Transportation is one of the important components of national economy and has a great impact on economic growth. This sector covers activities that are broadly used in all fields of production, distribution and consumption of goods and services and plays a prominent part in the economic activities.
A major share of goods supply is in transportation and improving this sector will have a significant impact on goods distribution process. The contribution of transportation services in GDP has reached about 9% and transportation share of products cost in the world and in Iran are 6% and 12%, respectively. Among 138 countries, Iran’s roads quality ranked 68th, railway 46th, ports 73rd and Aviation 111th in 2016.

The total transported passengers were 241.8 mn people of which road transport accounted for more than 69% in the year ended March 2017.

The total transported cargo was 573 mn tons of which by 67.7% road fleet had the largest share and the next ranks were allocated to maritime, rail and air transportation respectively, in the year ended March 2017.

Recent trends

  • Aircraft purchase contract with foreign companies
  • FDI contract in rail sector with Italy, China and Russia
  • Increased number of flights going over Iranian sky to over 1,000 per day and Qatar flights crossing over Iranian sky following sanctions by Arab countries
  • 10 ships purchase contract with South Korea


Roughly, 90% of the cargo and passengers are transported via the roads. The share of road transportation is more than other sub-sectors and road always holds 90% of transportation sector value added.

The total amount of intra-inter provincial transported cargo are 388 mn tons with shares of 27% and 73%, respectively. The number of domestic transported passengers in the year ended March 2017 amounted to 167 mn people with a decrease of 6.7%, compared to previous year.

The mining and construction sectors accounted for 37% share of road transportation. The agriculture and livestock with 22%, chemicals 14.6%, metal with 11.3% have occupied the road transportation market.


Due to geopolitical position and several thousand-year trading history in Asia-Pacific via Silk Road, Iran is located on main corridors of the region such as North-South Corridor and East-West Corridor and also favors Central Asian countries transit to international waters through the Persian Gulf and the Middle Eastern and the Eastern European countries.

Despite railway potential and routes of Iran, share of rail of total road transportation about 10% has been much less than other corridors including TRASICA. Currently, the railways annual capacity in international transport sector is estimated between 10 -15 mn tons based on available potential. Concerning available projects, transport capacity multiplication is predicted.
The average international rail cargo transport, including export, import and transit have been around 3 mn tons per year which is about ¼ of the capacity, in other words, 75% of the remaining rail capacity is useless.
At present, railways infrastructure includes 10,475 km of main lines and 556 main locomotives in service in order to increase cargo and passengers in the coming years which will not meet the needs.

More than 40 mn tons of cargo were transported through railways in the year ended March 2017, of which about 69.6 % were minerals transportation mainly iron ore, as in the future will reach at least 80%, due to the development of steel and cement production projects.

Railway investment contracts

Following JCPOA, Iran rail transportation started priority projects of foreign financing.

  • One of the first projects was Tehran-Qom-Isfahan express railway construction after nuclear deal implementation which started by chines financing of 1.9 bn EUR.
  • The 1.7 bn EUR financing contract for Tehran-Mashhad railway electrification concluded with China.
  • Italy had signed 1.36 bn USD agreements to construct express railways between Qom and Arak. The Islamic Republic of Iran Railways signed a contract worth 1.2 bn EUR by 1.36 bn USD with Italian State Railways Company. Iran and Italy signed initial agreement for rail systems development in Iran. According to these agreements, Italy is required to provide credit 55 bn EUR.
  • 1.2 bn EUR credit loan from Russia for railways: After years of development, railway electrification was developed with Russia. Electrification contract for Garmsar- Incheh-Borun railway (Semnan to Golestan) was signed. Through Mazandaran, this railway connects Iran to Turkmenistan and Kazakhstan. The value of this contract is 1.2 bn EUR, according to the Russian Railway Organization and credit loan will be granted to this project. Of 495 km of the project, 203 km are mountainous with 32 stations, 95 tunnels, 7 security centers, 11 Cutting post, 6 communication links and building services, estimated at 36 months.
  • Manufacturing of 4,900 wagons with foreign investment: A contract for 6,000 high-tram cargo wagons was signed with Russia as one of the most effective measures of past two years. Accordingly, 4,900 wagons are built by three domestic manufactures and the other 1,100 wagons are imported from Russia. Wagons are imported if production line of high-trim wagons is set up in Iran as the contract is 250 mn EUR.


