Runaway Inflation and the Nationwide Trucker Strike

Trucker Hossein Navidi has been protesting against dismal financial conditions for more than two months now. He has parked his truck in an abandoned garage and refuses to cover his normal route, from Bandar Imam Khomeini port in Khuzestan to the capital Tehran. At the end of October, he received a text message informing him that if he didn’t start transporting cargo, he would be stripped of his fuel quota, which would then not be renewed until the new year, beginning on March 21, 2019. 

Navidi has a contract with a transportation company in Bandar Imam Khomeini. Before he parked his truck in protest, he had scrambled to pay for a new pair of tires, which cost him nine million tomans, or over $2,100. The tires only lasted for a few weeks, and he found himself stranded on the highway after coming close to colliding with cars on more than one occasion because the tires were so badly worn. He discovered that in fact the tires he had bought were not new after all: covers had been glued to old tires to make them appear as though they were new.

Hossein Navidi is one of many truckers taking part in a nationwide strike to demand that the government stay true to its promises, among them supplemental insurance, subsidized tires and spare parts, increased rental fees to keep up with inflation, reduced rates for highway tolls and, most important, standardized rental fees on the basis of “a ton per kilometer.”

Navidi tells me more about the last demand. “There must be an standard rental fee for one ton of cargo carried for one kilometer,” he says. “The driver must receive a fee based on the distance and the weight of the cargo. After we demanded this, the government agreed to set rental fees based on a ton per kilometer, but it lasted for only three weeks and then things went back to the way they were before.”

 

Inflation Wiped out the Gain

Before the most recent economic crisis hit Iran, striking truckers had been demanding an increase in rental fees, which had to be approved by Iran’s Road Maintenance and Transportation Organization. The government gave in and added 20 percent to rental fees but, according to another trucker, Hamed Rouhizadeh, with the recent surge in inflation and the deepening economic crisis, in real terms the increase in rental rates has done nothing for him.

Rouhizadeh drives a Volvo truck and has had no income for the last three months. With the runaway inflation, he says, “suppose the government adds another 10 percent to rental rates for truck drivers. What good will this 10 percent do when the price of all spare parts and tires have gone up by 100 percent?”

“For several consecutive years,” Rouhizadeh said, “transportation rental fees had stayed the same, until this June when truckers couldn’t take it anymore. The government increased the rates by 20 percent. Bless them, but now that everything is one hundred percent more expensive this looks more like a joke.”

He also points the finger at transportation companies, manufacturers and importers who want to keep transportation costs down. “They collude over the rental fees that they have to pay,” he said. “All the costs along the route are borne by the trucker, who does not know what really goes on. He only knows about the financial and physical threats he faces while the profits are pocketed by others.”

Rouhizadeh believes that throughout the years, the government has kept down rental rates to protect its own prestige. “The government says we are the only country with transportation costs that have increased by only six percent over the years and considers this a bright spot on its record,” he said. “What it does not take into account is that the transportation prices have remained stable at a cost to the livelihood of truckers. The government has been gambling with our lives.”

Navidi’s father was also a trucker. For many years, he carried cargo from the busy ports of the Persian Gulf to the country’s north. In the early years, he would put up with everything and anything because he had to pay the bank six million tomans, almost $1,500, a month. So he tolerated the situation to keep his job.

“Lately, it has become impossible to just tolerate what I receive from the transportation company,” Navidi said. “Neither my truck nor the trucks belonging to my colleagues are domestically manufactured. With the price of the dollar these days, it is almost impossible to buy parts because most of the spare parts for trucks are imported. After America left the nuclear agreement, for a while the situation was tolerable because as long as the warehouses were filled they somehow provided us with what we needed, but the situation is no longer tolerable.”

Enter the Hoarders

But there is another factor at play: hoarding. “The owners of the merchandise truckers need hoarded tires and spare parts and sent them out to the market at several times the real price, drip by drip,” he says. “But now that supplies have run out and there is nothing left to sell, the price of spare parts for trucks has gone through the roof because imports have been limited by sanctions.”

Rouhizadeh says that most parts he needs to keep his truck running are imported, including water and gas filters, tires and even motor oil. And with all these problems, he lacks supplementary insurance and still has to pay the installments for the loan he took out to buy his truck.

He says recently he saw a big banner around the terminal’s loading dock that proclaimed: “More than 900,000 truckers and members of their families are covered by supplemental insurance.” And little further on, he says, “was another notice saying that from today we can go to the loading dock to buy tires at the approved price. All this came about because of the efforts by striking truckers.”

Insurance is another of the truckers' demands. “We are ‘self-insured’ and do not benefit from supplemental insurance,” Rouhizadeh said. “Many times we have asked for insurance but it seems that you cannot get what you have the right to unless you use force. We are still a long way off from the implementation of these promises. When the government agreed to raise rental prices by 20 percent, transportation companies refused to abide by it. The owner of the company that I have a contract with told me: ‘This is how it is. Work if you want or go away if you don’t.’”

Parked Trucks and no Money for Repairs

Navidi is beset by similar problems. “We used to buy a pair of tires for around 1.3 million tomans [$310], but nowadays we cannot get them even for nine million tomans [close to $2,200],” he said. “Many of us have been forced to park our trucks in the garage because we cannot pay for repairs. It started with the owners of old and cheap trucks and gradually spread to those with new and better models. Day by day we lose more jobs. Now the garages are filled with useless trucks.”

The shortage of good tires has led to many disasters on the road, Navidi said, and the many near-misses he recently experienced. “They are selling low-quality and worn-out tires disguised as new, and they sell them at exorbitant prices. But they do not last for more than a few weeks. We used to buy an air pump for one million tomans [a little less that $240] but now we cannot buy them for even a few times the old price. The same goes for hydraulic jacks.”

According to Rouhizadeh, one cargo transportation trip from Bandar Imam Khomeini to Tehran pays two million tomans, or around $477. “If you deduct the fuel and depreciation costs, the trucker is left with a million to a million and a half tomans [between around $240 and $360]. If a tire blows out along the route and we have to replace it, the cost comes out of what remains. A single tire now costs between nine and 11 million tomans [$2,143 to $2,620].”

Truckers with older trucks are not working because they cannot afford to repair them to get back on the road. Rouhizadeh said he was happy to see the new notices at Bandar Imam Khomeini port terminal. "They say that the Supreme Transportation Council has ruled that 500 thousand heavy tires and other consumables for truckers be imported and be offered to them with low custom duties,” he said. “And they have promised supplemental insurance.” But, given the government’s record of breaking its promises, he says there isn’t any real justification for optimism, although he hopes that this time it will be different. “I hope the situation returns to what it was six months ago,” Rouhizadeh said. “It was not heavenly. There were pressures and there was inflation. But today’s hell is no longer tolerable.”

 

More on the ongoing economic crisis in Iran:

Families and Fishermen Lose Out as Prices Rise, October 1, 2018

Government Refuses to Listen as Currency Nosedive Continues, September 27, 2018

The Fall and Fall (and Fall) of Iranian Currency, September 12, 2018

The Diaper Crisis in Iran: An American Conspiracy?, September 7, 2018

Iran’s Medicine Shortage: More About Corruption and Mismanagement Than Sanctions, September 7, 2018

Can Iran Survive the Inflation Hike?, August 29, 2018

Parliament Grills Rouhani in Public Session, August 28, 2018

Rouhani's U-Turn to Save Economy, August 10, 2018

Iran Appoints New Bank Governor as Freefall Continues, August 6, 2018

Iranian Protesters: Death to High Prices!, July 31, 2018

The Fall and Fall of the Iranian Rial, July 31, 2018