Moreover, the costs associated with transportation on other corridors is 20-30% higher. Lead times to India and Iran could be twice as long, up to 60 days. This hurts the profitability of grain, metals and chemical exports, according to Russian media. The total financial damage of a pause in INSTC operations could be around 40-60 million US dollars monthly for Russian logistics companies.

The total turnover of freight on the Russia-INSTC route could fall by as much as 25% this year, a Russian analyst claims, depending on the length of the conflict.

The INSTC

The INSTC connects Russia to the Indian Ocean via three branches: a western branch through Azerbaijan, a central route across the Caspian Sea, and an eastern one through Kazakhstan and Turkmenistan. All three branches cross Iran before reaching Indian Ocean ports.

The western part of the route is most popular with Russian exporters of timber and grain, while the eastern part is most popular with paper, pulp, construction materials, and food products. Oil and vegetable oil are primarily shipped through the Caspian ports.

Shipments along the INSTC declined in 2025 to 9.9 million tonnes. By comparison, 12.9 million tonnes moved along the route in 2024.

We have addressed virtually all previously outstanding issues, including land registration and obtaining benefits,” Tsivilyov said on the sidelines of an intergovernmental commission. “It is very complex, but we managed to resolve all the implementation issues. We can confidently say that as of April 1, we will begin the implementation phase of this large-scale infrastructure project,” he added.

Iran giving strong support to INSTC

Iranian President Masoud Pezeshkian has committed to removing all obstacles hindering the development of the INSTC by the end of March. “Relations between Iran and Russia are robust, with numerous agreements being signed and actively implemented,” Pezeshkian said. “We aim to eliminate remaining barriers by the end of the (Iranian) year so that the railway route can be completed and become operational,” he added.

Iran’s role does bring challenges.

Iran is important to North South Corridor but there are some concerns its political stance both internationally and domestically is a problem. Led by a hard line Muslim Islamic establishment it has backed many of the rebellions in the Middle East and has incurred the strong disapproval of moderate Muslim states, the West and the United States, who maintains two battleship groups in the Indian Ocean in order to bomb Iran.

Domestically a worsening economy triggered huge demonstrations across the country which were brutally crushed in January leading to widespread concerns about the stability of the regime. “Tensions between Iran and the US, particularly Trump’s policy of reimposing ‘maximum pressure’ on Iran, undoubtedly increase the risks associated with using Iranian transit routes.

Furthermore destabilisation of the domestic political situation could lead to higher insurance costs for cargo transport,” Nargiza Umarova, Head of the Center for Strategic Connectivity at the Institute for Advanced International Studies, University of World Economy and Diplomacy, Uzbekistan told RailFreight.com.

Where is the money going to come from?

One other big problem for the Corridor is finance. Iran whilst it has oil has an economy which is severely sanctioned – the consequence of years of supporting Islamic rebels and attempting to have its own nuclear weapons. “Sanctions and their tightening remain a significant constraint. Last year, for example, Washington took steps to reinstate sanctions against Iran’s only ocean port, Chabahar, which is included in many interregional transport projects. Only India, which is investing in the port’s modernization, was granted a six-month deferral that expires in April 2026,” added Umarova.

Her view is INSTC does not harm Iran’s transit capacity, but rather contributes to its expansion — especially given the increased practical significance of the project for Russia. “Following international sanctions imposed on Russia for its invasion of Ukraine, the country is reorienting its exports of raw materials towards the South Asian market. This trend has breathed new life into the INSTC,” she told RailFreight. “In 2024, for example, the volume of cargo transported along the eastern branch of this corridor, via direct rail links between Kazakhstan, Turkmenistan and Iran, nearly tripled compared to 2023, reaching 2 million tonnes”, Umarova added.

IMEC now more challenged

This is all adding to the difficulties facing IMEC the India-Middle East Corridor which India’s Prime Minister Narendra Modi announced at the September 2023 G20 Summit in New Delhi amidst broad excitement which has now gone. Not only is the IMEC route too close to both the Houthi’s in the Red Sea and the Israel-Arab War but some feel Iran’s Revolutionary Guards – who control much of Iran’s logistic industry – have a vested interest in egging the conflicts on.

“If IMEC became the standard trade route, not only Iran but also the Islamic Revolutionary Guard Corps itself stood to lose. If the Bab el-Mandab (the entrance to the Red Sea and prime Houthi territory) remained too risky or expensive to transit, Iran hoped to profit as an alternative transit route,” said Michael Rubin director of policy analysis at the Middle East Forum and a senior fellow at the American Enterprise Institute in FirstPost.com. On top of this Saudi Arabia, the effective Middle East part of IMEC, is now changing its foreign policy and pivoting towards Pakistan and possibly Turkey in what some have dubbed “the Islamic Nato,” – something that would be difficult for India.

