UNIVERSITY OF KWAZULU-NATAL The Provision of Efficient Transport Services in the Iranian Maritime and Land Transport Interface By Farhad Razkhaneh 206525761 A dissertation submitted in fulfillment of the requirements for the degree of Doctor of Philosophy in Economics School of Accounting, Economics and Finance College of Law & Management Studies Supervisor: Professor Trevor Jones 2014 ii Acknowledgements I extend my sincere gratitude to all those who helped me through the process and preparation of this Doctoral Thesis. My sincere gratitude goes to my supervisor, Professor Trevor Jones, who meticulously read through the drafts and provided me with valuable editorial suggestions and guided me with technical comments, criticisms, guidance and support through the various stages of the writing and completion of this thesis. His efforts, knowledge and experience in international trade and transportation, ports and maritime, and merchant shipping transport related issues, have contributed towards the success of this thesis. The research and writing of this thesis, whilst at times difficult and challenging, has contributed towards my academic knowledge development, with which I hope to humbly contribute, through further writing, teaching and research, back to society. Special thanks to Professor Geoff Harris for reading earlier chapters of this thesis and providing the valuable suggestions and guidance to me. I extend my thanks to friends in the School of Accounting, Economics and Finance at the University of KwaZulu-Natal, Professor Dev Tewari and Post Doc Mr. O.B. Saiedo for their help. In addition, I am grateful for support and interest shown by colleagues in the Islamic Republic of Iran Shipping lines and individuals in the freight industry, in particular Mr. M. H. Dajmar Managing Director of Islamic Republic of Iran Shipping lines, IRISL, Captain H. Jalilzadeh Managing Director of South Shipping lines – Iran line, Captain H. Keshavarz Managing Director of Hafiz Darya Shipping Company, Dr. Azizabadi Managing Director of Valfajre Shipping Company and my other colleagues in the IRISL Group of Companies including Hoopad Darya Agency. I extend my gratitude to Mr. A. Stiri previous and Mr. H. Delbari acting Managing Directors of Shahid Rajaee Port Complex Bandar Abbas, who supported me with the port industry insights, also to friends in the South African freight industry, Mr. M. Kajee Senior Director of Grindrods King & Sons Shipping Agency and Mr. P. Naidoo Marine Operation Branch Manager, and Ms. V. Bastian National Sales Manager who supported me both with data and valuable visions. Last but not least, my gratitude goes to my family Ms. M. Teyfouri and children Koorosh and Katayoon and siblings Ismail, Zahra, Musa, Maryam and Sougra, that with all obstacles and the status quo have always encouraged and been supportive to me. I am also learning that the comparative advantage in the economy is supported to be a general concept, applicable to countries in every stage of economic development with a central message that every country rich or poor, gains from specialising in those fields it has a comparative advantage such as transport for Iranian economy and hence, the gain from trade and transport is shared with other countries. Consequently, I am also learning that: “to gain righteousness you have to sacrifice that which you love (in terms of the world).” Al Quran 3:92. Love is the means to perfection: “but he will prosper who purifies himself (both inwardly and outwardly) and remembers the name of his Guardian Lord, and prays.” Al Quran 87:14. And also 91:9 iii Abstract This research investigates the efficiency of Iran’s transport system with reference to the sea- borne trade and sustainable development of ports, shipping services, logistics centres and transit corridors as the overall objectives. The reason this study is relevant, is it introduces Iran through its potentially cost-effective transport advantages to create an alternative source of revenue for a country that is heavily dependent on oil income. To successfully analyse the provision of effective transport services in the Iranian maritime and land transport interface, the emerging Iranian transport corridors have been under close observation, and a scenario planning approach mixed with a descriptive exploratory comparative cost analysis has been applied. This methodology comprises two stages. The first stage involves the identification of the main features, limitations and challenges of the chosen transport corridors through which the different infrastructure and the development of main ports, routes and corridors are described according to the available data and information. The second and more analytical stage utilises this base to estimate and compare