Iran's overland trade push falters amid border bottlenecks and costs

Food inflation in Iran hits 128% as bottlenecks drive up costs

Iran had vowed to respond to a U.S. blockade by pushing more trade overland. On the ground, the campaign is faltering at the country’s land borders, where the same bureaucratic and cost hurdles are throttling trade at every Iranian land crossing. The Wall Street Journal, citing Iranian trucking associations, drivers and border officials, reported that the situation amounts to a self-inflicted blow to Tehran’s remaining economic release valves.

At the main crossing into Pakistan, the Union of Truckers and Drivers Organizations Across Iran said 700 trucks — mostly carrying bottled gas and cement — were waiting at any time but only 40 were allowed to cross. The union posted video on social media showing drivers stuck at the Pakistani side without water, food or sanitation in temperatures reaching 122 degrees Fahrenheit, and said Pakistani authorities were asking Iranian drivers for the equivalent of more than $10,000 each to cross, an amount the union called unprecedented. A spokesman for Pakistan’s Foreign Ministry said he was unaware of any new charges or restrictions.

Ehsan Malekzadeh, chairman of the Iranian International Transport Companies Association, told the Mehr News Agency that customs officers across Iran’s land borders were struggling to cope. Malekzadeh said 3,700 trucks were stranded on the Iranian side of the crossing to Turkey, with delays reaching 20 days. At the border with Afghanistan, truckers told Iran’s Truckers’ Union that they had to wait days before being able to export Iranian iron ore, the Journal reported.

Tons of cargo have been ruined in the delays. One driver told Iran’s official news agency IRNA that he was stuck for days at the Pakistan side of the border with meat destined for Iran, where prices were spiraling higher. Apricots shipped overland have spoiled because of the waits, according to the Journal’s reporting. “Neither Iran is taking responsibility for the situation, nor is Pakistan allowing us to unload our cargo,” one driver said in a video posted by the Union of Truckers and Drivers Organizations Across Iran over the weekend.

Iran has tried to compensate for the clogged land crossings by routing more trade through the Caspian Sea and by rail to China. Transits across the Caspian have grown by 70% in the past five months, according to Iranian officials, and a freight railroad from Tehran to Xi’an in eastern China has increased from once-a-week journeys to every three or four days since the blockade started, according to the state-controlled Tehran Times. Hadi Haghshenas, the governor of the Iranian province of Gilan, told state news agency IRNA in late August: “We are trying to turn this threat into an opportunity.”

The Caspian and rail alternatives face their own constraints. At the border with Turkmenistan — the gateway to China — transporters complained of a lack of warehouses and of a proper registration process for bringing goods by rail to China, with one businessman telling the Journal it was increasingly difficult to bring in automotive spare parts from China. At the Pishin crossing into Pakistan, the daily number of trucks rose this summer from about 40 vehicles to as many as 130 vehicles a day, local governor Rahimbakhsh Balidehei told the semiofficial ISNA News Agency, adding to the customs backlog.

Iraq added a new disruption over the weekend, temporarily closing cargo terminals at its border with Iran after alleging Iran had used Iraqi territory to attack Saudi Arabia. On Sunday, trucks carrying Iranian onions bound for Iraq were forced to turn back, according to Tehran’s Central Fruit and Vegetable Market.

The air route is narrowing as well. Mahan Air, which the U.S. has sanctioned, said Wednesday it was suspending flights to Oman and Turkey, according to state-affiliated media in Tehran. Last week, the U.S. Treasury imposed new sanctions on companies it said were supporting Mahan’s cargo and passenger services.

The economic costs of the rerouting are reaching Iranian consumers. Mohammad Reza Khodarahm, an import-sector expert, told Iranian economic daily Donya-e-Eqtesad last week that overland bottlenecks and diversions were now contributing as much as a third of the price for common goods once they reached Tehran. Majidreza Hariri, the president of the Iran-China Chamber of Commerce, earlier predicted that the U.S. naval blockade would cost $18 billion a year in extra outlays, and told KhabarOnline that transporting one container from China to Iran costs $12,000 via land routes compared with $3,000 by sea. Iran’s official statistics office reported that food inflation rose to 128% in August.

The blockade has also cut into Iran’s imports of basic goods, 70% of which normally go through blockaded ports. The Journal reported that, though humanitarian goods and food are ostensibly exempt, shippers are reluctant to service Iran. Videos posted on social media last week showed cranes at the Port of Shahid Rajaee, Iran’s largest commercial container port, at a standstill. Transportation professionals in Tehran told the Mehr News Agency last month that thousands of containers were stranded in ports in Pakistan, the United Arab Emirates and Saudi Arabia.

Not every country in the region is being squeezed in the same way. The Journal reported that Saudi Arabia is moving more of its oil west across the Arabian Peninsula, and that the U.S. Navy is helping some Gulf nations shift their oil through the Strait of Hormuz. Iran, by contrast, is being hit both at sea — by the U.S. blockade and U.S. strikes on Iranian tankers carried out in reprisal for Tehran’s attacks on U.S. Navy vessels — and on land, by border delays the Journal attributed to a combination of Iranian bureaucracy and the actions of neighboring governments.