New Railway Connecting Iran & China Presents Opportunities & Challenges

A new overland trade route promises faster freight and strategic autonomy, but operational roadblocks threaten its success.

A significant new rail corridor linking China to Iran was inaugurated recently, with its first delivery arriving in Iran on June 1st, marking a major development in China's Belt and Road Initiative (BRI).

The main route connects cities in China, such as Xi'an and Urumqi, to dry ports near Tehran, including at Aprin. The rail route stretches approximately 10,400 kilometers (6,500 miles), traversing Kazakhstan, Turkmenistan, and Uzbekistan, with the ability to make stops in Kyrgyzstan and Tajikistan, as well. This land route has the potential to dramatically reduce delivery times from 30-40 days by sea to approximately 15 days by rail.

Geopolitical Significance

This rail route is intended to significantly increase trade and economic cooperation between China and Iran. For Iran, the overland route means facilitating the export of Iranian oil to China, offering a vital means to bypass existing U.S. economic sanctions. For China, it is a crucial component of the BRI, which aims to connect Asia to Europe via a transcontinental rail network. For both, its development is a significant geopolitical move as it strengthens the China-Iran nexus and has the potential, in theory, to shift global power dynamics by reducing reliance on Western-controlled maritime trade routes such as the Strait of Malacca, which is a chokepoint and is subject to U.S. naval presence. This provides China and Iran with a more secure and less vulnerable trade pathway.

While the core China-Iran route is operational for freight, there are ongoing projects and proposals to expand and improve the rail network within Iran, upgrade sections for passenger service, and connect to other regions. This includes projects like the Khaf-Herat railway connecting Iran to Afghanistan, and other high-speed rail lines within Iran. China has been investing heavily in Iranian infrastructure as part of the BRI, so much of the necessary investment for expansion will likely come from the $400 billion economic agreement signed between China and Iran in 2021.

The new China-Iran railway hopes to be more than just a trade route. Ultimately, it aims to reshape global trade flows, enhance regional connectivity, and reinforce the economic and geopolitical ties between China and Iran, especially in the face of external pressures. However, there is much more to international trade than just connecting railroad networks.

Operational Constraints

While the new rail line connecting China and Iran offers significant strategic and economic advantages, operating such a long-distance international freight railway presents a multitude of complex operational challenges. Infrastructure compatibility, for instance, poses significant hurdles.

While China and Iran generally use standard gauge 1,435 mm railroad tracks, the Central Asian countries in between (i.e., Kazakhstan, Turkmenistan, and Uzbekistan) use the broader Russian gauge 1,520 mm railroad tracks. This necessitates costly and time-consuming transshipment at border points. Cargo must either be moved from one train to another due to different track widths, or the railroads must use expensive "gauge-changing" bogies, which can be unreliable and slow down operations.

Additionally, different countries often employ varying signaling and communication systems. This requires trains to either carry multiple onboard systems or for frequent locomotive changes at borders, adding to delays and operational complexity. If parts of the route are electrified, differences in voltage and frequency standards require locomotive changes or specialized multi-system locomotives.

Regulatory Obstacles

Crossing multiple international borders also involves complex and often varying customs procedures, documentation requirements, and inspections. This can lead to significant delays and administrative burdens. Harmonizing these procedures across all transit countries is crucial, but difficult to achieve. Since each country has its own legal framework governing rail transport, liability, and tariffs, it is essential to establish unified waybills, common rules for liability for loss or damage, and competitive, consistent tariffs across the entire route to ensure efficiency and attract shippers.

Discussions are ongoing to agree on competitive tariffs and operational standards, but both agreement and subsequent implementation will take time. The same is true of varying national safety standards and security protocols, which require additional checks and compliance measures at borders.

Furthermore, training staff across multiple countries to a consistent standard of operation, maintenance, and safety is challenging for several reasons, including language barriers, different work cultures, and varying skill levels.

Logistical Challenges

Coordinating train schedules across multiple national rail operators is extremely complicated, and delays in one section can cascade and affect the entire line.

Since the route traverses diverse geographical regions, including deserts and mountains, extreme weather conditions can be expected to disrupt operations and require specialized maintenance. Ensuring consistent standards and rapid repair capabilities across such a long and multi-jurisdictional route is vital for reliability, but access to spare parts and skilled personnel can vary.

While the rail line aims to increase capacity, managing fluctuating demand, particularly during peak seasons, and ensuring sufficient rolling stock and locomotive availability poses a continuous challenge.

The quality and capacity of rail infrastructure can also vary significantly across different countries. Bottlenecks at certain sections, aging infrastructure, or single-track segments can limit overall speed and volume. Upgrading these sections requires substantial investment and coordination.

Economic Inefficiency

Sustained investment is required for maintenance, upgrades, and expansion of the rail network across all participating countries. Securing and coordinating this funding will be a significant challenge due to dynamic economic circumstances and varying priorities.

The rail line is intended, in part, to circumvent U.S. sanctions against Iran. However, the existence of such sanctions can still pose indirect challenges, impacting financial transactions and even the willingness of international partners to fully engage.

The rail line also competes with established maritime routes. Despite longer transit times, ocean shipping offers greater capacity and lower per-unit costs for certain types of cargo. The competitiveness of these railway shipping routes, therefore, depends on their ability to consistently deliver on both speed and cost.

While considered more secure than maritime routes in some respects, any land-based international route can still face security risks such as piracy or regional instability, which require further overhead costs for insurance.

Despite these challenges, the strategic impetus and long-term vision behind the China-Iran rail line, as part of the broader Belt and Road Initiative, suggest that efforts will continue to be made to overcome these operational hurdles. That being said, successful solutions will have to involve a combination of technical upgrades, diplomatic agreements, standardized protocols, and significant financial commitments simply to function as designed, let alone to shift the balance of global power dynamics.

Dr. Steven Terner is a geopolitical analyst and international business consultant at Terner Consulting. He specializes in Middle Eastern political economics and American foreign policy in the Middle East and Central Asia.

Editorial contributions by Rachael Rhine Milliard

The views and information contained in this article are the author’s own and do not necessarily represent those of The Asia Cable.