Rail market outlook 2013–2022

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<ol><li> 1. Rail Outlook Study 20132022 Paradigm Shift Towards Intermodal Mobility Boosts Growth in All Rail Segments M957-13 May 2013 </li><li> 2. 2M957-13 Sarwant Singh Partner and Business Leader Automotive &amp; Transportation +44 207 730 3343 Sarwant.singh@frost.com Research Team Strategic Review Committee Leader Franck Leveque Vice President Automotive &amp; Transportation - EMEA +49 (0) 69 770 33 21 franck.leveque@frost.com Research Director Shyam Raman Research Analyst Automotive &amp; Transportation +91-44-66814173 shyam.raman@frost.com Lead Analyst Special Thanks Vivek Balakrishnan Executive, Quality Assurance Hasmita Sandeep Assistant Editor Jaya Selvi A Production Editor </li><li> 3. 3M957-13 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 </li><li> 4. 4M957-13 Executive Summary </li><li> 5. 5M957-13 Note: Assumptions based on forecasted global economic growth and the Euro crisis. Top 5 Predictions and Trends for 201330 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 &amp; Sullivan RailIndustryGlobalVision:201330 </li><li> 6. 6M957-13 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 201330 (continued) RailIndustryGlobalVision:201330 Source: Frost &amp; Sullivan </li><li> 7. 7M957-13 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 So 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 Source: Frost &amp; Sullivan </li><li> 8. 8M957-13 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 Control Integrated Projects 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 80,000.0 100,000.0 120,000.0 140,000.0 160,000.0 180,000.0 Cost(Million) 2.3% 2.1% 2.9% 3.0% 2.6% 3.8% Note: All figures are rounded. The base year is 2012. Source: Frost &amp; Sullivan </li><li> 9. 9M957-13 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 and Africa 2.1% Western Europe 2.1% Eastern Europe 1.8% Asia-Pacific 2.1% Commonwealth of Independent 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. Brazils target to finish urban rail projects for the 2014 World Cup driver LATAM growth. Detroits 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). Nigerias rail industry has over 7 on-going infrastructure projects. Note: All figures are rounded. The base year is 2012. Source: Frost &amp; Sullivan </li><li> 10. 10M957-13 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 Population(perkmtrack) 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 &amp; Sullivan </li><li> 11. 11M957-13 -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 1,200,000 FreightTraffic(TKMMillion) 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 FreightTraffic(TKMMillion) 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 &amp; Sullivan Key: PKM - Passenger Kilometre </li><li> 12. 12M957-13 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) RollingStockManufacturers 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 products 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 Note: All figures are rounded. The base year is 2012. Source: Frost &amp; Sullivan </li><li> 13. 13M957-13 228 247 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 East and 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, 20122022 581.60 Billion 92.9 Billion Europe Asia- Pacific Middle East &amp; 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. Argentinas 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 Note: All figures are rounded. The base year is 2012. Source: Frost &amp; Sullivan </li><li> 14. 14M957-13 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, 20122022 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 &amp; Sullivan </li><li> 15. 15M957-13 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 Investment(Million) 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 Note: All figures are rounded. The base year is 2012. Source: Frost &amp; Sullivan </li><li> 16. 16M957-13 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 TravelDistance Travel DistanceDestination 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 Source: Frost &amp; Sullivan </li><li> 17. 17M957-13 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...</li></ol>