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Opportunity Analysis of the Eastern European Rail Market:
A 360-degree Perspective Interoperability in Pan-European Context Driving Market Growth
M8F3-13
June 2014
Czech Republic, Hungary, Romania, Poland, Ukraine
2 M8F3-13
Jagadeesh Chandran
Sr. Research Analyst
Automotive & Transportation
+91-44-66814058
jagadeeshc@frost.com
Sundar Shankaranarayanan
Research Analyst
Automotive & Transportation
+91-44-66814171
sundars@frost.com
Sandeep Kar
Global Director, Commercial Vehicle Research
Automotive & Transportation
+1 416 490 7796
Sandeep.kar@frost.com
Shyam Raman
Research Analyst
Automotive & Transportation
+1 416 495 2686
Shyam.raman@frost.com
Research Team
Contributing Analyst Contributing Analyst
Research Director Lead Analyst
3 M8F3-13
Contents
Section Slide Number
Executive Summary 4
Research Scope, Objectives, Methodology, and Background 13
Definitions and Segmentation 20
General Rail Trends in Eastern Europe 23
Mega Trends and Industry Convergence Implications 34
External Challenges: Drivers and Restraints 38
Rail Track in Eastern Europe 44
Urban Rail in Eastern Europe 50
Mainline Rail Rolling Stock in Eastern Europe 61
Rail Signalling Systems in Eastern Europe 79
Conclusions 88
Appendix 92
4 M8F3-13
Executive Summary
5 M8F3-13
Executive Summary—Key Findings Overall growth in the rail sector is bottlenecked by factors such as low funding and low volumes.
Between 2012 and 2020, the region will possess an approximately €33.00 billion worth
opportunity for rail infrastructure development projects, with up to 70% of investment directed
toward the upgrading of lines. 1
Severe shortage of fleet is causing a bottleneck; consequently, passenger volumes have suffered
in Poland, Ukraine, and Romania. 3
There are approximately 13,000 locomotives in active service, However, the number has
decreased significantly over the last decade. Electric locomotives represent approximately 40% of
the total locomotives in every country of the region.
4
The decline of passengers and freight traffic has resulted in a decline over the past decade in the
number of wagons and passenger coaches. Even with new deliveries, the total number of wagons
and coaches in active service is expected to decrease by 2.1% and 2.7%, respectively. 5
2 With a combined total of 21,770 km of track length already electrified, Czech Republic and
Ukraine account for 86% of growth of electrified lines in the previous decade.
Although the European signalling systems market is highly monopolized, the Eastern European
rail signalling market has a strong presence of smaller local companies, such as as Funkwerk and
Scheidt & Bachmann, Kombud Radom, AŽD Praha, and GANZ Trans Electro. 6
Source: Frost & Sullivan
6 M8F3-13
Rail Market: Expected Rail Infrastructure Investment by Country and Type, Eastern Europe, 2020
New Construction is 21.4% of Total Investment The majority of rail spend is expected to go toward upgrading infrastructure. Total rail network lengths and
rolling stock in installed fleets are expected to decrease as rail operations become leaner and more efficient.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Poland Romania Hungary Czech Republic Ukraine
Rail
In
frastr
uctu
re In
vestm
en
ts (
€ M
illi
on
)
New rail construction Rail upgrade Development of intermodal nodes
€32.72 billion
21.4%
68.8%
9.8%
Mainly Warsaw, Gdansk, Katowice, Poznan,
and Bialystok nodes, optimization efforts, and
high-speed development
Primarily line double-
tracking efforts on Kiev-
Crimea connection
New line development
under TEN-T PP 22
between Sighişoara and
Gurasada
Total
Investment
by 2020
Note: Development of intermodal nodes includes new stations, interchanging terminals, storage space, appropriate controlling and monitoring systems.
