Middle Corridor not ready yet

For strong multi-corridor Europe-Asia connectivity it is necessary to have diversion routes that can pick up volumes in situations like the current one. For rail, this would be the Middle Corridor, a multimodal link stretching from China to Europe via Central Asia and the Caspian and Red seas.

“Disruption at sea always increases interest in rail options, including the Middle Corridor”, Clowes added, “that being said, any shift would be gradual. Capacity, border processes and transfers between networks all create pinch points.” In other words, the Middle Corridor is not (yet) ready to become the main route.

Waiting for a Red Sea crisis too?

Rail, Clowes argued, can still be useful in cases like these for “time-sensitive, higher-value cargo when schedules are under pressure”. It needs to be mentioned that, so far, the main problem resides with the Strait of Hormuz and not the Red Sea. The closure of the former ‘only’ affects trade with the Gulf countries, while another crisis in the latter might cause ships to avoid the Suez Canal, as already happened last year.

“If Asia to Europe services start diverting via the Cape of Good Hope, you can be looking at an extra 10 to 15 days”, Clowes pointed out. This is where the Middle Corridor and rail freight might be helpful, as they can provide shorter transit times, albeit with much smaller volumes. And sometimes, he added, it is not even necessary for an actual escalation. “Shippers, insurers and carriers start pricing in risk before anything formally changes”.

Can Plan B become Plan A?

Over the past few years, the routes usually considered as Plan A for trade between Asia and Europe – Trans-Siberian rail and Arabian Sea – have become somewhat problematic. Both routes have been dealing with lower volumes over the past three or four years. Due to this, interest in alternative routes such as the Middle Corridor has increased exponentially. If alternative routes are valid, they might become the norm, even once conflicts and tensions pass.

“Freight markets rarely reset overnight. Even after a conflict eases, insurers and carriers can remain cautious, and routing decisions tend to lag because everyone is reassessing risk”, Clowes said, concluding that “the longer the disruption lasts, the more likely it is that ‘Plan B’ becomes part of the permanent operating model”.

Of course, this would require valid ‘Plan B’ routes. And currently, at least for what concerns the Strait of Hormuz and the Gulf, the main option for Plan B remains the road, as the railway network in the area is still under development. CMA CGM, for example, recently said it “is deploying emergency multimodal solutions” via UAE, Saudi Arabia or Oman, but they are all trucking services.

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.

“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.

Last week, Iran reported that rail freight transit had grown by 7% to heights never seen before – exceeding five million tonnes. This is a result of traffic originating from China, but also from Russia on the North-South Corridor.

Growth despite sanctions

“The importance of this achievement is that it was achieved under the most severe sanctions and political pressures, which have certainly affected international rail transport”, a representative of Iran Railways, Shahriar Naghizadeh, told Iranian media earlier.

“Countries that transit their goods through Iran are in the crosshairs of US sanctions and European Union sanctions, and this has made our work very difficult. However, we have also multiplied our efforts to neutralise these sanctions”, Naghizadeh continued.

“This year, with the efforts made, by signing bilateral and multilateral memorandums of understanding with neighboring countries as well as with countries along the route of these corridors, and with extensive railway diplomacy, we succeeded in extracting this performance from international memorandums of understanding.

Now that sanctions and pressures have turned kinetic – we have all read the news – this success almost certainly won’t be repeated in 2026. Iran suddenly does not seem like an option for rail transit at all. The most important takeaway is perhaps not the achievement of a modest five million tonnes in transit, but rather that the development of rail corridors through Iran will face delays or become impossible altogether.

Iran was on board with transit plans

Policymakers in Tehran were ready to accommodate more rail transit through the country. In November, RailFreight.com reported that Iran was considering building a new 200-kilometre railway to Kars, Türkiye, to facilitate traffic to Europe.

Türkiye, Iran and Pakistan also pursued reopening the Istanbul-Islamabad railway, which should have been launched by the start of the year. The aim was to provide a more economical and faster alternative to sea routes. Iran’s ability to revive these plans depends on a new status quo, whenever that may emerge.

