Brief Market Overview – Iraq's Logistics & Transport Sector 2025
Iraq’s logistics and transport sector is on the rise. With an expected market volume of around USD 7.7 billion in 2025 and an annual growth rate of 6.2%, the market offers numerous opportunities for German companies. Major infrastructure projects such as the “Development Road” corridor and the Grand Faw Port are driving a growing demand for modern infrastructure, digital logistics, and sustainable solutions.
AHK Iraq supports German companies with market analyses, local partnerships, and targeted advisory services to ensure a successful market entry.
Key Highlights
- Market Size: USD 7.7 billion in 2025
- CAGR (2025–2030): Approximately 6.2%
- Fastest Growing Segments: Air freight & warehousing
- Top Investor Interest: Strong confirmed investment interest from China through BRI-supported projects and a growing interest from the EU countries
- Strategic Projects: Development Road & Grand Faw Port
Executive Summary
Iraq’s logistics and transport sector is undergoing a transformation. With a market size expected to reach USD 7.7 billion in 2025 and a projected annual growth rate of 6.2%, Iraq is becoming a key logistics player in the region. This growth is driven by infrastructure upgrades, diversification of the economy, and increasing regional integration. For German companies, opportunities abound across infrastructure development, air cargo, warehousing, cold chain logistics, and digital supply chain solutions.
Sector Overview
Iraq’s logistics sector plays a central role in facilitating trade and supporting reconstruction. The market grew from approximately USD 7.2 billion in 2024 to an expected USD 7.7 billion in 2025. Looking ahead, the sector is forecast to exceed USD 10.4 billion by 2030. The sector is dominated by road freight, but air cargo, warehousing, and e-commerce logistics are seeing the fastest growth. Iraq’s economic trajectory and geographic position uniquely place it as a future regional logistics corridor.
Growth Drivers
- Infrastructure Revitalization: Significant investments in ports, railways, and highways.
- Diversified Economic Activity: Growth in automotive, construction, retail, and agriculture logistics.
- E-commerce Expansion: An emerging online retail sector demands efficient last-mile delivery and warehousing.
- Oil Sector Logistics: Ongoing investments and mega-projects continue to drive high-volume, specialized logistics demand.
- Young Consumer Base: A growing population with high digital engagement is shaping logistics demand across sectors.
Transport Segments
- Road Freight: Dominates inland cargo movement. Benefits from recent road upgrades and regional connectivity improvements.
- Air Freight: Fastest-growing segment with a projected CAGR of 7.6%, driven by high-value and time-sensitive cargo.
- Maritime Shipping: Seeing moderate growth as port infrastructure expands, notably at Grand Faw Port.
- Rail Freight: Currently limited, but poised for growth with the Basra–Shalamcheh rail and Development Road corridor.
Key Projects
- Grand Faw Port: A mega-port under construction, set to transform Iraq’s maritime capacity and reduce reliance on regional transshipment hubs.
- Development Road: A multimodal corridor from Basra to Turkey, enhancing Iraq’s role as a regional trade bridge.
- Rail Links: Projects linking Iraq to Iran and potentially Europe via Turkey are underway.
- Airport Upgrades: Expansion of Baghdad International Airport and regional hubs to support growing air cargo demands.
Role of German Companies & Opportunities
German expertise in logistics, transport infrastructure, and supply chain technology positions companies well to support Iraq’s modernization. Notable German players like DHL, DB Schenker are already active, and opportunities include:
- Public-private infrastructure development.
- Advanced warehousing systems.
- Digital freight and transport management solutions.
- Cold chain logistics for food and pharmaceuticals.
- Engineering and consulting services for complex logistics operations.
Infrastructure & Investment Outlook
Iraq is prioritizing investment in logistics capacity through PPPs, international cooperation, and integration with regional transport corridors. China’s Belt & Road Initiative and growing Gulf engagement complement Iraq’s vision of becoming a regional logistics hub. In the medium term, Iraq is expected to expand its role in East-West trade through improved road, port, and rail connectivity.