Country
Source: Frost & Sullivan
7 M8F3-13
Eastern Europe Invests Less in Rail Compared with Western Europe All countries in Eastern Europe have to invest heavily to increase competitiveness of rail and remain
sustainable.
0
20
40
60
80
100
120
140
160
180
200
0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8%
Ra
il I
nfr
astr
uc
ture
Ex
pe
nd
itu
re
per
1 k
m o
f L
ine
s (
€ ‘0
00
)
Rail Infrastructure Expenditures as a % of GDP
Slovakia
Czech Republic
Hungary
Poland
Romania Ukraine
Austria
Germany Russia
France
• Ukraine and Romania have been heavily under-investing in railway infrastructure.
• Poland, Czech Republic, and Hungary have to make the least effort to bring investments to levels comparable to
France, Germany, and Russia.
• Ukraine, Poland, and Romania have to make at least 3 times more effort (as a percentage of gross domestic product
[GDP]) for investment to be comparable to levels of France and Germany.
Rail Market: Investment in Rail Infrastructure as a Function of Rail Network Length and GDP,
Eastern Europe, 2012
Source: Frost & Sullivan
8 M8F3-13
Majority of Light Rail Service is Less Frequent on Older Trains Severe shortage of fleet is causing a bottleneck, and consequently passenger volumes suffer in Poland,
Ukraine, and Romania.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0
Nu
mb
er
of
Ro
llin
g S
tock p
er
km
of
Lin
e
Average Age of Fleet (Years)
Poland Ukraine Hungary Czech Republic Romania
Newer, fewer trains
Newer, more trains
Older, fewer trains
Older, more trains
Rail Market: Number of Rolling Stock per Km and Average Age of Fleet, Eastern Europe, 2012
• Ukraine and Romania have a fleet that is severely old and lacking in numbers.
• Poland’s rolling stock is moderately aged, and recent purchases have reduced the average ages of fleets.
• Czech Republic and Hungary both have more rolling stock per kilometer with a relatively younger fleet.
A
B
C
Source: Frost & Sullivan
9 M8F3-13
Competitive Benchmarking LRV and electric locomotives are 2 of the most competitive segments in the region, where competition will
only intensify.
Manufacturer Light
Rail Metro
High-
speed
EMUs
EMUs/
DMUs
Diesel
Loco-
motives
Electric
Loco-
motives
Pragoimex, Inekon,
Protram, Solaris,
Moderus, HCP, Astra
Skoda
Pesa
Alstom
Siemens
Bombardier
TMH
CAF
Newag
Stadler
CMSK, Remarul
Softronic, DEVZ,
Electropure, TEVZ
Skoda and Pesa are
considering expanding
into the locomotive
business.
Siemens and Bombardier
are the only companies
with more than 10% in 3
segments.
< 10%
~ 50%
~ 100%
~ 75%
potential entries
~ 25%
Rail Market: Rolling Stock Competitor Benchmarking, Eastern Europe, 2012
Source: Frost & Sullivan
10 M8F3-13
Light Rail Technology Roadmap Rapid modernization in light rail light rolling stock is expected by 2020.
Light Rail Technology Roadmap, Eastern Europe, 2012–2020
Wid
er
Op
era
tio
nal
Ran
ge
En
erg
y a
nd
Co
st
Eff
icie
ncy
Imp
rove
d
Co
mfo
rt
2012 2014 2016 2018
Line of sight
Radio infrastructure in wayside GPS-based control of traffic signals
Aluminum and stainless steel bodies, composites to reduce weight
Broadband wireless connectivity to control center, real-time
CCTV and monitoring
Electro-pneumatic friction brakes blended with electric regenerative braking, anti-skid valves,
brushless 3-phase induction motors, VVVF control
Jacobs Bogie that allows for 100% low floors
Catenary-free and induction-based
power transmission
Supercapacitors enable pantographless
inter-stop tram propulsion
Air conditioning
LCD displays,
mobile applications Wider doors
2020
Panoramic windows
Source: Frost & Sullivan
11 M8F3-13
Signalling Systems Technology Roadmap Although there is increasing interest in upgrading to modern systems, implementation of ETCS is expected to
develop only after 2020.
