of transporting a 40-foot container from Xi’an, China, to Tehran is approximately USD 4,500 under existing tariffs. Interestingly, the return journey offers a competitive 50 percent discount, bringing the price down to USD 2,500.

Moreover, the transit time along the 9,000-kilometer route is at most three weeks, which is significantly faster than maritime alternatives. This efficiency makes the Southern Corridor an attractive choice for traders and commercial operators looking to optimize their supply chains.

In conclusion, the Southern Corridor is poised to become a crucial artery in international trade, enhancing connectivity between China and Europe while providing economic benefits to Iran and its partners. The implementation of unified tariffs and the reduction of transit times are expected to further solidify this route as a preferred option for freight transport.