Malta Freeport has renewed its contacts in Iran with an eye to renewing contracts with Iranian shipping lines should sanctions be removed later this year, sources said.
Iranian national shipping line IRISL – which had some 170 vessels in its heyday – started using Malta Freeport as its Mediterranean hub in 2004 and had become its second largest client. It was first hit by US sanctions in 2009 and unilaterally pulled out of Malta in 2011, in the knowledge that Malta would have to apply sanctions by 2013.
However, in 2009, its operations were taken over by a private company – the Hafiz Darya Shipping Lines (HDS) as part of a government privatisation move.
HDS – whose contract with Malta Freeport predates the sanctions – continued to use Malta for a few years but as more and more ports on the Mediterranean route gradually politely declined its business, it abandoned its Malta route, also shutting its back office operations, which at one time employed a few dozen people. HDS is still operating between the Middle East and the Far East, where sanctions are not applicable and trade flows were largely unaffected.
Sources familiar with the current situation said that numerous countries were knocking on doors in Tehran seeking to establish commercial relationships which could be activated once the sanctions are lifted, particularly for industrial development.
“There was a delegation of 40 top French companies in Tehran quite recently, and we understand that the Germans were not far behind.”
However, Tony Nash, the global vice president of Delta Economics told the GTR magazine that France and Germany may get some business, “but not in a major way”.
There was a delegation of 40 top French companies in Tehran quite recently, and we understand that the Germans were not far behind
“Asian competitors would be there first but the Iranians also remember who their friends were through the sanctions,” he was quoted as saying.
The loss of HDS had hit Malta Freeport hard but over the years it gradually replaced the line with others, recently signing contracts with two worldwide shipping alliances.
“The question is whether the Freeport would have the capacity to handle its requirements. At the moment, it has capacity for 2.75m containers (TEU) but is increasing the number of cranes and expanding its footprint by 30,000 sq.m. so it depends what it will require – and when.
“Even if Iranian trade with Europe starts to pick up again – which is by no means guaranteed given its ties with China – it will take time.
“And from the shipping point of view, it will not be easy for HDS as its container business has all been absorbed by other shipping lines and it will have to start from scratch. It will not be able to get back to where it was overnight,” the sources said.
“It is more likely that HDS will succumb to the same pressures that other shipping lines faced, and form an alliance.”
There are currently sanctions imposed on Iran by the US (since 1979), the EU and the UN (since 2002), as well as individual countries.
An interim agreement in 2013 easing the sanctions was reached after it curbed uranium enrichment and gave UN inspectors better access to its facilities.
However, Iran and six major powers (US, UK, France, Russia, China and Germany) are hoping to reach an agreement for them to be lifted – all at one go, or in phases – by June 30.
They hammered out a preliminary agreement on April 2, with Iran committing to reduce the number of centrifuges it operates and to other long-term nuclear limitations.
Iran’s oil exports fell from 2.2 million barrels per day in 2011 to just 700,000 by May 2013, costing the country between $4 billion and $8 billion each month. Oil used to pay for half the government’s expenditure.
Within months of the sanctions being lifted from financial services, Iran will be able to collect debts from overseas banks for oil payments of over $100 billion.
Discussions on lifting the sanctions have already been extended twice and could be prolonged beyond the end of June – but commentators do not anticipate that they would be dropped if no agreement is reached by November 2015 when the US presidential election campaign is launched.