Iran is located in the best geographical location of the world’s air transportation. If the required infrastructure is completed at this stage, Iran’s share will increase. The total air fleet includes 300 aircrafts and 47,025 seats. Over the past four years, 52 aircrafts have been added to fleet but the capacity of the existing fleet does not cover the current needs; so, the fleet development is one of the priorities.
Although the average life-span aviation fleet has reached over 23 years, in many countries, aircrafts with a lifespan of 15 years are replaced with new ones.

New aircraft purchase contract

  • With JCPOA and lifting sanctions in early 2016, contract of 100 aircrafts purchase was signed between Airbus and Iran Air and the first aircraft was bought in late December 2016, followed by A330 aircraft in March and early April 2017. The contract included the purchase of 46 medium-range A320, 38 long-range A330 and 16 aircrafts, A350.
  • Concurrently, Iran Air signed a contract with American Boeing in Tehran to buy 80 aircrafts with Value of 16,600 mn USD, the first of which will be delivered to Iran Air in 2018.
  • According to the contract, Boeing will export 80 aircrafts for a 10-year period with 50 aircrafts of 737 and 30 aircrafts of 777. 15 Boeing 300-777 aircrafts are to be delivered by 2020 and the remaining will be provided between 2021 to 2028.
  • 3rd contract signed by Iran Air and ATR (Airbus subsidiary) that 20 aircrafts (with 72 seats) are supposed to purchase from ATR. Now, with importing of 6 aircrafts to Iran, less developed airports have begun to operate. The contract is worth 400 mn USD and can increase to more 20 crafts.
  • Aseman Airlines signed a contract for the purchase of 60 Boeing 737 Max aircraft for 3 bn USD, of which 5% will be paid by Aseman Airlines and 95% will be paid through the foreign financing for 30 aircrafts. The first Boeing 737 Max aircraft will be delivered to the Aseman Airlines Co. in 2022 and within 2 years, all of the 30 airplanes will be delivered to Aseman.
  • Qeshm Airlines signed a draft with Boeing to purchase 10 Boeing 737 Max aircrafts. Then, Iran Air Tour Co. signed an understanding memorandum with Airbus for 45 aircrafts of 320 Airbus series by 4.5 bn EUR.
  • With these 270 aircrafts, more than 60,000 air seats will be added to aviation industry and more than 240,000 people can be employed, thus Iran’s position in the region and international level would be strengthened increasingly.


Iran has tremendous geographical advantages in maritime, having about 3,000 km of coastline, access to the sea in the north and south, free waters (Indian Ocean), strategic position on North-South transit corridors and Central Asian countries interaction with southern waters. Due to international restrictions, the share of the maritime in GDP is insignificant and Iran’s share of world maritime is 1%. Commercial seaports have a capacity of 210 mn tons, while 160 mn tons are operational.

Maritime contracts

Hyundai Heavy Industries Group has agreed to build 14,500 TEU Mega Container and tankers with capacity of 49,000 tons for oil derivatives and chemical delivering, financed by South Korean banks and companies for Islamic Republic of Iran Shipping Lines (IRISL).
According to IRISL Group request for shipbuilding industry development, the Hyundai Heavy Industries Group (HHI) has put in place technical cooperation plan with one of the domestic shipbuilding companies on its agenda. The ordered container ships were 366 m long, 48.2 m wide and 29.9 m high and tankers carrying oil derivatives and chemical cargo, 183 m long, 32.2 m wide and 19.1 m high. The contract is considered to be the first order for Iranian companies in international yards after JCPOA. Under the agreement, the first ship will be delivered in the first half of 2018 and Hyundai has committed to finalize the training program, engineering, technical information and software models at a maximum of four months.


Due to geographical location, Iran is among the countries that enjoy good transit advantages. The Persian Gulf, is surrounded by the largest oil producers and considered as bottleneck.
The Caspian Sea in the north is the best communication bridge between Iran, Russia, Kazakhstan, Turkmenistan and Azerbaijan, as well as Iraq, Turkey, Pakistan and Afghanistan on the West and the East, can play an important role. In other words, by connecting with the 15 countries, Iran can be as a bridge between these countries.
Iran benefits these countries with large population and high revenues, since they have a beneficial effect on transit and trade development in the region. Also, this leads to Central Asian countries trade relations with East Asia and European countries through Iran.

Air transit

Increase of air navigation control up to 13 regions indicates that Iranian sky is safe for all air flights and more than 1,000 flights are being done daily. With about 450 flights crossing Iran’s airspace before 2015 per day, it increased by 100% in the year ended March 2016, an also 10% growth in the year ended March 2017 than the previous year. The JCPOA and Iran’s sky security, along with the region unrest were the main factors in choosing Iranian airspace by foreign airline companies. At present, 150 flights of Qatar Airlines to Europe and Africa use Iranian sky.
Due to geo-economic airspace status, Iran links the East to the West .Linking Asia-Pacific to Europe as the highest air traffic hotspots in horizon 2030; Iran can turn into a “regional equilibrium point”. The operation of 7,100 km in the year ended March 2016, 2,000km in the year ended March 2017 and 5,200 km new and unidirectional airway over Iran’s airspace on Apr. 30, 2017, resulted in travel time savings (VTTS), fuel consumption reduction and aviation safety of sky.

