In-depth Analysis of Iran’s Logistics: Breaking Through Under the Shadow of Sanctions and New Momentum from the Belt and Road Initiative

Iran is located at the crossroads of Eurasia—commanding the Persian Gulf and the Gulf of Oman to the south, bordering the Caspian Sea to the north, connecting to Central and South Asia to the east, and linking to the heart of the Middle East to the west. This uniquely advantageous geography should have made it one of the world’s leading logistics hubs. However, for a long time, harsh international sanctions and geopolitical conflicts have cast a heavy shadow over Iran’s international trade and logistics development.

Despite numerous obstacles, Iran’s logistics sector has not stagnated. Under the pressure of Western sanctions, Iran is actively implementing a “Look East” strategy by deepening cooperation with China under the Belt and Road Initiative (BRI) and vigorously advancing the International North–South Transport Corridor (INSTC). It is seeking a breakthrough within the constraints of sanctions and aiming to reshape its role as a transit trade hub across Eurasia.

1. Bandar Abbas Port: Iran’s Maritime Lifeline and a Test of Resilience

Bandar Abbas Port, located on the northern shore of the Strait of Hormuz (with its core container terminal at Shahid Rajaee Port), is Iran’s largest and most advanced commercial port. It handles 85% to 90% of the country’s container throughput and 55% of total seaborne imports and exports. With a designed annual capacity of over 6 million TEU, it is truly Iran’s economic lifeline.

However, this lifeline is also facing severe tests. In April 2025, a major explosion occurred at the Sina container yard in the Shahid Rajaee port area, causing extensive container damage and casualties, and bringing port operations to a complete standstill for a time. The incident briefly disrupted supply chains for grain and essential goods that rely on the port for imports. Notably, the undamaged areas resumed core operations within 48 hours, demonstrating the strong resilience of Iran’s logistics infrastructure under extreme pressure. In addition, to address the withdrawal of international shipping lines due to sanctions, the Islamic Republic of Iran Shipping Lines (IRISL) has taken on the vast majority of maritime transport tasks, maintaining basic trade links with Asia and neighboring Middle Eastern countries.

2. Breaking Through by Land: Strategic Opening of the China–Iran Rail Corridor

In response to the United States’ tight blockade of its ports and maritime shipping, Iran is accelerating a shift in its logistics focus to overland routes. In May 2025, a freight train loaded with solar panels departed from Xi’an, China, traveled via Kazakhstan and Turkmenistan, and successfully arrived at the Aprin Inland Port (Dry Port) near Tehran. This marked the official normalization of operations for the China–Iran cross-border rail freight corridor.

This new route is revolutionary for China–Iran trade. Traditionally, shipping Chinese goods by sea to Iran’s Persian Gulf ports takes 30 to 40 days; via this rail corridor, transit time is significantly reduced to around 15 days. This not only greatly improves supply chain efficiency, but also provides a secure channel for Iran’s oil exports and China’s imports of industrial goods—avoiding the potential risk of a blockade of the Strait of Hormuz. It is a key milestone for the Belt and Road Initiative’s implementation in the Middle East.

3. Chabahar Port: Strategic Competition in India–Iran Cooperation

In addition to Bandar Abbas, Chabahar Port on the coast of the Gulf of Oman is another deep-water port of major strategic significance for Iran. It is Iran’s only port with direct access to the Indian Ocean and is not affected by developments in the Strait of Hormuz. For India, Chabahar Port is a critical node for bypassing its rival Pakistan and directly opening trade routes to Afghanistan and the countries of Central Asia.

In 2024, India and Iran signed a 10-year long-term operating agreement under which India Ports Global Limited (IPGL) took over operations of the Shahid Beheshti terminal. Despite the threat of potential U.S. secondary sanctions, India has remained committed to advancing the project and has invested more than US$120 million in port equipment upgrades. The development of Chabahar Port not only brings Iran much-needed foreign exchange and infrastructure investment, but also gives it leverage to navigate the strategic competition between China and India—two major Asian economies.

4. International North–South Transport Corridor (INSTC): Reshaping the Eurasian Logistics Landscape

Beyond the east–west Belt and Road, Iran is fully promoting the north–south International North–South Transport Corridor (INSTC). This is a multimodal transport network linking Russia, Iran, and India, designed to replace the long traditional route via the Suez Canal. Through the INSTC, cargo is shipped by sea from Mumbai, India to Bandar Abbas or Chabahar in Iran, then transported via Iran’s domestic rail and road networks to Caspian Sea ports or the northwestern border, ultimately reaching Russia and Northern Europe.

As Russia has also been subjected to severe Western sanctions due to the war in Ukraine, Russia and Iran have highly aligned interests in the INSTC. Russia is increasing investment in Iran’s railway construction, particularly to eliminate the Rasht–Astara rail bottleneck. Once the INSTC is fully connected, Iran will transform from a sanctioned island into an irreplaceable transit hub linking the two major markets of Russia and India, potentially generating billions of dollars in annual transit transport revenue.

5. A Future Where Challenges and Opportunities Coexist

Although Iran’s logistics strategy is ambitious, real-world challenges remain severe. Long-term economic sanctions have disconnected Iran’s financial system from the international system, making cross-border payments and foreign exchange settlement extremely difficult. Infrastructure is seriously aging, and progress on railway electrification and double-tracking is slow. Domestic political conditions and instability in the surrounding geopolitical environment also increase transit risks and insurance costs.

However, for logistics companies with specialized compliance capabilities and geopolitical insight, challenges often contain unique opportunities. As trade between emerging Asian economies and Iran continues to deepen, non-dollar settlement systems are gradually being established, and infrastructure investment in Iran by China, Russia, India, and others increases, Iran’s logistics market is expected to reach US$19 billion in 2026—demonstrating strong growth potential.

Conclusion

Iran’s logistics industry is in a transformation period filled with both contradictions and hope. While sanctions have blocked its traditional routes to the West, they have also forced it to accelerate its “Look East” shift and integrate deeply into emerging Eurasian logistics networks such as the Belt and Road and the INSTC. The resilience of Bandar Abbas, the opening of the China–Iran rail link, and the rise of Chabahar Port together outline a new map of Iran’s logistics breakthrough.

In such a complex and highly uncertain market, companies need exceptionally professional guidance. With deep logistics networks and hands-on experience across the Middle East and Central Asia, HLT Logistics has a thorough understanding of compliance requirements and risk management under sanctions. We are committed to providing customers with safe, compliant, and efficient multimodal transport solutions—helping you seize the initiative in the new Eurasian trade landscape.

Handle logistics troubles.