Details of Iran's Trade Passing Through Naval Blockade / Half of Maritime Trade Revived

Iran's foreign trade volume fell 34% in the first six months of the year, but alternative routes remained active.

According to Ambassador Arjan, Dehghan Dehnavi, head of Trade Development Organization, referring to the consequences of maritime restrictions on the country's trade, said: Despite the fact that about 75% of the weight of Iran's foreign trade was carried out by sea last year, the 34% decrease in the weight of trade in the first half of the year shows that a significant part of the country's trade has continued through alternative routes and the capacities of the private sector.

Stating that sea transportation is an important advantage for countries' international trade due to its lower cost, he said: Many countries that do not have access to open waters consider this to be an economic weakness. Considering the high share of sea transportation in its foreign trade, Iran was exposed to the effects of the restrictions of this route.

34% decrease in the weight of trade against the 75% share of the sea

Referring to the share of sea transportation in the country's trade, this foreign trade official stated: According to last year's statistics, about 75% of the weight of Iran's foreign trade was carried out by sea. Therefore, the aim of the naval blockade was to affect the major part of the country's foreign trade in both the import and export sectors.

He added: According to six-month statistics, the weight of the country's foreign trade has decreased by 34%. By comparing this figure with the 75% share of sea transportation, it can be said that a significant part of the country's trade has continued using existing capacities and alternative routes.

According to him, some of the exchanges were still carried out by sea using the methods available to the private sector, and another part was transferred through corridors and alternative communication routes.

Increasing the cost of transportation and congestion at the borders

Referring to the costs caused by changing business routes, this official said: Rail and road transportation in normal conditions are more expensive than sea transportation in many ways. With the restriction of sea routes, the demand for using land and rail routes increases, and the created congestion also increases transportation costs.

He continued: In this situation, the country is faced with problems at some borders and also an increase in the cost of transporting goods. However, a significant part of the export is still carried out and the economic operators have been able to move part of their exchanges through alternative routes.

Why is the decrease in export value less than its weight loss?

Referring to the difference in the weight and value of exports, Dehnavi said: According to the statistics provided, along with the 34-35% drop in the weight of trade in the mentioned sector, the value of exports has decreased by 20%.

He added: This difference shows that the goods with a higher unit value have been able to better cover the additional costs of transportation and their export still has economic justification.

According to him, for some goods, paying additional transportation costs may destroy the economic efficiency of exports; But in the case of goods with a higher unit value, this cost constitutes a smaller share of the value of the shipment and it is possible to continue exporting.

20% reduction in import weight; Priority with essential goods

This official also said about the country's import situation: the weight of imports has decreased by about 20 percent in this period. Part of this situation is related to the composition of Iran's imports and the high share of basic goods, which have a lower price in terms of unit value, but the volume of their imports is high.

He emphasized: It is very important to continue meeting the needs of the country in such a situation, and import management aimed at allocating foreign exchange resources to essential goods has been effective in reducing the pressure on foreign trade.

Referring to the policies of the Ministry of Industry, Mining and Trade in the field of import demand management, he stated: Since the beginning of the year, a program has been implemented to manage and prioritize imports. In this framework, some of the goods have been included in the import ban or restriction list, and some other goods, including machinery related to new projects, have been restricted with the aim of managing foreign exchange resources.

According to him, in the current situation, the main priority should be the supply of raw materials, essential goods and needs that the continuity of the country's production depends on.

What is the effect of reducing imports on production?

Emphasizing that the decrease in imports and exports does not mean the absence of problems in the economy, this foreign trade official said: Although the statistics show that the country's foreign trade has been able to continue operating under the conditions of maritime restrictions, these reductions are not desirable and have economic effects.

He added: The main part of the country's imports are raw materials, intermediate goods and machinery. As a result, reducing the import of these items can affect the domestic production, and for this reason, alternative methods should be used to facilitate the import of the required production units.

He clarified: The goal is not to consider the decrease in foreign trade as a positive event; Rather, the main issue is that the current rate of decline, despite the imposed costs, has not yet reached a level that makes it impossible to continue the country's foreign trade.

In the end, Dehnavi pointed out the need to support exporters and stated: Despite the increase in transportation costs and the difficulties created in trade routes, economic activists and responsible institutions have tried to maintain the country's foreign trade flow.

He added: Requests for allocating special support to the export sector have been submitted to the government, and if these supports are realized and the measures taken to facilitate exchanges continue, a part of the decrease in exports can be compensated for in the rest of the year.

He emphasized: The ultimate goal is to maintain the stability of the country's economy and the continuation of foreign trade in the conditions of existing restrictions.