Rail outlook study 2013–2022

Rail Outlook Study 2013–2022 Paradigm Shift Towards Intermodal Mobility Boosts Growth in All

Rail Segments

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May 2013

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Sarwant Singh Partner and Business Leader

Automotive & Transportation

+44 207 730 3343

[email protected]

Research Team

Strategic Review Committee Leader

Franck Leveque Vice President

Automotive & Transportation - EMEA

+49 (0) 69 770 33 21

[email protected]

Research Director

Shyam Raman Research Analyst

Automotive & Transportation

+91-44-66814173

[email protected]

Lead Analyst

Special Thanks

Vivek Balakrishnan

Executive, Quality Assurance

Hasmita Sandeep

Assistant Editor

Jaya Selvi A

Production Editor

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Contents

Section Slide Numbers

Executive Summary: Global Rail Market Overview and Key Highlights 4

Research Scope, Objectives, Background, and Methodology 21

Definitions and Segmentation 28

Rail Trends in North America 30

Rail Trends in Europe 41

Rail Trends in China 56

Rail Trends in Turkey 65

Rail Trends in Eastern Europe 73

Rail Trends in Latin America 80

Rail Trends in Africa 86

Conclusion 92

Appendix 95

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Executive Summary

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Note: Assumptions based on forecasted global economic growth and the Euro crisis.

Top 5 Predictions and Trends for 2013–30

Key Predictions

• The Chinese high-speed rail network will span 25,631 km by 2030. China will have a track length

of 120,000 km by 2020, more than Russia.

• Class I railroads In North America will spend over €8.70 billion towards modernisation per year

until 2022. Signalling, track materials, locomotives and rail cars are of the highest priority in

modernisation.

• Demand for improved efficiency in the rail industry will drive the market for advanced asset and

fleet management tools, including remote diagnostics (or prognostics), passenger information and

asset planning.

• China Southern Rail and China Northern Rail are to be among the top three global rolling stock

manufacturers and suppliers.

• Automated people movers (APM) and personal rapid transit system (PRT) are expected to show

strong growth as ‘feeder’ routes for higher-density lines in highly urbanised and densely populated

areas.

• Rail automation will help increase efficiency without compromising on safety. The radio-based

communication-based train control (CBTC) network in Western Europe is expected to grow at a

compound annual growth rate (CAGR) of 22.8 per cent over the next 10 years.

Source: Frost & Sullivan

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Key Trends

• In Europe: About 10,298 locomotives and 1,860 railcars are likely to be replaced between 2015

and 2022.

• Rail automation will provide customers with real-time information, and information transfer and

sharing between different related businesses for better travel and planning.

• In North America: While light rail and commuter rail are the fastest growing markets in terms of

project rollout, metro rails are the largest market for replacements.

• Train operators are starting to use Internet protocol architecture for onboard Internet access,

operation and safety services. This also provides an opportunity for new-generation multimedia

applications developed in IP environments to build a common base in the future.

• Africa is the highest-growth region in the rail supply market globally. The market size is set to

double by 2022, as a relatively stable political environment is inviting international participants to

invest in African rail infrastructure.

Note: Assumptions based on forecasted global economic growth and the Euro crisis.

Top 5 Predictions and Trends for 2013–30 (continued) R

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• China crossed a milestone in high-speed rail (HSR), with services from Beijing to Guangzhou. The rail

covers 2,230 km in 8 hours, at an average speed of 300 km/h.

• Brazil invests over 1.48 billion in monorail systems for São Paulo and Manaus.

• Italy is spearheading mainstream deployment of driverless metro solutions, with the completion of four

lines in Milan and Rome. The market is expected to experience high growth post-2021.

• US Class I railroads invested more than €1.17 billion towards achieving 100 per cent positive train

control.

• The UK and the US have the highest number of rolling stock with Wi-Fi services in Europe and

North America, respectively.

• Over 12 projects have been approved in the Middle East, with an expected investment of over

€38.51 billion.

Highlights of 2012


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Global Rail Supply Market is Expected to Earn €155.19 Billion in 2013 Rolling stock and services are the chief contributors. Rail control is the fastest-growing, followed by services.