“Uzbekistan is holding consultations with Iran and Turkey on how to make the most of the Southern Corridor’s potential, in both bilateral and multilateral formats,” she said adding “this topic was thoroughly discussed at a ministerial meeting between Uzbekistan, Iran and Turkey during the second Transport Ministers’ meeting of Organization of Islamic Cooperation (OIC) member states in Istanbul.”

This builds on regular meetings between the heads of the railway administrations of China, Kazakhstan, Uzbekistan, Turkmenistan, Iran, and Turkiye, where the discussions are serious, detailed and commercial. “At the inaugural meeting in Tehran in May 2025, a preliminary agreement establishing uniform transport tariffs along the Southern Railway Corridor, as well as measures to increase freight volumes, including standardized delivery times and simplified procedures,” Umarova said.

Moving things forward via a coordinating body.

What Umarova believes is needed now is a coordinating body to keep up the pace of developments. “This is necessary in order to consolidate the efforts of stakeholders when addressing a wide range of legal, economic and technical issues,” she said – although there is a debate about what format this would take.

“In the case of the Southern Corridor, I believe that an intergovernmental coordinating structure would be most appropriate. As I mentioned previously, Uzbekistan has taken the lead in establishing the Council for the Integration of Railway Spaces of SCO Countries. The participating countries will most likely be represented by the heads of relevant ministries or agencies,” she added.

Big gains for infrastructure and trade.

What is at stake is a huge new piece of infrastructure as well as the movement of huge amounts of cargo. The potential capacity of the Southern Corridor between Central Asia and the EU is estimated at 10 million tons per year, Umarova told RailFreight.

That number could rise by 50% to 15 million tons per year when the electrification and construction of additional track segments along the 1,000-kilometre railway section from Sarakhs on the Turkmenistan border to Razi on the Turkish border is completed, added Umarova. This is a joint project between Iran and China, she further added.

Many challenges ahead

Like many experts Umarova is not blind to the many challenges the Southern Corridor faces to become a reality and supplies a lengthy list of them headed by differences in technical standards. “Iranian railways operate on a 1435 mm gauge, whereas Central Asian countries use a 1520 mm gauge. This necessitates the replacement of bogies (rearranging wagons) at border crossings, which incurs additional costs for freight transport along the route,” she said. Other issues mentioned were the lack of integration between the Iranian and Central Asian railway spaces, lack of unified transportation documentation, lack of tools for harmonizing rolling stock and transportation processes and sanctions against Iran.

Bottlenecks

But the geography of the route is also a problem and not just its length. “The main bottleneck of the Southern Corridor is currently the need to transfer cargo across Lake Van in Turkey,” said Umarova. This prevents the corridor from being entirely rail-based and explains the decision to construct the Marand–Cheshmeh Soraya railway line in Iran, with an extension to the Turkish border region of Aralık. On top of this she noted some sections of Iran’s railways are single-track and require electrification. Investment is needed to address these issues but pointed out these issues are being addressed through cooperation with China and Turkmenistan.

Costs will be huge

All this has a huge price tag made more difficult by the sanctions imposed on one of the principal countries Iran whose every move is seemingly overshadowed by another barrage of sanctions. “However, private and foreign investment (including from Turkey, China, India and some Gulf countries) is being attracted in some cases, particularly in the development of transit routes,” said Umarova.

Iran’s key role

In 2025, Iran’s Ministry of Roads and Urban Development announced plans to create nine transit railway corridors at an estimated cost of over 10 billion USD, to be financed by a percentage of oil sales, said Umarova. What is striking is some of these projects are linked to Afghanistan, including the Five Nations Railway Corridor (Iran-Afghanistan-Tajikistan-Kyrgyzstan-China).

In 2020, Iran completed the first three stages of the Khaf–Herat railway with the final section scheduled to open in 2026. Construction of a 1435 mm gauge railway between the Afghan cities of Herat and Mazar-i-Sharif has also been announced. “Iran is ready to allocate an unprecedented sum of 2,5 billion USD for these projects,” said Umarova.

The Aprin dry port

The Aprin dry port was opened in March 2023, but only saw its first freight train in May 2025. Since then, about 30 trains coming from China have reached it, as Iranian media stated. The new service from Russia is thus an important development, especially in the context of the INSTC.

European Silk Road Summit

The INSTC remains one of the key emerging corridors for trade between Europe (mostly Russia) and central and southern Asia. With the current geopolitical tensions, many countries are adjusting their trade routes. For example, Russia is looking for new partners after the sanctions imposed by the EU in the context of the war in Ukraine.

The development of these new corridors, including the IMEC, the Middle Corridor and the new Arctic route, will be one of the highlights of the European Silk Road Summit. The event will be held in Milan on 19 and 20 November. Find out more about the programme here and get your ticket here.