Signalling Systems Technology Roadmap, Eastern Europe, 2012–2020
Intensified competition on the market
Rail vehicles operating on ERTMS
lines to be equipped with OBU
More complex systems covering bigger areas
High requirements for system safety and
reliability
Increasing length of the rail network equipped with ERTMS systems across CEEC
Improved quality of traffic surveillance
Diagnostic equipment with highly reliable
installation
Increasing coverage of GSM-R across CEEC
Demand on detectors with
centralized supervision
Inte
rlo
ck
ing
Sys
tem
s
Tra
in C
on
tro
l
Sys
tem
s
Wa
ys
ide
Eq
uip
me
nt,
Tra
in
Dete
cti
on
, a
nd
RM
&D
Aging infrastructure and outdated interlocking
systems ready for replacement
Move toward computer-based interlocking
Increasing need to adopt common technical specifications
for unified interlocking across Europe
ERTMS Level 1 under construction
ERTMS Level 2 implementation ERTMS Level 3 implementation
Diminishing demand on trackside signalling
2012 2014 2016 2018 2020
Source: Frost & Sullivan
12 M8F3-13
Parameters Current Future
Market Status • There has been a steady decline in
rail freight passenger volumes.
• Increased investment, retirement of aged
fleets, and the operation of new fleets is
expected to increase rail traffic volumes.
Competition
• Competition is largely between local
manufacturers and technology
providers.
• Global leaders such as Siemens,
Bombardier have entered the market by
acquiring companies like PaFaWag and
CKD Tatra.
Solutions
• The average age of all rolling stock
is more than 20 years in active
service.
• The majority of signalling systems
are based on outdated mechanical
interlocking.
• Refurbishment is expected to be the major
method of extending service life of rolling
stock, compared with new fleet acquisition.
• Computer-based interlocking (CBI) is
expected to become the standard for
preparing for ETCS.
Barriers to
Entering Eastern
European Market
• Local manufacturers are favored in
the procurement process.
• Current regulations are biased
toward a closed market.
• The acquiring of local companies allows
foreasier entry of global manufacturers.
Executive Summary—Key Findings and Future Outlook The Eastern European rail market is expected to provide tremendous opportunities in terms of volume after
2020. Increased funding from EU for priority rail projects is expected to drive volumes and private investment.
Source: Frost & Sullivan
13 M8F3-13
Research Scope, Objectives, Background, and
Methodology
14 M8F3-13
Research Scope
Rail infrastructure, rolling stock, and signalling Topics Covered
2013 to 2020 Forecast Period
2012 to 2020 Study Period
2012 Base Year
Geographical Regions
The following regional market is covered in this research service:
• Poland
• The Czech Republic
• Hungary
• Romania
• Ukraine
Poland
Ukraine
Czech
Republic
Hungary
Romania
Source: Frost & Sullivan
15 M8F3-13
Research Aim and Objectives
Aim
The objective of this study is to evaluate the growth opportunities and the current market scenario of the
Eastern European rail market. The study offers a strategic market-sizing forecast for investment in rail
infrastructure; forecast of rail volumes; analysis of light rail, metro, and mainline rolling stock segments,
including market drivers and restraints; and market-share analysis of the above-mentioned segments.
Objectives
• To provide a strategic overview of the rail market in Eastern Europe
• To provide the market size and forecast of rolling stock deliveries for the mainline, light rail, and
metro, segments, with breakdown, from 2012 to 2020
• To analyze competitive factors, competitor market shares, product portfolio, and capabilities
Source: Frost & Sullivan
16 M8F3-13
Key Questions This Study Will Answer
Which are the leading rolling stock suppliers in the light rail, metro, and mainline segments in
Eastern Europe?
