Air cargo industry set to benefit from easing of Iranian sanctions
27 / 01 / 2016
The logistics industry stands to benefit from the removal of Iranian sanctions but uncertainties remain “substantial”, according to one logistics consultant.
In a research note, Transport Intelligence practice leader Thomas Cullen said that the removal of certain aspects of the Iranian sanction regime had “triggered a flood of business, much of it requiring logistics infrastructure”.
“Iran badly needs access to more aircraft to replace its worn-out fleet,” Cullen said. “Yet with any new fleet will go a requirement for maintenance and replacement logistics systems and it is unclear what condition this is in.”
On Monday, Air Cargo News reported that Iran is poised to begin the long process of rebuilding its civil aviation fleet, following the ending of UN sanctions this month.
The country’s government is expected to sign a deal for about 114 Airbus aircraft in Paris this week, which would allow state carrier Iran Air and other operators to begin the process of replacing aircraft that in some cases date to before the Islamic Revolution in 1979.
European airlines are also hoping to ramp up services to the country and Italy’s Alitalia and British Airways have both expressed an interest.
Cullen added there were also other sectors that stood to benefit from the removal of sanctions and air cargo had a role to play in the growth of these industries.
“Another prominent area is automotive production. In the not too distant past Iran has been a significant destination for hundreds of thousands of complete knock-down kit (a kit containing all the parts to assemble a car) vehicles, largely sourced from France.
“Peugeot-Citroen and Renault are very keen to resume this business but it too will require logistics, both in-terms of transport as well as assembly operations.
“These are generally provided by local Iranian companies but again it is likely that these will need extensive re-equipping and redesign.
“The most high-profile area for investment is the oil and gas sector. It is believed that its production of hydrocarbons is depressed by the poor condition of oil fields and the supporting infrastructure.
“The assumption is that the Iranians will aggressively invest to increase output. In particular, they are likely to need new gas liquefaction terminals. The construction and project cargo needs of such facilities would be significant.”
Cullen said that the country’s population would also find it easier to purchase consumer goods from abroad, creating more opportunities.
However, there were risks associated with entering the market, he said.
“The uncertainties in the Iranian market are substantial. The political situation is chronically unstable and there is no assurance that the sanctions will not return," he said.
“But the up-side potential is such that it could change the dynamics of the logistics market in the Middle East.”