The Iranian ports, including Bandar Abbas and Chabahar, are key transportation nodes for the INSTC. Iran wants to accommodate freight flows going through them, and is therefore building a railway from the Chabahar port to the city of Zahedan. Once completed, the railway will link the port to the greater rail network in the country, helping to boost capacity on the INSTC. Completion is scheduled within six months, according to Azerbaijani publication Trend.

Armenia

On (a part of) the other side of the INSTC, the western branch, Russian grain is now being delivered to Armenia while transiting Azerbaijan. That was not possible previously due to the hostile relationship between the two countries. A first batch has already been delivered, and 132 more wagons are planned before the end of January. Shipments of other freight types will be explored, says South Caucasus Railways, Armenia’s railway operator.

ADY wants to use the port of Gwadar

In addition, ADY said it wants to explore the possibility of utilising the Pakistani port of Gwadar, located near the border with Iran. The port is not among Pakistan’s most active, but it is currently undergoing a massive upgrade to implement a rail connection with the aid of China. Its position, isolated from big industrial centres, makes it difficult to pick up significant volumes. However, with the interest of countries like Azerbaijan and, most importantly, China, the future of the port might look brighter and rail can play a big role.

Pakistan’s rail freight developments

Freight trains used to be the main mode of transport of goods in Pakistan in the mid-20th century. However, over the past 70 or 80 years, the modal share of rail freight dropped from roughly 70% to the current 4%. Projects such as the INSTC and the trans-Afghan railway, on the other hand, have now revived Pakistan’s interest in this modality. The country is cooperating with China, Russia, Iran, Afghanistan and Uzbekistan and Turkmenistan. Another strong partner is the United Arab Emirates, which is helping Pakistan develop its rail infrastructure with over three billion euros in investments.

The second goal of the new deal is to boost rail traffic between China, Russia and Belarus. RZD and KTZ are considering the integration of a unified information system for rail transport between China, Kazakhstan, Russia and Belarus. This would happen within the ASOUP-2 (АСОУП-2) project, a single database that encompasses operational, forecast, archive, planned and regulatory information on all objects of the transportation process.

The train will travel from Pakistan into Iran, Turkmenistan and Kazakhstan, a route that is also known as the eastern branch of the International North – South Transport Corridor (INSTC). From Kazakhstan, it will make its way to Russia. The total length of the route is around 8,000 kilometres and takes 20 to 25 days to cross in its entirety.

Third attempt

The project has been postponed numerous times already. First, Pakistan planned to send the container train on its way in March, then in April, and now in late June. However, a tangible plan seems to be on the table for a June departure: 15 to 16 TEU of Pakistani exports, amounting to 500,000 tonnes, according to Chinese publication Xinhua.

The freight would depart Lahore for a 2,000-kilometre journey to the Iranian border. At Zahedan, an Iranian border town, the freight would be transferred from the Pakistani gauge to the Iranian one. In other words, the load would remain in Iran for a considerable amount of time.

That also makes it seem doubtful that the Pakistani exports will really depart for Russia this time around. Iran is currently the target of Israeli bombardments. Even though the east of Iran, the transit area, has been largely spared until now, it remains to be seen if Pakistan considers this a good time to move ahead with the trial.

Pakistan primarily exports leather products, electric medical appliances and textiles to Russia. As for imports, those consist of wheat, fertilisers, dried vegetables and petroleum products.

“I would like to express my gratitude to everyone who took part in the project. The development of transit and transport potential is one of the country’s strategic goals. In this direction, Samruk-Kazyna JSC, together with KTZ, is actively working not only in Kazakhstan, but also abroad”, commented Nurlan Zhakupov, CEO at the sovereign wealth fund and KTZ parent company Samruk-Kazyna.

“Over the 10 years of KTZ’s partnership with the port of Lianyungang, the Kazakh-Chinese terminal in Lianyungang, the Khorgos Gateway Dry Port, and now the container hub in Aktau have been opened. This project is an important step in the development of transport and logistics in Kazakhstan.”

Unmatched technology

The Aktau container hub provides transit opportunities and strengthens Kazakhstan’s position as an important link on the international transport corridors, says KTZ. Moreover, the rail operator comments that modern logistics infrastructure, including advanced technologies that have no analogues in Kazakhstan, will significantly speed up the processing of container freight.

Meanwhile, Russia also expressed its interest in the project. It is already known that Russia and Uzbekistan are cooperating on a feasibility study, but now Russian businesses are also looking favourably upon the project. According to a government official, Russian car manufacturers are interested in “developing cooperation with Afghan partners in terms of deliveries of freight and passenger vehicles.” To make that possible, Russia is willing to deliver modern equipment and rolling stock for the railway.

International North – South Transport Corridor

Afghanistan, for its part, is naturally satisfied with the international interest in a cross-country line. In order to give it some more weight, it is looking to join the International North – South Transport Corridor together with Pakistan. The latter’s authorities have reportedly presented calculations for new transport corridor branches – their lengths, necessary budgets, and lists of development measures.