Rail Market: Expected Breakdown of Rail Supply, Global, 2013

• Rail controls are witnessing extensive investment, as they are considered the first step to running a profitable railway line.

• Orders for rolling stock in Asia, the Middle East and Latin America are driving the market.

• The rail supply market is expected to grow at an annual growth rate of 3.8 per cent in 2013.

• The need for mobility is driving demand in mass transportation, passenger rail and freight applications.

• Global mainline freight and passenger levels have recovered from the 2009 recession levels. European rail traffic is constrained due to the ongoing sovereign debt crisis.

Rolling Stock Infrastructure Services Rail ControlIntegratedProjects

Total

Expected Investements 51,535.1 31,811.1 57,836.0 13,241.2 766.2 155,189.6

0.0

20,000.0

40,000.0

60,000.0

80,000.0

100,000.0

120,000.0

140,000.0

160,000.0

180,000.0C

ost

(€ M

illi

on

)

2.3%

2.1%

2.9%

3.0%

2.6%

3.8%

Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan

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Rail in Africa, the Middle East and Latin America to Double in Size by 2023 Infrastructure spending, rolling stock orders and greenfield and brownfield projects are factors for strong

growth. Political instability in Africa and the Middle East, and credit limits in Latin America keep growth in

check.

7.1%

Latin America

2.7%

North America

8.0%

The Middle East andAfrica

2.1%

Western Europe

2.1%

Eastern Europe

1.8%

Asia-Pacific

2.1%

Commonwealth ofIndependent States

Rail Market: Expected Regional Growth Rates in Rail Supply, Global, 2013

• The Middle East, Africa and Latin America (LATAM) drive the rail market.

• Eastern Europe shows great promise, but lack of funding continues to dampen demand, driving growth

rates below 2.5 per cent.

• India and Malaysia are expected to

be the next centres of infrastructure

expansion.

• Brazil’s target to

finish urban rail

projects for the

2014 World Cup

driver LATAM

growth.

Detroit’s P3 commuter rail has been

approved with an initial grant of €207

million.

• The growth rate in Asia-Pacific

(APAC) declined due to slowing

rolling stock orders in China

(previous orders completed).

• Nigeria’s rail industry has

over 7 on-going

infrastructure projects.


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5,000.0

0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

0 50 100 150 200 250 300 350

Po

pu

lati

on

(p

er

km

tra

ck)

Area per km track (km2)

Comparison of Top 20 Countries with Largest Rail Network Size China and India have low network density and high passenger compression on their networks, unlike

markets such as Germany, where the population and the land area are lower.

• China and India are considering increasing the

effective network length to lower the load on the

railways due to population (thereby reducing the

population per km of track).

• In Argentina, Australia, Brazil, Canada, Russia and

the US, as the population density is low, private

freight operators own and operate most of the rail

network.

Rail Market: Comparison of Top Countries by Rail Network Size, Global, 2013

Note: Bubble size denotes length of network in km. Future trend

Zone of effective rail length for population load Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan

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-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

-200,000 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000F

reig

ht

Tra

ffic

(T

KM

Millio

n)

Passenger Traffic (PKM Million)

Most Large Networks are Poor Utilizers of Rail Infrastructure With the exception of China and Ukraine, most countries perform poorly in either freight or passenger

transport.

100,000.0

50,000.0

0.0

50,000.0

100,000.0

150,000.0

200,000.0

250,000.0

300,000.0

350,000.0

400,000.0

(25,000) (5,000) 15,000 35,000 55,000 75,000 95,000

Fre

igh

t T

raff

ic (

TK

M M

illio

n)

Passenger Traffic (PKM Million)

Note: Bubble size denotes length of network in km.

• Low freight utilization, high

passenger utilization: poor modal

share of rail in freight transport

• High freight utilization, low

passenger utilization: poor modal

share of rail in passenger transport • China and Ukraine have balanced

utilization levels in freight and

passenger rail

Rail Market: Comparison of Utilisation of Top 20 Rail Networks by Size, Global, 2013

Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan Key: PKM - Passenger Kilometre

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CSR and CNR are among the Top 3 Rolling Stock Manufacturers Strong rail programme within China has CSR and CNR as a well-equipped competitor in the global market.