Road transit

Iran road transit had a share of 7,815.7 tons from total road transportation, with 23.4% and 76.6% for oil and on-oil products in the year ended March 2017.

Rail transit

Concerning the neighboring countries products and industries, different rail transit goods are transported through Iran including cotton, fertilizer and sulfur. Uzbekistan produces annually about 1,200,000 tons of cotton, of which about 400,000 tons are transported across Iran, which increased to 250,000 tons in the year ended March 2016. Uzbekistan, Kyrgyzstan and Kazakhstan produce fertilizers and Tajikistan produces 160,000 tons of aluminum ingots per year.
The transit rate reached 475,000 tons by July 2017, while in the same period of previous year Iran had 309,000 tons rail transits. A total of 1.2 mn tons were transported via rail in the year ended March 2017.

Advantages of transit

  • Iran being on the North-South corridor and linked to Russia, Eastern Europe, Central, North, Central Asia and the Caucasus; on the one hand, South Asia, South-East, Far East, Oceania and the Gulf states; on the other hand, are considered as prominent advantages. Due to the short routes in the North-South corridor and various transportation options; Iran’s route is attractive for goods transit. Shahid Rajaee, Amirabad and Bandar Anzali ports have unique potentialities, along with Shahid Bahonar, Lengeh, Bushehr, Chabahar, Imam Khomeini and Nowshahr ports.
  • Afghanistan extensive investments and facilities in the east axis and government support will turn the Chabahar port into a transit pole for Afghanistan. Even for East, Chabahar is considered as the most important port but due to some obstacles, is less important than Bandar Abbas for transport to Afghanistan.
  • Iran has played an active role in ECO business activities, due to geographical location among ECO member countries.
  • The goods transported through Chabahar port benefit facilities, including exemptions and discounts ,as for transit goods to Afghanistan, are exempted from warehousing costs up to 10 days after discharge and 30% discount on warehousing costs up to one month.
  • Government support, route shortness,facilities to expedite transit; all governmental organizations are obliged to remove barriers and take appropriate steps and valuable measures regarding ports, roads and railways, including the Bafg-Mashhad project .
  • Capacities and potential in transportation sectors, development of infrastructure and railways, roads, maritime, loading and unloading equipment; however a relative decline in the volume of cargo transported over the past two years, but now Iran enjoys an increase in the transit from Central Asia, the Caucasus, Iraq and Afghanistan, which indicate to the success of the measures.


The transportation has two subdivisions including infrastructure and fleet. Traditionally, the public sector has been in charge of transport infrastructure procurement as well as the aviation and railroad fleet. Today, the private sector is responsible for supply and provision of collaborative projects and fleet services, while the public sector continues to play a major role in the provision and operation of the transportation infrastructure. Certainly, the process begun in the public resources constraints, has led to the private sector involvement in infrastructure and the provision of sustainable resources.



  • Strategic location on transit corridors
  • Access to the markets of Iraq and Afghanistan
  • Access to Central Asia, Russia and Europe due to geopolitical location and security
  • Technical and engineering capacities in construction
  • Launching North-South Corridor to develop transportation
  • Railway infrastructure and special situation as corridors for access to new markets in the Middle East, Central Asia, the Caucasus, Asia, Russia, Europe and the world East-West corridor development
  • Identifying and strengthening roads through Intelligent Transportation Systems (ITS)
  • Specialized staff in road construction and transportation


  • Expert shortage in transportation industry, especially, Third Party Logistics (3PL) and Fourth Party Logistics (4PL)
  • Weak transport modes and economic inefficiency and low capital returns
  • The lack of large logistics companies providing transportation, warehousing, customs and other value added logistics services which cause serious damage to the export and import
  • Traditional transportation management restrain transportation sector to compete with other foreign markets
  • The transportation fleet Depreciated
  • No powerful companies in transportation services and the existence of a self-ownership phenomenon in the road transport fleet
  • Low safety of roads
  • High energy consumption by road transport fleet
  • Cargo transportation delay due to the single-track or old-fashioned railway
  • Increased flight delay or cancellation
  • Comparative high tariffs for ports