Where are the new opportunities in rolling stock and signalling for rail?
What is the market share of the rolling stock in rail applications? What are the market leaders across
each rolling stock segment in Eastern Europe?
What is the business environment of the Eastern European rail market? What are its market
dynamics?
Rail Market: Key Questions This Study Will Answer, Eastern Europe, 2013–2020
Source: Frost & Sullivan
17 M8F3-13
Research Background
This research study strengthens the coverage of the rail industry.
Year Study Code Existing Research Title Regional Scope
2013 M957-13 Rail Outlook Study 2013–2022 Global
2013 M663-18 Strategic Analysis of the European and North American Rail Infotainment Market Europe + NA
2013 P712-18 Transportation Modal Shift in India and Impact on Rail Logistics India
2012 NA5E-18 Strategic Analysis of the Global Market for Bus Rapid Transit Systems (BRT) Global
2012 M8BF-18 Future of Mobility—New Business Models, Opportunities, and Market Entrants in
Mobility Integration Europe
2012 9832-00-2C Strategic Analysis of Passenger Safety for Urban Rail in Malaysia APAC
2012 M77D-18 Strategic Insight on Global Rail Market Global
2011 M4DD-18 Strategic Analysis of the Global High-Speed Rail Market Global
2011 M64A-18
North American Locomotive Market: A Strategic Analysis of Powertrain
Technologies and Auxiliary Systems Considered by OEMs for EPA Emission
Compliance
North America
2011 M6DB-18 Strategic Analysis of Alternative Powertrain Technologies in the European Diesel
Locomotive and Railcar Market Europe
2011 9823-00-2A Strategic Insight on the GCC Rail Sector ME
2011 N92D-18 An Executive Analysis on Passenger Rolling Stock Market in the United States: A
Demand Analysis for Passenger Rolling Stock and Seating Systems US
2011 P488-01 Green Technologies and Developments in Rail Transportation APAC
2010 M649-18 European Rail Catenary Systems—Executive Analysis of Copper Requirement for
Electrification Across Strategic European Markets Europe
Source: Frost & Sullivan
18 M8F3-13
Research Methodology
Company Designation
PESA Manager, Marketing
PESA Sales Engineer
Siemens Transportation Manager, Marketing
Protrams Marketing Executive
PKP Intercity Sales Manager
Skoda Transportation Marketing Executive
CNR Tangshan Railway Vehicle Manager, Marketing
Ukrainian Railways Manager, Administration
PKP Cargo Manager, Service
Hungarian State Railways Manager, Maintenance
Bombardier Transportation Manager, After-sales
Solaris Trams Manager, Sales
Transmashholding Manager, Marketing
Alstom Transportation Manager, Technology
Research Methodology:
Frost & Sullivan’s research services are
based on secondary and primary research
data.
• Secondary Research: Researchers
extracted information from existing
reports and project material within the
Frost & Sullivan database to include data
and information gathered from technical
papers, specialized magazines, seminars,
and Internet research.
• Primary Research: More than 10
interviews were conducted over the
phone by senior consultants/industry
analysts with original equipment
suppliers, regulation authorities, and
distributors. Primary research accounts
for 80.0% of the total research.
Rail Market: Partial List of Industry Participants,
Eastern Europe, 2012
Source: Frost & Sullivan
19 M8F3-13
Key OEM/Participant Groups Included in This Study
Groups OEMs/Divisions
Alstom Alstom Transportation
Bombardier Bombardier Transportation
Siemens Siemens Mobility
PESA Pojazdy Szynowe PESA Bydgoszcz
Solaris Solaris Bus & Coach SA
Skoda Škoda Transportation a.s.
Inekon Inekon Trams a.s.
Pragoimex Pragoimex Trams a.s
Protram Remonty i Modernizacja Tramwajów Protram Wrocław Sp. z o.o
The following OEM groups and companies are compared in this study:
Source: Frost & Sullivan
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