Industry Spotlight: Transportation and Urban Services

By Ariane Gottlieb, Research Associate  

Given Iran’s geographic breadth and its sizable population, the task of maintaining and modernizing its public transportation system is immense. Cities in Iran are linked by 199,000 km of roads and 10,000 km of railroad. The country has over 300 airports.  Due to heavy traffic, the metro systems in all major cities are heavily utilized to avoid the congestion above. The Tehran metro, for example, is one of the busiest in the Middle East and estimated to service between two and four million people each day.
While impressive in its scope, Iran’s transportation system is in serious need of attention and improvement. The World Economic Forum’s 2015-2016 Global Competitiveness Report ranked Iran 76 out of 140 for overall infrastructure quality (other industrialized countries in the region received much higher ratings, such as Saudi Arabia at 31 and the United Arab Emirates at 2). Furthermore, traffic control standards are in dire need of improvement, as evidenced by the stunningly high fatality rate from road-accidents – the second highest cause of death in Iran. Indeed, the country has one of the highest traffic fatality rates in the world, with costs incurred from accidents some years totaling up to 8% of Iran’s GDP.
Though the country’s highways and roads are generally paved and in moderately good condition, a number of other factors make Iran’s city streets among the most dangerous in the world. Drivers and cyclists often ignore rules of the road, refusing to obey lane markers or road signs and driving at night without headlights. Safety precautions such as seat belts and motorcycle helmets are frequently neglected as well. Furthermore, city streets are poorly lit at night, and the few areas with sidewalks are often obstructed by parked cars. In recent years, UNICEF has partnered with the Iranian government to create a campaign to raise awareness about the importance of road safety.
Though road-accidents are the most pressing issue in the transportation sector, the country’s railroads have been neglected over the last few decades, with slowed railroad development since the 1979 Revolution. In the last ten years, the government has focused on privatizing the industry without modernizing the archaic safety standards or upgrading the aging equipment. Though the international standard age of a rail car is about 15 years, the average age in Iran is 29 years, with cars as old as 55 still in service.
The government has recently directed some attention to remedying this problem. Long-term plans are underway: by 2025, Iran plans to double its kilometers of railroad to 25,000 km. Furthermore, the government seeks to double passenger capacity and lower the average age of rail cars from 29 to 15 years. The country’s trains will also be upgraded, with the development of high-speed rails between major cities and modern software. New, energy-efficient trains will have the potential to reduce air pollution and fuel consumption, two problems that are particularly pressing in Iran.
Though the government is increasing funds for transportation infrastructure, foreign investment is also helping to modernize public transportation within Iran and to connect Iran to its neighbors. In 2012, Iran sought $2 billion in Chinese investments to complete construction of the Tehran metro. Now, the government is actively seeking foreign direct investments (FDIs) to realize similar projects. In the coming years, Iran is predicted to create foreign investment opportunities totaling $250 to $300 billion. Though sanctions have limited investment from Western countries in recent years, Iran has turned to partners such as Russia and China. Notably, Iran signed a $2.5 billion deal with Russia for the production of rail wagons.
Improving such ties with countries like Russia and China is part of an effort to establish Iran as the center of an expansive Eurasian trade network. To accomplish this goal, Iran hopes to establish railway ties with bordering nations of Iraq and Afghanistan, strategically aiming for connections directly to the east and west. Furthermore, Iran is a critical component in China’s Belt and Road Initiative, a project that would link Europe and Asia via a network of railroads. In 2016, the first freight train traveled the 10,399 km from Yiwu, China to Tehran. It completed the journey in 14 days, a significant reduction from the previous 45 day voyage by sea. The “Silk Road train” will complete the journey once a month, accompanying a broader effort to expand Iranian-Chinese relations and promote regional trade and connectivity.
Below, information can be found on Iran’s upcoming Transportation and Urban Services Exhibition, which will highlight ongoing projects related to Iran’s transportation industry.


Disclaimer: By publishing information concerning these events, AIC is not recommending, endorsing, or marketing the events or any participation therein. Anyone interested in these events should undertake on their own to secure necessary information. Furthermore, any activity or involvement in such events must be in full compliance with all applicable laws, including U.S. economic sanctions and export control laws relating to the Islamic Republic of Iran.