CSR and CNR have started competing for infrastructure projects as well through consortiums.

0 1,000 2,000 3,000 4,000 5,000 6,000

CSR

Bombardier

CNR

Alstom

Siemens

Transmashholding

CAF

Hyundai Rotem

Kawasaki

GE Transportation

Annual Revenue (€ Million)

Ro

llin

g S

toc

k M

an

ufa

ctu

rers

• CSR and CNR are expected to decline in size by 2016 as

Chinese orders are fulfilled.

• China is funding projects in developing markets, which

increases conversion rates for rolling stock bids and also allows

for earning potential throughout the product’s life cycle.

• Hyundai Rotem is strategically positioned in Turkey to compete

in Europe, Asia, North Africa and the Middle East.

Rail Market: Top 10 Rolling Stock Manufacturers, Global, 2012


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228

247

32

15

60

2022

14.0

13.7

9.5 6.6 7.5

15.6

93.6

13.0 1.7

52.5

198.3

11.6

28.2

8.6

5.3 7.1 0.9 18.8

12.0

3.0

18.8

41.3

Europe Asia-Pacific The Middle Eastand Africa

Latin America North America

Europe and Asia Show Strongest Investments in HSR China to invest €198.30 billion to extend the HSR network to 16,000km by 2020. Globally over €581.60

billion spending by 2022.

Turkey

Sweden

Spain

Russia

Poland

Italy

Germany

France

Portugal

Switzerland

2.0

54.0

36.9

2012

Saudi Arabia Morocco

GCC

Brazil

Argentina Mexico

US

Rail Market: Cumulative Investments on High-Speed Rail Infrastructure by Country,

Global, 2012–2022

€581.60 Billion

€92.9 Billion

Europe

Asia-

Pacific

Middle

East &

Africa

Latin

America

North

America

Europe

Asia-

Pacific

A

B

C D

E

A. Projects in Poland and Portugal have been

cancelled due to the Euro-zone crisis. The

Portuguese project had legal disputes as well.

B. Indian railways have approved 7 HSR

corridors.

C. The GCC project will link several member

states by 2017.

D. Argentina’s HSR project has been put on hold

due to a crisis in funding.

E. The California High-Speed Rail is considered

the only surviving project left in the US.

Africa Morocco

China

India

Japan

South

Korea


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9,824

7,361

362 200

5,395

3,694

480

3,982

9,603

511

900

Africa APAC EU LATAM NA

Operational Length Under Construction Planned

High-Speed Rail to Connect Continents in Future By 2025, the first steps to connect Asia and Europe by HSR services are expected to commence. A

tremendous modal shift is also likely from highways to rail.

2012 2022

Rail Market: Length of High-Speed Rail Infrastructure by Country, Global, 2012–2022

Total 42,312 km

Total 74,896 km

Global HSR Network Length

CAGR 4.5%

• Spain, France and Turkey

are expected to have the

largest HSR networks in

Europe by 2025.

• Although India has the

potential to be the second-

largest HSR network in

Asia after China, the rate

of HSR adoption in India is

still uncertain due to

concerns in project

management and funding.

17,547

9,289

15,476

42,312

15,858

16,726

Source: UIC, Frost & Sullivan

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Europe and North America Highest Spenders in Urban Rail Latin American and Asian markets are expected to reach maturity post-2025. Africa is expected to be the

highest-growth region in the world for urban rail post-2025.

362.6 171.9 504.7

3,089.5

465.0 1,480.0

2,234.0

867.6

207.2

917.0

286.3

542.4

243.0

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

Africa Asia-Pacific Latin America North America Europe

Inv

estm

en

t (€

Millio

n)

Light Rail Metro Commuter Rail Monorail

• Lima Metro is expected to award the contract for line 2 towards the end of 2013.

• At a total cost of €2.30 billion, the Lima Metro is expected to have Bombardiers CityFlo automation.

• The main impact of an investment of this scale would be the increased dependence on passenger rail, which could translate to future intercity projects.

• The monorail is experiencing a resurgence in adoption, with orders over €1,071 million expected in 2013.

• The monorail competitive scenario is expected to change significantly, with more participants entering the market.