  • Strategic status in transit and being in the region as a transit center
  • Market attractiveness for airline companies despite the sanctions
  • Relative cheapness of services
  • 5,000 km sea border in the north and south for harboring
  • Sufficient demand for passenger and cargo transportation
  • Domestic urban development capacity, especially on middle cities


  • Regional issues directly affecting transit.
  • Various types of obstacles, different institutions interference and prolonged transit time
  • State monopolies in the some transport activities
  • Strong rivals in the region (Turkey, Azerbaijan, Bulgaria, etc.)
  • Operational and safety risks due to weak in use of modern technologies including construction, maintenance and infrastructure operation and fleet

Laws & Regulations

  • A monthly charge should be paid for the aircraft weight and the distance. An amount of 0.004 USD / km is received for every 1,000 kg foreign flights on take-off. In other words, for almost 1,000 kg of aircraft weight, about 160 IRR per kilometer is to be paid monthly.
  • For any airspace request flying, US dollars, Euros or credit is paid to Iranian banks. Airlines requesting to fly over Iran temporarily or one-time, should pay the equivalent of the same amount in advance before take-off.
  • Iranian and non-Iranian ships are exempted from paying charges for entering any domestic repair shops.
  • Goods entering is subject to the same provisions agreements unless prohibited for security and religious aspects.
    Vehicles, such as truck, bus, minibus, locomotive or rail vehicles crossing Iran as transit cargo and with no load and passenger and passports, given recognized by an authorized international Iranian transportation company, are subject to the transit provisions.
  • Iran Road Maintenance and Transportation Organization is responsible to receive transit tolls. The organization receives amounts in accordance with foreign vehicles transit act in the following headings:
  1. Reciprocal: Mutual tolls of foreign vehicles belonging to countries that receive unilateral tolls from Iranian vehicles.
  2. Receiving the difference fuel price from the fleet according to the route length and the average fuel consumption of each foreign vehicle.
  3. An average of 30 cents EUR should be paid per liter, on the roads of neighboring countries
  4. Receiving tolls from Iranian roads fleet for 100 IRR per ton-km

Investment advantages & incentives

  • The services purchase guarantee is one of the incentives for investment in railways; accordingly, service providers in railways infrastructure and loading and unloading equipment, are purchase-guaranteed to ensure their investment. In this regard, exchange rate fluctuations are guaranteed to exceed 10%, which result in secure investment
  • Having the rights, supports and available facilities such as domestic investment
  • The existence of Chabahar as the only oceanic port in the Middle East
  • All types of trucks crossing on the roads with any standard
  • International transit corridors crossing through Iran
  • Proximity to Central Asian markets
  • Neighboring countries with only land borders which have to transport their goods from Iran
  • Extensive facilities such as exemptions and discounts on port and warehouse costs
  • In the Sixth Development Plan, in order to strengthen rail transportation economy and encourage the investment of non-state sector in construction and operation of inland and outward urban railway is assumed as investment in less developed regions and is subject to all laws and regulations relating to investments in less developed areas. Also, the VAT on railways services in addition to the VAT exemptions will be calculated at zero

Foreign investment opportunities


Establishment and development of airport infrastructures includes investment in constructing airports, passenger terminals and private jet terminals, airport city, commercial corridors. Other items are airports components such as: air industries town, media town, commercial exhibitions, research centers, vertical car parking, airport hotels, stores, recreational and touristic complexes, sport complexes, carting, pilot training centers, technology parks, airport city projects for CIP, goods exhibition, cargo terminals, fixing and maintenance workshops, catering, cargo warehouse, cargo and passenger holding complexes.


  • Establishment the supporting workshop for dry pools plan in order to make the ability of manufacturing all kind of giant oil ships and gas tankers etc.
  • Development plan of building and fixing small ships
  • Development plan of establishing a town for marine industries in special economic zone of shipbuilding Persian Gulf.


  • Development of rail lines with ”Transit Oriented Development” models
  • Railway industrial chains completion based on modern technologies
  • Development of station infrastructures and facilities
  • Development of electronic railway
  • Development of express railway
  • Establishment of new and two- lines
  • Development of subsidiary lines
  • Development of signs and security systems
  • Development of rail equipment and machines
  • Development of communication system
  • Development of cargo and passenger fleet
  • Development of stretch fleet
  • Development of fixing and maintenance potentials
  • Development of IT systems
  • Development of suburban trains
  • Establishment of combined transportation terminals

Transportation industry in Capital Market

Transportation companies are dealt in transportation, warehousing and communication groups. This group specified the market value of 1,989 mn USD equal to 1.9% of total market value.


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