Iran currently has one rail corridor to Türkiye. It runs from Marand to the Turkish city Van, but that is where rail infrastructure ends. The Marand-Cheshmeh Sorayya railway would also not directly link to Turkish rail, since there is none on the other side of the border. However, officials from both countries met in April to discuss an extended connection to Kars.

Türkiye is working on a railway from Kars to the Azerbaijani exclave Nakhchivan, which borders Iran. It is possible that this new Iranian railway will, in due time, link up to that corridor. That would secure a rail-only corridor from Iran to Europe, facilitating China-Europe traffic along the southern overland route.

“This railway line, which is over 6,500 kilometers long, plans to connect Islamabad, the capital of Pakistan, to Zahedan via Tehran and the Razi border in [Iran’s province of] West Azerbaijan to Istanbul. The last train service was in August 2022, but it was halted due to technical issues, delays at customs, and infrastructure damage caused by widespread flooding. Now, with a new agreement between the three countries, this line will be operational again by the end of December 2025”, Karimi Ghahi told Turkish media.

A geoeconomic move

“The revival of this route is not just a transportation project”, Ghahi added. “It is also a geoeconomic move that could redefine Iran’s position on the Eurasian trade map.” Iran hopes to position itself as a land bridge for energy and freight supply chains between Islamic countries.

“With the resumption of the Islamabad-Tehran-Istanbul train service, hopes for expanding economic cooperation, increasing goods transit, and establishing new ties among regional countries have been revived more than ever. Iran is at the center of this route”, Ghahi concluded.

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.

Pakistan and Türkiye are now involved in talks to discuss the goods to be exchanged on a revived ITI service. Once those talks are over, the goal is to relaunch the service by 31 December.

A long list of problems

After a decade-long hiatus, the ITI service was restarted initially in 2021, but was discontinued in August 2022. ITI struggled with a long list of problems: service quality issues, administrative delays, inconsistent schedules, and customs bottlenecks, writes The Diplomatic Insight. Floods in 2022 destroyed much rail infrastructure, which also contributed to the demise of ITI that year.

Minister Abbasi also identified high tariffs, unreliable schedules, and weak security protocols as obstacles to be overcome in reviving the service.

European Silk Road Summit

Asia-Europe rail traffic will be a key topic for discussion at the European Silk Road Summit. Join us in Milan on 19 and 20 November to talk about Middle Corridor developments, Eurasia market trends, important digitalisation projects and much more. Check out the programme here and get your ticket here.

Closure of Strait of Hormuz is not likely

Iran could decide to close this vital artery as a retaliation to the recent attacks orchestrated by the U.S.. However, the possibility of this happening remains low, as many think it would lead to an economic suicide for Teheran. “Sometimes, the threat is as potent as the actual action”, Kosmala added, saying that the country “will not do anything extreme like what the Houthis originally did shooting at ships crossing Bab al-Mandab”.

The Strait of Hormuz is the world’s most critical oil checkpoint. Around 20% of the oil consumed globally needs to cross it, and it is especially important for Asian countries including China, India, Japan and South Korea. For example, China imports 90% of the Iranian oil meant for exports. The Strait of Hormuz, however, is also very important for other countries in the area (Saudi Arabia, Oman and UAE), which rely on it to export their oil.

Worse consequences for Europe than China

Consequently, fully closing this passage remains an unlikely scenario, Kosmala underlined, as it would create tensions that Iran wants to avoid. “Just like the access to the Suez Canal is available to Chinese ships without worries, similar politics will play out here. Friends will always be spared the risk and the stress”, he commented.

The same cannot be said for Europe and its economy. “That has been already disrupted as European imports of oil and gas keep paying higher insurance premiums and European exports to the Gulf countries have to travel around Africa or in smaller quantities on smaller ships traversing Suez”, Kosmala claimed.