the comparative costs of these through-transport routes, with a view to establishing their cost effectiveness. As research recommendations, the optimisation of efficiency of some alternative land haulage routes, and the International North-South Transport Corridor (INSTC) as a sea cum-land route-rail are elaborated. iv Table of Contents Page Permission to submit ii English Language Waiver iii Declaration iv Acknowledgements v Abstract vi Table of Contents vii List of Figures xi List of Tables xii List of Abbreviations and Explanations xiv Chapter 1 Introduction 1 1.1 Introduction and objectives 1 1.2 Methodology 2 1.3 Results and discussions 3 1.3.1 Transportation and trade interaction 3 1.3.2 Developments in maritime transport 4 1.3.3 Challenges facing the transport sector, with particular reference to Iran 8 1.3.3.1 Alternative ways to improve facilities and infrastructure in the transport sector 8 1.3.3.2 Removal of non-physical barriers (including simplification of border crossing procedures) along intermodal sea-landside routes 10 1.3.3.3 Alternative ways of developing multimodal transport by improving logistics capabilities 13 1.3.3.4 Alternative reforms to set the stage for trade liberalisation in transport services 14 1.4 Overall direction and unfolding structure of this thesis 23 Chapter 2 Literature Review 26 2.1 The purpose, intent and direction of the overall study 26 2.2 The broader international trade and transport landscape 29 2.2.1 The economic function of seaports 31 2.2.2 Sectoral dialogue and commercialization: the changing role of modern-day ports 36 2.2.3 Transformation of port terminal operations - from local to global 39 2.2.4 Spatial and functional dynamics of ports as logistic centres 43 2.2.5 The multi-modal through-transport perspective in the context of global and regional trade 44 2.3 The focus of attention to the region specifically, and of course to Iran itself 48 2.4 Literature specific to the Iranian transport sector 56 Chapter 3 Research Methodology 59 v Chapter 4 Regional and International Trends for Iran’s Sea and Land Transport Links 65 4.1 Iran’s transport sector: Current status and present and future Challenges 66 4.2 Geo-strategic position of Iran 70 4.3 Iran’s politico-economic realities 71 4.4 Regionalism as a priority in Iran’s transportation 72 4.5 Bilateral, Regional or Corridor Agreements 74 4.6 North-South International Transport Corridor 78 4.7 The Trans-Asian Railway as a Section of the Modern Silk Road 82 4.8 TRACECA 84 4.9 Co-operation in the Oil and Gas Sector 85 4.10 Development and Construction of the Transit and Transport Infrastructure 88 4.11 Streamlining Transit through Iran 88 4.12 Transit costs 90 4.13 Transit times 91 4.14 Rationale and objectives in railway expansion and connectivity to the major ports 92 4.14.1 Chabahar Port to Kerman-Zahedan railway 94 4.14.2 Shiraz-Bushehr-Assaluyeh railway 98 4.14.3 Gorgan-Bojnourd-Mashhad rail line 100 4.14.4 Sangan-Herat railway line 102 4.14.5 Ghazvin-Rasht-Anzali-Astara Railway line 104 4.14.6 Mianeh-Bostan Abad-Tabriz double track rail line 107 4.14.7 Arak-Kermanshah-Khosravi rail line the border connection of Iran and Iraq 109 4.14.8 Khorramshahr-Basra railway line 110 4.15 Concluding remarks 113 Chapter 5 The Iranian Shoreline and Major Ports 116 5.1 The southern shoreline of Iran and the principal southern ports and their economic functions 118 5.1.1 Chabahar Port 120 5.1.1.1 Economic significance 122 5.1.1.2 Chababar Port Geographical situation and main features 122 5.1.1.3 Development plan of port 123 5.1.1.4 Railway network 124 5.1.1.5 Present port facilities 124 5.1.1.6 Chabahar Free Zone (CFZ) 126 5.1.2 Port of Bandar Abbas 128 5.1.2.1 Recent history of the port 129 5.1.3 Bandar Abbas old port or port of Shahid Bahonar – geography and main features 131 vi 5.1.3.1 Shahid Haghani Passenger port 132 5.1.4 Shahid Rajaee Port complex – location, infrastructure and Facilities 132 5.1.4.1 Importance and significance of the port 134 5.1.4.2 Port of Shahid Rajaee Infrastructure and Marine and Cargo-handling Equipment 136 5.1.4.3 Shahid Rajaee port Special Economic Zone (SEZ) 138 5.1.5 Affiliated ports and harbours 139 5.1.5.1 Berths of Foolad Hormuzgan complex 140 5.1.5.2 Qeshm Island ports 140 5.1.5.3 Kish Island 141 5.1.5.4 Overview of maritime and economic strengths of Bandar Abbas 142 5.1.6 The port of Assaluyeh 143 5.1.6.1 Assaluyeh’s Logistic Port 143 5.1.6.2 Petrochemical port 145 5.1.7 Bushehr Port 145 5.1.7.1 Bandar Bushehr main features and other specifications 146 5.1.7.2 Sadra-Bushehr shipbuilding and repair yards 148 5.1.8 Bandar Imam Khomeini 149 5.1.8.1 Port history BIK 149 5.1.8.2 Bandar Imam Khomeini Port geography, main features and other specifications 149 5.1.8.3 Warehouses, cargo handling