Despite having the largest maritime and tanker fleet in the region, Iran’s shipping and aviation sectors are largely inactive. U.S. sanctions, coupled with an aging fleet, have left much of the country’s logistics grounded, forcing reliance on foreign operators and highlighting deep operational challenges.
Recent United Nations Security Council resolutions, revived at the request of three European countries that are parties to the 2015 Iran nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), directly target the Islamic Republic of Iran Shipping Lines (IRISL) and Iran’s aviation fleet. This development is expected to further increase pressures on Iran’s maritime and aviation logistics.
Official company data show that the average age of [the IRISL] fleet is approximately nineteen years.
Meanwhile, over the past six months, the market value of IRISL shares has been highly volatile and continues to decline. During this period, the company’s shares on the Tehran Stock Exchange have fallen by 45 percent. The company has not only failed to expand or modernize its fleet in recent years, but the volume of foreign trade transit carried by the 115 large vessels it operates has remained steady at 27 million tons, equivalent to just 14 percent of Iran’s total non-oil trade.
Official company data show that the average age of its fleet is approximately nineteen years; in other words, despite having the largest maritime fleet in the region, many of its ships are worn out and very old. Last year, the company announced plans to reduce the fleet’s average age to ten years, but given the falling stock value and its unstable financial situation, this target seems unrealistic and remains out of reach.
According to United Nations Conference on Trade and Development statistics, Iran quadrupled the capacity of its maritime fleet between 2015 and 2020. Tehran never provided concrete reasons for this expansion, except grandiose statements about national power and becoming a sea-faring nation. Since then, growth has virtually stalled. The fourfold increase in the number of Iranian cargo ships from 2015 to 2020, combined with the average age of IRISL’s fleet, indicates that a large portion of the ships acquired during this period were second-hand and already old.
The situation is even worse in the tanker sector: Only 17 percent of Iran’s crude oil exports are transported by tankers flying the Iranian flag. Many Iranian tankers have reached the end of their operational lifespan and are now used primarily for floating storage or ship-to-ship transfers to conceal the origin of Iranian crude.
Services imports have more than doubled over the past four years, peaking at $24.2 billion last year.
As a result, Iran has resorted to more foreign service providers for logistics. Services imports have more than doubled over the past four years, peaking at $24.2 billion last year, according to the Central Bank of Iran. Service imports refer to receiving services from foreign countries, consumed domestically without physical goods movement. In Iran, the bulk of service imports focuses on logistics (e.g., international transport) and cargo insurance for trade support. Meanwhile, the World Bank reports that Iran ranks second to last in the region in terms of logistics performance, ahead only of Afghanistan.
Maritime logistics is not the only sector that has been grounded. In aviation, official figures indicate that more than half of the country’s fleet is inactive. Out of 324 passenger aircraft, only 160 are operational, while some reports put this number as low as seventy.
With the reimposition of United Nations sanctions, Iran’s maritime and aviation fleets now face not only inspections by foreign countries but also are prohibited from refueling abroad. Additionally, financial transactions in exchange for services provided by Iranian ships and aircraft in foreign ports are subject to severe restrictions.
