High will attract private market investments to contribute

High Demand for Intercity and High-Speed Railway

It is evident from the growth of EU rail and Asian rail market that
the demand for long distance rail journeys is already growing in many countries.
As the economy and urbanization grows, the demand of high speed trains will
increase with further development of the rail network in Europe and Asia. High
speed trains traveling at 250-300 kmph allows 1,000 km distance to be covered
in 5 to 7 hours. This will attract individuals to opt for high speed trains and
avoid the inconvenience of air travel. The new technology will enable express
freight to be offered ensuring faster deliveries and optimized supply chain.
Expectations of rail experts see substantial revenues of these infrastructures
and rolling stock segment, which will attract private market investments to
contribute to their cost and thus relieving public budgets.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

Outsourcing maintenance activities to the third parties

Traditionally, the maintenance of rolling stock and rail infrastructure
was carried out by the maintenance divisions of the rail operators. Even today
still 70% of the total market is accounted for by rail companies, who maintain
their own vehicles. However, with the increasing degree of liberalization and
the disintegration of the incumbent railway operators, the number of enterprises
in the railway sector has multiplied. In addition, railway operators and
infrastructure managers are increasingly concentrating on their core business.
As a result, maintenance activities are becoming outsourced to third parties
instead of relying on in-house maintenance divisions. With new rolling stock
the maintenance is increasingly performed by the original manufacturer that
hold contract for both the delivery and maintenance of rolling stock.

Adapting to the emergence of Digitization, Big Data, and Analytics

The innovation and usage of big data and analytics has
substantially increased in recent years. Since this technology is becoming easily
available at low cost, suppliers are expanding their business models and incorporating
more responsibilities from rail operators and infrastructure owners in the product
portfolio. Internet of Things (IoT), remote monitoring, and big data analytics
will offer new opportunities in the service space for traditional suppliers
provided they adapt to the current business models successfully.

As innovation flourishes, digitization and big data
analytics will significantly lower maintenance costs and improve profit margins. Apart from advances in
technology and cost efficiency, customers’ preference for asset availability
further contributes to this development. Digitization is not limited to rail
operations and maintenance, but will also have a huge impact on the industry’s innovation,
and research and development phase.

Industry Consolidation

As in many other industries, global rail is witnessing a
clear trend towards consolidation and it appears likely that the industry will
experience further consolidation. In a few years, there could only be a handful
of large suppliers. One possible scenario might see four to six large system
suppliers providing rolling stock, train control, and infrastructure systems.

In last few years, we’ve seen major mergers and related
activity in the rail industry. Siemens acquired Invensys Rail. Alstom acquired
GE Rail Signaling. CNR and CSR announced a merger. Hyundai Rotem had an initial
public offering. The Hitachi group acquired Ansaldo STS. And in September 2017,
Europe’s biggest suppliers, Alstom and Siemens Mobility, agreed to merge their
global rail operations in September 2017.

While the market will remain relatively fragmented,
market pressures mean that consolidation is most likely to continue, but
possibly at a slower pace. We’re likely to see further consolidation among the
lower tier suppliers, and particularly the manufacturers of specialist
subsystems. Larger industry participants may start to break up into separate
businesses focused on specific niches.


I'm Morris!

Would you like to get a custom essay? How about receiving a customized one?

Check it out