• Light rail is the most popular rapid transit choice in Africa. However, future lines and expansion are expected with the monorail.

Rail Market: Expected Financial Commitments in Urban and Commuter Rail, Global, 2013


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The Future of Mobility is Multi-Modal Commuting, Combining

Door-to-Door Solutions Using Dedicated Mobility Platforms

• Door-to-door integrated multi-mobility is likely to become a reality.

• Vehicle manufacturers plan to offer smart mobility solutions, ensuring first and last mile connectivity.

• The government plans to club public transport with bike / two wheeler/car rental schemes.

• The market will probably encounter new participants termed Mobility Integrators.

City

Suburbs

Intercity

Tra

vel D

ista

nce

Travel Distance Destination

Public

Transportation

Private Cars

Shared Mobility

Micro-mobility

Intercity Bus

Intercity

Train

ty

Shared Mobility

CAR

OWNERSHIP

Rail Market: Future of Multi-Modal Passenger Transport, Global, 2022


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Schematic of a Multi-Modal Electronic Travel Card NS: Case NS Card The electronic ticketing server is synchronised in real time with central control systems of various transport

modes to provide the most updated, accurate information to passengers.

Level 0 NS-Business Card

Level 1 Equipment on

Passenger Level

Level 2 Local Systems

Level 3 Central System of

the Public Transport

Company

Level 4 Central Processing System

• The OV-chip card is the basis of the

NS-Business Card and has a unique

code.

• RFID Card Readers are used to

read the NS-Business Card.

• Information on ‘Check-in’ and

‘Check-out’ timestamps transferred.

• Check-in and check-out information

from Level 1 equipment is stored in

local systems in stations, garages

and depots.

• Respective transport company

receives information from Level 2

Systems.

• Billing for each card based on

usage is calculated by respective

transport companies.

• Payment details for each

commuter are collated from

different public transport

companies to generate a single bill

for each customer.

• Unique code offers the possibility

of personalised bills (person-

oriented analysis).

• Information sent to the respective

companies and employees for

payment.


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DB Bahn Touch and Travel System Technology Solution VDV Kernapplikation‘ (KA) is the German eTicketing standard embedded on an NFC SIM card. The existing mobile

operator’s infrastructure is used to transmit data and is the key piece in the technology puzzle.

Sources: NFC Forum, DB Bahn, NXP and Frost & Sullivan

“eTicketing will become iTicketing. Traditional methods of fare collection are expected to become

obsolete by 2030. Ticketing systems in transport systems will become “Aware” of the passenger, and

collect charges without the physical action of paying the fare.” – OEM

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Transition Shift in ICT Strategies On-board Trains Faster time-to-market solutions can be realised if rail operators also have the knowledge of IT systems, as

rail operators traditionally deal with mechanical issues. They buy IT solutions but do not manage them.

Complex IT Architecture Separate & Standardise

Link System

Audio

Telephony Security Systems

Audio

Video

Telephony Security Systems y y pppSystemsyyy

AudioRemote

Monitoring Video

Remote

Monitoring

A modular approach is used Can incorporate new solutions with ease

Single point-based solutions are deployed

Difficulty in integrating new solutions

Shift of Information Technology Platforms in Trains

A d l h i d

Shift to 80% configuration & 20% customisation

Single point-based solutions are deployed

80% customisation & 20% configuration approach


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IT has been Integrated Heavily in Every Aspect of Rolling Stock The data communication system (DCS) provides synchronisation of varied information at high bandwidth and

low latency for high throughput. The DCS does not perform control functions.

Wayside data

communication network

Wayside radio

Platform doors

interface unit

Zone

controller

Train doors

Platform doors

Zone controller + internal

interlocking

Operations control centre

Cab HMI

Transponder

On-board passenger

information

Spot transmission

antenna

Train-borne

controller

Database storage unit

Maintenance

management unit

Form fit functional interface specification

Functional interface specification

External

interlocking

Wayside Passenger

Information

Wireless link

Human machine interface

System

Data Communication Subsystem

Spot Transmission Subsystem

Mobile radio

Sources: MODURBAN, Frost & Sullivan

Schematic Layout of the MODURBAN Communication System in Europe