Challenges & Mitigation Approaches
- Customs and Bureaucracy: Continued reform is needed to streamline trade processes.
- Security & Infrastructure Gaps: While improving, security and infrastructure still pose operational risks.
- Fragmented Market: Quality and reliability vary significantly across providers.
- Training and Standards: Workforce development and service quality standardization are essential for long-term sector growth.
Regulatory Landscape
Ongoing efforts to modernize customs (e.g., ECTN, TIR), harmonize regulations with the Kurdistan Region, and attract private investment are improving the operating environment. WTO accession efforts also signal long-term liberalization. With support from the international community, Iraq is slowly building an environment more conducive to trade and logistics growth.
SWOT Analysis
Strengths:
- Strategic Location: Positioned at the intersection of Asia, the Middle East, and Europe, Iraq offers potential for cross-continental transit.
- Oil-Funded Infrastructure Investment: High oil revenues are enabling large-scale investment in transport and logistics infrastructure.
- Population Dynamics: A youthful population with rising consumer demand boosts internal distribution and e-commerce growth.
- Government Commitment: Strong political focus on modernizing transport systems and integrating with regional trade corridors.
Weaknesses
- Institutional and Regulatory Complexity: Iraq’s logistics environment is hindered by overlapping authorities, slow customs clearance procedures, and fragmented regulatory enforcement, resulting in high dwell times and inconsistent operational performance across regions.
- Underdeveloped Rail Network: rail freight infrastructure remains outdated and operationally limited. While some connectivity exists with Iran, major investments such as the Basra–Shalamcheh line and Development Road corridor are still under construction and not yet operational at scale.
- Fragmented Domestic Market: A large number of small, unstandardized logistics operators limits service reliability and scalability.
- Overreliance on Oil: Logistics demand and investment are tied to oil price fluctuations and government budget cycles.
Opportunities
- Transit Corridor Leadership: Grand Faw Port and the Development Road position Iraq to become a regional logistics hub.
- E-Commerce & Retail Expansion: Rapid growth in online shopping creates strong demand for parcel delivery and fulfillment services.
- German Technology & Know-How: German firms can lead in warehouse automation, fleet management, and customs digitization.
- Cold Chain Development: Demand for refrigerated transport in food, health, and agriculture is rising with urbanization.
- Digital Leapfrogging: Iraq can bypass legacy systems by adopting modern, tech-driven logistics infrastructure.
Threats
- Security Disruptions: Although improving, certain regions still face risks from localized unrest or organized crime.
- Regional Competition: Neighboring countries (e.g., Turkey, Iran, UAE) are also competing to be regional logistics gateways.
- Climate Vulnerability: Extreme heat, dust storms, and flooding threaten infrastructure durability and operational efficiency.
- Global Economic Fluctuations: Geopolitical tensions or downturns in global trade could delay investment and reduce volumes.
Comparative Regional Analysis: Iraq vs. Oman, Kuwait, and Jordan
To contextualize Iraq’s logistics sector, it is valuable to compare its progress and potential with that of neighboring countries. While Iraq offers strong long-term growth and scale, other markets like Oman, Kuwait, and Jordan provide insights into infrastructure maturity, regulatory performance, and ease of doing business.
Key Insights:
- Iraq has the largest potential market among the four, driven by reconstruction and oil-funded infrastructure.
- Oman leads in port performance and operational efficiency, particularly in maritime freight.
- Kuwait offers better retail and e-commerce infrastructure, but limited diversification in logistics.
- Jordan is focused on regional integration and pharmaceutical logistics, supported by better regulatory frameworks.
Conclusion: While Iraq currently lags in logistics efficiency, its strategic projects like the Development Road and Grand Faw Port could dramatically alter its standing by 2030. For German firms, Iraq represents a high-reward, high-effort market compared to its neighbors.
