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Iran's Maritime Trade Under Pressure Due to Aging Fleet

 Hormozgan shipyards, Iran
VLCC operated by the National Iranian Tanker Company (file image courtesy Alf van Been)

Published Sep 13, 2021 2:13 PM by The Maritime Executive

Iran has admitted that U.S.-imposed sanctions have effectively blocked its effort to upgrade its maritime fleet, forcing the country to depend on overstretched local capacity for newbuilds and maintenance.

In 2018, citing security risks from Iranian covert operations and nuclear-missile R&D, the Trump administration imposed stiff sanctions penalties on most business transactions with Iran. This has made it impossible for the Persian Gulf nation to order new vessels from top global shipyards in China, Japan and South Korea.

The result has been dependence on Iran's homegrown Hormozgan shipyards, stretching domestic shipbuilding capacity and negatively impacting maritime trade in Iran.

“The equipment of the country’s ports as well as our maritime fleet have been worn out due to sanctions and unfavorable economic conditions, and in recent years we have not been able to buy new ships and renovate the national fleet,” said Saman Rezaei, Iranian Merchant Mariners Syndicate (IMMS) secretary.

He added that due to high depreciation, maintenance costs and lower safety of older ships, buying new ships and renovating existing ones is a necessity for the country's maritime sector. 

To address this issue, Iran’s Transport and Urban Development Ministry has crafted a new plan for the development of a roadmap for improving the quality of the maritime transport fleet and the country’s northern and southern ports.

Early this year the country ranked itself among the world’s top 20 nations in terms of shipping fleet. About 300 ocean-going vessels are under the ownership and flag of the Islamic Republic.

The U.S. considers Iran a threat to global security due to its controversial nuclear program, and has imposed tough sanctions targeting virtually every segment of Iran's economy. This includes a blanket prohibition on doing business with Iran's oil, ports, shipping and metallurgical industries, along with a crippling ban on foreign transactions with Iranian banks. 

State-owned Islamic Republic of Iran Shipping Lines (IRISL), its subsidiary Hafez Darya Arya Shipping Company (HDASCO) and the National Iranian Tanker Company (NITC) are among the shipping companies that have been hit with sanctions.

Iran’s Ports and Maritime Organization data show that cargo throughput across the country’s port stood at 130 million tons in 2020, a 14 percent decline from 150 million in 2019. During the year, container throughput posted an 11 decline to 21 million from 23 million the previous year.