Future Outlook
Scenario: Iraq in 2030 – A Logistics Gateway?
By 2030, Iraq could be operating as a major overland logistics corridor between the Gulf and Europe. Imagine this:
A container ship docks at the newly completed Grand Faw Port. Within 24 hours, the container is offloaded, cleared, and placed on a freight train along the Development Road rail line. In just 5–6 days, the shipment reaches Turkey’s border, from where it continues into the EU via multimodal rail networks.
This vision is not far-fetched. With consistent infrastructure investments, regulatory streamlining, and cross-border cooperation, Iraq can become a vital node in the new Silk Road, offering an alternative to congested maritime routes via the Suez Canal.
For logistics companies, this means faster transit times, lower shipping costs, and new warehousing hubs strategically positioned along a revitalized North–South trade corridor. By 2030, Iraq could become a central logistics hub between Asia and Europe, especially if major infrastructure projects like the Development Road and Grand Faw Port reach full operational capacity. Ongoing digital transformation, improved regional trade ties, and private sector participation will further enhance Iraq’s logistics competitiveness. Investments in training, sustainability, and digitalization will be critical for long-term success.
Sustainability in Logistics: A New Frontier
As Iraq’s logistics sector modernizes, the question of sustainability is becoming increasingly relevant. While environmental, social, and governance (ESG) practices are still emerging in the Iraqi context, there is growing awareness of the long-term benefits of sustainable logistics solutions particularly in areas like energy efficiency, emissions reduction, and waste management.
German companies are well-positioned to lead in this transformation. Technologies such as electric delivery vehicles, solar-powered warehouses, and green fleet management systems present promising opportunities for early adopters in Iraq. Additionally, digital tools that enable better route optimization and lower fuel consumption align with both environmental goals and cost efficiency.
AHK Iraq encourages the integration of sustainability into logistics planning. By sharing German best practices and facilitating knowledge exchange, we aim to support Iraq’s transition toward a greener, more resilient transport system especially in light of the country’s vulnerability to climate-related challenges.
AHK Iraq Perspective
AHK Iraq supports German companies in identifying and seizing opportunities in Iraq’s logistics and transport sector. Through business delegations, market insights, and local matchmaking, we empower companies to engage with confidence. As Iraq’s infrastructure modernizes, AHK Iraq stands ready to assist partners in navigating this promising yet complex environment. Our goal is to serve as the bridge connecting German innovation with Iraq’s emerging logistics potential.
AHK Iraq in Action: How We Support Logistics Partnerships
At AHK Iraq, we go beyond market insights we actively support German companies seeking to enter or expand in Iraq’s logistics sector. From arranging business matchmaking meetings to organizing delegation trips and sector-specific roundtables, we help companies navigate regulatory frameworks, connect with reliable Iraqi partners, and identify investment-ready projects. Our support is tailored, neutral, and grounded in deep knowledge of the Iraqi market.
Through our trusted network and institutional partnerships, AHK Iraq enables German logistics providers, supply chain consultants, and infrastructure developers to engage with confidence in Iraq’s evolving market landscape.
Success Snapshot: German Efficiency Meets Iraqi Growth
In 2024, a mid-sized German cold chain logistics company partnered with a Basra-based distributor to deliver temperature-sensitive pharmaceuticals across southern Iraq. With AHK Iraq’s support in identifying the right partner and navigating import regulations, the company was able to set up a temperature-controlled warehouse near the Umm Qasr Port and launch operations within five months. Today, the partnership services over 30 pharmacies and hospitals in the region showcasing the power of German precision paired with local agility. AHK Iraq supports German companies in identifying and seizing opportunities in Iraq’s logistics and transport sector. Through business delegations, market insights, and local matchmaking, we empower companies to engage with confidence. As Iraq’s infrastructure modernizes, AHK Iraq stands ready to assist partners in navigating this promising yet complex environment. Our goal is to serve as the bridge connecting German innovation with Iraq’s emerging logistics potential.